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EXHIBIT 10.12
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
November 30, 1998, is entered into by and between PLANTRONICS, INC., a Delaware
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
A. The Company and the Bank are parties to a Credit Agreement dated as
of February 19, 1997, as amended by a First Amendment to Credit Agreement dated
as of May 15, 1997, effective as of February 19, 1997, and a Second Amendment to
Credit Agreement dated as of February 18, 1998 (as so amended, the "Credit
Agreement") pursuant to which the Bank has extended certain credit facilities to
the Company.
B. The Company has requested that the Bank agree to certain amendments
of the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement, subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings, if any, assigned to them in the Credit
Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be amended by
amending and restating the definition of 'Revolving Termination Date' in its
entirety to read as follows:
"'Revolving Termination Date' means the earlier to occur of:
(a) November 29, 1999, and
(b) the date on which the Commitment shall terminate in
accordance with the provisions of this Agreement."
(b) Section 2.01 of the Credit Agreement shall be amended by deleting
the amount "$20,000,000" and inserting the amount "$30,000,000" in place
thereof.
(c) Article VI of the Credit Agreement shall be amended by inserting
the following new Section 6.19 immediately following Section 6.18:
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6.19 Y2K Representation. The Company has performed a reasonable
review and assessment of the Company's and its Subsidiaries' systems
and equipment and is in the process of making reasonable inquiry of the
Company's and its Subsidiaries' material suppliers, vendors and
customers regarding the "Year 2000 problem" (that is, the inability of
computers, as well as embedded microchips in non-computing devices, to
perform properly date-sensitive functions with respect to certain dates
prior to and after December 31, 1999). On the basis of such internal
review and assessment and of the external inquiries made to date, the
Company reasonably believes that the Year 2000 problem, including costs
of remediation, will not result in a Material Adverse Effect. The
Company and its Subsidiaries have developed or will develop contingency
plans which the Company believes in good faith to be adequate to ensure
uninterrupted and unimpaired business operation in the event of failure
of their own or a third party's systems or equipment due to the Year
2000 problem.
(d) Section 8.13 of the Credit Agreement shall be amended and restated
in its entirety to read as follows:
8.13 Tangible Net Worth. The Company shall not permit Tangible
Net Worth on a consolidated basis as of the last day of any fiscal
quarter to be less than the sum of (a) 90% of Tangible Net Worth as of
the quarter ended September 26, 1998 minus (b) the lesser of (i) the
amount of its stock repurchased by the Company after September 26,
1998; provided that such repurchases are otherwise permitted hereunder,
and (ii) $35,000,000 plus (c) 50% of the Company's consolidated net
income (but not less any net losses for any period) earned in each
fiscal quarter starting with the quarter ended December 26, 1998 plus
(d) 75% of the net proceeds of any equity securities issued after
September 26, 1998 plus (e) 75% of any increase in stockholders' equity
resulting from the conversion of debt securities to equity securities
after September 26, 1998.
(e) Schedule 2 to Exhibit C to the Credit Agreement (the form of
Compliance Certificate) is hereby amended and restated in its entirety to read
as set forth in Schedule 2 attached hereto.
3. Representations and Warranties. The Company hereby represents and
warrants to the Bank as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
notice to or action by, any Person (including any Governmental Authority) in
order to be effective and enforceable. The Credit Agreement as amended by this
Amendment constitutes the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its respective terms,
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except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
(c) All representations and warranties of the Company contained in
the Credit Agreement are true and correct in all material respects on and as of
the date hereof, except to the extent such representations and warranties
expressly refer to an earlier date, in which case they are true and correct in
all material respects as of such earlier date.
(d) The Company is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the Bank or any
other Person.
4. Effective Date. This Amendment will become effective as of the date
first above written, provided that each of the following conditions precedent is
satisfied:
(a) The Bank has received from the Company a duly executed original
(or, if elected by the Bank, an executed facsimile copy) of this Amendment.
(b) The Bank has received from the Company a copy of a resolution
passed by the board of directors of such corporation, certified by the Secretary
or an Assistant Secretary of such corporation as being in full force and effect
on the date hereof, authorizing the execution, delivery and performance of this
Amendment.
5. Reservation of Rights. The Company acknowledges and agrees that the
execution and delivery by the Bank of this Amendment shall not be deemed to
create a course of dealing or otherwise obligate the Bank to enter into
amendments under the same, similar or any other circumstances in the future.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and effect
and all references therein and in the other Company Documents and Loan Documents
to such Credit Agreement shall henceforth refer to the Credit Agreement as
amended by this Amendment. This Amendment shall be deemed incorporated into, and
a part of, the Credit Agreement. This Amendment is a Company Document and a Loan
Document.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and to the Credit Agreement and their respective successors
and assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of California.
