<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-Q
--------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-23354
FLEXTRONICS INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
Singapore Not Applicable
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Blk 514, Chai Chee Lane
#04-13
Singapore 469029
(Address of principal executive offices) (Zip Code)
(65) 449 5255
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Ordinary Shares June 30, 1996
--------------- -------------
$0.01 par value 13,295,544
- -------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets - June 30, 1996 and
March 31, 1996........................................... 3
Condensed Consolidated Statements of Income - Three months
ended June 30, 1996 and 1995.............................. 4
Condensed Consolidated Statements of Cash Flow - Three months
ended June 30, 1996 and 1995.............................. 5
Notes to Condensed Consolidated Financial Statements........... 6
</TABLE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............. 7 - 9
PART II. OTHER INFORMATION
- --------------------------
Items 1 through 6........................................................ 10
Signatures............................................................... 11
2.
<PAGE>
PART 1 - FINANCIAL INFORMATION
------------------------------
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1996 1996/*/
----------------------------------------
(UNAUDITED)
ASSETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Current assets
Cash $ 8,760 $ 6,546
Accounts receivable, net 69,933 78,114
Inventories - Note B 54,941 52,637
Other current assets 5,039 4,087
-------- --------
Total current assets 138,673 141,384
======== ========
Property and equipment
At cost 101,180 98,998
Accumulated depreciation (36,658) (37,896)
-------- --------
Net property and equipment 64,522 61,102
-------- --------
Other non-current assets 11,294 12,102
TOTAL ASSETS $214,489 $214,588
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank borrowings $ 19,041 $ 14,379
Current portion of capital lease and long-term debt 20,833 20,934
Accounts payable 52,749 64,625
Other current liabilities 15,318 13,770
-------- --------
Total current liabilities 107,941 113,708
-------- --------
Long term debt, less current portion 17,795 17,554
Obligations under capital leases and deferred income taxes 11,054 11,376
Notes payable to shareholders 686 686
Minority Interest 485 485
Shareholders' equity
Ordinary shares, S$0.01 par value:
Authorized - 100,000,000 shares at March 31, 1996 and June 30, 1996
Issued and outstanding - 13,213,289 shares at March 31, 1996 and
13,295,544 shares at June 30, 1996 85 85
Additional paid-in capital 94,181 93,634
Accumulated deficit (17,738) (22,940)
-------- --------
Total shareholders' equity 76,528 70,779
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $214,489 $214,588
======== ========
</TABLE>
- -------------------------
/*/ The balance sheet at March 31, 1996 has been derived from audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
3.
<PAGE>
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
----------------------------------------
1996 1995
-------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net sales $118,269 $86,014
Costs and expenses:
Cost of sales 106,143 78,907
Selling, general and administrative expenses 5,611 3,405
Goodwill & intangibles amortisation 287 255
Interest expense and other, net 425 480
-------- -------
112,466 83,047
Income before income taxes 5,803 2,967
Provision for income taxes 849 282
-------- -------
Net income after income taxes 4,954 2,685
======== =======
Earnings per share:
Net income per shar $ 0.35 $ 0.22
======== =======
Weighted average ordinary shares and equivalents 14,336 12,484
======== =======
</TABLE>
See notes to condensed consolidated financial statements.
4.
<PAGE>
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Net cash provided by (used for) operating activities $ 3,455 $ (1,337)
Investing activities:
Purchases of property and equipment (5,739) (7,664)
Proceeds from sale of property and equipment 39 0
Payment for business acquired, net of cash acquired 0 (3,116)
------- --------
Net cash used for investing activities (5,700) (10,780)
======= ========
Financing activities:
Borrowings from banks 4,605 14,095
Source (repayment) of capital lease obligations (701) 395
Source (repayment) of long-term debt (342) 51
Repayment of loan from related party 350 0
Net proceeds from issuance of share capital 547 248
Proceeds from notes payable 0 73
------- --------
Net cash provided by financing activities 4,459 14,862
======= ========
Net increase in cash 2,214 2,745
Cash, beginning of period 6,546 4,751
------- --------
Cash, end of period $ 8,760 $ 7,496
======= ========
</TABLE>
See notes to condensed consolidated financial statements.
5.
<PAGE>
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended March 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in Flextronics International
Ltd.'s annual report on Form 10-K for the year ended March 31, 1996.
NOTE B - INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
(000's omitted)
<S> <C> <C>
Raw materials $44,149 $42,202
Work-in-process 13,748 14,049
Finished goods 1,698 962
------- -------
$59,596 $57,213
Less: Allowance for obsolescence (4,655) (4,576)
------- -------
$54,941 $52,637
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
6.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains projections and other forward-
looking statements regarding future events and the future financial performance
of the Company that involve a number of risks and uncertainties. While this
outlook represents the Company's current judgment on the future direction of the
business, such risks and uncertainties could cause actual events or results to
differ materially from any future performance suggested herein. Certain of the
factors that could cause actual events or results to differ are highlighted
herein. We also refer you to the documents the Company files from time to time
with the Securities and Exchange Commission, specifically the Company's Annual
Report on Form 10-K filed in June 1996 and fiscal year 1996 Form 10-Qs and Form
8-Ks. This document, as well as the Company's Form 10-K, Form 10-Qs and Form 8-
Ks contain and identify important factors that could cause the Company's actual
results to differ materially from those contained in the projections and the
forward-looking statements contained in this report on Form 10-Q. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
RESULTS OF OPERATIONS
Net Sales
Net sales for the three months ended June 30, 1996 increased 37.6% to
$118.3 million from $86.0 million for the three months ended June 30, 1995. The
increase was primarily due to higher sales to existing customers, including
Visioneer, Global Village Communication, Microcom and Thermoscan, sales to new
customers in the computer and communications industries such as Microsoft, US
Robotics and Advanced Fiber Communications and the inclusion of sales of Astron
Group Limited ("Astron") after its acquisition in February 1996.
Gross Profit
Gross profit is affected by, among other things, product mix,
component costs, product life cycles, unit volumes, startup of new manufacturing
facilities, expansion of existing manufacturing facilities and new product
introductions. Gross profit margin increased to 10.3% for the three months
ended June 30, 1996 as compared to 8.3% for the three months ended June 30,
1995. The increase in gross profit margin for the quarter ended June 30, 1996
was mainly due to higher sales during this period resulting in better labor and
overhead expense absorption and the inclusion of Astron's printed circuit board
business which has historically had a higher gross profit margin due to lower
materials costs than the Company's.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months
ended June 30, 1996 increased to $5.6 million from $3.4 million for the three
months ended June 30, 1995 and increased as a percentage of net sales to 4.7%
for the three months ended June 30, 1996 from 4.0% for the three months ended
June 30, 1995. The increase was principally due to costs associated with
increased corporate salaries and bonuses, increased sales and marketing expenses
and the inclusion of Astron's selling and general administrative expenses after
its acquisition in February 1996.
Interest Expense and Other, Net
Net interest expense and other decreased to $425,000 for the three
months ended June 30, 1996 from $480,000 for the three months ended June 30,
1995. Net interest expense and other decreased because of a $276,000 regional
development grant received from the Wales government for capital expenditures
incurred at the Wales facility in 1996. Interest expenses incurred for the
three months ended June 30, 1996 were mainly due to indebtedness incurred in
order to finance the cash portion of the Astron acquisition.
Provision for Income Taxes
The Company is structured as a holding company with several operating
subsidiaries. The Company conducts its operations in Asia through its
manufacturing and marketing subsidiaries incorporated in Singapore, Malaysia,
Hong Kong and China, and each of these subsidiaries is subject to taxation in
the country in which it has been formed. The Company's manufacturing
subsidiaries have been granted certain tax relief in each of these countries,
resulting in lower taxes than would otherwise be the case under ordinary tax
rates.
7.
<PAGE>
The Company's consolidated effective tax rate for any given period is
calculated by dividing the aggregate taxes incurred by each of the operating
subsidiaries and the holding company by the Company's consolidated pretax
income. Losses incurred by any subsidiary or by the holding company are not
deductible by the other entities in the calculation of their respective local
taxes.
The Company's consolidated effective tax rate was 14.6% for the three
months ended June 30, 1996 and 9.5% for the three months ended June 30, 1995.
Variations in the Company's consolidated effective tax rates are primarily
attributable to the differences in the relative amount of the holding company's
interest expense compared to the amount of pretax income in the respective
periods.
The Company's Singapore subsidiary was granted an investment allowance
incentive in respect of approved fixed capital expenditures subject to certain
conditions. These allowances have been fully utilized to reduce its taxable
income since fiscal 1991. If the Singapore subsidiary sells, leases or disposes
of assets in respect of which investment allowances have been granted before
July 31, 1997 the amount of income previously exempted from Singapore tax will
then become taxable at the standard corporate tax rate of 26%. The Company's
Malaysian manufacturing subsidiary has obtained a five-year pioneer certificate
from the relevant authority which provides a tax exemption on manufacturing
income from certain products in Johore, Malaysia. To date, this incentive has
had a limited impact on the Company due to the relatively short history of its
Malaysian operations and its loss carry forwards. The Company's facility in
Shekou, China is located in a "Special Economic Zone" and is an approved
"Product Export Enterprise" which qualifies for a special corporate income tax
rate of 10%. This special tax rate is subject to the Company exporting more
than 70% of its total value of products manufactured in China, and the Company's
status as a Product Export Enterprise is reviewed annually by the Chinese
government authorities. The Company's investments in its plants in Xixiang and
Doumen, China fall under the "Foreign Investment Scheme" which entitle the
Company to apply for a five-year tax incentive. The Company applied for the tax
incentive for both plants and obtained the incentive for the Doumen plant in
December 1995. The Company believes that the incentive will be granted for the
Xixiang plant, although there can be no assurance in this regard. If approval
is received, the Company's tax rates on income from these facilities during the
incentive period will be 0% in years 1 and 2 and 7 1/2% in years 3 through 5,
commencing in the first profitable year. In fiscal 1993, the Company
transferred its offshore marketing and distribution functions to a newly formed
marketing subsidiary located in Labuan, Malaysia, where the tax rate is de
minimis. In February 1996, the Company transferred Astron's sales and marketing
business to a newly formed subsidiary in Mauritius, where the tax rate is at 0%.
The Company has structured its operations in Asia in a manner designed
to maximize income in countries where tax incentives have been extended to
encourage foreign investment or where income tax rates are low. If tax
incentives are not renewed upon expiration, if the tax rates applicable to the
Company are rescinded or changed, or if tax authorities were to challenge
successfully the manner in which profits are recognized among the Company's
subsidiaries, the Company's taxes would increase and its results of operations
and cash flow would be adversely affected. Substantially all of the products
manufactured by the Company's Asian subsidiaries are sold to U.S. based
customers. While the Company believes that profits from its Asian operations
are not sufficiently connected to the U.S. to give rise to U.S. federal or state
income taxation, there can be no assurance that U.S. tax authorities will not
challenge the Company's position or, if such challenge is made, that the Company
will prevail in any such disagreement. If the Company's Asian profits became
subject to U.S. income taxes, the Company's taxes could increase and its results
of operations and cash flow could be adversely affected. The expansion by the
Company of its operations in the U.S. may increase its effective tax rate.
There are no Singapore exchange controls or other restrictions on the
export or import of capital. The remittance of dividends or other payments by
the Company to non-resident shareholders is therefore not subject to any
restriction. Singapore does not currently have a double tax treaty with the
United States of America.
8.
<PAGE>
However, under the current Singapore tax rules, there is no Singapore
withholding tax on payments of dividends or other distributions by the Company
to its non-resident shareholders.
Variability of Results
The Company has experienced, and expects to continue to experience,
significant periodic and quarterly fluctuations in the Company's results of
operations. These factors include, among other things, timing of orders, volume
of orders relative to the Company's capacity, customers' announcement and
introduction of new products or new generations of products, evolutions in the
life cycles of customers' products, timing of expenditures in anticipation of
future orders, effectiveness in managing manufacturing processes, changes in
cost and availability of labor and components, mix of orders filled, and changes
or anticipated changes in economic conditions. In addition, the Company's
operating results are adversely affected by seasonality (principally in Malaysia
and China during each fourth fiscal quarter due to local holiday seasons). The
market segments served by the Company are also subject to economic cycles and
have in the past experienced, and are likely in the future to experience,
recessionary periods. A recessionary period affecting the industry segments
served by the Company could have a material adverse effect on the Company's
results of operations. Results of operations in any period should not be
considered indicative of the results to be expected for any future period, and
fluctuations in operating results may also result in fluctuations in the price
of the Company's Ordinary Shares.
Liquidity and Capital Resources
The Company has funded its operations from the proceeds of public
offerings of equity securities, cash generated from operations, bank debt and
lease financing of capital equipment. The Company has a total of $50 million in
credit facilities from several banks.
Cash provided by operating activities was $3.5 million for the three
months ended June 30, 1996. Cash used for operating activities was $1.3 million
for the three months ended June 30, 1995. Cash provided by operating activities
for the three months ended June 30, 1996 was comprised primarily of net income,
depreciation, and decrease in accounts receivable. Cash used for operating
activities was primarily due to increase in inventory and decrease in accounts
payable.
Accounts receivable, net of allowance for doubtful accounts decreased
to $69.9 million at June 30, 1996 from $78.1 million at March 31, 1996. The
decrease in accounts receivable was mainly due to lower sales for the three
months ending June 30, 1996 compared to the fourth quarter ending March 31, 1996
and better collection of accounts receivable during the quarter ending June 30,
1996. Inventories increased to $54.9 million at June 30, 1996 from $52.6
million at March 31, 1996.
Net cash used for investing activities during the three months ended
June 30, 1996 was $5.7 million which consisted primarily of expenditures for
production machinery and equipment in the San Jose, nCHIP and Xixiang, China
facilities and for the purchase of land in San Jose.
Net cash provided by financing activities was $4.5 million for the
three months ended June 30, 1996 and $14.9 million for the three months ended
June 30, 1995. Cash provided by financing activities consisted primarily of
borrowings from banks and net proceeds from the issuance of share capital.
Bank borrowings increased from $14.4 million at March 31, 1996 to
$19.0 million at June 30, 1996 as the Company has utilized its bank lines to
help finance the growth of its business. The Company ended the June 1996
quarter with cash of $8.8 million.
9.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Items 1 through 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: (10.1) Revolving Credit Facility Agreement dated June 13, 1996
among Flextronics International USA, Inc., Flextronics
Singapore Pte Ltd., The First National Bank of Boston,
Singapore Branch, et al.
(10.2) Supplemental Agreement dated July 25, 1996 being
supplemental to the Revolving Credit Facility Agreement
among Flextronics International USA, Inc., Flextronics
Singapore Pte Ltd., The First National Bank of Boston,
Singapore Branch, et al.
(10.3) Security Agreement dated July 25, 1996 between The First
National Bank of Boston, Singapore Branch and Flextronics
International USA, Inc.
(11.1) Statement re: computation of earnings per share.
(27) Financial Data Schedule
(b) Reports on Form 8-K: The Company did not file any reports on Form 8-K
during the three months ended June 30, 1996.
10.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
FLEXTRONICS INTERNATIONAL LTD
-----------------------------------------
(Registrant)
Date August 14, 1996 /s/ Michael E. Marks
--------------- -----------------------------------------
Michael E. Marks, Chief Executive Officer
Date August 14, 1996 /s/ Goh Chan Peng
--------------- -----------------------------------------
Goh Chan Peng, Chief Financial Officer
11.
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Document Description
- ------ --------------------
10.1 Revolving Credit Facility Agreement dated June 13, 1996 among
Flextronics International USA, Inc., Flextronics Singapore Pte Ltd.,
The First National Bank of Boston, Singapore Branch, et al.
10.2 Supplemental Agreement dated July 25, 1996 being supplemental to the
Revolving Credit Facility Agreement among Flextronics International
USA, Inc., Flextronics Singapore Pte Ltd., The First National Bank of
Boston, Singapore Branch, et al.
10.3 Security Agreement dated July 25, 1996 between The First National Bank
of Boston, Singapore Branch and Flextronics International USA, Inc.
11.1 Statement re: computation of earnings per share.
27 Financial Data Schedule
12.
<PAGE>
EXHIBIT 10.1
DATED THE 13TH DAY OF JUNE 1996
====================================================
FLEXTRONICS INTERNATIONAL USA. INC.
FLEXTRONICS SINGAPORE PTE LTD
as Borrowers
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
as Tranche A Lender
THE BANKS AND FINANCIAL INSTITUTIONS LISTED IN SCHEDULE 1
as Tranche B Lenders
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
as Facility Agent
and
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
as Security Agent
====================================================
REVOLVING CREDIT FACILITY
AGREEMENT
====================================================
DREW & NAPIER
Advocates & Solicitors
20 Raffles Place #17-00
Ocean Towers
Singapore 048620
<PAGE>
TABLE OF CONTENTS
=================
CLAUSE HEADING PAGE
- ------ ------- ----
1. INTERPRETATION .................................................1
2. THE FACILITIES..................................................6
3. CONDITIONS PRECEDENT............................................7
4. DRAWDOWN........................................................7
5. REPAYMENT.......................................................8
6. PREPAYMENT......................................................9
7. CANCELLATION....................................................9
8. INTEREST........................................................9
9. FEES...........................................................10
10. TAXES..........................................................10
11. CHANGE IN CIRCUMSTANCES........................................12
12. PAYMENTS.......................................................14
13. REPRESENTATIONS AND WARRANTIES.................................16
14. INFORMATION....................................................19
15. UNDERTAKINGS...................................................20
16. DEFAULT........................................................23
17. DEFAULT INTEREST...............................................25
18. INDEMNITIES....................................................26
19. THE FACILITY AGENT AND THE SECURITY AGENT......................27
20. SET-OFF AND PRO RATA SHARING...................................30
21. EXPENSES AND STAMP DUTY........................................31
22. CALCULATIONS AND EVIDENCE......................................32
23. ASSIGNMENT.....................................................32
24. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS.....................34
25. COMMUNICATIONS.................................................34
26. PARTIAL INVALIDITY.............................................35
27. NATURE OF RIGHTS AND OBLIGATIONS...............................35
28. COUNTERPARTS...................................................35
29. GOVERNING LAW AND JURISDICTION.................................35
30. ARBITRATION....................................................36
SCHEDULE
- --------
1 TRANCHE B LENDERS..............................................37
2 FINANCIAL DEFINITIONS..........................................38
3 PART 1 - CONDITIONS PRECEDENT .................................41
PART 2 - CERTIFICATE (to be given by FIUI).....................42
PART 3 - CERTIFICATE (to be given by FSPL).....................45
PART 4 - CERTIFICATE (to be given by FIL)......................48
PART 5 - CERTIFICATE (to be given by FIM)......................51
PART 6 - CERTIFICATE (to be given by FMSB).....................54
4 NOTICE REQUESTING ADVANCE......................................57
5 EXISTING SECURITY..............................................58
6 BORROWING BASE REPORT..........................................62
7 LITIGATION CURRENT OR PENDING..................................65
8 LIST OF CURRENT GUARANTEES.....................................65
<PAGE>
THIS AGREEMENT is made on 13 June 1996 BETWEEN:-
(1) FLEXTRONICS INTERNATIONAL USA, INC. ("FIUI"), a company incorporated in
the State of California, the United States of America with its chief
executive office at 2241 Lundy Avenue San Jose, CA 95131 and FLEXTRONICS
SINGAPORE PTE LTD ("FSPL"), a company incorporated in Singapore with its
registered offices at 36 Robinson Road #18-01 City House, Singapore
068877 (collectively the "Borrowers" and individually a "Borrower");
(2) THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH (the "Tranche A
Lender");
(3) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 (the "Tranche
B Lenders");
(4) THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH in its capacity as
facility agent for the Lenders (as defined below) (in such capacity, the
"Facility Agent" which expression shall include any of its successors in
such capacity); and
(5) THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH in its capacity as
security agent for the Lenders and the Facility Lender (as defined below)
(in such capacity, the "Security Agent" which expression shall include
any of its successors in such capacity).
WHEREAS at the request of the Borrowers, the Tranche A Lender is willing
to make available to FIUI a revolving credit facility of up to US$18,000,000 and
the Tranche B Lenders are willing to make available to FSPL a revolving credit
facility of up to US$27,000,000, upon the terms and subject to the conditions of
this Agreement and the other Transaction Documents (as defined below).
IT IS AGREED as follows:-
1. INTERPRETATION
(A) Definitions: In this Agreement, unless the context otherwise requires:-
"Advances" means the Tranche A Advances and the Tranche B Advances and
"Advance" means any of them;
"Available Commitment" means, in relation to the Tranche A Lender, its
Tranche A Commitment less its Tranche A Outstandings and in relation to a
Tranche B Lender, its Tranche B Commitment less its Tranche B
Outstandings;
"Available Facilities" means the Available Tranche A Facility and the
Available Tranche B Facility;
"Available Tranche A Facility" means the Tranche A Commitment less the
Tranche A Outstandings;
"Available Tranche B Commitment" means, in relation to a Tranche B
Lender, its Tranche B Commitment less its Tranche B Outstandings;
"Available Tranche B Facility" means the total amount of the Available
Tranche B Commitments;
"Borrowing Base Report" means in relation to each Borrower, the monthly
borrowing base report to be delivered by that Borrower to the Facility
Agent and in the form set out in Schedule 6;
"Business Day" means a day (other than Saturday or Sunday) on which (i)
US Dollar deposits may be dealt in on the Singapore inter-bank market and
(ii) commercial banks are open for business in
<PAGE>
2
Singapore and, if on that day a transfer of funds is to be made under
this Agreement, New York City also;
"Charges" means the charges over or security agreements covering
receivables executed or to be executed (as the case may be) by each of
the Borrowers, FIM and FMSB and such other Subsidiaries of FIL as may
from time to time be agreed between the parties in favour of the Security
Agent for the benefit of the Lenders and the Facility Lender in respect
of the Borrowers' obligations under this Agreement and the Facility
Letter, in the form agreed between the Security Agent and the Borrowers;
"Commitment" means in relation to the Tranche A Lender, its Tranche A
Commitment and in relation to a Tranche B Lender, its Tranche B
Commitment;
"Commitment Termination Date" means the date falling 23 months after the
date of this Agreement;
"Event of Default" means one of the events mentioned in Clause 16(A);
"Facility Agent's Account" means the Facility Agent's account (Number:
009-07029) with the First National Bank of Boston, New York, or such
other account and/or with such other bank as the Facility Agent shall
have specified to the person by whom the relevant payment is to be made;
"Facility Lender" means the lender under the Facility Letter, which is
currently contemplated to be The First National Bank of Boston, Singapore
Branch;
"Facility Letter" means the US$3,000,000 revolving credit facility letter
dated 4 June 1996 between the Facility Lender and FSPL;
"FIL" means Flextronics International Limited, a company incorporated in
Singapore with its registered office at 36 Robinson Road #18-01 City
House, Singapore 068877;
"FIM" means Flex International Marketing (L) Ltd, a company incorporated
in Malaysia with its registered office at Level 9, Wisma Oceanic Jalan
OKK Awang Besar 87007 Federal Territory of Labuan, Malaysia;
"Final Maturity Date" means the date falling 24 months after the date of
this Agreement;
"FMSB" means Flextronics (M) Sdn Bhd, a company incorporated in Malaysia
with its registered office at No. 2 Benteng 50050 Kuala Lumpur, Malaysia;
"Group" means, at any particular time, FIL and all its Subsidiaries (and
"member of the Group" shall be construed accordingly);
"Guarantees" means the guarantees executed or to be executed (as the case
may be) by each of the Guarantors in favour of the Security Agent for the
benefit of the Lenders and the Facility Lender in respect of the
Borrowers' obligations under this Agreement and the Facility Letter, in
the form agreed between the Security Agent and the Borrowers;
"Guarantors" means FSPL, FIL, FIM and FMSB and "Guarantor" means any of
them;
"Information Memorandum" means the document dated February 1996
containing certain information regarding (among other things) the
Borrowers and the Group and which, at the request
<PAGE>
3
and on behalf of the Borrowers, has been prepared in connection with the
transactions contemplated in this Agreement and distributed by the
Facility Agent to the Lenders;
"Interest Payment Date" means the last day of an Interest Period;
"Interest Period" means a period by reference to which interest is
calculated and payable on an overdue sum;
"Lenders" means the Tranche A Lender and the Tranche B Lenders and
"Lender" means any of them;
"Lending Office" means, in relation to a Lender at any particular time,
the office through which it is acting for the purpose of this Agreement;
"Leverage" means the ratio of the Consolidated Total Liabilities to
Consolidated Tangible Net Worth (both as defined in Schedule 2);
"Majority Lenders" means Lenders whose Outstandings together exceed 66.67
per cent. Of the total Outstandings (or, if there are no Outstandings,
Lenders whose Available Commitment together exceed 66.67 per cent of the
total amount of the Available Commitments of all the Lenders);
"Margin" means 1.375 per cent. If the Leverage is two times or less and
1.5 per cent. If the Leverage is more than two times;
"Obligors" means the Borrowers, the Guarantors and the Chargors, and
"Obligor" means any of them;
"Outstandings" means, in relation to a Lender at any particular time, the
aggregate principal amount of its share of all (if any) Advances
outstanding at that time;
"Put Option Date" means the date falling 12 months after the date of
this Agreement;
"Reference Banks" means the principal Singapore office of The First
National Bank of Boston, Singapore Branch, Citibank, N.A., Singapore
Branch and ABN AMRO Bank, N.V., Singapore Branch;
"Repayment Date" means, in relation to an Advance, the last day of its
Term;
"Security Documents" means the Charges and Guarantees and any and every
other document from time to time executed to guarantee, secure or
otherwise assume the obligations of the Borrowers under this Agreement
and the Facility Letter (and any reference to a Security Document shall
be a reference to that Security Document as from time to time amended,
modified or supplemented and any document which amends, modifies or
supplements that Security Document);
"Relevant Obligors" means (i) in relation to any warranty,
representation, undertaking or covenant made by FIUI hereunder, itself,
FIL, FIM and FMSB, and (ii) in relation to any warranty, representation,
undertaking or covenant made by FSPL hereunder, itself, FIL, FIM and
FMSB;
"Security Sharing Agreement" means the security sharing agreement made or
to be made between the Facility Lender, the Borrowers, the Facility
Agent, the Security Agent and the Lenders;
"Subsidiary" means a subsidiary as defined in Section 5 of the Companies
Act, Chapter 50 of Singapore;
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4
"Term" means, in relation to an Advance, the period for which it is to be
or, as the case may be, has been made;
"Tranche A Advance" means an advance made or to be made by the Tranche A
Lender to FIUI under this Agreement or, as the case may be, the
outstanding principal amount of any such Advance;
"Tranche A Commitment" means, in relation to the Tranche A Lender and
subject as provided in this Agreement, the amount set opposite its name
at the end of this Agreement;
"Tranche A Facility" means the revolving credit facility granted by the
Tranche A Lender to FIUI under Clause 2(A);
"Tranche A Outstandings" means, in relation to the Tranche A Lender at
any particular time, the aggregate principal amount of all (if any)
Tranche A Advances outstanding at that time;
"Tranche B Advance" means an advance made or to be made by the Tranche B
Lenders to FSPL under this Agreement or, as the case may be, the
outstanding principal amount of any such Advance;
"Tranche B Commitment" means, in relation to a Tranche B Lender and
subject as provided in this Agreement, the amount set opposite its name
in Schedule 1;
"Tranche B Facility" means the revolving credit facility granted by the
Tranche B Lenders to FSPL under Clause 2(B);
"Tranche B Outstandings" means, in relation to a Tranche B Lender at any
particular time, the aggregate principal amount of its share of all (if
any) Tranche B Advances outstanding at that time;
"Transaction Documents" means this Agreement, the Facility Letter, the
Security Sharing Agreement, the Guarantees and the Charges and
"Transaction Document" means any of them; and
"US Dollars" and the symbol "US$" mean the lawful currency or the United
States of America.
(B) Construction of Certain References: Except to the extent that the
context requires otherwise, any reference in this Agreement to:-
an "agency" of a state includes any agency, authority, central bank,
department, government, legislature, minister, ministry, official, or
public or statutory person (whether autonomous or not) of, or of the
government of, that state or any political sub-division in or of that
state;
this "Agreement", any other "Transaction Document" or any other agreement
or document includes this Agreement, such other Transaction Document,
such other agreement or document as from time to time amended, modified
or supplemented;
the "assets" of any person mean all or any part of its business,
undertaking, property, assets, revenues (including any right to receive
revenues) and uncalled capital;
"borrowed money" includes any indebtedness (i) for or in respect of money
borrowed or raised (whether or not for cash), by whatever means
(including acceptances, deposits, discounting, factoring, finance leases,
hire purchase, sale-and-lease back, sale-and-repurchase and any form of
<PAGE>
5
"off-balance sheet" financing) or (ii) for the deferred purchase price of
assets or services (other than goods or services obtained on normal
commercial terms in the ordinary course of trading);
"consent" also includes an approval, authorisation, exemption, filing,
licence, order, permission, recording or registration (and references to
obtaining consents shall be construed accordingly);
a "day, month or year" shall be construed by reference to the Gregorian
calendar;
a "directive" includes any present or future directive, regulation,
request, requirement, rule or credit restraint programme of any agency of
any state or of any self-regulating organisation (but, if not having the
force of law, only if compliance with the directive is in accordance with
the general practice of persons to whom the directive is intended to
apply);
"disposal" includes any sale, assignment, exchange, transfer, concession,
loan, lease, surrender of lease, licence, reservation, waiver,
compromise, release of security, dealing with or the granting of any
option or right or interest whatsoever or any agreement for any of the
same and "dispose" means to make a disposal, and "acquisition" and
"acquire" shall be construed mutatis mutandis;
a "guarantee" also includes an indemnity, and any other obligation
(whatever called) of any person to pay, purchase, provide funds (whether
by the advance of money, the purchase of or subscription for shares or
other securities, the purchase of assets or services, or otherwise) for
the payment of, indemnify against the consequences of default in the
payment of, or otherwise be responsible for, any indebtedness of any
other person (and "guaranteed" and "guarantor" shall be construed
accordingly);
"indebtedness" includes any obligation (whether present or future, actual
or contingent, secured or unsecured, as principal, surety or otherwise)
for the payment or repayment of money;
a "law" includes common or customary law and any constitution, decree,
judgment, legislation, order, ordinance, regulation, statute, treaty or
other legislative measure, in each case of any jurisdiction whatsoever
(and "lawful" and "unlawful" shall be construed accordingly);
something having a "material adverse effect" on a person is to it having
a material adverse effect (i) on its financial condition, business or
operations or on the consolidated financial condition, business or
operations of it and its Subsidiaries or (ii) on its ability to perform
and comply with its obligations under any Transaction Document to which
it is a party;
an "obligation" of any person under this Agreement or any other
Transaction Document or any other agreement or document shall be
construed as a reference to an obligation expressed to be assumed by or
imposed on it under this Agreement, any other Transaction Document or as
the case may be, that other agreement or document (and "due", "owing",
"payable" and "receivable" shall be similarly construed);
a "person" includes any individual, company, corporation, firm,
partnership, joint venture, association, organisation, trust, state or
agency of a state (in each case, whether or not having separate legal
personality);
"security" includes any mortgage, pledge, lien, hypothecation, security
interest or other charge or encumbrance and any other agreement or
arrangement having substantially the same economic effect (including any
"hold back" or "flawed asset" arrangement) (and "secured" shall be
construed accordingly);
<PAGE>
6
"tax(es)" includes any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed;
"tax on overall net income" of a person shall be construed as a reference
to tax (other than tax deducted or withheld from any payment) imposed on
that person by the jurisdiction on which its principal office (and/or, in
the case of a Lender, its Lending Office) is located on (i) the net
income profits or gains of that person worldwide or (ii) such of its net
income, profits or gains as arise in or relate to that jurisdiction;
a "time of the day" is to Singapore time unless otherwise stated; and
the "winding-up" of a person also includes the amalgamation,
reconstruction, reorganisation, administration, judicial management,
dissolution, liquidation, merger or consolidation of that person, and any
equivalent or analogous procedure under the law of any jurisdiction in
which that person is incorporated, domiciled or resident or carries on
business or has assets.
(C) Miscellaneous Construction: The headings in this Agreement are inserted for
convenience only and shall be ignored in construing this Agreement. Unless the
context requires otherwise, words denoting the singular number only shall
include the plural and vice versa. References to "Clauses" and "Schedules" are
to be construed as references to clauses of and schedules to this Agreement.
2. THE FACILITIES
(A) Tranche A Facility: The Tranche A Lender grants to FIUI on the terms and
conditions of this Agreement, a revolving credit facility of up to
US$18,000,000.
(B) Tranche B Facility: The Tranche B Lenders grant to FSPL on the terms and
conditions of this Agreement, a revolving credit facility of up to
US$27,000,000.
(C) Participation: Each Tranche B Lender will participate through its Lending
Office in each Tranche B Advance in the proportion borne by its Available
Tranche B Commitment to the Available Tranche B Facility when the Facility Agent
receives a notice requesting that Tranche B Advance (unless, between then and
the time for making that Tranche B Advance its Available Tranche B Commitment is
reduced to zero, in which case the amount of that Tranche B Advance will be
reduced accordingly).
(D) Calculation of Available Commitment/Facility: For the purpose of calculating
the amount of the Available Tranche A Facility or the Available Tranche B
Facility and each Tranche B Lender's Available Tranche B Commitment in
connection with a proposed Advance (whether for the purpose of Clause 2(C) or
Clause 4(A)(i)):-
(i) any Tranche A Advances or Tranche B Advances (as the case may be)
with Repayment Dates on or before the proposed date of that Advance shall
be deemed to have been repaid; and
(ii) if any other requests are outstanding for Tranche A Advances or
Tranche B Advances (as the case may be) to be made on or before the
proposed date of that Advance, all Tranche A Advances or Tranche B
Advances (as the case may be) to which those requests relate shall be
deemed to be outstanding.
(E) Purpose: Each Borrower shall use the entire proceeds of each Advance to
finance its general corporate requirements including the financing of equipment
purchases and other acquisitions and the
<PAGE>
7
repayment of all its existing bank borrowings excluding any outstanding leases,
but neither the Facility Agent, the Security Agent nor any Lender need check
that it does so.
3. CONDITIONS PRECEDENT
Neither Borrower may make its first request for an Advance until the
Facility Agent has confirmed to the Borrowers and the Lenders in writing via fax
or telex that the Facility Agent has received documents appearing to the
Facility Agent to comply with the requirements of Schedule 3 and to be
satisfactory.
4. DRAWDOWN
(A) Advances: Subject to sub-Clause (B) below, Tranche A Advances will be made
by the Tranche A Lender to FIUI and Tranche B Advances will be made by the
Tranche B Lenders to FSPL at their respective request if the following
additional conditions are fulfilled:-
(i) not later than 11 a.m. on the fifth Business Day before the proposed
date of the relevant Advance (or, as the case may be, such later time as
may be acceptable to the Facility Agent and the Tranche A Lender (in the
case of a Tranche A Advance) and to the Facility Agent and the Tranche B
Lenders (in the case of a Tranche B Advance)), the Facility Agent has
received from the relevant Borrower a notice in the form set out in
Schedule 4 specifying:
(a) the proposed date of that Advance in which must be a Business
Day on or before the Commitment Termination Date);
(b) the amount of that Advance which must be equal to or less than
the Available Tranche A Facility (in the case of a Tranche A
Advance) or the Available Tranche B Facility (in the case of a
Tranche B Advance), and if less, must be at least US$1,000,000 or a
whole multiple of that amount and when added to the total
Outstandings of all Lenders, will not cause the total Outstandings
of all Lenders to exceed 75 per cent. of the Value of the Eligible
Accounts (as defined in Clause 15(B));
(c) the Term of that Advance, which must be in accordance with
Clause 8(A); and
(d) details of the bank (which must be in New York City) to which
the relevant Borrower wishes the proceeds of that Advance to be
made available by the Facility Agent;
(ii) none of the events mentioned in Clause 11(C)(i) occurs in relation
to that Advance;
(iii) the Facility Agent has received and found satisfactory the latest
available Borrowing Base Report in the form set out in Schedule 6;
(iv) all representations and warranties in Clause 13 (except to the
extent waived in accordance with Clause 24(B)) have been complied with
and would be correct in all material respects if repeated on the proposed
date for the making of that Advance by reference to the circumstances
then existing;
(v) no Event of Default has occurred on or before the proposed date of
that Advance and is continuing or will occur as a result of making that
Advance, other than any waived in accordance with Clause 24(B); and
<PAGE>
8
(vi) not later than 11 a.m. on the fifth Business Day before the proposed
date of that Advance, the Facility Agent has received and found
reasonably satisfactory such additional information, legal opinions
and/or other documents relevant in the context of or relating to this
Agreement or that Advance as the Facility Agent may reasonably request as
a result of circumstances which have arisen or come to its attention
since (in the case of the first Advance) the signing of this Agreement
and (in any other case) the making of the previous Advance.
(B) Failure of Sources of Funding: Notwithstanding the fulfillment of the
conditions in Clause 4(A) above or any other provisions in this Agreement, if at
any time after the receipt by the Facility Agent of a notice requesting a
Tranche A Advance, the Tranche A Lender does not for any reason whatsoever (save
where it is due to the gross negligence or wilful default of the Tranche A
Lender) receive its source of funding from any relevant persons for any part of
that Tranche A Advance, then the Tranche A Lender may, but shall not be obliged
to make that part of the Tranche A Advance available to FIUI. The Tranche A
Lender may, by notice to FIUI, cancel the amount of the Tranche A Commitment and
reduce the amount of the Tranche A Facility (equivalent to such part of the
Tranche A Advance) accordingly (unless the Tranche A Lender does not receive
such funding by reason of its own gross negligence or wilful default). The
Tranche A Lender shall, at the request of FIUI, subject to the Tranche A Lender
being indemnified to its satisfaction, take all steps as may be necessary to
assign to FIUI the rights, if any, of the Tranche A Lender against any relevant
person in respect of such non-funding by such person.
(C) Notification: The Facility Agent shall promptly and in any event by 5.00
p.m. on the third Business Day before the proposed date of the relevant Advance
notify the Tranche A Lender of the proposed date and Term of and the amount of
the Tranche A Advance (in the case of a Tranche A Advance) and each Tranche B
Lender of the proposed date and Term of, and the amount of that Tranche B
Lender's share of, the Tranche B Advance in the case of a Tranche B Advance).
(D) Limit on Number of Advances: The Borrowers hereby agree and undertake that
there may not be more than 25 Advances outstanding at any one time.
5. REPAYMENT
(A) Repayment of Advances: FIUI shall repay each Tranche A Advance and FSPL
shall repay each Tranche B Advance on their respective Repayment Dates, together
with all unpaid interest accrued on that Advance. However, any amount repaid
before the Commitment Termination Date will remain available for reborrowing on
the terms and conditions of this Agreement. Provided that, without limiting any
other provision of this Agreement, any amount repaid before the Commitment
Termination Date shall not be available for reborrowing if any of the Tranche A
Facility or Tranche B Facility (or any part thereof) were cancelled or reduced
pursuant to sub-Clause (B) below.
(B) Put Option Date: Any Tranche B Lender may cancel all (but not part only) of
its Tranche B Commitment and the Tranche A Lender may cancel all or part of its
Tranche A Commitment on the Put Option Date by giving to the Facility Agent not
less than 60 days' prior written notice of the cancellation. The Facility Agent
shall, within 7 days of such notice, notify the Borrowers and the other Lenders.
Upon such notification, the relevant Borrower shall prepay that Lender's
Outstandings without premium or penalty on the Put Option Date together with all
accrued interest on that Lender's Outstandings, all unpaid fees accrued to that
Lender and any other sum then due to that Lender under Clause 18(A) or any other
provision of this Agreement. Upon any such cancellation by the Tranche A Lender
the Tranche A Facility shall be cancelled. Upon any such cancellation by a
Tranche B Lender the Tranche B Commitment of such Tranche B Lender shall be
cancelled and the Tranche B Facility shall be reduced by that Tranche B Lender's
Commitment on the Put Option Date.
<PAGE>
9
(C) Final Maturity Date: If on the Final Maturity Date any Advance remains
outstanding, FIUI (in the case of a Tranche A Advance) or FSPL (in the case of a
Tranche B Advance) shall repay that Advance on that date together with all
unpaid accrued interest thereon and all fees and any other sum then due from
that Borrower under this Agreement.
6. PREPAYMENT
Save as expressly provided in this Agreement, the Borrowers may not
prepay all or any part of the Advances.
7. CANCELLATION
Save as expressly provided in this Agreement, the Borrowers may not
cancel all or any part of the Tranche A Facility or the Tranche B Facility.
Provided that a Borrower may cancel all or any part of the Tranche A Facility or
the Tranche B Facility in the event:-
(i) in relation to the Tranche A Facility, the Tranche A Lender or any
other persons is or may be unable to fund all or any part of the Tranche
A Facility due to the insolvency or winding-up of any such persons, in
which case, FIUI snaIl be entitled to cancel the relevant part of the
Tranche A Facility;
(ii) in relation to the Tranche B Facility, any one or more of the
Tranche B Lenders is or may be unable to fund all or any part of the
Tranche B Facility due to the insolvency or winding-up of any such
persons, in which case, FSPL shall be entitled to cancel the relevant
part of the Tranche B Facility;
(iii) in relation to the Tranche A Facility, the Tranche A Lender is or
may be unable to fund all or any part of the Tranche A Facility due to
any default on the part of any other persons in providing the Tranche A
Lender with its source of funding for the relevant part of the Tranche A
Facility (save where such default is due to the gross negligence or
wilful default of the Tranche A Lender), in which case, FIUI shall be
entitled to cancel the relevant part of the Tranche A Facility; and
(iv) in relation to the Tranche B Facility, any Tranche B Lender is in
default of its obligations to provide the relevant part of the Tranche B
Facility, in which case, FSPL shall be entitled to cancel the relevant
part of the Tranche B Facility.
8. INTEREST
(A) Term of Advances: Interest shall be calculated on each Advance by reference
to the Term of that Advance. The Term shall begin on the proposed date of that
Advance and shall be of 1, 2, 3 or 6 months' duration, as selected by the
relevant Borrower in the notice requesting that Advance except that a Borrower
may not select a Term ending after (i) the Put Option Date (for any Advance to
be made on or before that date) or (ii) the Final Maturity Date (for any Advance
to be made after the Put Option Date). If no such selection is made, the Term of
that Advance shall be 3 months or such shorter period as is necessary for
complying with the foregoing condition (i) or (ii) (as the case may be).
(B) Normal Interest Rate: The rate of interest applicable to an Advance for all
or any part of its Term shall be the rate per annum (as determined by the
Facility Agent) equal to the sum of the Margin applicable for that Term or part
thereof and the arithmetic mean (rounded up, if necessary, to the next 1/16 per
cent.)
<PAGE>
10
of the respective rates which are quoted as of 11 a.m. on the second
Business Day before the first day of that Term on the page "SIBO" of the Reuter
Monitor Money Rates Service (or such other page as may replace the SIBO page for
the purpose of displaying Singapore inter-bank US Dollar offered rates of
leading reference banks) as being the interest rates offered in the Singapore
inter-bank market for US Dollar deposits for the same period as that Term (or,
if the periods are not the same, such period as the Facility Agent determines to
be substantially the same) but if no, or only one, such offered quotation
appears, the relevant arithmetic mean (rounded as mentioned above) shall be
determined on the basis of the respective rates (as quoted to the Facility Agent
at its request) at which each Reference Bank is offering US Dollar deposits for
that Term in an amount comparable to its share, if any, of that Advance (or, if
none, to 10 per cent. of that Advance) to prime banks in the Singapore inter-
bank market at or about 11 a.m. on the second Business Day before the proposed
date of that Advance. If any Reference Bank does not supply any quotation
required from it for the purpose of this Agreement, the relevant arithmetic mean
(rounded up, if necessary, to the next 1/16 per cent.) shall be determined on
the basis of the quotations supplied by the remaining Reference Banks.
(C) Notification of Terms and Rates: The Facility Agent shall promptly notify
the relevant Borrower and the relevant Lenders of each rate of interest
determined in accordance with Clause 8(B) or 17.
(D) Payment of Interest: On the Repayment Date of an Advance or (in the relevant
case of an overdue sum) the last day of each Interest Period relating to that
overdue sum, the Borrower shall pay the unpaid interest accrued during that Term
or Interest Period on the Advance or overdue sum to which it relates at the
rate(s) applicable for that Term or Interest Period.
9. FEES
(A) Agency Fee: Each Borrower shall pay to the Facility Agent for its own
account an agency fee as stated in a letter dated 1 February 1996 from the
Facility Agent to FIL.
(B) Arrangement Fee: Each Borrower shall pay to The First National Bank of
Boston, Singapore Branch, as arranger for its own account an arrangement fee as
stated in a letter dated 1 February 1996 from The First National Bank of Boston,
Singapore Branch to FIL.
(C) Commitment Fee: FIUI shall pay a commitment fee at the rate of 0.125 per
cent. per annum on the amount of the Tranche A Lender's Available Commitment and
FSPL shall pay a commitment fee at the rate of 0.125 per cent. per annum on the
amount of each Tranche B Lender's Available Commitment from day to day during
the period beginning on the date of this Agreement and ending on the Commitment
Termination Date. That fee shall be payable in arrear quarterly from the date of
this Agreement, on the Commitment Termination Date or any earlier date on which
that Lender's Commitment first equals zero.
(D) Extension Fee: FIUI shall pay to the Tranche A Lender an extension fee in an
amount equal to 0.125 per cent. of the Tranche A Commitment as at the end of the
Put Option Date and FSPL shall pay to each Tranche B Lender an extension fee in
an amount equal to 0.125 per cent. of its Tranche B Commitment as at the end of
the Put Option Date. Such extension fee shall be payable within 14 days of the
Put Option Date.
10. TAXES
(A) Payments to be free and clear: All sums payable by each Borrower under this
Agreement shall be paid (i) free of any restriction or condition, (ii) free and
clear of and (except to the extent required by law) without any deduction or
withholding for or on account of any tax and (iii) without deduction or
withholding
<PAGE>
11
(except to the extent required by law) on account of any other
amount, whether by way of set-off or otherwise.
(B) Grossing-up of Payments:
(i) If a Borrower or any other person (whether or not a party to, or on
behalf of a party to, this Agreement) must at any time deduct or withhold
any tax or other amount from any sum paid or payable by, or received or
receivable from, such Borrower under this Agreement, such Borrower shall
pay such additional amount as is necessary to ensure that the Facility
Agent or a Lender (as the case may be) to which that sum is due receives
on the due date and retains (free from any liability other than tax on
its own overall net income) a net sum equal to what it would have
received and so retained had no such deduction or withholding been
required or made.
(ii) If a Borrower or any other person (whether or not a party to or on
behalf of a party to, this Agreement) must at any time pay any tax or
other amount on, or calculated by reference to, any sum received or
receivable by the Facility Agent or any Lender (as the case may be) under
this Agreement (except for a payment by the Facility Agent or a Lender of
tax on its own overall net income), such Borrower shall pay or procure
the payment of that tax or other amount before any interest or penalty
becomes payable or, if that tax or other amount is payable and paid by
the Facility Agent or any Lender, shall reimburse it on demand for the
amount paid by it.
(iii) Within 30 days after paying any sum from which it is required by
law to make any deduction or withholding, and within 30 days after the
due date of payment of any tax or other amount which it is required by
paragraph (ii) to pay, such Borrower shall deliver to the Facility Agent
evidence reasonably satisfactory to the Facility Agent or, as the case
may be, the relevant Lender of that deduction, withholding or payment and
(where remittance is required) of the remittance thereof to the relevant
taxing or other authority.
(iv) As soon as either Borrower is aware that any such deduction,
withholding or payment is required (or of any change in any such
requirement), it shall notify the Facility Agent.
(C) Refund of Tax Credit: If:-
(i) a Borrower makes a payment under sub-Clause (B) (a "Tax Payment") in
respect of a payment to the Facility Agent or a Lender under this
Agreement; and
(ii) the Facility Agent or that Lender has obtained a refund of tax or
obtained and used a credit against tax on its overall net income (a "Tax
Credit") which is attributable to that Tax Payment,
then the Facility Agent or that Lender shall forthwith reimburse that Borrower
such proportion of that Tax Credit as will leave the Facility Agent or that
Lender (after that reimbursement) in no better or worse position than it would
have been in if no Tax Payment had been required. No Lender or the Facility
Agent shall be obliged to disclose any information regarding its tax affairs and
computations.
(D) Goods and Services Tax: Each Borrower shall also pay to the Facility Agent
and each Lender on demand, in addition to any amount payable by such Borrower to
the Facility Agent or, as the case may be, the relevant Lender under this
Agreement, any goods and services, value added or other similar tax payable in
respect of that amount (and references in this Agreement to that amount shall be
deemed to include any such taxes payable in addition to it).
<PAGE>
12
11. CHANGE IN CIRCUMSTANCES
(A) Illegality: If at any time it is or will become unlawful or contrary to any
law or directive for any Lender or (in the case of the Tranche A Lender only)
any of the Tranche A Lender's sub-participants to allow all or part of its
Commitment or sub-participation commitment, as the case may be, to remain
outstanding, to make, fund or allow to remain outstanding all or part of its
Outstandings or (in the case of the Tranche A Lender only) the outstandings
under any sub-participation arrangement and/or to carry out all or any of its
other obligations under this Agreement or (in the case of the Tranche A Lender
only) under any sub-participation arrangement, upon that Lender notifying the
relevant Borrower:-
(i) that Lender's Tranche A Commitment or Tranche B Commitment or the
relevant part thereof, as the case may be, shall be cancelled and in the
case where such Lender is the Tranche A Lender, the Tranche A Facility
shall be reduced accordingly and in the case where such Lender is a
Tranche B Lender, the Tranche B Facility shall be reduced accordingly;
and
(ii) FIUI or FSPL (as the case may be) shall prepay that Lender's share
of each Advance or the relevant part thereof on the Repayment Date of
that Advance or on such earlier date as that Lender shall certify to be
necessary to comply with the relevant law or directive with accrued
interest thereon, all unpaid fees or the relevant part thereof accrued to
that Lender and any other sum then due to that Lender under Clause 18(A)
or any other provision of this Agreement or the relevant part thereof.
(B) Increased Costs: If the Facility Agent or (as the case may be) any Lender
determines that, as a result of any law or directive:-
(i) the cost to that Lender or (in the case of the Tranche A Lender only)
any of the Tranche A Lender's sub-participants of maintaining all or any
part of its Tranche A Commitment or Tranche B Commitment, as the case may
be, and/or of making, maintaining or funding all or any part of its share
of any Advance or any overdue sum is increased; and/or
(ii) any sum received or receivable by the Facility Agent or (as the case
may be) that Lender or (in the case of the Tranche A Lender only) any of
the Tranche A Lender's sub-participants under this Agreement or the
effective return to it under this Agreement or the overall return on its
capital is reduced (except on account of tax on its overall net income);
and/or
(iii) the Facility Agent or (as the case may be) that Lender or (in the
case of the Tranche A Lender only) any of the Tranche A Lender's sub-
participants makes any payment (except on account of tax on its overall
net income) or forgoes any interest or other return on or calculated by
reference to the amount of any sum received or receivable by it under
this Agreement;
FSPL or FIUI, as the case may be, shall indemnify the Facility Agent or (as the
case may be) that Lender against that increased cost, reduction, payment or
foregone interest or other return (except to the extent that FSPL or FIUI, as
the case may be, is liable to make any payment pursuant to any deduction or
withholding of tax under Clause 10 above) and, accordingly, shall from time to
time on demand (whenever made) pay to the Facility Agent for its own account or
(as the case may be) for the account of that Lender the amount certified by it
to be necessary so to indemnify it. Under this Clause 11(B), a Lender shall be
entitled to claim indemnification not only for a cost, reduction, payment or
foregone interest or other return directly attributable to this Agreement, its
Commitment, its Outstandings or its share of any overdue sum, but also for that
proportion of any cost, reduction, payment or foregone interest or other return
which that Lender determines to be fairly allocable to this Agreement, its
Commitment, its Outstandings or its share of any overdue sum in relation to any
law or directive applicable to that Lender or affecting the conduct of that
Lender's business or type of business or the manner in which or the extent to
which that Lender allocates
<PAGE>
13
capital resources. Provided that nothing in this Clause shall be construed or be
deemed to be construed as allowing the Tranche A Lender to claim it has suffered
or incurred any increased cost by reason of a change in market conditions or
individual non-availability of funds or by reason of any other person being
required to deduct or withhold any tax or other amount from any sum paid or
payable, or any sum received or receivable by it from the Tranche under any
arrangement for funding between the Tranche A Lender and that person.
(C) Change in Market Conditions:
(i) If in relation to any Advance:-
(a) no, or only one, Reference Bank supplies a quotation as and
when required by Clause 8(B); or
(b) the Facility Agent is notified by the Lenders to whom more than
66.67 per cent. of that Advance if made, would be owing, that (1)
they are unable to obtain matching deposits in the Singapore inter-
bank market at or about 11 a.m. on the second Business Day before
the proposed date of that Advance in sufficient amounts to fund
their respective shares of that Advance during its Term or (2) the
arithmetic mean (rounded up, if necessary, to the next 1/16 per
cent.) of the quotations used for fixing the interest rate under
Clause 8(B) does not reflect the cost to those Lenders of obtaining
such deposits;
the Facility Agent shall promptly notify the relevant Borrower and the
Lender(s) and that Advance shall not be made.
(ii) The Facility Agent (on behalf of and after consultation with the
Lender(s)) shall then negotiate in good faith with the relevant Borrower
with a view to agreeing an alternative basis for calculating the interest
payable on and/or for making, maintaining and/or funding that Advance.
Any alternative basis agreed in writing by the Facility Agent (on behalf
of and with the consent of all the relevant Lender(s)) and the relevant
Borrower within 10 Business Days of the Facility Agent's notification of
the event in question shall take effect in accordance with its terms.
(D) Individual Non-Availability:
(i) If in relation to any Advance any Lender notifies the Facility Agent
that:-
(a) by reason of circumstances affecting the Singapore inter-bank
market, or a particular category (which includes that Lender) of
banks dealing in that market, it is unable to obtain matching
deposits in the Singapore inter-bank market at or about 11 a.m. on
the second Business Day before the proposed date of that Advance in
sufficient amounts to fund its share of that Advance during its
Term; or
(b) by reason of circumstances affecting that market or a
particular category (which includes that Lender) of banks dealing
in that market the arithmetic mean (rounded up, if necessary, to
the next 1/16 per cent.) of the quotations used for fixing the
interest rate under Clause 8(B) does not reflect its cost of
obtaining such deposits,
the Facility Agent shall promptly notify the relevant Borrower
accordingly unless it has already given a notification to that Borrower
in relation to that Advance Clause 11(C)(i).