(d) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto
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either in the form of an executed original or an executed original sent by
facsimile transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Bank of a facsimile transmitted document
purportedly bearing the signature of the Company shall bind the Company with the
same force and effect as the delivery of a hard copy original. Any failure by
the Bank to receive the hard copy executed original of such document shall not
diminish the binding effect of receipt of the facsimile transmitted executed
original of such document which hard copy page was not received by the Bank, and
the Bank is hereby authorized to make sufficient photocopies thereof to assemble
complete counterparty documents.
(e) This Amendment, together with the Credit Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior drafts
and communications with respect thereto. This Amendment may not be amended
except in accordance with the provisions of Section 10.01 of the Credit
Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Credit Agreement, respectively.
(g) Company covenants to pay to or reimburse the Bank, within 30
Business Days after demand, for all reasonable costs and expenses (including
allocated costs of in-house counsel) incurred in connection with the
development, preparation, negotiation, execution and delivery of this Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
PLANTRONICS, INC.
By: /s/ XXXXXXX X. XXXXXXX
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Sr. Vice President,
Finance & Administration
and Chief Financial
Officer
-------------------------
By: /s/ XXXX X. XXXXXXX
----------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President-Legal,
Senior General Counsel
& Secretary
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BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
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Date: ______________, _____
For the fiscal quarter/year
ended ______________, _____
PLANTRONICS, INC.
SCHEDULE 2
to the Compliance Certificate X
($ in 000's)(1)
Actual Required/Permitted
------ ------------------
1. Section 8.12 Net Funded Debt to
EBITDA Ratio.
The ratio of:
A. Net Funded Debt:
the difference of:
(i) Indebtedness(2) ----------
plus
(ii) Guaranty Obligations(2) ----------
less
(iii) cash and Cash Equivalents(3)
----------
(i)+(ii)-(iii) = ----------
B. EBITDA(4)
the sum of:
(i) net income or loss(5) ----------
plus
(ii) depreciation ----------
plus
(iii) amortization ----------
plus
(iv) interest ----------
plus
----------------------
(1) All items determined on a consolidated basis and in accordance with
GAAP, consistently applied.
(2) See definition of Net Funded Debt for certain items excluded.
(3) Not subject to any Lien, and to extent exceeding $5,000,000.
(4) Calculated on a rolling four-quarter basis.
(5) Without giving effect to extraordinary losses or gains
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Actual Required/Permitted
------ ------------------
(v) taxes on income ----------
plus
(vi) non-cash expenses or
charges for management
stock compensation ----------
(i)+(ii)+(iii)+(iv)+(v)+(vi) = ----------
A
-------
B = ---------- Not more than 3.00
2. Section 8.13 Tangible Net Worth.
Tangible Net Worth: Not to be less than the sum of:
A. Tangible Net Worth as of
9/26/98:
(i) gross book value of assets ---------- (i) gross book value
of assets ----------
less less
---- ----
(ii) goodwill, licensing agreements, (ii) goodwill, licensing
patents, trademarks, trade agreements, patents, trade-
names, organization expenses, marks, trade names, organi-
treasury stock, unamortized debt zation expenses, treasury
discount and premium, deferred stock, unamortized debt
charges and other like discount and premium, deferred
intangibles ---------- charges and other like
intangibles ----------
less less
---- ----
(iii) reserves applicable to assets (iii) reserves applicable
(including reserves for to assets (including reserves
depreciation and amortization) ---------- for depreciation and
amortization) ----------
less less
---- ----
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Actual Required/Permitted
------ ------------------
(iv) all liabilities (including (iv) all liabilities (including
accrued and deferred accrued and deferred income
income taxes and any taxes and subordinated
subordinated liabilities) ---------- liabilities) -----------
(i)-(ii)-(iii)-(iv) = (i)-(ii)-(iii)-(iv) = -----------
==========
x 90%
-----------
Less
----
B. Stock repurchases after
9/26/98 (not to exceed
$35,000,000) -----------
plus
----
C. 50% of net income after
Income taxes (without
Subtracting losses)
earned after 9/26/98 -----------
plus
----
D. 75% of net proceeds
From any equity
Securities issued
After 9/26/98 -----------
plus
----
---------------------
(6) Calculation will need to be done for first compliance certificate only;
thereafter, this number will be inserted.
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Actual Required/Permitted
------ ------------------
E. 75% of any increase
in stockholder's
equity resulting
from the conversion
of debt securities
to equity securities
after 9/26/98 -----------
A - B + C + D + E =
===========
3. Section 8.14 Interest Coverage
Ratio.(7)
The ratio of:
A. Adjusted EBITDA
(i) EBITDA (from 1(B) above) ----------
less
(ii) Capital Expenditures ----------
(i) - (ii) ----------
B. Cash Interest Expense
(i) Total interest expense
(including commissions,
discounts, fees and other charges
in connection with standby
letters of credit and similar
instruments
----------
less
(ii) Non-cash items included
in (i) ----------
(i) - (ii) ----------
A
----
B = ========== Not less than 3.00
----------------------
(7) Calculated on a rolling four-quarter basis.
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