(ii) The relevant Borrower, the Facility Agent and that Lender shall then
negotiate in good faith (unless and until the Facility Agent gives a
notification to that Borrower in relation to that Advance
<PAGE>
14
under Clause 11(C)(i)) with a view to agreeing an alternative basis for
calculating the interest payable on and/or for making, maintaining and/or
funding that Lender's share of that Advance. Any alternative basis agreed
in writing by that Borrower, the Facility Agent and that Lender within 10
Business Days of the Facility Agent's notification under subclause (D)(i)
above shall take effect in accordance with its terms. If an alternative
basis is not so agreed, that Lender's share of that Advance shall during
its Term bear interest at the rate per annum equal to the sum of the
Margin applicable for that Term or part thereof and the cost to it
(expressed as a rate per annum) of funding its share of that Advance
during that Term by whatever means it reasonably determines to be most
appropriate. That Lender shall certify that cost to that Borrower (such
certificate to contain in reasonable detail a computation of such amount)
as soon as practicable after the end of that 10 Business Day period (but
in any event at least two Business Days before the Repayment Date of that
Advance).
(E) Mitigation: If any circumstances arise which result, or would on the giving
of notice (or the like) result, in a Borrower having to make a payment to or for
the account of a Lender under Clause 10(B), 11(A) or 11(B), or in a Lender's
Tranche A Commitment or Tranche B Commitment or any part thereof, as the case
may be, being cancelled under Clause 11(A), then:-
(i) promptly after an officer of that Lender with responsibility for its
participation in this Agreement becomes aware of the relevant
circumstances and their results, that Lender shall notify the Borrower;
and
(ii) in consultation with that Borrower and the Facility Agent, that
Lender shall take all such steps as are reasonably open to it and as are
acceptable to that Borrower and the Facility Agent to mitigate the effect
of those circumstances (such as restructuring its participation in this
Agreement and/or novating or assigning some or all of its rights or
obligations under this Agreement to another person acceptable to that
Borrower and willing to take that novation or assignment).
(F) Other Losses: Each of the Borrowers acknowledges that in connection with
funds borrowed by the Lenders to fund their Outstandings and other obligations
hereunder, the Lenders may have to prepay advances or sub-participations of
others or to pay, or indemnify others against, costs and losses similar to the
prepayment of Advances, payment or indemnities of cost and losses contemplated
under Clauses 10, 11(A), 11(B), 18(A) and 18(B). FIUI hereby agrees on demand to
prepay such part of the Tranche A Advances and to indemnify the Tranche A Lender
against such costs and losses.
12. PAYMENTS
(A) Manner of Payments: On each date on which a Tranche A Advance is to be made,
the Tranche A Lender shall make that Tranche A Advance available to the Facility
Agent and on each date on which a Tranche B Advance is to be made, each Tranche
B Lender shall make its share of that Tranche B Advance available to the
Facility Agent, and on each date on which any sum is due from any Borrower it
shall make that sum available to the Facility Agent, by payment in US Dollars
and in funds which are for same day settlement in the New York Clearing House
Interbank Payments System (or, if such funds cease to exist or, in the Facility
Agent's opinion, cease to be customary for the settlement in New York City of
international banking transactions in US Dollars, such other US Dollar funds as
the Facility Agent may from time to time determine to be customary for that
purpose), so as to be received before 11 a.m. local time in New York City to the
Facility Agent's Account.
(B) Disbursement to Borrowers: The Facility Agent shall make the amounts so
received by it from the Lenders available to the relevant Borrower by payment
before close of business in New York City on that
<PAGE>
15
date in the same currency and funds as received by the Facility Agent to such
account with such bank in New York City as the relevant Borrower shall have
specified in the notice requesting the relevant Advance. If the Tranche A Lender
makes a Tranche A Advance or any Tranche B Lender makes its share of a Tranche B
Advance available to the Facility Agent later than required by sub-Clause (A)
above, the Facility Agent shall make that Tranche A Advance or that share of a
Tranche B Advance available to the relevant Borrower as soon as practicable
thereafter.
(C) Distribution to Lenders: The Facility Agent shall make available to each
Lender before close of business in New York City on that date its pro rata share
(if any) of any sum so received by the Facility Agent in the same currency and
funds as received by the Facility Agent from the relevant Borrower to such
account of that Lender with such bank in New York City as it shall have
designated to the Facility Agent for that purpose. If any sum is received by the
Facility Agent later than required by subclause (A) above, the Facility Agent
shall make each Lender's share (if any) available to it as soon as practicable
thereafter.
(D) Netting of Payments: Notwithstanding Clauses 4(A) and 12(A) to (C) or any
other provision of this Agreement, if on any date an amount (the "first amount")
is to be advanced by a Lender to a Borrower under this Agreement and an amount
(the "second amount") is due from that Borrower to that Lender under this
Agreement, that Lender shall apply the first amount in or towards payment of the
second amount. The relevant Lender shall remain obliged to advance any excess
(or, as the case may be, the relevant Borrower shall remain obliged to pay any
shortfall) in accordance with this Clause 12. Nothing in this Clause 12(D) shall
be effective to create a charge.
(E) Order of Distribution:
(i) If the amount received by the Facility Agent from FIUI on any date is
less than the total sum remaining and/or becoming due under this
Agreement from FIUI on that date, the Facility Agent shall apply that
amount in or towards payment of the following sums in the following
order:-
(a) first, any sum then due to the Facility Agent in its capacity
as Facility Agent to the Tranche A Lender as such;
(b) secondly, in or towards payment pro rata of any sums (other
than principal of or interest on the Tranche A Advances) then due
to the Tranche A Lender;
(c) thirdly, in or towards payment pro rata of any interest then
due on the Tranche A Advances; and
(d) fourthly, in or towards payment pro rata of any principal then
due on the Tranche A Advances.
(ii) If the amount received by the Facility Agent from FSPL on any date
is less than the total sum remaining and/or becoming due under this
Agreement from FSPL on that date, the Facility Agent shall apply that
amount in or towards payment of the following sums in the following
order:-
(a) first, any sum then due to the Facility Agent in its capacity
as Facility Agent to the Tranche B Lenders as such;
(b) secondly, in or towards payment pro rata of any sums (other
than principal of or interest on the Tranche B Advances) then due
to the Tranche B Lenders (or any of them);
(c) thirdly, in or Towards payment pro rata of any interest then
due on the Tranche B Advances; and
<PAGE>
16
(d) fourthly, in or towards payment pro rata of any principal then
due on the Tranche B Advances.
Any such applications shall override any purported appropriation by any person.
For the avoidance of doubt, any amounts received or to be received by the
Security Agent from any person under or in connection with the Charges and the
Guarantees shall be applied in the manner as contemplated under the Security
Sharing Agreement.
(F) Refunding of Payments: The Facility Agent shall not be obliged to (but may)
make available to any person any sum which it is expecting to receive for the
account of that person until it has been able to establish that it has received
that sum. However, it may do so if it wishes. If and to the extent that it does
so but it transpires that it had not then received the sum which it paid out:-
(i) the person to whom the Facility Agent made that sum available shall
on request refund it to the Facility Agent; and
(ii) that person or (at the option of the Facility Agent) the person by
whom that sum should have been made available shall on request pay to the
Facility Agent the amount (as certified by the Facility Agent) which will
indemnify the Facility Agent against any funding or other cost, loss,
expense or liability sustained or incurred by it as a result of paying
out that sum before receiving it but without prejudice to the rights of
any party hereto against such defaulting party.
(G) Non-Business Days:
(i) If any Repayment Date, the Put Option Date or the Final Maturity Date
would otherwise fall on a non-Business Day, it shall instead fall on the
next Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(ii) Any payment to be made by either Borrower (otherwise than on a
Repayment Date, Put Option Date or Final Maturity Date) and which would
otherwise be due on a non-Business Day shall instead be due on the next
Business Day.
13. REPRESENTATIONS AND WARRANTIES
Each Borrower separately represents and warrants to and for the benefit
of each other party to this Agreement as follows:-
(i) Status: each of the Relevant Obligors is a company duly incorporated,
validly existing and in good standing under the laws of the State of
California, the United States of America (in the case of FIUI), Singapore
(in the case of FSPL and FIL) and Malaysia (in the case of FIM and FMSB)
and each of them has the power and authority to own its assets and to
conduct the business which it conducts and/or proposes to conduct and
each of the Relevant Obligors (other than FIL) is a Subsidiary of FIL;
(ii) Powers: each of the Relevant Obligors has the power to enter into,
exercise its rights and perform and comply with its obligations under
each of the Transaction Documents to which it is a party;
(iii) Authorisation and Consents: all action, conditions and things
required to be taken, fulfilled and done (including the obtaining of any
necessary consents) in order (a) to enable each of the Relevant Obligors
lawfully to enter into, exercise its rights and perform and comply with
its
<PAGE>
17
obligations under each of the Transaction Documents to which it is a
party (b) to ensure that those obligations are valid, legally binding and
enforceable, (c) to ensure that the obligations of each Relevant Obligor
under this Agreement and the relevant Guarantee respectively rank and
will at all times rank in accordance with Clause 15(A)(i) and (d) to make
each Transaction Document admissible in evidence in the courts of
Singapore and the country in which each Relevant Obligor who is a party
thereto is incorporated have been taken, fulfilled and done;
(iv) Non-Violation of Laws: each Relevant Obligor's entry into, exercise
of its rights and/or performance of or compliance with its obligations
under the Transaction Documents to which it is a party do not and will
not violate, or exceed any borrowing or other power or restriction
granted or imposed by (a) any law to which it is subject or (b) any
provision of its Memorandum or Articles of Association (or equivalent);
(v) Obligations Binding: each Relevant Obligor's obligations under the
Transaction Documents to which it is a party are valid, binding and
enforceable;
(vi) Non-Violation of Other Agreements: each Relevant Obligor's entry
into, exercise of its rights and/or performance of or compliance with its
obligations under the Transaction Documents to which it is a party do not
and will not (a) violate any agreement to which it is a party or which is
binding on any of them or their respective assets, or (b) result in the
existence of, or oblige any of them to create, any security over those
assets;
(vii) No Default: no Event of Default, other than any waived in
accordance with Clause 24(B), has occurred and is continuing or will
occur as a result of making any Advance and none of the Relevant Obligors
is in breach of or default under any agreement to an extent or in a
manner which has or could have a material adverse effect on any of them;
(viii)Existing Security: no security exists on or over any of the assets
of the Relevant Obligors except as permitted by Clause 15(A)(ii);
(ix) Litigation: save as disclosed in Schedule 7, no litigation,
arbitration or administrative proceeding (other than those which are of a
frivolous or vexatious nature) is current or pending or, so far as it is
aware, threatened (a) to restrain the entry into, exercise of any
Relevant Obligor's rights under and/or performance or enforcement of or
compliance with any of its obligations under the Transaction Documents to
which it is a party or (b) which has or could have a material adverse
effect on any Relevant Obligor;
(x) No Immunity: none of the Relevant Obligors nor any of their
respective assets is entitled to immunity from suit, execution,
attachment or other legal process. Each Relevant Obligor's entry into
each Transaction Document to which it is a party constitutes, and the
exercise of its respective rights and performance of and compliance with
its obligations thereunder will constitute, private and commercial acts
done and performed for private and commercial purpose;
(xi) Winding-Up: no meeting has been convened for the winding-up of any
Relevant Obligor or for the appointment of a receiver, trustee, judicial
manager or similar officer of any Relevant Obligor, their respective
assets or any of them, no such step is intended by any Relevant Obligor
and, so far as it is aware, no petition, application or the like is
outstanding for the winding-up of any Relevant Obligor or for the
appointment of a receiver, trustee, judicial manager or similar officer
of any Relevant Obligor, their respective assets or any of them;
<PAGE>
18
(xii) Disclosure: it has fully disclosed in writing to the Facility Agent
all facts relating to the Relevant Obligors which it knows or should
reasonably know and which are material for disclosure to the Facility
Agent in the context of the Transaction Documents;
(xiii)Accounts: the respective audited accounts and consolidated accounts
(if any) of each Relevant Obligor as at 31 March 1995 and for the
financial year then ended and as delivered to the Facility Agent (with
copies of the reports and approvals referred to in paragraph (b) below):-
(a) include such financial statements as are required by the laws
to which the relevant Relevant Obligor is subject;
(b) save as stated in the notes thereto, were prepared, audited,
examined, reported on and approved in accordance with accounting
principles, standards and practices generally accepted in the
country in which the relevant Relevant Obligor was incorporated and
consistently applied and in accordance with applicable law and its
Memorandum and Articles of Association (or equivalent);
(c) together with those notes, give a true and fair view of the
relevant Relevant Obligor's state of affairs and financial
condition and operations (or, in the case of consolidated accounts,
the consolidated state of affairs and financial condition and
operations of such Relevant Obligor and its Subsidiaries) as at
that date and for the year then ended; and
(d) together with those notes and to the extent required by
accounting principles, standards and practices generally accepted
in the country to which the relevant Relevant Obligor was
incorporated, disclose or reserve against all liabilities
(contingent or otherwise) of the relevant person(s) as at that date
and all material unrealised or anticipated losses from any
commitment entered into by the relevant person(s) and which existed
on that date;
(xiv) No Material Adverse Change: there has been no material adverse
change in any of the Relevant Obligors' financial condition or operations
since 31 March 1995, nor in the consolidated financial condition or
operations of each of them and their respective Subsidiaries since that
date save as disclosed to the Lenders in writing;
(xv) Information Memorandum:
(a) the information in the Information Memorandum was true,
complete and accurate in all material respects at the date thereof;
(b) there are no material facts or circumstances which have not
been disclosed to the Facility Agent and the Lenders and which
could make any of such information untrue, incomplete, inaccurate
or misleading in any material respect or which, if disclosed, might
reasonably be expected to adversely affect the decision of a person
considering whether to provide financing to any of the Relevant
Obligors;
(xvi) No Misstatement: no information, exhibit or report furnished in
writing by any of the Relevant Obligors to the Facility Agent or any of
the Lenders in connection with the negotiation of this Agreement and the
other Transaction Documents contained any misstatement of fact as at the
date of such exhibit or report or as at the date when such information
was given which was material in the context of this Agreement and/or the
other Transaction Documents or omitted to state a fact
<PAGE>
19
as at such date which in any such case would be materially adverse to the
interests of the Facility Agent and/or any of the Lenders under this
Agreement and the other Transaction Documents;
(xvii) Repetition: each of the above representations and warranties will
be correct and complied with in all material respects so long as any sum
remains to be lent or remains payable under this Agreement or any other
Transaction Document as if repeated then by reference to the then
existing circumstances, except that each reference to accounts in
paragraph (xiii) above shall be construed as a reference to the then
latest available audited accounts (or, as the case may be, consolidated
accounts) of the relevant person(s).
14. INFORMATION
Each Borrower separately undertakes that, so long as any sum remains to
be lent or remains payable under this Agreement or any other Transaction
Document:-
(i) Preparation of Accounts: it will ensure that all accounts to be
delivered by it under this Agreement are prepared in such manner that
Clause 13(xiii) would be complied with if applied to those accounts by
Clause 13(xvii);
(ii) Audited Accounts: as soon as available and in any event within 120
days after the end of each of the Relevant Obligors' financial years
(beginning with the current one), it will deliver to the Facility Agent
enough copies for the Lenders of each of the Relevant Obligors' annual
report and audited accounts (both consolidated and unconsolidated) as at
the end of and for that financial year, together with copies of the
related reports and approvals referred to in Clause 13(xiii);
(iii) Quarterly Information: as soon as available and in any event within
45 days after the end of the first three months of each of the Borrowers'
and FIL's financial years (beginning with the current one), it will
deliver to the Facility Agent enough copies for the Lenders of each of
the Relevant Obligors' unaudited accounts (both consolidated and
unconsolidated) as at the end of and for that three month period;
(iv) Information to Shareholders: at the same time as sent to the
respective shareholders of each of the Relevant Obligors, it will deliver
to the Facility Agent enough copies for the Lenders of any circular,
document or other written information relating to its financial condition
or business sent to the respective shareholders as such;
(v) Monthly Borrowing Base Report: as soon as available and in any event
within 14 days after the end of each month, it will deliver to the
Facility Agent enough copies for the Lenders of the Borrowing Base Report
in the form set out in Schedule 6 as of the end of and for that month;
(vi) Litigation: it will promptly deliver to the Facility Agent for
distribution to the Lenders details of any litigation, arbitration or
administrative proceeding which, if to its knowledge had been current,
pending or threatened at the date of this Agreement, would have rendered
the representation and warranty in Clause 13(ix) incorrect;
(vii) Events of Default: it will notify the Facility Agent of the
occurrence of any Event of Default (and of any action taken or proposed
to be taken to remedy it) promptly after becoming aware of it. With each
financial statement delivered by it under Clause 14(ii) or (iii), and
within 7 Business Days after any request made by the Facility Agent from
time to time, it will deliver to the Facility Agent a certificate signed
on its behalf by such person as may be acceptable to the Facility Agent
for that purpose confirming that, so far as it is aware and (if
applicable) except as previously notified
<PAGE>
20
to the Facility Agent or waived in accordance with Clause 24(B), no Event
of Default has occurred or (as the case may be) setting out details of
any which has occurred and has not been so notified and of which it is
aware and of any action taken or proposed to be taken to remedy it;
(viii) Shareholding, Status and Constitution: it will within 7 Business
Days inform the Facility Agent of any proposed reorganisation, merger,
amalgamation, reconstruction or other proposed changes affecting its
constitution, control and/or management before such changes are effected;
(ix) Compliance with Financial Ratios: with each set of accounts
delivered by it under Clauses 14(ii) and (iii), it will deliver to the
Facility Agent a certificate signed by a director or the chief financial
officer of FIL:-
(a) confirming compliance with Clause 15(A)(vi) as at the end of
the relevant financial year or quarter; and
(b) setting out in reasonable detail and in a form satisfactory to
the Facility Agent the computations necessary to demonstrate such
compliance; and
(x) Other Information: it will as soon as reasonably practicable deliver
to the Facility Agent for distribution to the Lenders such other
information relating to the financial condition or business of any
Relevant Obligor as the Facility Agent (or any Lender through the
Facility Agent) may from time to time reasonably require.
15. UNDERTAKINGS
(A) General Undertakings: Each Borrower separately undertakes that, so long as
any amount remains to be lent or remains payable under this Agreement or any
other Transaction Document:-
(i) Ranking of Obligations: its payment obligations under this Agreement
and the Guarantors' payment obligations under the Guarantees rank and
will at all times rank for payment at least equally and rateably in all
respects with all their respective other unsecured indebtedness except
for such indebtedness as would, by virtue only of the law in force in the
respective jurisdictions in which they are incorporated, be preferred in
the event of their respective winding-up;
(ii) Negative Pledge: it will not create or have outstanding any security
on or over its assets, except for:-
(a) the security detailed in Schedule 5 (but the principal amount
secured by any such security may not be increased beyond the
maximum amount which may be secured by the relevant security at the
date of this Agreement as detailed in that Schedule, without the
prior consent in writing of the Majority Lenders);
(b) any security created under or pursuant to the Charges;
(c) liens arising solely by operation of law (or by an agreement
evidencing the same) and in the ordinary course of its business in
respect of indebtedness which (1) has been due for less than 14
days or (2) is being contested in good faith and by appropriate
means;
(d) security arising out of title retention provisions in a
supplier's standard conditions of supply of goods acquired by the
relevant person in the ordinary course of its operations;
<PAGE>
21
(e) any security existing at the time of acquisition on or over any
asset acquired by it after the date of this Agreement;
(f) any security created on any asset acquired by it after the date
of this Agreement for the sole purpose of financing that
acquisition; and
(g) any other security created or outstanding with the prior
consent in writing of the Majority Lenders;
(iii) Disposals: it will not (whether by a single transaction or a number
of related or unrelated transactions and whether at the same time or over
a period of time) sell, transfer, lease out, lend or otherwise dispose of
(whether outright, by sale-and-repurchase or sale-and-leaseback
arrangement, or otherwise) all or substantially all of its assets nor of
any part of its assets, which, either alone or when aggregated with all
other disposals required to be taken into account under this Clause
15(A)(iii), is substantial in relation to its assets, taken as a whole or
the disposal of which (either alone or when so aggregated) could have a
material adverse effect on it. The following disposals shall not be taken
into account under this Clause 15(A)(iii):-
(a) disposals in the ordinary course of operations;
(b) disposals on normal commercial terms of obsolete assets or
assets no longer required for the purpose of its business;
(c) the payment of cash as consideration for the acquisition of any
asset on normal commercial terms; and
(d) any disposal which the Majority Lenders shall have agreed shall
not be taken into account;
(iv) Change of Business: it will ensure that there is no material change
in the nature of its business, or the business of itself and its
Subsidiaries taken as a whole (whether by a single transaction or a
number of related or unrelated transactions, whether at one time or over
a period of time and whether by disposal, acquisition or otherwise);
(v) Guarantees: save for those guarantees listed in Schedule 8, it will
not give any guarantee of any of the indebtedness of any person other
than in the ordinary course of its trading operations for the
indebtedness of a Subsidiary in respect of the supply of goods and
services;
(vi) Financial Ratios:
(a) Consolidated Tangible Net Worth of FIL will not at any time be
less than the aggregate of (1) US$54,000,000, (2) 60 per cent. of
positive consolidated net income of FIL and (3) 100 per cent. of
new equity in FIL issued after 31 December 1995;
(b) Leverage will not at any time be more than (1) 2.5 times up to
and including the financial year ending 31 March 1997 and (2) 2.0
times thereafter;
(c) the ratio of Consolidated Current Assets to Consolidated
Current Liabilities will not at any time be less than 1.2 to 1;
<PAGE>
22
(d) the ratio of Earnings Before Interest and Taxes to Interest
Expense for each financial quarter of FIL must not be less than 3.0
to 1; and
(e) FIL shall not declare or pay any dividend in excess of 40 per
cent. of its positive consolidated net income for any financial
year;
For the purpose of this Clause 15(A)(vi), "Consolidated Tangible
Net Worth", "Consolidated Current Assets", "Consolidated Current
Liabilities", "Earnings Before Interest and Taxes" and "Interest
Expense'" shall have the meanings set out in Schedule 2;
(vii) Constitutive Documents: it will not, without the prior written
consent of the Facility Agent amend or alter any of the provisions of its
constitutive documents relating to its borrowing powers or principal
objects;
(viii) Further Assurance: it will from time to time on request by the
Facility Agent or by any Lender through the Facility Agent do or procure
the doing of all such acts and will execute or procure the execution of
all such documents as the Facility Agent or any Lender may consider
reasonably necessary or desirable for giving full effect to this
Agreement and the other Transaction Documents or securing to the Facility
Agent and the Lenders the full benefits of all rights, powers and
remedies conferred upon the Facility Agent and the Lenders in this
Agreement and the other Transaction Documents;
(ix) Dividend Payments: it shall not without prior written consent of the
Majority Lenders pay, make or declare any dividend or other distribution
in respect of any financial year until the aggregate amount available for
distribution to its shareholders in respect of any financial year has
been determined and then only in the amount not exceeding forty per cent.
(40%) of the aggregate amount so available for distribution and not pay,
make or declare any dividend or other distribution for any of its
financial years at any time after an Event of Default has occurred.
(B) Security Undertaking: Each Borrower separately covenants and agrees that so
long as any amount remains to be lent or remains payable under this Agreement or
any other Transaction Document it will ensure that the Value (as defined below)
of the Eligible Accounts (as defined below) will at all times be not less than
133.33 per cent. of the Total Secured Debt (as defined below). If at any time
the Value of the Eligible Accounts is less than 133.33 per cent. of the Total
Secured Debt, the Facility Agent shall notify each Borrower of such
determination. Not later than 30 days following such notification, the Borrowers
will either (a) prepay its respective outstanding Advances or any part thereof
in accordance with the provisions of this Agreement or (b) provide to or procure
the provision to the Lenders of additional security (the "Additional Security")
of sufficient value (the '"Additional Security Value") and in a form reasonably
acceptable to the Majority Lenders so that immediately after such prepayment of
its respective Advances or any part thereof or the provision of such Additional
Security, the aggregate (as determined by the Lenders) of the Value of the
Eligible Accounts and the Additional Security Value of such Additional Security
shall be not less than 133.33 per cent. of the Total Secured Debt. Each Borrower
will do or procure the doing of all such acts and will execute or procure the
execution of all such documents as the Majority Lenders may consider reasonably
necessary or desirable for giving full effect to such Additional Security or
securing to the Lenders the full benefit of all rights, powers and remedies to
be conferred upon the Lenders in such Additional Security. In this Clause 15(B),
the expression "Value" means, at any time, the value of the Eligible Accounts at
that time determined by the Facility Agent on the basis of the then latest
available Borrowing Base Report (either delivered to the Lenders pursuant to
Clause 14(v) or otherwise obtained by the Lenders), the expression "Total
Secured Debt'" means all sums (whether principal, interest, fee, commission or
otherwise) which are or at any time may be or become due from or owing by either
of the Borrowers to the Facility Agent, the Facility Lender and/or the Lenders,
whether actually or contingently, under or in connection with, or which either
has covenanted to pay or discharge to the Facility Agent, the Facility Lender
and/or the
<PAGE>
23
Lenders under or pursuant to this Agreement or the Facility Letter and the
expression "Eligible Accounts" shall bear the meaning set out in Schedule 6.
16. DEFAULT
(A) Events of Default: The following are Events of Default:-
(i) Non-Payment: any Obligor does not pay in the manner provided in the
Transaction Documents to which it is a party any sum payable thereunder
when due; or
(ii) Breach of Warranty: any representation, warranty or statement by any
Obligor in any Transaction Document to which it is a party or in any
document delivered under such Transaction Document is not complied with
in any material respect or is or proves to have been incorrect in any
material respect when made or deemed repeated; or
(iii) Breach of Undertaking: Clause 2(E), Clause 14 (other than Clause
14(x)) or Clause 15 is not complied with or any condition attached to any
waiver or consent given under this Agreement is not fulfilled; or
(iv) Breach of Other Obligations: any Obligor does not perform or comply
with any one or more of its other obligations under the Transaction
Documents to which it is a party and, if in the opinion of the Majority
Lenders that default is capable of remedy, it is not in the opinion of
the Majority Lenders remedied within 21 days of its occurrence; or
(v) Cross Default: any other indebtedness in respect of borrowed money
exceeding US$1,000,000 of any of the Obligors is or is declared to be or
is capable of being rendered due and payable before its normal maturity
by reason of any actual or potential default, event of default or the
like (however described) or is not paid when due nor within any
applicable grace period in any agreement relating to that indebtedness
or, as a result of any actual or potential default, event of default or
the like (however described) any facility relating to any such
indebtedness exceeding US$1,000,000 is or is declared to be or is capable
of being canceled before its normal expiry date or any person otherwise
entitled to use any such facility is not so entitled; or
(vi) Insolvency: any of the Obligors is (or is, or could be, deemed by
law or a court to be) insolvent or unable to pay its debts, stops,
suspends or threatens to stop or suspend payment of all or a material
part of (or of a particular type of) its indebtedness, begins
negotiations or takes any other step with a view to the deferral,
rescheduling or other readjustment of all or a material part of (or of a
particular type of) its indebtedness, proposes or makes a general
assignment or an arrangement or composition with or for the benefit of
the relevant creditors or a moratorium is agreed or declared in respect
of or affecting all or a material part of (or of a particular type of)
the indebtedness of any of the Obligors; or
(vii) Enforcement Proceedings: a distress, attachment, execution or other
legal process is levied, enforced or sued out on or against all or a
material part of the assets of any of the Obligors and is not discharged
or stayed within 14 days; or
(viii) Security Enforceable: any security granted pursuant to a Charge on
or over all or a material part of the assets of any of the Obligors
becomes enforceable; or
(ix) Winding-up: any step (other than a step which is of a frivolous or
vexatious nature) is taken by any person with a view to the winding-up of
any of the Obligors (except for the purpose of and
<PAGE>
24
followed by a reconstruction, amalgamation, reorganisation, merger or
consolidation on terms approved by the Majority Lenders before that step
is taken) or for the appointment of a liquidator (including a provisional
liquidator), receiver, judicial manager, trustee, administrator, agent or
similar officer of any of the Obligors or over any part of the assets of
any of the Obligors; or
(x) Cessation of Business: any of the Obligors ceases or threatens to
cease to carry on all or a substantial part of its business; or
(xi) Nationalisation: any step is taken by any person or agency with a
view to the seizure, compulsory acquisition, expropriation or
nationalisation of all or a material part of the assets or shares of any
of the Obligors; or
(xii) Illegality: it is or will become unlawful for any of the Obligors
to perform or comply with any one or more of its obligations under any of
the Transaction Documents to which it is a party; or
(xiii)Cessation: any Transaction Document ceases for any reason (or is
claimed by any Obligor which is a party thereto not) to be the legal and
valid obligations of the Obligor which is party to it, binding upon it in
accordance with its terms; or
(xiv) Authorisation and Consents: any action, condition or thing
(including the obtaining of any necessary consent) at any time required
to be taken, fulfilled or done for any of the purposes stated in Clause
13(iii) is not taken, fulfilled or done or any such consent ceases to be
in full force and effect without modification or any condition in or
relating to any such consent is not complied with (unless that consent or
condition is no longer required or applicable); or
(xv) Litigation: any litigation, arbitration or administrative proceeding
(other than those which are of a frivolous or vexatious nature) is
current or pending to restrain the exercise of any of the rights and/or
the performance or enforcement of or compliance with any of the
obligations of any Obligor under any Transaction Document to which it is
a party or which has or could have a material adverse effect on any of
the Obligors taken as a whole; or
(xvi) Ownership of Obligors: any Obligor (other than FIL) ceases to be a
wholly-owned Subsidiary of FIL; or
(xvii) Charges: the security granted pursuant to a charge created by any
of the Charges ceases to apply to the indebtedness of either or both of
the Borrowers under this Agreement or the security created or to be
created under any of the Charges is in jeopardy; or
(xviii) Analogous Events: any event occurs which, under the laws of any
applicable jurisdiction, has an effect analogous or equivalent to any of
the events mentioned in Clauses 16(A)(vi), (vii), (ix) or (xi); or
(xix) Material Adverse Change: any event occurs or circumstances arise
which Lenders whose Outstandings together exceed 75 per cent. of the
total Outstandings (or, if there are no Outstandings, Lenders whose
Available Commitment together exceed 75 per cent. of the total amount of
the Available Commitments of all the Lenders) reasonably determine (a)
has a material adverse effect on the financial condition or business of
any Obligor or (b) gives reasonable grounds for believing that any
Obligor may not (or may be unable to) perform or comply with any one or
more of its obligations under any of the Transaction Documents to which
it is a party.
(B) Cancellation/Acceleration: If at any time and for any reason (whether within
or beyond the control of any party to this Agreement) any Event of Default has
occurred then at any time thereafter, so long as
<PAGE>
25
such Event of Default is continuing, the Facility Agent may and, if so
instructed by the Majority Lenders, shall by notice to the Borrowers declare:-
(i) the Commitments to be cancelled, whereupon they shall be cancelled;
and/or
(ii) all Advances, all unpaid accrued interest or fees and any other sum
then payable under this Agreement to be immediately due and payable,
whereupon they shall become so due and payable.
17. DEFAULT INTEREST
(A) Interest on Overdue Sums: If a Borrower does not pay any sum payable under
this Agreement (including but not limited to any sum payable under this Clause)
when due, it shall pay interest on the amount from time to time outstanding in
respect of that overdue sum for the period beginning on its due date and ending
on the date of its receipt by the Facility Agent (both before and after
judgment) in accordance with this Clause. For the purpose of this Clause, if any
payment is received by the Facility Agent on the due date, but after the time
required by Clause 12(A) and too late to be made available by the Facility Agent
on that due date to the person(s) entitled to it under Clause 12(C), that
payment shall be deemed to be received on the next Business Day (but the
Facility Agent will give credit to the Borrower for any interest earned by the
Facility Agent on the relevant sum pending distribution to such person(s)).
(B) Default Interest Periods and Rates: Interest under this Clause shall be
calculated by reference to successive Interest Periods, each of which (other
than the first, which shall begin on the due date) shall begin on the last day
of the previous one. Each such Interest Period shall be of one month's duration
or such other period as the Facility Agent may from time to time select and the
rate of interest applicable for all or any part of a particular Interest Period
shall be the rate per annum equal to the sum of two per cent. (2%) and the rate
which would be applicable to that overdue sum for (or, as the case may be, for
that part of) that Interest Period under Clause 8(B) if that overdue sum were a
non-overdue Advance, except as follows:-
(i) subject to the following exceptions, until the third Business Day
after the Facility Agent becomes aware of the relevant default, each
Interest Period relating to the relevant overdue sum shall be an
"overnight" period beginning on one Business Day and ending on the next
and the rate of interest for a particular "overnight" period shall be the
rate per annum equal to the sum of two per cent. (2%), the applicable
Margin and the arithmetic mean (rounded up, if necessary, to the next
1/16 per cent.) of the respective rates quoted by each Reference Bank to
the Facility Agent on request as the rate at which it is offering
"overnight" deposits in US Dollars for that period in amounts comparable
to that overdue sum;
(ii) if the overdue sum is of principal of an Advance and becomes due
before the Repayment Date of that Advance, the first Interest Period
applicable to that overdue sum shall end on that Repayment Date and the
rate of interest applicable to that sum for that Interest Period shall be
the rate per annum equal to the sum of two per cent. and the rate
applicable to it immediately before it became due;
(iii) if any event equivalent to those mentioned in Clause 11(C) occurs
in relation to any interest Period applicable to an overdue sum, the rate
of interest payable on each person's share of that sum for all or any
part of that Interest Period shall be the sum of two per cent. (2%), the
applicable Margin and the cost to that person (as certified by it and
expressed as a rate per annum) of funding its share during that Interest
Period by whatever means it reasonably determines to be most appropriate;
and
<PAGE>
26
(iv) any Interest Period which would otherwise end on a non-Business Day
shall instead end on the next Business Day in the same calendar month (if
there is one) or the preceding Business Day (if there is not).
(C) Notification of Interest Rates: The Facility Agent shall promptly notify the
Borrowers and the Lenders of each rate of interest determined in accordance with
sub-Clause (B).
(D) Payment and Compounding of Default Interest: Interest accrued under this
Clause shall be due on demand by the Facility Agent but, if not previously
demanded, shall be paid when due in accordance with Clause 8(D). If not paid
when due, such interest shall be added to the overdue sum and itself bear
interest accordingly.
18. INDEMNITIES
(A) Miscellaneous Indemnities:
(i) FIUI shall on demand indemnify the Facility Agent and the Tranche A
Lender against any funding or other cost, loss, expense or liability
(including any loss of the Margin) reasonably sustained or incurred by it
as a result of:-
(a) a Tranche A Advance not being made by reason of non-fulfilment
of any of the conditions in Clause 4(A) or FIUI purporting to
revoke a notice requesting a Tranche A Advance;
(b) the occurrence or continuance of any Event of Default; or
(c) the receipt or recovery by any party (or the Facility Agent on
its behalf) of all or any part of a Tranche A Advance or overdue
sum otherwise than on the Repayment Date of that Tranche A Advance
or the Put Option Date or Final Maturity Date or the last day of an
Interest Period relating to that overdue sum.
(ii) FSPL shall on demand indemnify the Facility Agent and the Tranche B
Lender against any funding or other cost, loss, expense or liability
(including any loss of the Margin) reasonably sustained or incurred by it
as a result of:-
(a) a Tranche B Advance not being made by reason of non-fulfilment
of any of the conditions in Clause 4(A) or FSPL purporting to
revoke a notice requesting a Tranche B Advance;
(b) the occurrence or continuance of any Event of Default; or
(c) the receipt or recovery by any party (or the Facility Agent on
its behalf) of all or any part of a Tranche B Advance or overdue
sum otherwise than on the Repayment Date of that Tranche B Advance
or the Put Option Date or Final Maturity Date or the last day of an
Interest Period relating to that overdue sum.
(B) Broken Funding Costs: In the case of sub-Clauses (A)(i) and (A)(ii) above,
the amount payable shall in any event include the amount (if any) by which:-
(i) the amount of interest which the relevant person is able to obtain by
placing an amount equal to its share of the relevant Advance or overdue
sum on deposit in the Singapore inter-bank
<PAGE>
27
market, for the remainder of the relevant Term or Interest Period, as
soon as reasonably practicable after it becomes aware that the relevant
Advance is not being made or (as the case may be) of the relevant receipt
or recovery
is less than:-
(ii) the amount of interest which, in accordance with the expressed terms
of this Agreement, would otherwise be payable to that person on its share
of that Advance for its Term or (as the case may be) on the relevant
amount so received or recovered for the remainder of the relevant
Interest Period.
(C) Currency Indemnity:
(i) US Dollars is the sole currency of account and payment for all sums
payable by each of the Borrowers under or in connection with this
Agreement, including damages.
(ii) Any amount received or recovered in a currency other than US Dollars
(whether as a result of, or of the enforcement of, a judgment or order of
a court of any jurisdiction, in the winding-up of a Borrower or
otherwise) by the Facility Agent or any Lender in respect of any sum
expressed to be due to it from a Borrower under this Agreement shall only
constitute a discharge to that Borrower to the extent of the amount in US
Dollars which the recipient is able, in accordance with its usual
practice, to purchase with the amount so received or recovered in such
other currency on the date of that receipt or recovery (or, if it is not
practicable to make that purchase on that date, on the first date on
which it is practicable to do so).
(iii) If that amount in US Dollars is less than the amount in US Dollars
expressed to be due from a Borrower to the recipient under this
Agreement, that Borrower shall separately indemnify it against any loss
reasonably sustained by it as a result. In any event, that Borrower shall
indemnify the recipient against the cost of making any such purchase. For
the purpose of this sub-Clause (C), it will be sufficient for the
recipient to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made. Any person intending to make a claim
under this sub-Clause (C) shall deliver to that Borrower (through the
Facility Agent) a certificate setting out in reasonable detail the basis
and computation of such claim.
(D) Indemnities Separate: Each of the indemnities in this Agreement constitutes
a separate and independent obligation from the other obligations in this
Agreement, shall give rise to a separate and independent cause of action, shall
apply irrespective of any indulgence granted by the Facility Agent and/or any
Lender and shall continue in full force and effect despite any judgment, order,
claim or proof for a liquidated amount in respect of any sum due under this
Agreement or any judgment or other order.
19. THE FACILITY AGENT AND THE SECURITY AGENT
(A) Appointment of Facility Agent: Each Lender irrevocably appoints the Facility
Agent to act as its agent for the purpose of this Agreement and the other
Transaction Documents and authorises it to take such action and exercise such
rights, powers and discretions as are specifically delegated to it by this
Agreement and the other Transaction Documents and such other action, rights,
powers and discretions as are reasonably incidental. However, the Facility Agent
may not begin any legal action or proceeding in the name of a Lender without its
consent. The relationship between the Facility Agent and the Lenders is of agent
and principal only. The Facility Agent shall not be a trustee for any Lender,
nor an agent or trustee for either Borrower or any other Obligor, under or in
relation to this Agreement or any of the other Transaction Documents.
<PAGE>
28
(B) Facility Agent's Duties: The Facility Agent shall:-
(i) promptly send to each Lender details of each communication received
by it from any Obligor under any of the Transaction Documents, except
that details of any communication relating to a particular Lender shall
be sent to that Lender only;
(ii) promptly send to each Lender a copy of any legal opinion delivered
under this Agreement and of any document or information received by it
under Clause 4 or 14;
(iii) subject to the other provisions of this Clause, act in accordance
with any instructions from the Majority Lenders or, if so instructed by
the Majority Lenders, refrain from exercising a right, power or
discretion vested in it under this Agreement or any other Transaction
Document; and
(iv) have only those duties, obligations and responsibilities expressly
specified in this Agreement and the other Transaction Documents.
(C) Facility Agent's Rights: The Facility Agent may:-
(i) perform any of its duties, obligations and responsibilities under
this Agreement and the other Transaction Documents by or through its
personnel or agents;
(ii) refrain from exercising any right, power or discretion vested in it
under this Agreement or any other Transaction Document until it has
received instructions from the Majority Lenders as to whether (and, if it
is to be, the way in which) it is to be exercised and shall in all cases
be fully protected when acting, or (if so instructed) refraining from
acting, in accordance with instructions from the Majority Lenders;
(iii) treat (a) the Lender which makes available any share of an Advance
as the person entitled to repayment of that share unless all or part of
it has been transferred (or the Facility Agent has received a notice of
assignment of all or part of it) in accordance with Clause 23 and (b) the
office set under a Lender's name at the end of this Agreement (or, as the
case may be, set out in the relevant notice of assignment) as its Lending
Office unless the Facility Agent has received from that Lender a notice
of change of Lending Office in accordance with Clause 23. The Facility
Agent may act on any such transfer or notice until it is superseded by a
further transfer or notice;
(iv) refrain from doing anything which would or might in its reasonable
opinion be contrary to any law of any jurisdiction or any directive of
any agency of any state or otherwise render it liable to any person and
may do anything which is in its opinion necessary to comply with any such
law or directive;
(v) assume that no Event of Default has occurred unless an officer of the
Facility Agent, while active on the account of any Obligor, acquires
actual knowledge to the contrary; and
(vi) refrain from taking any step (or further step) to protect or enforce
the rights of any Lender under this Agreement or any other Transaction
Document until it has been indemnified (or received confirmation that it
will be so indemnified) and/or secured to its reasonable satisfaction
against any and all costs, losses, expenses or liabilities (including
legal fees) which it would or might sustain or incur as a result.
<PAGE>
29
(D) Rights of Facility Agent: The Facility Agent may:-
(i) rely on any communication, certificate, legal opinion or other
document believed by it to be genuine and assume that any person notified
to it by an Obligor as duly authorised to take any action contemplated by
the Transaction Documents which that Obligor is a party remains so
authorised until it has received notice to the contrary from that
Obligor;
(ii) rely as to any matter of fact which might reasonably be expected to
be within the knowledge of an Obligor on a statement by or on behalf of
such Obligor;
(iii) obtain and pay for such legal or other expert advice or services as
may to it seem necessary or desirable and rely on any such advice;
(iv) retain for its own benefit and without liability to account any fee
or other sum receivable by it for its own account; and
(v) accept deposits from, lend money to provide any ordinary or other
services to or engage in any kind of banking or other business with any
party to the Transaction Documents or any Subsidiary or associated
company of any such party (and, in each case, may do so without liability
to account).
(E) Exoneration of Facility Agent: Neither the Facility Agent nor any of its
personnel or agents shall be:-
(i) responsible for the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement, projection,
assumption or information in the Information Memorandum, this Agreement
or any other Transaction Document or any notice or other document
delivered under this Agreement or any other Transaction Document;
(ii) responsible for the execution, delivery, validity, legality,
adequacy, enforceability or admissibility in evidence of this Agreement,
any other Transaction Document or any such notice or other document;
(iii) obliged to enquire as to the occurrence or continuance of an Event
of Default; or
(iv) liable for anything done or not done by it on any of them under or
in connection with this Agreement or any other Transaction Document save
in the case of its or their own negligence or wilful misconduct.
(F) Facility Agent as Lenders: The Facility Agent shall have the same rights and
powers with respect to its Commitment (if any) and its Outstandings (if any) as
any other Lender and may exercise those rights and powers as if it were not also
acting as Facility Agent.
(G) Non-Reliance on Facility Agent: Each Lender confirms that it has itself
been, and will at all times continue to be, solely responsible for making its
own independent investigation and appraisal of the business, operation,
financial condition, prospects, creditworthiness, status and affairs of the
Obligors and their respective Subsidiaries and has not relied, and will not at
any time rely, on the Facility Agent and/or any other Lender:-
(i) to provide it with any information relating to the business,
operations, financial condition, creditworthiness, status or affairs of
any Obligor or any other person, whether coming into its possession
before or after the making of any Advance (except, in the case of the
Facility Agent, as stated in sub-Clause (B) above);
<PAGE>
30
(ii) to check or enquire into the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement, projection,
assumption or information at any time provided by or on behalf of any
Obligor or any other person under or in connection with this Agreement or
any other Transaction Document (whether or not that information has been
or is at any time circulated to it by the Facility Agent), including any
contained in the Information Memorandum; or
(iii) to assess or keep under review the business, operations, financial
condition, prospects, creditworthiness, status or affairs of any Obligor
or any other person.
(H) Indemnity to Facility Agent: To the extent that the Borrowers do not do so
on demand or are not obliged to do so, each Lender shall on demand indemnify the
Facility Agent in the proportion borne by its Outstandings to all the
Outstandings at the relevant time (or, if there are then no Outstandings, the
Tranche A Commitment (in the case of a Tranche A Lender) and the Tranche B
Commitment (in the case of the Tranche B Lender) to the aggregate of the Tranche
A Commitment and the Tranche B Commitment of all the Tranche B Lenders) against
any cost, expense or liability mentioned in Clause 21 or sustained or incurred
by the Facility Agent in complying with any instructions from the Majority
Lenders or otherwise sustained or incurred by it in connection with this
Agreement or any other Transaction Document or its duties, obligations and
responsibilities under this Agreement or any other Transaction Document except
(i) routine administrative costs and expenses of the Facility Agent; or (ii) to
the extent that they are sustained or incurred as a result of the negligence or
wilful misconduct of the Facility Agent or any of its personnel or agents.
(I) Resignation of Facility Agent: Notwithstanding the irrevocable appointment
in Clause 19(A), the Facility Agent may resign at any time (after consultation
with the Borrowers) if it gives at least 30 days' notice to the Borrowers and
the Lenders. However, no resignation shall be effective until the successor has
been appointed and accepted its appointment in accordance with this Clause
19(I). The Majority Lenders may appoint a successor to the resigning Facility
Agent but, if the successor has not been so appointed and accepted its
appointment within 15 days after the date of the notice of resignation, the
resigning Facility Agent may appoint a successor Facility Agent, which must be a
reputable and experienced bank or financial institution with an office in
Singapore. Any appointment of a successor must be in writing, signed by the
person(s) appointing that successor and delivered to that successor. Any
acceptance of such appointment must be in writing, signed by the person
appointed and delivered to the person(s) appointing that successor. The other
parties to this Agreement shall be promptly informed of the acceptance by a
successor Facility Agent. Upon the successor accepting its appointment, the
resigning Facility Agent shall be automatically discharged from any further
obligation under this Agreement and its successor and each of the other parties
to this Agreement shall have the same rights and obligations among themselves as
they would have had if the successor had been the original Facility Agent party
to this Agreement. The resigning Facility Agent shall provide its successor with
(or with copies of) such records as its successor requires to carry out its
duties under this Agreement.
(J) The Security Agent: Each Lender irrevocably appoints the Security Agent to
act as its agent for the purpose of the Security Documents and the Security
Sharing Agreement and the Borrower and the Lenders acknowledge that the Security
Agent will act as the agent of the Lenders for the purposes of the Security
Documents upon the terms and subject to the conditions of the Security Sharing
Agreement.
20. SET-OFF AND PRO RATA SHARING
(A) Set-Off: Each of the Borrowers separately authorises the Facility Agent or
any Lender to apply (without prior notice) any credit balance (whether or not
then due) to which it is at any time beneficially entitled on any account at,
any sum held to its order by and/or any liability of, any office of that party
in or towards satisfaction of any sum then due from it to that or any other
party under this Agreement and unpaid
<PAGE>
31
and, for that purpose, to convert one currency into another (but so that nothing
in this Clause 20(A) shall be effective to create a charge). No party shall be
obliged to exercise any of its rights under this Clause, which shall be without
prejudice and in addition to any right of set-off, combination of accounts, lien
or other right to which it is at any time otherwise entitled (whether by
operation of law, contract or otherwise). If any party exercises its rights
hereunder, it shall promptly notify the relevant Borrower.
(B) Pro Rata Sharing: If at any time the proportion received or recovered
(whether by direct payment, by exercise of any right of set-off, combination of
accounts or lien, or otherwise) by any Lender in respect of the total sum which
has become due to it from a Borrower under this Agreement before that time
exceeds the proportion received or recovered by the Tranche A Lender or Tranche
B Lenders, as the case may be, receiving or recovering the smallest proportion
(if any) then:-
(i) within two Business Days after receiving a request from the Facility
Agent, that Lender shall pay to the Facility Agent an amount equal to the
excess;
(ii) the Facility Agent shall promptly distribute that payment as if it
were paid by the relevant Borrower; and
(iii) as between the Borrowers and the Lenders, that excess amount shall
be treated as having been paid to the Lenders to which (and in the
proportions in which) it is distributed under (ii) above, rather than as
having been paid to that Lender.
Within two Business Days after any Lender receives or recovers any such sum
otherwise than by payment through the Facility Agent, that Lender shall notify
the Facility Agent of the amount and currency so received or recovered, how it
was received or recovered and whether it represents principal, interest or other
sums. If all or part of any amount so received or recovered by that Lender has
to be refunded by it (with or without interest), each Lender to whom any part of
that amount has been distributed shall (within two Business Days after receiving
a request from that Lender) in turn pay to that Lender its proportionate share
of the amount to be refunded and of any interest required to be paid by that
Lender on that amount in respect of all or any part of the period from the date
of the relevant distribution to the date of that payment to that Lender.
Any amount received or recovered by a Lender under a novation, assignment, sub-
participation (or the like) shall be ignored for the purpose of this Clause
20(B). Furthermore, a Lender shall not be obliged to share any amount which it
has received or recovered as a result of taking legal proceedings with any other
Lender which had an opportunity to participate in those legal proceedings but
did not do so and did not take separate legal proceedings.
This Clause 20(B) shall apply, with any necessary modifications, to any amount
set-off under Clause 20(A) above by any party to this Agreement in respect of
any sum due to any other party under this Agreement.
21. EXPENSES AND STAMP DUTY
Whether or not any Advance is made under this Agreement:-
(i) Initial Expenses: FIUI and FSPL shall pay on demand, each in the
proportion borne by the Tranche A Facility or the Tranche B Facility, as
the case may be, to the total of the Tranche A Facility and the Tranche B
Facility, all reasonable costs and expenses (including legal fees and all
goods and services, value added and other duties or taxes payable on such
costs and expenses) incurred by the Facility Agent in connection with the
preparation or entry into of, this Agreement and the other Transaction
Documents and/or any amendment of, supplement to or waiver in respect of
this Agreement and/or any other Transaction Document;
<PAGE>
32
(ii) Enforcement Expenses: FIUI shall pay on demand, all costs and
expenses (including legal fees on a full indemnity basis and all goods
and services, value added and other duties or taxes payable on such costs
and expenses) incurred by the Facility Agent in the administration of, or
by the Facility Agent or the Tranche A Lender in protecting or enforcing
any rights under, this Agreement and/or any other Transaction Document
and/or any such amendment, supplement or waiver where such rights relate
to or are otherwise in connection with the Tranche A Facility;
(iii) Enforcement Expenses: FSPL shall pay on demand, all costs and
expenses (including legal fees on a full indemnity basis and all goods
and services, value added and other duties or taxes payable on such costs
and expenses) incurred by the Facility Agent in the administration of, or
by the Facility Agent or any Tranche B Lender in protecting or enforcing
any rights under, this Agreement and/or any other Transaction Document
and/or any such amendment, supplement or waiver where such rights relate
to or are otherwise in connection with the Tranche B Facility; and
(iv) Stamp Duty: FIUI and FSPL shall pay promptly, and in any event
before any interest or penalty becomes payable, each in the proportion
borne by the Tranche A Facility or the Tranche B Facility, as the case
may be, to the total of the Tranche A Facility and the Tranche B
Facility, any goods and services, value added, stamp, documentary,
registration or similar duty or tax payable in connection with the entry
into, registration, performance, enforcement or admissibility in evidence
of this Agreement and/or any other Transaction Document and/or any such
amendment, supplement or waiver, and shall indemnify the Facility Agent
and the Lenders in the same proportion as aforesaid against any liability
with respect to or resulting from any delay in paying or omission to pay
any such duty or tax.
22. CALCULATIONS AND EVIDENCE
(A) Basis of Calculation: All interest (including default interest) and
commitment fee shall accrue from day to day and shall be calculated on the basis
of a year of 360 days and the actual number of days elapsed.
(B) Accounts: The entries made in the accounts maintained by each Lender in
accordance with its usual practice shall be prima facie evidence of the
existence and amounts of the obligations of the Borrowers recorded in them.
(C) Certificate Conclusive: A certificate by the Facility Agent or any Lender as
to any sum payable to it under this Agreement and any other certificate,
determination, notification, opinion or the like of the Facility Agent or any
Lender or the Majority Lenders provided for in this Agreement, shall in the
absence of manifest error or error in the computation of any sum mentioned
therein, be final and binding on the parties hereto.
23. ASSIGNMENT
(A) Benefit and Burden of this Agreement: This Agreement shall benefit and be
binding on the parties, their respective successors and any permitted assignee
or transferee of some or all of a party's rights or obligations under this
Agreement. Any reference in this Agreement to any party shall be construed
accordingly.
(B) Borrowers: Neither Borrower may assign or transfer all or part of its rights
or obligations under this Agreement.
<PAGE>
33
(C) Lenders:
(i) Any Lender may assign all or part of its rights or transfer all or
part of its obligations under this Agreement and the other Transaction
Documents to any bank or financial institution without the consent of any
party (save that any assignment or transfer of part of a Lender's Tranche
A Commitment or Tranche B Commitment, as the case may be, shall be at
least US$3,000,000 or such smaller amount as the Facility Agent may
agree). Any such transfer shall become effective when the Facility Agent
and the Borrowers have been notified of it by that Lender and have
received from the transferee an undertaking (addressed to all the parties
to this Agreement) to be bound by this Agreement and to perform the
obligations transferred to it.
(ii) Any such assignee or transferee shall be and be treated as a party
for all purposes of this Agreement and shall be entitled to the full
benefit of this Agreement to the same extent as if it were an original
party in respect of the rights or obligations assigned or transferred to
it.
(iii) Any such assignee or transferee shall pay to the Facility Agent for
its own account a recordation fee of US$500. Such recordation fee shall
be payable on the date of such assignment or transfer.
(D) Lending Offices: The initial Lending Office of each Lender is set under its
name at the end of this Agreement. Any Lender may at any time change its Lending
Office in relation to all or a specified part of its Available Commitments (if
any) and/or its Outstandings by notifying the Facility Agent of the telex
number, fax number and address of its new Lending Office.
(E) No Adverse Effect: If, at any time, any Lender assigns or transfers any of
its rights, benefits and obligations hereunder or transfers its Lending Office
or any of its sub-participants assigns or transfers any of that sub-
participant's rights against a Lender and, at the time of such assignment or
transfer there arises an obligation on the part of either Borrower under Clauses
10(B), 11(A) or 11(B) to pay to such Lender or its assignee or transferee any
amount in excess of the amount it would have then been obliged to pay but for
such assignment or transfer, then that Borrower shall not be obliged to pay the
amount of such excess.
(F) Reference Banks: If a Reference Bank assigns all of its rights under this
Agreement or its Outstandings are prepaid under Clause 11, it shall be replaced
as a Reference Bank by such other Lender as the Facility Agent (after
consultation with the Borrowers) shall designate by notice to the Borrowers and
the Lenders.
(G) Disclosure of Information:
(i) The Facility Agent or any Lender may disclose to a potential
assignee, transferee or sub-participant or any other person proposing to
enter into contractual arrangements with any Lender in relation to this
Agreement or any other Transaction Document such information about the
Borrowers, the other Obligors and the Group as it may think fit.
(ii) The Facility Agent and any Lender may disclose any information
relating to the Obligors, the Tranche A Facility or the Tranche B
Facility to any branch, unit or department of the Facility Agent or any
Lender or any of its related and affiliated companies for the purpose of
credit approval, assessment, administration or, as the case may be, for
information generally.
<PAGE>
34
24. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS
(A) No Implied Waivers, Remedies Cumulative: No failure on the part of the
Facility Agent or any Lender to exercise, and no delay on its part in
exercising, any right or remedy under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or remedy preclude
any other or further exercise thereof or the exercise of any other right or
remedy. The rights and remedies provided in this Agreement are cumulative and
not exclusive of any rights or remedies (whether provided by law or otherwise).
(B) Amendments, Waivers and Consents: Any provision of this Agreement may be
amended only if the Borrowers and the Majority Lenders so agree in writing and
any Event of Default, provision or breach of any provision of this Agreement may
be waived before or after it occurs only if the Majority Lenders so agree in
writing but:-
(i) an amendment which puts one or more Lenders in a better or worse
position than one or more other Lenders or changes (except as provided
herein) or relates to (a) the amount of the Available Tranche A Facility
or the Available Tranche B Facility or any Lender's Commitment or
Available Commitment, (b) the Commitment Termination Date, (c) the Put
Option Date, (d) the amount or currency of the Advances, (e) the amount
or date of any repayment, (f) the length of Terms or Interest Periods,
(g) the rate or date(s) of payment of interest, (h) the amount or date(s)
of payment of any fee payable under Clause 9, (i) the currency of any
payment, (j) the definition of "Majority Lenders" or (k) this Clause
24(B), shall require the agreement of all the Lenders and (in the case of
an amendment or supplement) the Borrowers also; and
(ii) an amendment or waiver which changes or relates to the rights and/or
obligations of the Facility Agent shall require its agreement also.
Any such waiver, and any consent by the Facility Agent or the Lenders under any
provision of this Agreement, must be in writing and may be given subject to any
conditions thought fit by the person giving that waiver or consent. Any waiver
or consent shall be effective only in the instance and for the purpose for which
it is given.
25. COMMUNICATIONS
(A) Addresses: Each communication under this Agreement shall be made in writing
but, unless otherwise stated, may be made by fax, telex or letter. Each
communication or document to be delivered to any party under this Agreement
shall be sent to that party at the fax or telex number or address, and marked
for the attention of the person (if any), from time to time designated by that
party to the Facility Agent (or, in the case of the Facility Agent, by it to
each other party) for the purpose of this Agreement. The initial fax number,
telex number, address and person (if any) so designated by each party are set
out under its name at the end of this Agreement. Any communication or document
from or to the Borrowers shall be sent to, by or through the Facility Agent.
(B) Deemed Delivery: Any communication from a Borrower shall be irrevocable, and
shall not be effective until received by the Facility Agent. Any other
communication to any person under this Agreement shall be deemed to have been
received by that person (if sent by fax or telex) on the day of despatch or (in
any other case) when left at the address required by Clause 25(A) above or 7
days after being put in the registered post (by airmail if to another country)
postage prepaid and addressed to it at that address.
(C) Language: All communications and documents shall either be in English or
accompanied by a certified translation into English by a translator reasonably
acceptable to the Facility Agent. If there is a
<PAGE>
35
conflict, the English translation shall prevail over the original language
version, except in the case of documents delivered with any certificate referred
to in paragraph 1 of Part 1 of Schedule 2.
26. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its legality,
validity or enforceability under the law of any other jurisdiction nor the
legality, validity or enforceability of any other provision.
27. NATURE OF RIGHTS AND OBLIGATIONS
(A) Liability Several: The liability of the Lenders is several. Except for a
Borrower's responsibility for the obligations of the other Borrower, no party to
this Agreement shall be responsible for the obligations of any other party. The
failure of a Lender to perform its obligations shall not release any other party
from its obligations.
(B) Rights Several: The rights of the Lenders are also several. The amount at
any time owing by a Borrower to any party under this Agreement shall be a
separate and independent debt from the amount owing to any other party.
28. COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of which
taken together and when delivered to the Facility Agent shall constitute one and
the same instrument. Any party may enter into this Agreement by signing any such
counterpart.
29. GOVERNING LAW AND JURISDICTION
(A) Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of Singapore.
(B) Singapore Courts: For the benefit of the Facility Agent and each Lender, all
the parties irrevocably agree that the courts of Singapore are to have
jurisdiction to settle any disputes which may arise out of or in connection with
this Agreement and that, accordingly, any legal action or proceedings arising
out of or in connection with this Agreement ("Proceedings") may be brought in
those courts and each Borrower irrevocably submits to the non-exclusive
jurisdiction of those courts.
(C) Other Competent Jurisdiction: Nothing in this Clause 29 shall limit the
right of the Facility Agent and/or any Lender to take Proceedings against any
Borrower in any other court of competent jurisdiction nor shall the taking of
Proceedings in one or more jurisdictions preclude the Facility Agent and/or any
Lender from taking Proceedings in any other jurisdiction, whether concurrently
or not.
(D) Venue: Each of the Borrowers and the Guarantors irrevocably waives any
objection which it may at any time have to the laying of the venue of any
Proceedings in any court referred to in this Clause 29 and any claim that any
such Proceedings have been brought in an inconvenient forum. Each party
irrevocably waives all right to trial by jury in any Proceedings.
<PAGE>
36
(E) Service of Process:
(i) FIUI irrevocably appoints Flextronics International Limited at 36
Robinson Road #18-01 City House, Singapore 068877 and its successors (now
of Singapore to receive, for it and on its behalf, service of process in
any Proceedings in Singapore. Such service shall be deemed completed on
delivery to the relevant process agent (whether or not it is forwarded to
and received by FIUI. If for any reason the process agent ceases to be
able to act as such or no longer has an address in Singapore, as the case
may be, the FIUI irrevocably agrees to appoint a substitute process agent
reasonably acceptable to the Facility Agent, and to deliver to the
Facility Agent a copy of the new agent's acceptance of that appointment,
within 30 days.
(ii) Each Borrower each irrevocably consent to any process in any
Proceedings anywhere being served by mailing a copy by registered or
prepaid airmail post to it in accordance with Clause 25. Such service
shall become effective 30 days after mailing.
(iii) Nothing shall affect the right to serve process in any other
manner permitted by law.
(F) Consent to Enforcement etc.: Each Borrower irrevocably and generally
consents in respect of any Proceedings anywhere to the giving of any relief or
the issue of any process in connection with those Proceedings including. without
limitation, the making, enforcement or execution against any assets whatsoever
(irrespective of their use or intended use) of any order or judgment which may
be made or given in those Proceedings.
(G) Waiver of Immunity: Each Borrower irrevocably agrees that, should any party
take any Proceedings anywhere (whether for an injunction, specific performance,
damages or otherwise), no immunity (to the extent that it may at any time exist,
whether on the grounds of sovereignty or otherwise) from those Proceedings, from
attachment (whether in aid of execution, before judgment or otherwise) of its
assets or from execution of judgment shall be claimed by it or on its behalf or
with respect to its assets, any such immunity being irrevocably waived. Each of
them irrevocably agrees that it and its assets are, and shall be, subject to
such Proceedings, attachment or execution in respect of its obligations under
this Agreement.
30. ARBITRATION
(A) Option: For the benefit of the Lenders, each Borrower hereby irrevocably
agrees that at the option of the Lenders, any dispute arising out of or in
connection with this Agreement may be referred to and finally resolved by
arbitration in Singapore in accordance with the Arbitration Rules of the
Singapore International Arbitration Centre for the time being in force (the
"Rules"). The Rules are deemed to be incorporated by reference into this Clause.
The tribunal conducting the arbitration (the "Tribunal") shall consist of three
arbitrators to be appointed pursuant to the Rules. The arbitration shall be
conducted in the English language.
(B) Final and Binding: To the extent that the Lenders exercise its option under
Clause 30(A), the decision of the Tribunal shall be final, binding and
incontestable and enforceable in accordance with its terms and the award may be
entered into or registered in any court of Singapore or elsewhere having
jurisdiction.
<PAGE>
37
SCHEDULE 1
TRANCHE B LENDERS
<TABLE>
<CAPTION>
<S> <C>
Tranche B Lenders Tranche B Commitment
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH US$6,000,000
DE NATIONALE INVESTERINGSBANK ASIA LTD US$4,200,000
ABN AMRO BANK, N.V., SINGAPORE BRANCH US$3,000,000
BAYERISCHE VEREINSBANK AG, SINGAPORE BRANCH US$3,000,000
CITIBANK, N.A. (SINGAPORE BRANCH) US$3,000,000
MALAYAN BANKING BERHAD, SINGAPORE BRANCH US$3,000,000
SOCIETE GENERALE, SINGAPORE BRANCH US$3,000,000
TAT LEE BANK LIMITED US$1,800,000
</TABLE>
<PAGE>
38
SCHEDULE 2
FINANCIAL DEFINITIONS
Definitions of "Consolidated Total Liabilities", "Contingent Liabilities",
"Consolidated Tangible Net Worth ", "Consolidated Current Assets", "Consolidated
Current Labilities", "Earnings Before Interest and Taxes" and "Interest Expense"
in this Schedule shall be determined from the consolidated accounts of FIL.
"Aggregate Bank in relation to FIL and its Subsidiaries, the amount for
Borrowings" the time being, calculated on a consolidated basis in
accordance with generally accepted accounting principles
in the United States, equal to the aggregate of:-
(i) bank overdrafts and any part of any other
indebtedness in respect of Borrowed Moneys
maturing within 12 months;
(ii) all other indebtedness whatsoever of FIL and
its Subsidiaries in respect of Borrowed Moneys;
(iii) the principal amount raised by acceptances under
any acceptance credit in favour of FIL or any of
its Subsidiaries; and
(iv) the face amount of any bills of exchange (other
than cheques) or other instruments upon which FIL
or any of its Subsidiaries is liable as drawer,
acceptor or endorser,
provided that no indebtedness shall be included in a
calculation of Aggregate Bank Borrowings more than once.
"Borrowed Moneys" includes without limitation the following except insofar
as otherwise taken into account:-
(i) the principal amount (together with any fixed or
minimum premium payable on final repayment) for
the time being owing in respect of any loan,
debenture, debenture stock, bond or any other
instrument (excluding guarantees and indemnities)
creating or evidencing indebtedness of FIL and its
Subsidiaries but so that in the case of a
debenture, debenture stock, bond or other
instrument (excluding guarantees and indemnities)
created or evidencing collateral security the
amount to be taken into account shall be the
principal amount thereof or the amount for the
time being outstanding of the borrowing or
indebtedness collaterally secured, whichever is
the lesser;
(ii) the principal amount payable in respect of any
overdraft or other similar indebtedness of FIL and
its Subsidiaries;
(iii) amounts raised by FIL and its Subsidiaries by
acceptances under any acceptance credit opened on
its behalf and the principal amount recoverable
from FIL and its Subsidiaries in respect of bills
or receivables discounted;
<PAGE>
39
(iv) amounts outstanding under all agreements entered
into by FIL and its Subsidiaries for the leasing,
hire purchase, conditional purchase or purchase on
deferred terms and similar transactions in
relation to any property other than land or
buildings; and
(v) amounts raised by FIL and its Subsidiaries by
factoring its hire-purchase receivables without
recourse.
"Consolidated Current the aggregate value of all tangible assets of FIL and
Assets" its Subsidiaries which would be realised in the normal
course of business within 12 months including cash,
debtors (less provision for bad and doubtful debts) due
and payable on demand or within 12 months, marketable
stock in trade (less provision for obsolete or slow
moving stock) work in progress, marketable investments
and short term deposits (being deposits for twelve
months or less) and other assets not otherwise taken
into account properly included as "current assets" under
generally accepted accounting practice in the United
States but excluding any assets held on trust and
indebtedness from or investment in any Subsidiaries.
"Consolidated Current the aggregate amount of all liabilities present or
Liabilities" future of FIL and its Subsidiaries due for payment on
demand or within 12 months including if so payable but
not limited to:-
(i) the aggregate principal amount of all Borrowed
Moneys (including any current portion of long and
medium term borrowings) with any fixed or minimum
premium payable on final payment;
(ii) any sums due to trade creditors;
(iii) proposed dividends;
(iv) any liability for tax; and
(v) all other indebtedness properly included as
"current liabilities" under good United States
accounting practice.
"Consolidated Total at any time the aggregate amount, calculated on a
Liabilities" consolidated basis in accordance with generally accepted
accounting principles in the United States, of all
secured and unsecured liabilities of FIL and its
Subsidiaries (other than liabilities of FIL to any of
its Subsidiaries in respect of Borrowed Moneys which are
subordinated to, or rank for payment or discharge after,
the payment obligations of FIL under its Guarantee).
"Earnings Before in respect of any financial period of FIL the amount for
Interest and Taxes" the time being, calculated on a consolidated basis in
accordance with generally accepted accounting principles
in the United States, equal to the consolidated profits
before tax, interest expense and extraordinary items of
FIL and its Subsidiaries for such financial period.
<PAGE>
40
"Interest Expense" in respect of any financial period of FIL all the
interest payments payable to financial institutions in
respect of the Aggregate Bank Borrowings during such
financial period.
"Consolidated the amount for the time being, calculated in accordance
Tangible Net Worth" with generally accepted accounting principles in the
United States, equal to the aggregate of:-
(i) the nominal capital of FIL for the time being
issued and paid up; and
(ii) the amounts standing to the credit of the capital
and revenue reserves (including share premium
account, capital redemption reserve fund and
profit and loss account) of FIL and its
Subsidiaries on a consolidated basis,
all as shown in the then latest audited consolidated
balance sheet of FIL and its Subsidiaries but after:-
(a) making such adjustments as may be appropriate in
respect of any variation in the issued and paid up
share capital, the share premium account and the
capital redemption reserve fund of FIL or any of
its Subsidiaries since the date of latest audited
consolidated balance sheet;
(b) deducting:-
(1) an amount equal to any distribution by FIL
or any of its Subsidiaries to persons other
than FIL or its Subsidiaries out of profits
earned prior to the date of the latest
audited consolidated balance sheet and which
have been declared or made since that date
except so far as provided for in such
balance sheet and/or paid or due to be paid
to FIL or any of its Subsidiaries;
(2) all goodwill and other intangible assets;
(3) any debit balances on consolidated profit
and loss account; and
(4) any amounts arising from a writing-up after
the date of this Agreement of the book
values of any property of FIL or any of its
Subsidiaries (any increases in the book
value of property which results from its
transfer being deemed for this purpose to
have arisen from a writing-up),
(c) making such other adjustments (if any) as the
auditors of FIL for the time being consider
appropriate.
<PAGE>
41
SCHEDULE 3
Part 1
CONDITIONS PRECEDENT
1. Certificates from each of FIUI, FSPL, FIL, FIM and FMSB dated on or
after the date of this Agreement and not more than 7 Business Days before the
date of the notice requesting the first Advance, substantially in the form set
out in Parts 2, 3, 4, 5 and 6 of this Schedule respectively, duly executed by a
Director of each of them respectively, together with the documents stated by the
relevant certificate as being delivered with it.
2. Evidence of the acceptance of the appointment of the process agent
appointed in Clause 29.
3. All the Guarantees and Charges together with all other documents which
may be required or necessary for the purposes of perfecting all the Guarantees
and Charges duly executed by the relevant Obligors.
4. Evidence that the security created by the Charges has been perfected.
5. A legal opinion dated on or after the date of this Agreement and not
more than 7 Business Days before the date of the notice requesting the first
Advance from:-
(i) Drew & Napier, legal advisers in Singapore to the Facility Agent
and the Lenders as to such matters of the laws of Singapore relevant to
this Agreement and the other Transaction Documents as the Facility Agent
may request;
(ii) Lee, Ong & Kandiah, legal advisers in Malaysia to the Lenders as
to such matters of the laws of Malaysia relevant to this Agreement and
the other Transaction Documents as the Facility Agent may request; and
(iii) Orrick, Herrington & Sutcliffe, legal advisers in the State of
California, U.S.A. to the Facility Agent and the Lenders as to such
matters of the laws of the State of California and the U.S.A. relevant
to this Agreement and the other Transaction Documents as the Facility
Agent may request.
<PAGE>
42
SCHEDULE 3
Part 2
CERTIFICATE
(to be given by FIUI)
[Letterhead of FIUI]
To: [The Facility Agent and Lenders Date:
parties to the Agreement referred to below.]
I refer to the Revolving Credit Agreement dated [_] between Flextronics
International USA, Inc. (the "Company"), Flextronics Singapore Pte Ltd and
yourselves (the "Agreement"). l am [the Secretary] [an Assistant Secretary] of
the Company and HEREBY CERTIFY and WARRANT as follows:-
1. I am duly authorised to give this Certificate.
2. The Company is carrying on business as authorised under its Articles of
Incorporation and Bylaws.
3. Attached to this Certificate are true, complete, correct and up-to-date
copies of:-
(i) the minutes of a meeting (the "Meeting") of the Board of Directors
of the Company duly convened and held on [_] at which a quorum was
present and voting throughout, the resolutions (the "Resolutions")
set out in the minutes having been duly adopted and not having been
rescinded, modified or superseded; and
(ii) the Articles of Incorporation and Bylaws of the Company.
4. The persons specified as being present at the Meeting were at the date
thereof all Directors of the Company.
5. The borrowing by the Company under the Agreement, the entry into and
performance by the Company of the Agreement and the Charge, the creation
by the Company of the security expressed to be created by the Charge, and
the performance by the Company of the other actions authorised by the
Resolutions are within the powers of the Company under its Articles of
Incorporation and Bylaws and do not require any consent on the part of
the shareholders of the Company or of any class of the shareholders
thereof and are not precluded by nor will they infringe the provisions of
its Articles of Incorporation or Bylaws or any trust, deed, mortgage,
charge, agreement or other instrument binding upon the Company.
6. The Company has passed no resolution purporting to alter its Articles of
Incorporation or Bylaws within the 21 days preceding the date of this
Certificate.
<PAGE>
43
7. The Agreement and the Charge have been unconditionally executed and
delivered by the Company.
8. No liquidation or dissolution proceedings with respect to the Company
have been commenced by any person or are intended or anticipated by the
Company and no order or resolution for the winding-up of the Company has
to the best of my knowledge and belief having made all reasonable
enquiries, been made, proposed or threatened.
9. No appointment or notice of the appointment of a receiver or judicial
manager of the Company or any of its assets or property has been made or
given or, to the best of my knowledge and belief having made all
reasonable enquiries, proposed or threatened.
10. There has been no material adverse change in the Company's financial
condition or operations since 31 March 1995, nor in the consolidated
financial condition or operations of the Company and its respective
Subsidiaries since that date save as disclosed to the Lenders in writing.
11. (i) The information in the Information Memorandum was true, complete
and accurate in all material respects at the date thereof.
(ii) There are no material facts or circumstances which have not been
disclosed to the Facility Agent and the Lenders and which could
make any of such information, protections or forecasts untrue,
incomplete, inaccurate or misleading in any material respect or
which, if disclosed, might reasonably be expected to adversely
affect the decision of a person considering whether to provide
financing to the Company.
12. No information, exhibit or report furnished in writing by the Company to
the Facility Agent or any of the Lenders in connection with the
negotiation of the Agreement and the other Transaction Documents
contained any misstatement of fact as at the date of such exhibit or
report or as at the date when such information was given which was
material in the context of the Agreement and/or the other Transaction
Documents or omitted to state a fact as at such date which in any such
case would be materially adverse to the interests of the Facility Agent
and/or any of the Lenders under the Agreement and the other Transaction
Documents.
13. Below is a complete list of the Directors of the Company:-
14. The Secretary of the Company is [_].
15. Below are the identified signatures of the officers of the Company who
were given power to sign the Agreement on behalf of the Company[, to
attest to the affixing of the Corporate Seal of the Company to the
Charge] and to sign all notices and communications required or permitted
to be given by or on behalf of the Company under or for the purposes of
the Agreement and the Charge:-
Name Position Held Signature
<PAGE>
44
[16. The Corporate Seal of the Company has been duly:-
(i) adopted by a resolution of the Board of Directors of the Company;
and
(ii) affixed to the Charge.]
[17. Below is an impression of the Corporate Seal of the Company:-]
Words and expressions used in this Certificate shall bear the same meaning as
herein as in the Resolutions.
Dated:
[Secretary] [Assistant Secretary]
<PAGE>
45
SCHEDULE 3
Part 3
CERTIFICATE
(to be given by FSPL)
[Letterhead of FSPL]
To: [The Facility Agent and Lenders Date:
parties to the Agreement referred to below.]
I refer to the Revolving Credit Agreement dated [_] between Flextronics
International USA, Inc., Flextronics Singapore Pte Ltd (the "Company") and
yourselves (the "Agreement"). I am a Director of the Company and HEREBY CERTIFY
and WARRANT as follows:-
1. I am duly authorised to give this Certificate.
2. The Company is carrying on business as authorised under its [Memorandum
and Articles of Association].
3. Attached to this Certificate are true, complete, correct and up-to-date
copies of:-
(i) the minutes of a meeting (the "Meeting") of the Board of Directors
of the Company duly convened and held on [_] at which a quorum was
present and voting throughout, the resolutions (the "Resolutions")
set out in the minutes having been duly adopted and not having been
rescinded, modified or superseded; and
(ii) the [Memorandum and Articles of Association] of the Company.
4. The persons:-
(i) specified as being present at the Meeting;
(ii) signing on behalf of the Company the Agreement; and
(iii) attesting to the affixing of the Common Seal of the Company to the
Charge, were at the date thereof all Directors of the Company.
5. The borrowing by the Company under the Agreement, the entry into and
performance by the Company of the Agreement and the Charge, the creation
by the Company of the security expressed to be created by the Charge, and
the performance by the Company of the other actions authorised by the
Resolutions are within the powers of the Company under its [Memorandum of
Association], exercisable by the Directors under its [Articles of
Association] and do not require any consent on the part of the Company in
General Meeting or of any class of the members thereof and are not
<PAGE>
46
precluded by nor will they infringe the provisions of its [Memorandum or
Articles of Association] or any trust, deed, mortgage, charge, agreement
or other instrument binding upon the Company.
6. The Company has passed no resolution purporting to alter its [Memorandum
or Articles of Association] within the 21 days preceding the date of this
Certificate.
7. The Agreement and the Charge have been unconditionally executed and
delivered by the Company.
8. No liquidation or dissolution proceedings with respect to the Company
have been commenced by any person or are intended or anticipated by the
Company and no order or resolution for the winding-up of the Company has,
to the best of my knowledge and belief having made all reasonable
enquiries, been made, proposed or threatened.
9. No appointment or notice of the appointment of a receiver or judicial
manager of the Company or any of its assets or property has been made or
given or, to the best of my knowledge and belief having made all
reasonable enquiries, proposed or threatened.
10. There has been no material adverse change in the Company's financial
condition or operations since 31 March 1995, nor in the consolidated
financial condition or operations of the Company and its respective
Subsidiaries since that date save as disclosed to the Lenders in writing.
11. (i) The information in the Information Memorandum was true, complete
and accurate in all material respects at the date thereof.
(ii) There are no material facts or circumstances which have not been
disclosed to the Facility Agent and the Lenders and which could
make any of such information, projections or forecasts untrue,
incomplete, inaccurate or misleading in any material respect or
which, if disclosed, might reasonably be expected to adversely
affect the decision of a person considering whether to provide
financing to the Company.
12. No information, exhibit or report furnished in writing by the Company to
the Facility Agent or any of the Lenders in connection with the
negotiation of the Agreement and the other Transaction Documents
contained any misstatement of fact as at the date of such exhibit or
report or as at the date when such information was given which was
material in the context of the Agreement and/or the other Transaction
Documents or omitted to state a fact as at such date which in any such
case would be materially adverse to the interests of the Facility Agent
and/or any of the Lenders under the Agreement and the other Transaction
Documents.
[13. No notice has been received by the Company under Section 254(2)(a) or
Section 344(1) of the Companies Act Chapter 50.]
14. Below is a complete list of the Directors of the Company:-
15. The Secretary of the Company is [_].
16. Below are the identified signatures of the persons who were given power
to sign the Agreement on behalf of the Company, to attest to the affixing
of the Common Seal of the Company to the Charge
<PAGE>
47
and to sign all notices and communications required or permitted to be
given by or on behalf of the Company under or for the purposes of the
Agreement and the Charge:-
Name Position Held Signature
Director
Director
17. The Common Seal of the Company has been duly:-
(i) adopted by a resolution of the Board of Directors of the Company;
and
(ii) affixed to the Charge.
18. Below is an impression of the Common Seal of the Company:-
Words and expressions used in this Certificate shall bear the same meaning as
herein as in the Resolutions.
Dated:
Director
<PAGE>
48
SCHEDULE 3
Part 4
CERTIFICATE
(to be given by FIL)
[Letterhead of FIL]
To: [The Facility Agent and Lenders Date:
parties to the Agreement referred to below.]
I refer to the Revolving Credit Agreement dated [s] between Flextronics
International USA, Inc., Flextronics Singapore Pte Ltd and yourselves (the
"Agreement"). I am a Director of Flextronics International Limited (the
"Company") and HEREBY CERTIFY and WARRANT as follows:-
1. I am duly authorised to give this Certificate.
2. The Company is carrying on business as authorised under its [Memorandum
and Articles of Association].
3. Attached to this Certificate are true, complete, correct and up-to-date
copies of:-
(i) the minutes of a meeting (the "Meeting") of the Board of Directors
of the Company duly convened and held on [s] at which a quorum was
present and voting throughout, the resolutions (the "Resolutions")
set out in the minutes having been duly adopted and not having been
rescinded, modified or superseded; and
(ii) the [Memorandum and Articles of Association] of the Company.
4. The persons:-
(i) specified as being present at the Meeting; and
(ii) attesting to the affixing of the Common Seal of the Company to the
Guarantee,
were at the date thereof all Directors of the Company.
5. The entry into and performance by the Company of the Guarantee and the
performance by the Company of the other actions authorised by the
Resolutions are within the powers of the Company under its [Memorandum of
Association], exercisable by the Directors under its [Articles of
Association] and do not require any consent on the part of the Company in
General Meeting or of any class of the members thereof and are not
precluded by nor will they infringe the provisions of
<PAGE>
49
its [Memorandum or Articles of Association] or any trust, deed, mortgage,
charge, agreement or other instrument binding upon the Company.
6. The Company has passed no resolution purporting to alter its [Memorandum
or Articles of Association] within the 21 days preceding the date of this
Certificate.
7. The Guarantee has been unconditionally executed and delivered by the
Company.
8. No liquidation or dissolution proceedings with respect to the Company
have been commenced by any person or are intended or anticipated by the
Company and no order or resolution for the winding-up of the Company has,
to the best of my knowledge and belief having made all reasonable
enquiries, been made, proposed or threatened.
9. There has been no material adverse change in the Company's financial
condition or operations since 31 March 1995, nor in the consolidated
financial condition or operations of the Company and its respective
Subsidiaries since that date save as disclosed to the Lenders in writing.
10. (i) The information in the Information Memorandum was true, complete
and accurate in all material respects at the date thereof.
(ii) There are no material facts or circumstances which have not been
disclosed to the Facility Agent and the Lenders and which could
make any of such information, projections or forecasts untrue,
incomplete, inaccurate or misleading in any material respect or
which, if disclosed, might reasonably be expected to adversely
affect the decision of a person considering whether to provide
financing to the Company.
11. No information, exhibit or report furnished in writing by the Company to
the Facility Agent or any of the Lenders in connection with the
negotiation of the Agreement and the other Transaction Documents
contained any misstatement of fact as at the date of such exhibit or
report or as at the date when such information was given which was
material in the context of the Agreement and/or the other Transaction
Documents or omitted to state a fact as at such date which in any such
case would be materially adverse to the interests of the Facility Agent
and/or any of the Lenders under the Agreement and the other Transaction
Documents.
12. No appointment or notice of the appointment of a receiver or judicial
manager of the Company or any of its assets or property has been made or
given or, to the best of my knowledge and belief having made all
reasonable enquiries, proposed or threatened.
[13. No notice has been received by the Company under Section 254(2)(a) or
Section 344(1) of the Companies Act Chapter 50.]
14. Below is a complete list of the Directors of the Company:-
15. The Secretary of the Company is [_].
16. Below are the identified signatures of the persons who were given power
to attest to the affixing of the Common Seal of the Company to the
Guarantee and to sign all notices and communications
<PAGE>
50
required or permitted to be given by or on behalf of the Company under or
for the purposes of the Guarantee:-
Name Position Held Signature
_ Director
_ Director
17. The Common Seal of the Company has been duly:-
(i) adopted by a resolution of the Board of Directors of the Company;
and
(ii) affixed to the Guarantee.
18. Below is an impression of the Common Seal of the Company:-
Words and expressions used in this Certificate shall bear the same meaning as
herein as in the Resolutions.
Dated:
Director
<PAGE>
51
SCHEDULE 3
Part 5
CERTIFICATE
(to be given by FIM)
[Letterhead of FIM]
To: [The Facility Agent and Lenders Date:
parties to the Agreement referred to below.]
I refer to the Revolving Credit Agreement dated [_] between Flextronics
international USA, Inc., Flextronics Singapore Pte Ltd and yourselves (the
"Agreement"). l am a Director of Flex International Marketing (L) Ltd (the
"Company") and HEREBY CERTIFY and WARRANT as follows:-
1. I am duly authorised to give this Certificate.
2. The Company is carrying on business as authorised under its [Memorandum
and Articles of Association].
3. Attached to this Certificate are true, complete, correct and up-to-date
copies of:-
(i) the minutes of a meeting (the "Meeting") of the Board of Directors
of the Company duly convened and held on [s] at which a quorum was
present and voting throughout, the resolutions (the "Resolutions")
set out in the minutes having been duly adopted and not having been
rescinded, modified or superseded; and
(ii) the [Memorandum and Articles of Association] of the Company.
4. The persons:-
(i) specified as being present at the Meeting; and
(ii) attesting to the affixing of the Common Seal of the Company to the
Charge and the Guarantee,
were at the date thereof all Directors of the Company.
5. The entry into and performance by the Company of the Charge and the
Guarantee, the creation by the Company of the security expressed to be
created by the Charge, and the performance by the Company of the other
actions authorised by the Resolutions are within the powers of the
Company under its [Memorandum of Association], exercisable by the
Directors under its [Articles of Association] and do not require any
consent on the part of the Company in General Meeting or of
<PAGE>
52
any class of the members thereof and are not precluded by nor will they
infringe the provisions of its [Memorandum or Articles of Association] or
any trust, deed, mortgage, charge, agreement or other instrument binding
upon the Company.
6. The Company has passed no resolution purporting to alter its [Memorandum
or Articles of Association] within the 21 days preceding the date of this
Certificate.
7. The Charge and the Guarantee have been unconditionally executed and
delivered by the Company.
8. No liquidation or dissolution proceedings with respect to the Company
have been commenced by any person or are intended or anticipated by the
Company and no order or resolution for the winding-up of the Company has,
to the best of my knowledge and belief having made all reasonable
enquiries, been made, proposed or threatened.
9. No appointment or notice of the appointment of a receiver or judicial
manager of the Company or any of its assets or property has been made or
given or, to the best of my knowledge and belief having made all
reasonable enquiries, proposed or threatened.
10. There has been no material adverse change in the Company's financial
condition or operations since 31 March 1995, nor in the consolidated
financial condition or operations of the Company and its respective
Subsidiaries since that date save as disclosed to the Lenders in writing.
11. (i) The information in the Information Memorandum was true, complete
and accurate in all material respects at the date thereof.
(ii) There are no material facts or circumstances which have not been
disclosed to the Facility Agent and the Lenders and which could
make any of such information, projections or forecasts untrue,
incomplete, inaccurate or misleading in any material respect or
which, if disclosed, might reasonably be expected to adversely
affect the decision of a person considering whether to provide
financing to the Company.
12. No information, exhibit or report furnished in writing by the Company to
the Facility Agent or any of the Lenders in connection with the
negotiation of the Agreement and the other Transaction Documents
contained any misstatement of fact as at the date of such exhibit or
report or as at the date when such information was given which was
material in the context of the Agreement and/or the other Transaction
Documents or omitted to state a fact as at such date which in any such
case would be materially adverse to the interests of the Facility Agent
and/or any of the Lenders under the Agreement and the other Transaction
Documents.
13. No notice has been received by the Company under Section 21 8(2)(a) or
Section 308(1) of the Malaysian Companies Act 1965.
14. Below is a complete list of the Directors of the Company:-
15. The Secretary of the Company is [_].
<PAGE>
53
16. Below are the identified signatures of the persons who were given power
to attest to the affixing of the Common Seal of the Company to the Charge
and the Guarantee and to sign all notices and communications required or
permitted to be given by or on behalf of the Company under or for the
purposes of the Charge and the Guarantee:-
Name Position Held Signature
_ Director
_ Director
17. The Common Seal of the Company has been duly:-
(i) adopted by a resolution of the Board of Directors of the Company;
and
(ii) affixed to the Charge and the Guarantee.
18. Below is an impression of the Common Seal of the Company:-
Words and expressions used in this Certificate shall bear the same meaning as
herein as in the Resolutions.
Dated:
Director
<PAGE>
54
SCHEDULE 3
Part 6
CERTIFICATE
(to be given by FMSB)
[Letterhead of FMSB]
To: [The Facility Agent and Lenders Date:
parties to the Agreement referred to below.]
I refer to the Revolving Credit Agreement dated [s] between Flextronics
international USA, Inc., Flextronics Singapore Pte Ltd and yourselves (the
"Agreement ). l am a Director of Flextronics (M) Sdn Bhd (the "Company") and
HEREBY CERTIFY and WARRANT as follows:-
1. I am duly authorised to give this Certificate.
2. The Company is carrying on business as authorised under its [Memorandum
and Articles of Association].
3. Attached to this Certificate are true, complete, correct and up-to-date
copies of:-
(i) the minutes of a meeting (the "Meeting") of the Board of Directors
of the Company duly convened and held on [] at which a quorum was
present and voting throughout, the resolutions (the "Resolutions")
set out in the minutes having been duly adopted and not having been
rescinded, modified or superseded; and
(ii) the [Memorandum and Articles of Association] of the Company.
4. The persons:-
(i) specified as being present at the Meeting; and
(ii) attesting to the affixing of the Common Seal of the Company to the
Charge and the Guarantee,
were at the date thereof all Directors of the Company.
5. The entry into and performance by the Company of the Charge and the
Guarantee, the creation by the Company of the security expressed to be
created by the Charge, and the performance by the Company of the other
actions authorised by the Resolutions are within the powers of the
Company under its [Memorandum of Association], exercisable by the
Directors under its [Articles of Association] and do not require any
consent on the part of the Company in General Meeting or of
<PAGE>
55
any class of the members thereof and are not precluded by nor will they
infringe the provisions of its [Memorandum or Articles of Association] or
any trust, deed, mortgage, charge, agreement or other instrument binding
upon the Company.
6. The Company has passed no resolution purporting to alter its [Memorandum
or Articles of Association] within the 21 days preceding the date of this
Certificate.
7. The Charge and the Guarantee have been unconditionally executed and
delivered by the Company.
8. No liquidation or dissolution proceedings with respect to the Company
have been commenced by any person or are intended or anticipated by the
Company and no order or resolution for the winding-up of the Company has,
to the best of my knowledge and belief having made all reasonable
enquiries, been made, proposed or threatened.
9. No appointment or notice of the appointment of a receiver or judicial
manager of the Company or any of its assets or property has been made or
given or, to the best of my knowledge and belief having made all
reasonable enquiries, proposed or threatened.
10. There has been no material adverse change in the Company's financial
condition or operations since 31 March 1995, nor in the consolidated
financial condition or operations of the Company and its respective
Subsidiaries since that date save as disclosed to the Lenders in writing.
11. (i) The information in the Information Memorandum was true, complete and
accurate in all material respects at the date thereof.
(ii) There are no material facts or circumstances which have not been
disclosed to the Facility Agent and the Lenders and which could make
any of such information, projections or forecasts untrue,
incomplete, inaccurate or misleading in any material respect or
which, if disclosed, might reasonably be expected to adversely
affect the decision of a person considering whether to provide
financing to the Company.
12. No information, exhibit or report furnished in writing by the Company to
the Facility Agent or any of the Lenders in connection with the
negotiation of the Agreement and the other Transaction Documents
contained any misstatement of fact as at the date of such exhibit or
report or as at the date when such information was given which was
material in the context of the Agreement and/or the other Transaction
Documents or omitted to state a fact as at such date which in any such
case would be materially adverse to the interests of the Facility Agent
and/or any of the Lenders under the Agreement and the other Transaction
Documents.
[13. No notice has been received by the Company under Section 254(2)(a) or
Section 344(1) of the Companies Act Chapter 50.]
14. Below is a complete list of the Directors of the Company:-
15. The Secretary of the Company is [_].
<PAGE>
56
16. Below are the identified signatures of the persons who were given power
to attest to the affixing of the Common Seal of the Company to the Charge
and the Guarantee and to sign all notices and communications required or
permitted to be given by or on behalf of the Company under or for the
purposes of the Charge and the Guarantee:-
Name Position Held Signature
_ Director
_ Director
17. The Common Seal of the Company has been duly:-
(i) adopted by a resolution of the Board of Directors of the Company;
and
(ii) affixed to the Charge and the Guarantee.
18. Below is an impression of the Common Seal of the Company:-
Words and expressions used in this Certificate shall bear the same meaning as
herein as in the Resolutions.
Dated:
Director
<PAGE>
57
SCHEDULE 4
NOTICE REQUESTING ADVANCE
To: The First National Bank of Boston, Date:
Singapore Branch
Attention: [insert name of relevant department
or title of relevant officer]
Dear Sirs,
Re: Revolving Credit Facility Agreement Dated [_] 1996
We refer to the above Agreement between (1) ourselves and [Flextronics
International USA, Inc./ Flextronics Singapore Pte Ltd] as Borrowers (2) The
First National Bank of Boston, Singapore Branch as Tranche A Lender (3) the
banks and financial institutions referred to therein as Tranche B Lenders and
(4) yourselves as Facility Agent. Terms defined in that Agreement have the same
meaning in this notice.
We give you notice that we request a Tranche A Advance/Tranche B Advance
to be made to us under the Agreement as follows:-
(i) Amount: US$[_]
(ii) Date: [_] (or, if that is not a Business Day (the next
succeeding Business Day)
(iii) Term: [_]
The proceeds of the Advance are to be made available to us by credit to
our account at [_], New York, N.Y. U.S.A.
No Event of Default has occurred and is continuing or will occur as a
result of the making of the above Advance. All representations and warranties in
Clause 13 of the Agreement have been complied with and would be correct in all
material respects if repeated today by reference to the circumstances now
existing. All the undertakings on our part contained in Clauses 14 and 15 of the
Agreement have been fully performed and observed by us.
Yours faithfully,
- ----------------------------------------
[Name of authorised signatory:
)
for and on behalf of
[Flextronics International USA, Inc./Flextronics Singapore Pte Ltd]
<PAGE>
58
SCHEDULE 5
EXISTING SECURITY
I. Banking Facilities Granted
SINGAPORE:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Bridging Overdraft Short Term Letter of Guarantee Total
Loan US$ Advance Credits US$ US$
US$ US$ US$
- --------------------------------------------------------------------------------------------------------------
Bank of Boston 20,000,000 20,000,000
Bank of America 15,000,000 15,000,000
Citibank 5,000,000 5,000,000
Maybank 350,000 1,500,000 1,500,000 1,650,000 5,000,000
Hellar Factoring 333,333 333,333
- --------------------------------------------------------------------------------------------------------------
Total 20,000,000 350,000 21,833,333 1,500,000 1,650,000 45,333,333
- --------------------------------------------------------------------------------------------------------------
</TABLE>
1. Banking facilities available up to the amount of US$45 million are
secured by:-
(a) a negative pledge over the company's fixed and floating assets; and
(b) guarantee from holding company and subsidiary companies.
2. The Standby L/C is used as collateral for the extension of credit
facilities to Flextronics
(M) Sdn Bhd.
3. Term loan of US$333,333 outstanding payable is secured by:-
(a) a Corporate Guarantee by Flextronics International Ltd; and
(b) a debenture taking a first fixed charge over the proposed equipment
executed in favour of Heller Factoring (S) Ltd as chargee.
II. Hire Purchase/Finance Lease
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount
Hire Purchase Company Equivalent under Hire Purchase Contract Number Payable
- --------------------- ------------------------------ --------------- -------
Flextronic Singapore Pte Ltd: 30018 colder parts screen printer and
Singapore Leasing upgrade kit HP 95417 US$72,488
100AV auto vision solder past printer HP 95472 US$52,483
(A) Rotary b/h aluminum wire bonder HP 98384 US$163,328
</TABLE>
<PAGE>
59
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(B) 30DAVP solder past screen printer
(C) Vitronica SMR8005 150 therm flow
system
Panasonic automatic autoface amount
machine HP 95384 US$140,102
MVIC-K NM 2558DA/MPAG1 NM2547 with
accessories HP94302 US$323,770
CAT 2000 net-system HP 95561 US$118,247
Rotary bin aluminum wire bonder HP 95584 US$132,523
ST Capital Panasonic automatic surface mount machine HP 00001884US $247,875
Orix Leasing HP come test system H/2082/95-8514US $314,879
HP computer system H/2081/95-9513US $430,930
Flextronics international USA, Inc SMT equipments:
USL Capital 124830 US$920,358
Panasonic: MV10
MPA III
Feeders
SMT equipments: 124711 US$539,943
Panasonic: MVC11C
Feeders
SMT equipments: 124660 US$418,272
Panasort: MK1CC-11
MK1 Feeders
Bank Boston Leasing Inc. SMT equipments: Rental Sch 1 US$701,966
DEK 265G5 screen printers
Chip placer NM 2565 MK-1-C11
SMT equipments: Rental Sch 2 US$793,045
Board Test System
Panasonic MN 2528/MK-1-C-LL
Panasonic M3PAGI & Feeders
DEK screen printer
Convection Reflow Oven
SMT equipments: Rental Sch 3 US$646,594
Panasert MPA Il
Sert feeders
2283G test system
EUA Cogenex Corporation Leasehold improvements 00228 US$45,933
</TABLE>
<PAGE>
60
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Xerox Corporation Blueprint 2080 958573955 US$7,677
GATX Partnership NP 2 Track System 01-0001-00 US$70,084
Degree Wire Bond 02-0001-00 US$38,383
03-0001-00 US$78,547
Wire Bond 04-0001-00 US$18,552
Desicostor cabinet
Probe Arm Assembly
Laser Barcode scanner
436 VLB Computers w/HD
Wet Etch Station
Microscope
Tegel 903e 06-0001-00 US$71,657
Etch Vat 06-0001-00 US$89,852
488 VLB Computer w/HD
Penitum File Server
Microscope
Die Attach Machine
Letts Ergolux scope
Comdisco Inc Wire Bond SLS127700A US$121,747
Substrate Continuity Tester SL31288-00 US$190,937
Wire bonder
Plasma System
486 VLB V#3232
486 VLB V#3229
486 VLB V#3231
3COM Etherink V#3166
Ph Meter
Vacuum Pump
Lap Top Computer
Computer Equipment Inv#26154
Computer Equipment Inv#28155
Hydel Eng
Power Supply
Bar Code Readers
Electric Arms
Epoxy Die Bonder/wire bonder
Tagel 903e SLS 1288-01 US$50,748
Varian sputtering sys SL31289 US$386,488
Copier machine
</TABLE>
<PAGE>
61
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Wet Deck
PC Workstation
Demo SCT-1000 Substrate
High Speed Prober SL24816 US$340,694
Sumitomo Metal Mining Die&Wire Bonder D&W Bonder-00 US$279,665
Inspection Station D&W Bonder-01 US$47,602
USL Capital Yes-15 Vac Prime Oven 00124470-001
Tegal 1903e Etcher
Dicing System
Canon Pia-501f-fa Alligner US$352,718
COMIDSCO (A) Fab, computer equip 18-SL23774-00 US$985,542
RCLS BANCBOSTON LSE Novelius Concept one CVD sys 06027007-10-002 US$945,870
Varian 3190 Sarila
</TABLE>
<PAGE>
62
SCHEDULE 6
BORROWING BASE REPORT
Dated:
---------------------------
For Period Ended:
----------------
The First National Bank of Boston
as Facility Agent
150 Beach Road #07-00
Gateway West
Singapore 189720
The undersigned, [_], the duly elected and qualified [_] of Flextronics
International USA, Inc and Flextronics Singapore Pte Ltd (the "Borrowers"),
hereby certifies pursuant to [_] of the Revolving Credit Facility Agreement,
dated as of [_] (as amended, modified, restated, or supplemented and in effect
from time to time, the "Credit Agreement"), among the Borrowers, The First
National Bank of Boston, Singapore Branch and the other lending institutions
that are or may become parties thereto from time to time (collectively, the
"Banks") and The First National Bank of Boston, Singapore Branch as agent (the
"Facility Agent") for the Banks, that (a) the information set forth in this
Borrowing Base Report was true and correct as of the last day of the period
specified herein, (b) this Borrowing Base Report has been prepared in accordance
with the applicable provisions of the Credit Agreement relating to the
computation of the Borrowing Base and the various components thereof, and (c) as
of the date of this Borrowing Base Report, there exists no Event of Default.
Capitalised items used herein without definition that are defined in the
Credit Agreement shall have the same meanings herein as in the Credit Agreement.
Flextronics International USA, Inc
By:
Name:
Title:
Flextronics Singapore Pte Ltd
By:
Name:
Title:
<PAGE>
63
Borrowing Base Calculation
Calculation of Borrowing Base
As of [_] (the "Determination Date")
A. Eligible Accounts as of the Determination Date:
<TABLE>
<CAPTION>
<S> <C>
1. Aggregate net amount of all accounts of FIL and its Subsidiaries
(including, but not limited to, FIM, FSPL, FIUI. FMSB) US$[_]
2. Deductions:
(a) Accounts which do not arise from the sale or lease of goods or
services rendered to the account debtor thereon in the ordinary
course of business, or which arise from a sale, lease, or service
which has not been fully performed by FIL and its Subsidiaries US$[_]
(b) Accounts and portions thereof to the extent the same are subject
to any right of discount, credit, allowance, recision, set-off,
claim, or defense or which are otherwise not valid and
enforceable against the account debtor thereon US$[_]
(c) Accounts which are not subject to a first priority perfected
security interest (or similar lien) in favour of the Facility
Agent for the benefit of the Banks US$[_]
(d) Accounts which are not owned by FIL and its Subsidiaries free and
clear of all liens, rights, and interests of all other persons
except for Permitted Liens US$[_]
(e) Accounts which are unpaid more than ninety (90) days after the
invoice date therefor US$[_]
(f) Accounts arising from consignments by FIL and its Subsidiaries as
consignee and Cash Against Delivery shipments US$[_]
(g) Accounts payable by (i) the United States government or any
department, agency, or other subdivision thereof (except to the
extent FIL and its Subsidiaries has complied with the Federal
Assignment of Claims Act of 1940, as amended), (ii) Affiliates of
FIL and its Subsidiaries US$[_]
(h) Accounts payable by account debtors (i) which are subject to
any bankruptcy, insolvency, liquidation, or similar proceedings,
(ii) which have made assignments for the benefit of their
creditors, (iii) for which receivers have been appointed, or (iv)
which have admitted in writing their inability to pay their debts
or such debts become due US$[_]
(i) Other accounts which the Facility Agent reasonably determined are
not likely to be paid in full within ninety (90) days after the
invoice date US$[]
</TABLE>
<PAGE>
64
<TABLE>
<CAPTION>
<S> <C>
Total deductions (sum of A.2.(a)-(i)) US$[_]
3. Total Eligible Accounts US$[_]
B. Borrowing Base as of the Determination Date:
1. Total Revolving Facility US$[_]
2. Borrowing Base - Total Eligible Accounts set for in A.3 above times 0.75 US$[_]
3. Total Outstandings US$[_]
4. Unused portion (overadvance) of Borrowing Base
(Lesser of B.1-B.3 or B.2-B.3) US$[_]
</TABLE>
RECEIVABLES SPREAD CONCENTRATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Company Name:
Aging Date:
- -----------------------------------------------------------------------------------------
1-30 31-60 61-90 91 +
Customer # Name City Total days days days days
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
65
SCHEDULE 7
LITIGATION CURRENT OR PENDING
1. In the High Court of Malaya at Kuala Lumpur
Suit No. 01-22-11-96
Flextronics (Malaysia) Sdn Bhd as Plaintiff and
Eagle Exima Computer Products Sdn Bhd as Defendants
2. In the Supreme Court of the State of California
Case No. H-183966-9
Eagle Exima Computer Products Sendirian Berhad as Plaintiff Logitech
Inc, Logitech Far East Ltd, Robert L Hagerty, Flextronics
International, Flextronics (Malaysia) Sendirian Berhad and Does 1-100
as Defendants
<PAGE>
66
SCHEDULE 8
LIST OF CURRENT GUARANTEES
Singapore
<TABLE>
<CAPTION>
<S> <C> <C>
Party to the Contract Subject Matter Amount US$
as 3/31/1996
- --------------------------------------------------------------------------------------------------------
Heller Factoring Equipment financing for placement Station Siplace 8OS and 698,632
Equipment financing for placement Station Siplace 80F
- --------------------------------------------------------------------------------------------------------
S'pore Leasing Equipment financing for placement Station Siplace 80F 207,789
Equipment financing for placement Station Space 80F 290,143
- --------------------------------------------------------------------------------------------------------
Hong Leong Finance Equipment financing for Intellisert DD4500 42,416
Equipment financing for Vitronics 3rd Generation 27,154
- --------------------------------------------------------------------------------------------------------
D&C Leasing Equipment financing for Dextrex Semi Aque, Deflux System 46,207
Equipment financing for Simens SMT Line 129,621
Equipment financing for Simens SMT Line & W/Solder 305,997
- --------------------------------------------------------------------------------------------------------
Showa Leasing Equipment financing for ectronics Production Equipment 624,534
Equipment financing for digital Pabx System Conveyer Line 124,192
Equipment financing for Universal Radial Lead Sequencer M/C 874,081
- --------------------------------------------------------------------------------------------------------
D&C Finance Equipment financing for Simens Placement Station Siplace 8OS 190,285
Equipment financing for Simens SP120 Speed Placer & HS180 279,103
HR 193,112
Equipment financing for 1500KA Standby Genset
- --------------------------------------------------------------------------------------------------------
Arab Malaysian Term loan facility for Flextronics Malaysia Sdn Bhd - Building 1 ,571,428
Merchant Bank Term loan facility for Flextronics Malaysia Sdn Bhd - Worker
appartm 816,327
- --------------------------------------------------------------------------------------------------------
Maybank Malaysia Corporate guarantee for Maybank granting overdraft facility to
Flextro 1,224,490
- --------------------------------------------------------------------------------------------------------
ShenZhen Xinan Tenancy Agreement between Flextronics Industrial Shanzhen Ltd 180,000
Industrial Engineering an Estimat
- --------------------------------------------------------------------------------------------------------
East Asia Finance - Equipment financing for one set of Siplace 8OS 96,055
Hong Kong
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
67
IN WITNESS WHEREOF the parties hereto have set their hands the day and
year first abovewritten.
<TABLE>
<CAPTION>
<S> <C> <C>
The Borrowers
SIGNED by Goh Chan Peng for and on behalf )
of FLEXTRONICS INTERNATIONAL USA, INC. )
in the presence of:- ) /s/ Goh Chan Peng
)
/s/Witness )
- ---------------------------------------------
SIGNED by Goh Chan Peng for and on behalf )
of FLEXTRONICS SINGAPORE PTE LTD in the )
presence of:- ) /s/ Goh Chan Peng
)
/s/ Witness )
- ---------------------------------------------
The Tranche A Lender Tranche A Commitment
SIGNED by Mr. Soh Boon Hock for and on )
behalf of THE FIRST NATIONAL BANK OF )
BOSTON, SINGAPORE BRANCH in the )
presence of:- ) /s/ Soh Boon Hock US$18,000,000
)
/s/ Witness )
- ---------------------------------------------
The Tranche B Lenders
SIGNED by Mr. Soh Boon Hock for and on )
behalf of THE FIRST NATIONAL BANK OF )
BOSTON, SINGAPORE BRANCH in the )
presence of:- ) /s/ Soh Boon Hock
)
/s/ Witness )
- ---------------------------------------------
</TABLE>
<PAGE>
68
<TABLE>
<S> <C> <C>
SIGNED by DE NATIONALE ) DE NATIONALE INVESTERINGSBANK
INVESTERINGSBANK ASIA LTD by its ) ASIA LTD
Attorney Mr. Jan J.C. van Suchtelen van de ) By its Attorney
Haare and Ernst J.F. Lambers acting under a )
Power of Attorney dated the 10 day of June )
1996 )
) /s/ Jan J.C. van Suchtelen van de Haare and Ernst
/s/ Witness ) J.F. Lambers
- ---------------------------------------------
SIGNED by ABN AMRO BANK, N.V., ) ABN AMRO BANK, N.V.,
SINGAPORE BRANCH by its Attorney Mr. Goh ) SINGAPORE BRANCH
Chong Theng acting under a Power of Attorney ) By its Attorney
dated the 11 day of October 1995 (a copy of )
which was deposited in the Registry, Supreme )
Court, Singapore, on the 22 day of November )
1995 and registered as No. 8715 of 1995) in the )
presence of:- ) /s/ Goh Chong Theng
)
/s/ Witness )
- ---------------------------------------------
SIGNED by /s/ Mr. Wong Kook Fei and Ms. )
Ling Wong Hiong Li for and on behalf of )
BAYERISCHE VEREINSBANK AG, )
SINGAPORE BRANCH in the presence of:- ) /s/ Wong Kook Fei and Ling Wong Hiong Li
)
/s/ Witness )
- ---------------------------------------------
SIGNED by Mr. Won Hin Weng for and on )
behalf of CITIBANK, N.A. (SINGAPORE )
BRANCH) in the presence of:- ) /s/ Won Hin Weng
)
/s/ Witness )
- ---------------------------------------------
SIGNED by Mr. Ong Cheng Sng for and on )
behalf of MALAYAN BANKING BERHAD, )
SINGAPORE BRANCH in the presence of:- ) /s/ Ong Cheng Sng
)
/s/ Witness )
- ---------------------------------------------
</TABLE>
<PAGE>
69
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNED by Mr. Koh Bock Swi, Raymond and )
Mr. Yan Thiam Hwa, Francis for and on behalf )
of SOCIETE GENERALE, SINGAPORE )
BRANCH in the presence of:- ) /s/ Koh Bock Swi, Raymond and Yan Thiam Hwa,
) Francis
/s/ Witness )
- ---------------------------------------------
SIGNED by Mr. Hong Keah Huat for and on )
behalf of TAT LEE BANK LIMITED in the )
presence of:- ) /s/ Hong Keah Huat
)
/s/ Witness )
- ---------------------------------------------
The Facility Agent
SIGNED by Mr. Soh Boon Hock for and on )
behalf of THE FIRST NATIONAL BANK OF )
BOSTON, SINGAPORE BRANCH in the )
presence of:- ) /s/ Soh Boon Hock
)
/s/ Witness )
- ---------------------------------------------
The Security Agent
SIGNED by Mr. Soh Boon Hock for and on )
behalf of THE FIRST NATIONAL BANK OF )
BOSTON, SINGAPORE BRANCH in the )
presence of:- ) /s/ Soh Boon Hock
)
/s/ Witness )
- ---------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.2
DATED THE 25TH DAY OF JULY 1996
FLEXTRONICS INTERNATIONAL USA, INC.
FLEXTRONICS SINGAPORE PTE LTD
as Borrowers
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
as Tranche A Lender
THE BANKS AND FINANCIAL INSTITUTIONS LISTED IN SCHEDULE 1
as Tranche B Lenders
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
as Facility Agent
and
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
as Security Agent
====================================
SUPPLEMENTAL AGREEMENT
(being supplemental to a US$45,000,000
Revolving Credit Facility Agreement
dated 13th June 1996)
====================================
DREW & NAPIER
20 Raffles Place #17-00
Ocean Towers
Singapore 048620
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
CLAUSE HEADING PAGE
- ------ ------- ----
1. INTERPRETATION......................................... 1
2. AMENDMENTS TO FACILITY AGREEMENT....................... 2
3. INCORPORATION.......................................... 2
4. EXPENSES AND STAMP DUTY................................ 2
5. COMMUNICATIONS......................................... 3
6. PARTIAL INVALIDITY..................................... 3
7. COUNTERPARTS........................................... 3
8. GOVERNING LAW AND JURISDICTION......................... 3
9. ARBITRATION............................................ 3
SCHEDULE 1 - TRANCHE B LENDERS......................... 5
</TABLE>
<PAGE>
THIS SUPPLEMENTAL AGREEMENT is made on 25th July 1996 BETWEEN:-
- --------------------------- --------
(1) FLEXTRONICS INTERNATIONAL USA. INC. ("FIUI"), a company incorporated in the
----------------------------------
State of California, the United States of America with its chief executive
office at 2241 Lundy Avenue San Jose, CA 95131 and FLEXTRONICS SINGAPORE
---------------------
PTE LTD ("FSPL"), a company incorporated in Singapore with its registered
-------
office at 36 Robinson Road #18-01 City House, Singapore 068877
(collectively the "Borrowers" and individually a "Borrower");
(2) THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH (the "Tranche A
---------------------------------------------------
Lender");
(3) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 (the "Tranche B
------------------------------------
Lenders");
(4) THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH in its capacity as
---------------------------------------------------
facility agent for the Lenders (in such capacity, the "Facility Agent"
which expression shall include any of its successors in such capacity); and
(5) THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH in its capacity as
---------------------------------------------------
security agent for the Lenders and the Facility Lender (in such capacity,
the "Security Agent" which expression shall include any of its successors
in such capacity).
and is supplemental to a US$45,000,000 Revolving Credit Facility Agreement (the
"Facility Agreement") dated 13th June 1996 made between (1) the Borrowers, (2)
the Tranche A Lender, (3) the Tranche B Lenders, (4) the Facility Agent and (5)
the Security Agent.
WHEREAS:-
--------
(A) Pursuant to the Facility Agreement, the Tranche A Lender has agreed to
grant to FIUI a revolving credit facility of up to US$18,000,000 and the Tranche
B Lenders have agreed to grant FSPL a revolving credit facility of up to
US$27,000,000 upon the terms and subject to the conditions of the Facility
Agreement and the other Transaction Documents.
(B) The parties have agreed to amend certain provisions of the Facility
Agreement on the terms and subject to the conditions of this Supplemental
Agreement.
1. INTERPRETATION
--------------
(A) This Supplemental Agreement shall be construed as one with the Facility
Agreement and except as otherwise provided in this Supplemental Agreement, all
terms and references used in the Facility Agreement and which are defined or
construed in the Facility Agreement but are not defined or construed in this
Supplemental Agreement, shall have the same meaning and construction in this
Supplemental Agreement as in the Facility Agreement.
(B) Except to the extent that the context requires otherwise, any reference in
this Supplemental Agreement to this "Supplemental Agreement," any
----------------------
"Transaction Document" or any other agreement or document includes this
- ---------------------
Supplemental Agreement, such Transaction Document, such other agreement or
document as from time to time amended, modified or supplemented.
(C) The headings in this Supplemental Agreement are inserted for convenience
only and shall be ignored in construing this Supplemental Agreement. Unless
otherwise stated, references to "Clauses" and
<PAGE>
2
the "Schedule" are to be construed as references to the clauses of, and the
exhibit and the schedules to, this Supplemental Agreement.
2. AMENDMENTS TO FACILITY AGREEMENT
--------------------------------
The parties hereto agree, subject to the provisions of this Supplemental
Agreement, that the Facility Agreement be and is hereby amended as follows:-
(i) Clause 19(H) of the Facility Agreement shall be amended by deleting the
existing Clause 19(H) and replacing it with the following:-
"(H) Reimbursement and Compensation to Facility Agent: To the extent
------------------------------------------------
that the Obligors do not do so on demand or are not obliged to do so,
each Lender shall on demand reimburse or compensate (as the case may
be), on production of documentary proof, the Facility Agent in the
proportion borne by such Lender's Outstandings to all the Outstandings
at the relevant time (or, if there are then no Outstandings, the
Tranche A Commitment (in the case of the Tranche A Lender) and the
Tranche B Commitment (in the case of a Tranche B Lender) to the
aggregate of the Tranche A Commitment and the Tranche B Commitment of
all the Tranche B Lenders) against any cost, expense or liability
mentioned in Clause 21 or sustained or incurred by the Facility Agent
in complying with any instructions from the Majority Lenders or
sustained or incurred by it in connection with its duties, obligations
and responsibilities under this Agreement except (i) routine
administrative costs and expenses of the Facility Agent; or (ii) to the
extent that they are sustained or incurred as a result of the
negligence or wilful misconduct of the Facility Agent or any of its
personnel or agents."
3. INCORPORATION
-------------
(A) Except to the extent expressly amended by the provisions of this
Supplemental Agreement, the terms and conditions of the Facility Agreement are
hereby confirmed and shall remain in full force and effect.
(B) The Facility Agreement and this Supplemental Agreement shall be read and
construed as one document and this Supplemental Agreement shall be considered to
be part of the Facility Agreement, and without prejudice to the generality of
the foregoing, where the context so allows references in the Facility Agreement
to "this Agreement", howsoever expressed, shall be read and construed as
references to the Facility Agreement as amended and supplemented by this
Supplemental Agreement.
4. EXPENSES AND STAMP DUTY
-----------------------
FIUI and FSPL shall pay, on a full indemnity basis, each in proportion
borne by the Tranche A Facility or the Tranche B Facility, as the case may be,
to the total of the Tranche A Facility and the Tranche B Facility:-
(i) on demand, all reasonable costs and expenses (including legal fees and
all goods and services, value added and other duties or taxes payable or
such costs and expenses) incurred by the Facility Agent, the Security Agent
or the Lenders in connection with the preparation, negotiation, entry into
and/or enforcement of this Supplemental Agreement and any document
delivered or to be delivered under this Supplemental Agreement; and
<PAGE>
3
(ii) promptly, and in any event before any penalty becomes payable, any
stamp, documentary or similar duty or tax payable in connection with the
entry into, performance, enforcement and admissibility in evidence of this
Supplemental Agreement and shall indemnify the Facility Agent, the Security
Agent and the Lenders in the same proportion as aforesaid against any
liability with respect to or resulting from any delay in paying or omission
to pay any such tax.
5. COMMUNICATIONS
--------------
Each communication under this Supplemental Agreement shall be made in
writing but unless otherwise stated, may be made by fax, telex or letter. Each
communication or document to be delivered to any party under this Supplemental
Agreement shall be sent to that party at the fax, telex numbers or addresses
referred to in the Facility Agreement and shall be made in the manner or deemed
to have been received in accordance with the provisions of the Facility
Agreement.
6. PARTIAL INVALIDITY
------------------
The illegality, invalidity or unenforceability of any provision of this
Supplemental Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other jurisdiction nor
the legality, validity or enforceability of any other provision.
7. COUNTERPARTS
------------
This Supplemental Agreement may be signed in any number of counterparts,
all of which taken together and when delivered to the Facility Agent shall
constitute one and the same instrument. Any party may enter into this
Supplemental Agreement by signing any such counterpart.
8. GOVERNING LAW AND JURISDICTION
------------------------------
(A) This Supplemental Agreement shall be governed by, and construed in
accordance with, the laws of Singapore.
(B) For the benefit of the Facility Agent and each Lender all the parties
irrevocably agree that the courts of Singapore are to have jurisdiction to
settle any disputes which may arise out of or in connection with this
Supplemental Agreement and that, accordingly, any legal action or proceedings
arising out of or in connection with this Supplemental Agreement ("Proceedings")
may be brought in those courts and each Borrower irrevocably submits to the non-
exclusive jurisdiction of those courts.
(C) Nothing in this Clause 8 shall limit the right of the Facility Agent and/or
any Lender to take Proceedings against any Borrower in any other court of
competent jurisdiction nor shall the taking of Proceedings in one or more
jurisdiction preclude the Facility Agent and/or any Lender from taking
Proceedings in any other jurisdiction, whether concurrently or not.
9. ARBITRATION
-----------
(A) Option: For the benefit of the Lenders, each Borrower hereby irrevocably
------
connection with this Supplemental Agreement may be referred to and finally
resolved by arbitration in Singapore in accordance with the Arbitration Rules of
the Singapore International Arbitration Centre for the time being in force (the
"Rules"). The Rules are deemed
<PAGE>
4
to be incorporated by reference into this Clause. The tribunal conducting the
arbitration (the "Tribunal") shall consist of three arbitrators to be appointed
pursuant to the Rules. The arbitration shall be conducted in the English
language.
(B) Final and Binding: To the extent that the Lenders exercise its option under
-----------------
Clause 9(A), the decision of the Tribunal shall be final, binding and
incontestable and enforceable in accordance with its terms and the award may be
entered into or registered in any court of Singapore or elsewhere having
jurisdiction.
<PAGE>
5
SCHEDULE 1
----------
TRANCHE B LENDERS
-----------------
THE FIRST NATIONAL BANK OF BOSTON, SINGAPORE BRANCH
DE NATIONALE INVESTERINGSBANK ASIA LTD
ABN AMRO BANK, N.V., SINGAPORE BRANCH
BAYERISCHE VEREINSBANK AG, SINGAPORE BRANCH
CITIBANK, N.A. (SINGAPORE BRANCH)
MALAYAN BANKING BERHAD, SINGAPORE BRANCH
SOCIETE GENERALE, SINGAPORE BRANCH
TAT LEE BANK LIMITED
<PAGE>
6
IN WITNESS WHEREOF the parties hereto have set their hands the day and year
------------------
first abovewritten.
The Borrowers
- -------------
<TABLE>
<CAPTION>
<S> <C>
SIGNED by Goh Chan Peng for and on behalf of )
FLEXTRONICS INTERNATIONAL USA, INC. in )
the presence of:- )
) /s/ Goh Chan Peng
/s/ Witness ) -----------------
- ----------------------------------------------
SIGNED by Goh Chan Peng for and on behalf of )
FLEXTRONICS SINGAPORE PTE LTD in the )
presence of:- )
) /s/ Goh Chan Peng
/s/ Witness ) -----------------
- ----------------------------------------------
The Tranche A Lender
- --------------------
SIGNED by Soh Boon Hock for and on behalf of )
THE FIRST NATIONAL BANK OF BOSTON, )
SINGAPORE BRANCH in the presence of:- )
) /s/ Soh Boon Hock
/s/ Witness ) -----------------
- ----------------------------------------------
The Tranche B Lenders
- ----------------------------------------------
SIGNED by Soh Boon Hock for and on behalf of )
THE FIRST NATIONAL BANK OF BOSTON, )
SINGAPORE BRANCH in the presence of:- )
) /s/ Soh Boon Hock
/s/ Witness ) -----------------
- ----------------------------------------------
</TABLE>
<PAGE>
7
<TABLE>
<CAPTION>
<S> <C>
SIGNED by Jan J.C. van Suchtelen van de Haare )
and Ernst J.F. Lambers for and on behalf of DE )
NATIONALE INVESTERINGSBANK ASIA LTD in )
the presence of:- ) /s/ Jan J.C. van Suchtelen van de Haare
---------------------------------------
/s/ Witness and Ernst J.F. Lambers
- ------------------------------------------------- -----------------------
SIGNED by ABN AMRO BANK, N.V., )
SINGAPORE BRANCH by its Attorney Edwin Yip ) ABN AMRO BANK, N.V.,
Seck Tai acting under a Power of Attorney dated ) SINGAPORE BRANCH
the 11th day of October 1995 (a copy of which ) By its Attorney
was deposited in the Registry, Supreme Court, )
Singapore, on the 22nd day of November 1995 ) /s/ Edwin Yip Seck Tai
and registered as No. 8718 of 1995 in the ) ----------------------
presence of:- )
)
/s/ Witness )
- --------------------------------------------------
SIGNED by ABN AMRO BANK, N.V., )
SINGAPORE BRANCH by its Attorney Goh ) ABN AMRO BANK, N.V.,
Chong Theng acting under a Power of Attorney ) SINGAPORE BRANCH
dated the 11th day of October 1995 (a copy of ) By Its Attorney
which was deposited in the Registry, Supreme )
Court, Singapore, on the 22nd day of November )
1995 and registered as No. 8718 of 1995) in the ) /s/ Goh Chong Theng
presence of:- ) --------------------
)
/s/ Witness )
- --------------------------------------------------
SIGNED by Wong Kook Fei and Ling Wong )
Hiong Li for and on behalf of BAYERISCHE )
VEREINSBANK AG, SINGAPORE BRANCH in )
the presence of:- ) /s/ Wong Kook Fei
) ------------------
/s/ Witness ) and Ling Wong Hiong Li
- ------------------------------------------- ----------------------
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
<S> <C>
SIGNED by Wan Hin Weng for and on behalf of )
CITIBANK, N.A. (SINGAPORE BRANCH) in the )
presence of:- )
)
/s/ Witness )
- --------------------------------------------- ) /s/ Wan Hin Weng
----------------
SIGNED by Ong Cheng Sng for and on behalf of )
MALAYAN BANKING BERHAD, SINGAPORE )
BRANCH in the presence of:- )
) /s/ Ong Cheng Sng
/s/ Witness ) -----------------
- ----------------------------------------------
SIGNED by Koh Bock Swi, Raymond and Yan )
Thiam Hwa, Francis for and on behalf of )
SOCIETE GENERALE, SINGAPORE BRANCH in )
the presence of:- ) /s/ Koh Bock Swi, Raymond
) --------------------------
/s/ Witness ) and Yan Thiam Hwa, Francis
- ------------------------------------------ --------------------------
SIGNED by Hong Keah Huat for and on behalf of )
TAT LEE BANK LIMITED in the presence of:- )
)
/s/ Witness ) /s/ Hong Keah Huat
- ----------------------------------------------- ) ------------------
The Facility Agent
- --------------------
SIGNED by Soh Boon Hock for and on behalf of )
THE FIRST NATIONAL BANK OF BOSTON, )
SINGAPORE BRANCH in the presence of:- )
) /s/ Soh Boon Hock
/s/ Witness ) -----------------
- ----------------------------------------------
</TABLE>
<PAGE>
9
The Security Agent
- --------------------
<TABLE>
<CAPTION>
<S> <C>
SIGNED by Soh Boon Hock for and on behalf of )
THE FIRST NATIONAL BANK OF BOSTON, )
SINGAPORE BRANCH in the presence of:- )
) /s/ Soh Boon Hock
/s/ Witness ) -----------------
- ----------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.3
[EXECUTION COPY]
SECURITY AGREEMENT
ORRICK, HERRINGTON
& SUTCLIFFE
<PAGE>
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT, dated as of 25 July, 1996, is executed by
Flextronics International USA, Inc. a California corporation ("Debtor" or
------
"FIUI") in favor of The First National Bank of Boston, Singapore Branch, acting
----
as security agent (in such capacity, "Security Agent") for and on behalf of, and
---------------
for the benefit of, the Security Agent, the Facility Lender (as defined below),
the Facility Agent (as defined below) and each of the Lenders (as defined
below).
RECITALS
--------
A. By a US$45,000,000 revolving credit facility agreement (the "Facility
Agreement") dated June 13, 1996 between (1) Debtor and Flextronics Singapore Pte
Ltd. ("FSPL") as Borrowers, (2) The First National Bank of Boston, Singapore
Branch as Tranche A Lender, and the banks and financial institutions listed
under Schedule 1 therein as Tranche B Lenders (collectively, the "Lenders" and
individually a "Lender"), (3) The First National Bank of Boston, Singapore
Branch as Facility Agent for the Lenders and (4) The First National Bank of
Boston, Singapore Branch as Security Agent for the Facility Lender and the
Lenders, the Lenders agreed on the terms and subject to the conditions contained
in the Facility Agreement to make available to FIUI the Tranche A Facility of up
to US$18,000,000 and to make available to FSPL the Tranche B Facility of up to
US$27,000,000.
B. By a US$3,000,000 revolving credit facility letter ("Facility Letter")
dated June 4, 1996 between (1) FSPL and (2) The First National Bank of Boston,
Singapore Branch (the "Facility Lender"), the Facility Lender has agreed on the
terms and subject to the conditions contained in the Facility Letter to make
available to FSPL the revolving line of credit of up to US$3,000,000.
C. FIUI and FSPL or either of them may not utilize the facilities under
the Facility Agreement and the Facility Letter unless and until (amongst other
things) the Security Agent has received this Security Agreement duly executed by
the Debtor.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Security Agent, for the benefit of the
Security Agent, the Facility Agent, the Facility Lender and each of the Lenders,
as follows:
<PAGE>
1. DEFINITIONS AND INTERPRETATION. When used in this Security Agreement,
------------------------------
the following terms shall have the following respective meanings:
"Account Debtor" shall have the meaning given to that term in
--------------
subparagraph 3(A)(d) hereof.
-------------------
"Borrowers" shall mean collectively FIUI and FSPL.
---------
"Collateral" shall have the meaning given to that term in paragraph 2
---------- -----------
hereof.
"Debtor" shall have the meaning given to that term in the introductory
------
paragraph hereof.
"Default" shall mean the occurrence of an Event of Default under
-------
Clause 16(A)(vi), (ix) or (x) of the Facility Agreement, the exercise by
the Facility Agent of its rights under Clause 16(B) of the Facility
Agreement, or the exercise by the Facility Lender of its right to terminate
the US$3,000,000 facility under the Facility Letter.
"FIUI" shall have the meaning given to that term in the preamble
hereof.
"FSPL" shall have the meaning given to that term in Recital A hereof.
---- ---------
"Facility Agreement" shall have the meaning given to that term in
------------------
Recital A hereof.
---------
"Facility Documents" shall mean the Facility Agreement and the
------------------
Facility Letter.
"Facility Lender" shall have the meaning given to that term in Recital
--------------- -------
B hereof.
-
"Facility Letter" shall have the meaning given to that term in Recital
--------------- -------
B hereof.
-
"Lenders" shall have the meaning given to that term in Recital A
------- ---------
hereof.
"Obligations" shall mean and include all loans, advances, debts,
-----------
liabilities and obligations, howsoever arising, owed by any Borrower to any
Lender, the Facility Lender, the Facility Agent or the Security Agent of
every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), direct or
indirect, absolute or contingent, due or
2
<PAGE>
to become due, now existing or hereafter arising pursuant to the terms of
the Facility Documents or any of the other Transaction Documents.
"Permitted Liens" means the following: (i) liens for taxes not yet
---------------
payable; and (ii) liens in favor of customs and revenue authorities which
secure payment of customs duties in connection with importation of goods.
"Receivables" shall have the meaning given to that term in Attachment
----------- ----------
1 hereto.
-
"Related Contracts" shall have the meaning given to that term in
-----------------
Attachment 1 hereto.
------------
"Security Agent" shall have the meaning given to that term in the
--------------
introductory paragraph hereof.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Facility Agreement shall have the respective meanings given to
those terms in the Facility Agreement, and all terms defined in the UCC shall
have the respective meanings given to those terms in the UCC.
2. GRANT OF SECURITY INTEREST. As security for the Obligations, Debtor
--------------------------
hereby pledges and assigns to Security Agent (for the benefit of the Security
Agent, the Facility Agent, the Facility Lender and each of the Lenders) and
grants to Security Agent (for the benefit of the Security Agent, the Facility
Agent, the Facility Lender and each of the Lenders) a security interest in all
right, title and interest of Debtor in and to the property described in
Attachment 1 hereto, whether now owned or hereafter acquired (collectively and
- ------------
severally, the "Collateral"), which Attachment 1 is incorporated herein by this
---------- ------------
reference. Notwithstanding the foregoing provisions of this Section 2, such
grant of a security interest shall not extend to, and the term "Collateral"
shall not include, any general intangibles of the Debtor (whether owned or held
as licensee or lessee, or otherwise), to the extent that (i) such general
intangibles are not assignable or capable of being encumbered as a matter of law
or under the terms of the license, lease or other agreement applicable thereto
(but solely to the extent that any such restriction shall be enforceable under
applicable law), without the consent of the licensor or lessor thereof or other
applicable party thereto and (ii) such consent has not been obtained; provided,
--------
however, that the foregoing grant of security interest shall extend to, and the
- -------
term "Collateral" shall include, (A) any general intangible which is a
Receivable or a proceed of, or otherwise related to the enforcement or
collection of, any Receivable, or goods which are the subject of any Receivable,
(B) any and all proceeds of any general intangibles which are otherwise excluded
to the extent that the assignment or
3
<PAGE>
encumbrance of such proceeds is not so restricted; and (C) upon obtaining the
consent of any such licensor, lessor or other applicable party's consent with
respect to any such otherwise excluded general intangibles, such general
intangibles as well as any and all proceeds thereof that might have theretofore
have been excluded from such grant of a security interest and the term
"Collateral".
3. REPRESENTATIONS AND WARRANTIES. (A) Debtor represents and warrants to
------------------------------
the Facility Agent, the Facility Lender, each of the Lenders and the Security
Agent as follows:
(a) Ownership of Collateral. Debtor is the legal and beneficial owner
-----------------------
of the Collateral (or, in the case of after-acquired Collateral, at the
time Debtor acquires rights in the Collateral, will be the legal and
beneficial owner thereof). No other Person has (or, in the case of after-
acquired Collateral, at the time Debtor acquires rights therein, will have)
any right, title, claim or interest (by way of lien, purchase option or
otherwise) in, against or to the Collateral save and except pursuant to
this Agreement and the Charge.
(b) Priority of Security Interest. Security Agent has (or in the case
-----------------------------
of after-acquired Collateral, at the time Debtor acquires rights therein,
will have) a first priority perfected security interest in the Collateral,
subject to Permitted Liens.
(c) Location of Records. Debtor keeps all records concerning the
-------------------
Receivables and the originals of all Related Contracts at Datasafe, 3160 W.
Bayshore Freeway, Palo Alto, CA 94303, 1965 Concord Drive, Suite G, San
Jose, CA 95131 or 1971 North Capital Ave., San Jose, CA 95132. Debtor's
chief executive office is located at 2241 Lundy Avenue, San Jose,
California 95131, USA.
(d) Enforceability of Receivables. Each Receivable to the best
-----------------------------
knowledge of Debtor is genuine and enforceable against the party obligated
to pay the same (an "Account Debtor") free from any right of rescission,
---------------
defense, setoff or discount.
(e) Powers. Debtor has the power to enter into, exercise its rights
------
(if any) and perform and comply with its obligations under and to create
the security expressed to be created by this Security Agreement.
(f) Authorizations and Consents. All action, conditions and things
---------------------------
required to be taken, fulfilled and done (including the obtaining of any
necessary consents) in order (i) to enable the Debtor lawfully to enter
into, exercise its rights and perform and comply with its obligations under
the Security Agreement,
4
<PAGE>
(ii) to ensure that those obligations are legally binding and enforceable
and (iii) to make this Security Agreement admissible in evidence in the
courts of Singapore and the State of California, USA have been taken,
fulfilled and done.
(g) Non-violation of Laws. Debtor's entry into, exercise of its
---------------------
rights and/or performance of or compliance with its obligations under this
Security Agreement do not and will not violate (1) any law to which it is
subject, or (2) any agreement to which it is a party or which is binding on
its assets.
(h) No Default. Debtor is not in default under any agreement to which
----------
it is a party or which is binding on its assets or by which it may be
bound.
(i) Obligations Enforceable. Debtor's obligations under this Security
-----------------------
Agreement are valid, binding and enforceable.
(j) Litigation. There are no actions, suits or proceedings (other
----------
than those of a frivolous or vexatious nature) current or pending or
threatened by or against the Debtor in connection with or arising out of
any Collateral which would affect the Security Agent's, Facility Agent's,
Facility Lender's or the Lenders' security herein.
(k) Book Value. The amount payable by the Account Debtors in respect
----------
of the Receivables will be not less than ninety percent of the book value
of the Receivables except as is previously disclosed in writing to the
Security Agent.
(l) No Extension of Time. Except for any reasonable extension and
--------------------
except in the ordinary course of business in accordance with Debtor's usual
and customary policies and practices, Debtor has not agreed with any
Account Debtors for any extension of the contractual time for payment of
any Receivables or for any waiver or modification of the terms of contract
except as provided for in this Security Agreement.
(m) Related Corporation. No Account Debtor is a related corporation
-------------------
or an affiliate of the Debtor.
(n) Winding-up. No meeting has been convened for Debtor's winding-up
----------
or bankruptcy or for the appointment of a receiver, trustee, judicial
manager or similar officer of Debtor, its assets or any of them, no such
step is intended by it and, so far as it is aware, no petition, application
or the like is outstanding for its winding-up or bankruptcy or for the
appointment of a receiver, trustee, judicial manager or similar officer of
it, its assets or any of them.
5
<PAGE>
(o) No Immunity. Neither Debtor nor any of its assets entitled to
-----------
immunity from suit, execution, attachment or other legal process, and its
entry into this Security Agreement constitutes, and the exercise of its
rights and performance of and compliance with its obligations under this
Security Agreement will constitute, private and commercial acts done and
performed for private and commercial purposes.
(p) No Misstatement. No information, exhibit or report furnished in
---------------
writing by Debtor to the Security Agent in connection with the negotiation
of this Security Agreement contained any misstatement of fact as at the
date of such exhibit or report or as at the date when such information was
given which was material in the context of this Security Agreement or
omitted to state a fact as at such date which in any such case would be
materially adverse to the interests of the Security Agent, Facility Agent,
Facility Lender or the Lenders under this Security Agreement.
(q) No Material Adverse Change. There has been no material adverse
--------------------------
change in Debtor's financial condition or operations since the date of its
last financial statement submitted to the Security Agent save as previously
disclosed to the Security Agent in writing.
(r) Full Disclosure. It has fully disclosed in writing to the
---------------
Security Agent all facts relating to Debtor which it knows or should
reasonably know and which are material for disclosure to the Security
Agent, Facility Agent, Facility Lender and the Lenders in the context of
this Security Agreement.
(B) The Debtor warrants to and for the benefit of the Facility Agent, the
Facility Lender, each of the Lenders and the Security Agent that each of the
warranties and representations in Paragraph 3(A) made by it will be correct and
---------
complied with in all material respects at all times during the continuance of
this Security Agreement as if repeated then by reference to the then existing
circumstances.
4. COVENANTS. Debtor hereby agrees as follows:
---------
(a) Debtor, at Debtor's expense, shall promptly procure, execute and
deliver to Security Agent all documents, instruments and agreements and
perform all acts, including filing all financing statements, which are
necessary or desirable, or which Security Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the lien
granted to Security Agent therein and the first priority of such lien
(subject to Permitted Liens) or to enable Security Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the preceding sentence, Debtor shall at
the request of Security Agent (i) deliver to Security Agent all originals
of Collateral consisting of instruments (other than instruments which
constitute
6
<PAGE>
identifiable cash proceeds), (ii) procure, execute and deliver to Security
Agent all endorsements, assignments and other instruments of transfer
requested by Security Agent, (iii) deliver to Security Agent promptly upon
receipt all originals of Collateral consisting of documents and chattel
paper, (iv) deliver to Security Agent all non-cash proceeds of Collateral
and (v) cause the lien of Security Agent in any Collateral consisting of
securities to be recorded or registered in the books of any financial
intermediary or clearing corporation requested by Security Agent.
(b) Debtor shall not use or permit any Collateral to be used in
violation of (i) any provision of the Facility Documents, this Security
Agreement or any other Transaction Document, (ii) any applicable law, rule
or regulation where such use might have a material adverse effect, or (iii)
any policy of insurance covering the Collateral.
(c) Debtor shall pay promptly when due all taxes and other
governmental charges, all Liens (other than Permitted Liens) and all other
charges now or hereafter imposed upon, relating to or affecting any
Collateral.
(d) Without thirty (30) days' prior written notice to Security Agent,
Debtor shall not (i) change Debtor's name or place of business (or, if
Debtor has more than one place of business, its chief executive office), or
the office in which Debtor's records relating to Receivables or the
originals of Related Contracts are kept, or (ii) keep Collateral consisting
of chattel paper and documents at any location other than the addresses
office set forth in subparagraph 3(A)(c).
--------------------
(e) Debtor shall instruct all Account Debtors to deliver all
remittances, checks and other funds payable with respect to Receivables,
and shall deposit all remittances, checks and other funds (in whatever
form) received with respect to Collateral, to the deposit account described
in Attachment 2 (the "Lock Box Account") in which Security Agent has a
first priority perfected security interest. Debtor shall not deposit or
permit to be deposited into the Lock Box Account funds other than proceeds
of the Collateral and shall not commingle the proceeds of Collateral with
any other funds of Debtor. Debtor shall execute and deliver to the bank or
other depository institution at which such Lock Box Account is maintained
(the "Depositary Bank") a Notice of Security Interest in the form of
----------------
Attachment 3 hereto. As soon as possible after the first funding under the
------------
Facility Agreement, Debtor shall use its best efforts to enter into and to
cause the Depositary Bank to enter into a three-party agreement
satisfactory to Security Agent relating to the Lock Box Account, and
thereafter Debtor shall comply with the terms of such agreement.
(f) Debtor shall appear in and defend any action or proceeding which
may affect its title to or Security Agent's, Facility Agent's, Facility
Lender's or any Lenders' interest in the Collateral.
7
<PAGE>
(g) Debtor shall keep complete records of the Collateral and shall
provide Security Agent with such records and such other reports and
information relating to the Collateral as Security Agent may reasonably
request from time to time and shall allow representatives of Security Agent
at all reasonable times access to its premises where its books of account
and other records and documents relating to the Account Debtors and the
Receivables are kept and further permit such representatives to inspect and
make copies of all such accounts, records and documents.
(h) Debtor shall not surrender or lose possession of (other than to
Security Agent), sell, encumber, or otherwise dispose of or transfer any
Collateral or right or interest therein except as permitted in the Facility
Agreement; provided that Debtor shall be free to deal in and with the
Collateral in the ordinary course of its business from time to time during
the duration of this Security Agreement so long as no Default has occurred
and is continuing, and, provided further that notwithstanding any provision
of the Facility Agreement, Debtor shall keep the Collateral free of all
liens other than Permitted Liens.
(i) Debtor shall at the request of the Security Agent, following a
Default, stamp conspicuously on the face of all original copies of all
Collateral consisting of chattel paper and documents not in the possession
of the Security Agent a legend satisfactory to the Security Agent
indicating that such chattel paper is subject to the security interest
created hereby.
(j) Debtor shall promptly and diligently perform the obligations on
its part contained in all contracts giving rise to the Receivables, notify
the Security Agent of any breach of or default of which it has knowledge
under any contracts giving rise to the Receivables and collect, enforce and
receive delivery of the Receivables, in accordance with past practice until
otherwise notified by Security Agent.
(k) Debtor shall comply with all material laws, rules and regulations
applicable to Debtor which relate to the production, possession, operation,
maintenance and control of the Collateral (including, without limitation,
the Fair Labor Standards Act).
(l) Debtor shall notify the Security Agent in writing:
(1) upon the request of the Security Agent of any information
concerning the creditworthiness of any of the Account
Debtors; and
(2) as soon as reasonably practicable, of the happening of any
event tending to adversely affect the warranties contained
in
8
<PAGE>
Paragraph 3(A)(d), (j), (k), (l) and (m) including any
disputes arising out of the Receivables.
5. AUTHORIZED ACTION BY SECURITY AGENT. Debtor hereby irrevocably
-----------------------------------
appoints Security Agent as its attorney-in-fact and agrees that Security Agent
may perform (but Security Agent shall not be obligated to and shall incur no
liability to Debtor or any third party for failure so to do) any act which
Debtor is obligated by this Security Agreement to perform, and to exercise such
rights and powers as Debtor might exercise with respect to the Collateral,
including, without limitation, the right to (a) collect by legal proceedings or
otherwise and endorse, receive and receipt for all dividends, interest,
payments, proceeds and other sums and property now or hereafter payable on or on
account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for the Collateral;
(c) insure, process, preserve and enforce the Collateral; (d) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; (e) pay any indebtedness of Debtor relating to the
Collateral; and (f) execute UCC financing statements and other documents,
instruments and agreements required hereunder; provided, however, that Security
-------- -------
Agent may exercise such powers only after the occurrence and during the
continuance of a Default. Debtor agrees to reimburse Security Agent upon demand
for all reasonable costs and expenses, including attorneys' fees, Security Agent
may incur while acting as Debtor's attorney-in-fact hereunder, all of which
costs and expenses are included in the Obligations. Debtor agrees that such
care as Security Agent gives to the safekeeping of its own property of like kind
shall constitute reasonable care of the Collateral when in Security Agent's
possession; provided, however, that Security Agent shall not be required to make
-------- -------
any presentment, demand or protest, or give any notice and need not take any
action to preserve any rights against any prior party or any other Person in
connection with the Obligations or with respect to the Collateral.
6. DEFAULT AND REMEDIES. Debtor shall be deemed in default under this
--------------------
Security Agreement upon the occurrence and during the continuance of a Default.
In addition to all other rights and remedies granted to Security Agent, Facility
Agent, Facility Lender and the Lenders by this Security Agreement, the Facility
Documents the other Transactions Documents, the UCC and other applicable laws,
Security Agent may, upon the occurrence and during the continuance of a Default,
exercise any one or more of the following rights and remedies: (a) collect,
receive, appropriate or realize upon the Collateral or otherwise foreclose or
enforce Security Agent's security interests in any or all Collateral in any
manner permitted by applicable laws or in this Security Agreement; (b) notify
any or all Account Debtors to make payments on Receivables directly to Security
Agent and/or notify the bank holding the Lock Box Account to pay all funds in
such account to Security Agent; (c) sell or otherwise dispose of any or all
Collateral at one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as Security Agent may determine; (d)
require Debtor to assemble the Collateral and make
9
<PAGE>
it available to Security Agent at a place to be designated by Security Agent;
(e) enter onto any property where any Collateral is located and take possession
thereof with or without judicial process; and (f) prior to the disposition of
the Collateral, store, process, repair or recondition any Collateral consisting
of goods, perform any obligations and enforce any rights of Debtor under any
Related Contracts or otherwise prepare and preserve Collateral for disposition
in any manner and to the extent Security Agent deems appropriate. In any case
where notice of any sale or disposition of any Collateral is required, Debtor
hereby agrees that seven (7) days notice of such sale or disposition is
reasonable.
7. AUTHORIZED ACTIONS; WAIVERS; ETC.
---------------------------------
(a) Authorizations. Debtor authorizes Security Agent, Facility Agent,
--------------
Facility Lender and the Lenders, in their discretion, without notice to
Debtor (but (with respect to any action as to Debtor as a borrower under
the Facility Agreement), subject to the terms of the Facility Agreement),
irrespective of any change in the financial condition of FSPL, Debtor or
any other guarantor of the Obligations since the date hereof, and without
affecting or impairing in any way the liability of Debtor hereunder, from
time to time to:
(i) Create new Obligations and renew, compromise, extend,
accelerate or otherwise change the time for payment or performance of,
or otherwise amend or modify the Facility Documents or the Transaction
Documents or change the terms of the Obligations or any part thereof,
including increase or decrease of the rate of interest thereon;
(ii) Take and hold security for the payment or performance of
the Obligations and exchange, enforce, waive or release any such
security; apply such security and direct the order or manner of sale
thereof; and purchase such security at public or private sale;
(iii) Otherwise exercise any right or remedy it may have against
FSPL, Debtor, any other guarantor of the Obligations or any security,
including, without limitation, the right to foreclose upon any such
security by judicial or nonjudicial sale;
(iv) Settle, compromise with, release or substitute any one or
more makers, endorser or guarantors of the Obligations; and
(v) Assign the Obligations, this Security Agreement, the
Facility Documents or the other Transaction Documents in whole or in
part to the extent provided in the Facility Documents and the other
Transaction Documents.
10
<PAGE>
(b) Waivers. Debtor hereby waives to the full extent permitted by
-------
law:
(i) Any right to require Security Agent, Facility Agent,
Facility Lender or any Lender to (A) proceed against FSPL or any other
guarantor of the Obligations, (B) proceed against or exhaust any
security received from FSPL, Debtor or any other guarantor of the
Obligations or otherwise marshall the assets of FSPL or (C) pursue any
other remedy in Security Agent's, Facility Agent's, Facility Lender's
or any Lender's power whatsoever;
(ii) Any defense arising by reason of the application by FSPL
of the proceeds of any borrowing;
(iii) Any defense resulting from the absence, impairment or loss
of any right of reimbursement, subrogation, contribution or other
right or remedy of Debtor against FSPL, any other guarantor of the
Obligations or any security, whether resulting from an election by
Security Agent, Facility Agent, Facility Lender or any Lender to
foreclose upon security by nonjudicial sale, or otherwise;
(iv) Any setoff or counterclaim of FSPL or any defense which
results from any disability or other defense of FSPL or the cessation
or stay of enforcement from any cause whatsoever of the liability of
FSPL (including, without limitation, the lack of validity or
enforceability of any of the Facility Documents or the Transaction
Documents);
(v) Any defense based upon any law, rule or regulation which
provides that the obligation of a surety must not be greater or more
burdensome than the obligation of the principal;
(vi) Until all obligations of Security Agent, Facility Agent,
Facility Lender or any Lender to extend credit to FSPL have terminated
and all of the Obligations have been fully, finally and indefeasibly
paid, any right of subrogation, reimbursement, indemnification or
contribution and other similar right to enforce any remedy which
Security Agent, Facility Agent, Facility Lender, the Lenders or any
other Person now has or may hereafter have against FSPL on account of
the Obligations, and any benefit of, and any right to participate in,
any security now or hereafter received by Security Agent or any other
Person on account of the Obligations;
(vii) All presentments, demands for performance, notices of non-
performance, notices delivered under the Facility Documents or the
Transaction Documents, protests, notice of dishonor, and notices of
acceptance of this Security Agreement and of the existence, creation
or
11
<PAGE>
incurring of new or additional Obligations and notices of any public
or private foreclosure sale;
(viii) The benefit of any statute of limitations;
(ix) Any appraisement, valuation, stay, extension, moratorium
redemption or similar law or similar rights for marshalling;
(x) Any right to be informed by Security Agent, Facility
Agent, Facility Lender or any Lender of the financial condition of
FSPL or any other guarantor of the Obligations or any change therein
or any other circumstances bearing upon the risk of nonpayment or
nonperformance of the Obligations;
(xi) Until all obligations of Security Agent, Facility Agent,
Facility Lender or any Lender to extend credit to FSPL have terminated
and all of the Obligations have been fully, finally and indefeasibly
paid, any right to revoke this Security Agreement;
(xii) Any defense arising from an election for the application
of Section 1111 (b)(2) of the United States Bankruptcy Code which
applies to the Obligations;
(xiii) Any defense based upon any borrowing or grant of a
security interest under Section 364 of the United States Bankruptcy
Code; and
(xiv) Any right it may have to a fair value hearing to determine
the size of a deficiency judgment following any foreclosure on any
security for the Obligations.
Without limiting the scope of any of the foregoing provisions of this
Paragraph 7(b), Debtor hereby further waives (A) all rights and defenses
--------------
arising out of an election of remedies by Security Agent, Facility Agent,
Facility Lender and the Lenders, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a
Obligation, has destroyed Debtor's rights of subrogation and reimbursement
against FSPL by the operation of Section 580d of the Code of Civil
Procedure or otherwise, (B) all rights and defenses Debtor may have by
reason of protection afforded to FSPL with respect to the Obligations
pursuant to the antideficiency or other laws of California limiting or
discharging the Obligations, including, without limitation, Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure, and (C) all
other rights and defenses available to Debtor by reason of Sections 2787 to
2855, inclusive, Section 2899 or Section 3433 of the California Civil Code
or Section 3605 of the California Commercial Code.
12
<PAGE>
(c) Financial Condition of FSPL, Etc. Debtor is fully aware of the
--------------------------------
financial condition and affairs of FSPL. Debtor has executed this Security
Agreement without reliance upon any representation, warranty, statement or
information concerning FSPL furnished to Debtor by Security Agent, Facility
Agent, Facility Lender or any Lender and has, independently and without
reliance on Security Agent, Facility Agent, Facility Lender or any Lender,
and based on such documents and information as it has deemed appropriate,
made its own appraisal of the financial condition and affairs of FSPL and
of other circumstances affecting the risk of nonpayment or nonperformance
of the Obligations. Debtor is in a position to obtain, and assumes full
responsibility for obtaining, any additional information about the
financial condition and affairs of FSPL and of other circumstances
affecting the risk of nonpayment or nonperformance of the Obligations and
will, independently and without reliance upon Security Agent, Facility
Agent, Facility Lender or any Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own appraisals and decisions in taking or not taking action in connection
with this Security Agreement.
8. GENERAL PLEDGE; SETOFF.
----------------------
(a) Pledge. In addition to all liens upon and rights of setoff
------
against the property of Debtor given to Security Agent, Facility Agent,
Facility Lender or any Lender by law or separate agreement to secure the
liabilities of Debtor hereunder, to the extent permitted by law, Debtor
hereby grants to Security Agent (for the benefit of Security Agent,
Facility Agent, Facility Lender and the Lenders), as security for the
Debtor's Obligations, a security interest in all monies, deposit accounts,
securities and other property of Debtor now or hereafter in the possession
of or on deposit with Security Agent, Facility Agent, Facility Lender or
any Lender, whether held in a general or special account or deposit, or for
safekeeping or otherwise; and Security Agent shall have all rights and
remedies of a secured party with respect to such property.
(b) Setoff. In addition to any rights and remedies of Security Agent,
------
Facility Agent, Facility Lender or any Lender provided by law, Security
Agent, Facility Agent, Facility Lender and the Lenders (with the prior
consent of Security Agent) shall have the right, without prior notice to
Debtor, any such notice being expressly waived by Debtor to the extent
permitted by applicable law, upon the occurrence and during the continuance
of a Default, to set-off and apply against the Obligations any amount owing
from Security Agent, Facility Agent, Facility Lender or any Lender to
Debtor, including all deposits, accounts and moneys of Debtor then or
thereafter maintained with Security Agent, Facility Agent, Facility Lender
or any Lender, at or at any time after, the happening of any of the above
mentioned events. The Security Agent, the Facility Agent, any Facility
Lender or
13
<PAGE>
any Lender exercising any such right of setoff shall promptly notify Debtor
thereof following such exercise.
(c) Nonwaiver. No security interest or right of setoff shall be
---------
deemed to have been waived by any act or conduct on the part of Security
Agent, Facility Agent, Facility Lender or any Lender or by any failure to
exercise such right of setoff or to enforce such security interest, or by
any delay in so doing; and every right of setoff and security interest
shall continue in full force and effect until such right of setoff or
security interest is specifically waived or released by an instrument in
writing executed by Security Agent.
9. MISCELLANEOUS.
-------------
(a) Notices. Except as otherwise specified herein, all notices,
-------
requests, demands, consents, instructions or other communications to or
upon Debtor or Security Agent under this Security Agreement shall be given
as provided in Section 25 of the Facility Agreement.
(b) Waivers; Amendments. Any term, covenant, agreement or condition
-------------------
of this Security Agreement may be amended or waived only with the consent
of Security Agent. No failure or delay by Security Agent, Facility Agent,
Facility Lender or any Lender in exercising any right hereunder shall
operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise
thereof or of any other right. Unless otherwise specified in any such
waiver or consent, a waiver or consent given hereunder shall be effective
only in the specific instance and for the specific purpose for which given.
(c) Successors and Assigns. This Security Agreement shall be binding
----------------------
upon and inure to the benefit of Security Agent, Facility Agent, Facility
Lender, the Lenders and Debtor and their respective successors and assigns;
provided, however, that Security Agent, Facility Agent, Facility Lender,
-------- -------
and the Lenders may sell, assign and delegate their respective rights and
obligations hereunder only as permitted by the Facility Documents and
Debtor may not assign or delegate its rights and obligations hereunder.
Security Agent, Facility Agent, Facility Lender and Lender may disclose to
a potential assignee or transferee or any person proposing to enter into
contractual arrangements with it in relation to this Security Agreement
such information about the Debtor as it may think fit.
(d) Partial Invalidity. If at any time any provision of this Security
------------------
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Security Agreement nor
the legality, validity or
14
<PAGE>
enforceability of such provision under the law of any other jurisdiction
shall in any way be affected or impaired thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of
----------------------
Security Agent, Facility Agent, Facility Lender and the Lenders under this
Security Agreement shall be in addition to all rights, powers and remedies
given to Security Agent, Facility Agent, Facility Lender and the Lenders by
virtue of any applicable law, rule or regulation, the Facility Documents,
any other Transaction Document or any other agreement, all of which rights,
powers, and remedies shall be cumulative and may be exercised successively
or concurrently without impairing Security Agent's rights hereunder. For
the avoidance of doubt and notwithstanding any other provision in this
Security Agreement expressed or implied to the contrary, Debtor
acknowledges that an additional security agreement (the "Charge") has been
or will be executed by Debtor in favor of Security Agent, Facility Agent,
Facility Lender, and the Lenders over the Charged Property, as defined
therein, and that, without prejudice to the validity of the security
created by this Security Agreement, Security Agent, Facility Agent,
Facility Lender and the Lenders shall have the right to exercise their
rights under either this Security Agreement or the Charge or both. The
security interest created under this Security Agreement is in addition to
and shall not merge with or otherwise prejudice or affect or be prejudiced
or affected by security created under the Charge and the terms, conditions
and provisions hereof shall be in addition to and without prejudice to the
terms, conditions and provisions in the Charge. Debtor waives any right to
require Security Agent, Facility Agent, Facility Lender or any Lender to
proceed against any Person or to exhaust any Collateral or to pursue any
remedy in Security Agent's Facility Agent, Facility Lender or such Lender's
power.
(f) Execution of Documents. The Charge shall be deemed to have been
----------------------
executed prior to the execution of this Security Agreement.
(g) Payments Free of Taxes, Etc. All payments made by Debtor under
---------------------------
this Security Agreement shall be made by Debtor free and clear of and
without deduction for any and all present and future taxes, levies,
charges, deductions and withholdings. In addition, Debtor shall pay upon
demand any stamp or other taxes, levies or charges of any jurisdiction with
respect to the execution, delivery, registration, performance and
enforcement of this Security Agreement. Upon request by Security Agent,
Debtor shall furnish evidence satisfactory to Security Agent that all
requisite authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and made
and that all requisite taxes, levies and charges have been paid.
(h) Debtor's Continuing Liability. Notwithstanding any provision of
-----------------------------
this Security Agreement, the Facility Documents or any other Transaction
Document
15
<PAGE>
or any exercise by Security Agent of any of its rights hereunder or
thereunder (including, without limitation, any right to collect or enforce
any Collateral), (i) Debtor shall remain liable to perform its obligations
and duties in connection with the Collateral (including, without
limitation, the Related Contracts and all other agreements relating to the
Collateral) and (ii) neither Security Agent nor any Lender shall assume any
liability to perform such obligations and duties or to enforce any of
Debtor's rights in connection with the Collateral (including, without
limitation, the Related Contracts and all other agreements relating to the
Collateral). Security Agent, Facility Agent, Facility Lender and each
Lender shall be indemnified by the Debtor from and against all actions,
losses, claims, proceedings, costs, demands and liabilities which may be
suffered by any of them by reason of any failure of the Debtor to perform
any of its obligations under any contract giving rise to the Receivables or
the Collateral or this Security Agreement or in the execution or purported
execution of any of the rights, powers, remedies, authorities or
discretions vested in it under or pursuant to this Security Agreement.
(i) Governing Law. This Security Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California, except as
required by mandatory provisions of law and to the extent the validity or
perfection of the security interests hereunder, or the remedies hereunder,
in respect of any Collateral are governed by the law of a jurisdiction
other than California.
16
<PAGE>
IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be
executed as of the day and year first above written.
Flextronics International USA, Inc.
By: /s/ Goh Chan Peng
-----------------
Name: Goh Chan Peng
---------------
Title: C.F.O.
--------
17
<PAGE>
ATTACHMENT 1
TO SECURITY AGREEMENT
---------------------
All right, title and interest of Debtor whether now owned or hereafter
acquired, in and to the following:
(a) All accounts, chattel paper, instruments (consisting of or giving rise
to the right to payment of money), deposit account number 12330-19074 maintained
by Debtor with Bank of America NT&SA, other rights to the payment of money
(including, without limitation, general intangibles) and all deposit accounts
into which any proceeds of any of the foregoing property may be deposited
(collectively, the "Receivables") and all general intangibles, contracts,
------------
security agreements, leases, guaranties and other agreements evidencing,
securing or otherwise relating to the Receivables (collectively, the "Related
-------
Contracts");
- ---------
(b) All proceeds of the foregoing (including, without limitation, whatever
is receivable or received when Receivables, Related Contracts or proceeds is
sold, collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights to
payment and return premiums and insurance proceeds under insurance with respect
to any Receivables, Related Contracts or proceeds, and all rights to payment
with respect to any cause of action affecting or relating to the Receivables,
Related Contracts or proceeds).
[1]-1
<PAGE>
ATTACHMENT 2
DEPOSIT ACCOUNT FOR
-------------------
DEPOSIT OF PROCEEDS OF COLLATERAL
---------------------------------
Lock Box account:
Bank of America
File 72929
P.O. Box 60000
San Francisco, CA 94160-2929
Deposit account into which all funds received into the lock box are deposited on
a daily basis:
Bank of America NT&SA
P.O. Box 27128
Concord, CA 94520
Account No. 12330-19074
[2]-1
<PAGE>
ATTACHMENT 3
TO SECURITY AGREEMENT
---------------------
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
-----------------------
_______ __, 199__
[Name of Depositary Bank]
-----------------------
[Address of Depositary Bank]
--------------------------
__________________________
__________________________
Flextronics International USA, Inc., a California corporation
("Debtor") and First National Bank of Boston, Singapore Branch, acting as agent
------
for certain financial institutions under that certain Revolving Credit Facility
Agreement dated June 13, 1996 (the "Facility Agreement"), and as agent for the
------------------
Facility Lender under the Revolving Credit Facility Letter dated June 4, 1996
(in such capacities, "Security Agent"), hereby notify you that pursuant to a
--------------
Security Agreement dated as of __________, 1996 (the "Security Agreement")
Debtor has granted to Security Agent a security interest in the deposit account
maintained by Debtor with you described below:
Account Depositor's Account
Number Name Type
------- ------------ --------
________________________________________________________________________________
Flextronics International USA, Inc.
By:___________________________________
Name:_______________________________
Title:______________________________
First National Bank of Boston, Singapore
Branch as Security Agent
By:___________________________________
Name:_______________________________
Title:______________________________
[3]-1
<PAGE>
Exhibit 11.1
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------------
1996 1995
------------------- -------------------
(In thousands, except per share amounts)
<S> <C> <C>
Shares issued outstanding (1) 13,271 11,724
Common Stock Equivalent
Stock Options (2) 1,065 760
-------
14,336 12,484
======= =======
Net income $ 4,954 $ 2,685
======= =======
Earnings per share: $ 0.35 $ 0.22
Net income ======= =======
</TABLE>
(1) Shares issued and outstanding - based on the weighted average method.
(2) Stock options - based on the treasury stock method using average market
price.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,760
<SECURITIES> 0
<RECEIVABLES> 69,933
<ALLOWANCES> 3,752
<INVENTORY> 54,941
<CURRENT-ASSETS> 138,673
<PP&E> 101,180
<DEPRECIATION> 36,658
<TOTAL-ASSETS> 214,489
<CURRENT-LIABILITIES> 107,941
<BONDS> 28,279
0
0
<COMMON> 94,266
<OTHER-SE> (17,738)
<TOTAL-LIABILITY-AND-EQUITY> 214,489
<SALES> 118,269
<TOTAL-REVENUES> 118,269
<CGS> 106,143
<TOTAL-COSTS> 106,143
<OTHER-EXPENSES> 5,898
<LOSS-PROVISION> 183
<INTEREST-EXPENSE> 425
<INCOME-PRETAX> 5,803
<INCOME-TAX> 849
<INCOME-CONTINUING> 4,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,954
<EPS-PRIMARY> 0
<EPS-DILUTED> .35
</TABLE>
