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EXHIBIT 10.45
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
October 7, 1997, is entered into by and among:
(1) XXX RESEARCH CORPORATION, a Delaware corporation
("Borrower");
(2) Each of the financial institutions currently listed in
Schedule I to the Credit Agreement referred to in Recital A below
(collectively, the "Lenders"); and
(3) ABN AMRO BANK N.V., San Francisco International Branch, as
agent for the Lenders (in such capacity, "Agent").
RECITALS
A. Borrower, the Lenders and Agent are parties to a Credit Agreement
dated as of December 20, 1995, as amended by a First Amendment to Credit
Agreement dated as of January 22, 1997, and as amended by a Second Amendment to
Credit Agreement dated as of March 30, 1997 (as so amended, the "Credit
Agreement").
B. Borrower has requested the Lenders and Agent to amend the Credit
Agreement in certain respects.
C. The Lenders and Agent are willing so to amend the Credit Agreement
upon the terms and subject to the conditions set forth below.
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, Borrower, the Lenders and Agent hereby agree as follows:
1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other
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capitalized terms used herein shall have the respective meanings given to those
terms in the Credit Agreement, as amended by this Amendment. The rules of
construction set forth in Section I of the Credit Agreement shall, to the extent
not inconsistent with the terms of this Amendment, apply to this Amendment and
are hereby incorporated by reference.
2. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of the
conditions set forth in paragraph 5 below, the Credit Agreement is hereby
amended as follows:
(a) The definition of "EBIT" set forth in Paragraph 1.01 is
amended to read in its entirety as follows:
"EBIT" shall mean, with respect to any Person for any
period, the sum of the following, determined on a consolidated
basis in accordance with GAAP where applicable:
(a) The net income or net loss of such Person and
its Subsidiaries (excluding interest income) for such
period before provision for income taxes;
plus
(b) All Interest Expenses of such Person and its
Subsidiaries accruing during such period (to the extent
deducted in calculating net income or loss in clause (a)
above).
(b) The definition of "Interest Expenses" set forth in Paragraph
1.01 is amended to read in its entirety as follows:
"Interest Expenses" shall mean, with respect to any Person
for any period, the sum, determined on a consolidated basis in
accordance with GAAP, of all interest accruing on the
Indebtedness of such Person during such period (including
interest attributable to Capital Leases).
(c) The definition of "Maturity Date" set forth in Paragraph 1.01
is amended to read in its entirety as follows:
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"Maturity Date" shall mean December 20, 2000.
(d) The definition of "Equity Securities" set forth in Paragraph
1.01 is amended to read in its entirety as follows:
"Equity Securities" of any Person shall mean (a) all
common stock, preferred stock, participations, shares,
partnership interests or other equity interests in and of such
Person (regardless of how designated and whether or not voting or
non-voting) and (b) all warrants, options and other rights to
acquire any of the foregoing, other than convertible debt
securities which have not been converted into common stock,
preferred stock, participations, shares, partnership interests or
other equity interests in any such Person.
(e) The definition of "Subordinated Debt" set forth in Paragraph
1.01 is amended to read in its entirety as follows:
"Subordinated Debt" shall mean, collectively, (i)
Borrower's $310,000,000 Five Percent (5%) Convertible
Subordinated Notes due 2002, and (ii) and any other subordinated
debt permitted by Subparagraph 5.02(a)(xi).
(f) Paragraph 1.01 is amended by adding a new definition of "Debt
Service Coverage Ratio" thereto in alphabetical order to read in its
entirety as follows:
"Debt Service Coverage Ratio" shall mean, with respect to
any Person for any fiscal quarter, the ratio, determined on a
consolidated basis in accordance with GAAP where applicable, of;
(a) The EBIT of such Person and its Subsidiaries
for such quarter;
to
(b) The sum of (i) all Interest Expenses of such
Person and its Subsidiaries for such quarter
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and (ii) one-fourth of all principal payments on
Indebtedness for borrowed money of such Person and its
Subsidiaries scheduled for payment during the four
quarters immediately succeeding the quarter for which EBIT
is calculated pursuant to clause (a).
(g) Paragraph 1.01 is amended by deleting in their entirety the
definitions of "Interest Coverage Ratio", "Leverage Ratio" and "Total
Liabilities" set forth therein.
(h) Subparagraph 5.01(a) is hereby amended by (i) renumbering
clause (vi) as clause (vii); (ii) deleting the "; and" at the end of
clause (v) thereof and replacing it with a ";", and (iii) adding a new
clause (vi) to read in its entirety as follows:
(vi)Contemporaneously with any Investment by Borrower
consisting of any purchase or other acquisition of any
Equity Securities or Indebtedness of any other Person or
any capital contribution to or any other investment in any
other Person having a value in excess of $60,000,000, a
pro forma Compliance Certificate certified by the
president, chief financial officer or treasurer of
Borrower which sets forth the calculation of the financial
ratios and tests provided in Subparagraph 5.02(l) after
giving effect to any such Investment; and
(i) Clause (ii) of subparagraph 5.02(e) is hereby amended to read
in its entirety as follows:
(ii)Other Investments, provided that the aggregate
amount of such other Investments plus the aggregate cost
of assets acquired, mergers consummated and Subsidiaries
established or acquired by Borrower and its Subsidiaries
pursuant to Subparagraph 5.02(d) does not exceed in any
fiscal year $150,000,000 for any amounts paid in cash.
(j) Subparagraph 5.02(l) is hereby amended to read in its
entirety as follows:
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(l) Financial Covenants.
(i) Borrower shall not permit its Quick Ratio during
any period to be less than 1.10 to 1.00.
(ii) Borrower shall not permit its Debt Service
Coverage Ratio during any period set forth below to be
less than the ratio set forth opposite such period below:
January 1, 1998 -
March 31, 1998.....................1.25 to 1.00;
April 1, 1998 -
June 30, 1998......................1.50 to 1.00;
July 1, 1998 -
December 31, 1998..................2.00 to 1.00;
Thereafter............................3.00 to 1.00.
(iii) Borrower shall not permit its Senior Indebtedness
Ratio during any period to be greater than 0.35 to 1.00.
(iv) Borrower shall not permit its Tangible Net Worth
on any date of determination (such date to be referred to
herein as a "determination date") which occurs after
September 30, 1997 (such date to be referred to herein as
the "base date") to be less than the sum on such
determination date of the following:
(A) Ninety percent (90%) of Borrower's and
its Subsidiaries Tangible Net Worth as of September
30, 1997, as set forth in the Financial Statements
of Borrower and its Subsidiaries for the fiscal
quarter ending on September 30,
1997;
(B) Seventy-five percent (75%) of the sum of
Borrower's consolidated quarterly net income
(ignoring any quarterly losses) for each quarter
ending after the base date
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through and including the quarter ending
immediately prior to the determination date;
(C) One hundred percent (100%) of the Net
Proceeds of all Equity Securities issued by
Borrower and its Subsidiaries during the period
commencing on the base date and ending on the
determination date; and
(D) One hundred percent (100%) of the
aggregate decrease in the total liabilities of
Borrower and its Subsidiaries resulting from
conversions of convertible Subordinated
Indebtedness or other liabilities of Borrower and
its Subsidiaries into Equity Securities of Borrower
and its Subsidiaries during the period commencing
on the base date and ending on the determination
date.
(v) Borrower shall generate a net profit of at least
$1.00, determined in accordance with GAAP,for the fiscal quarter
ending December 31, 1997.
(k) Schedule 1.01(a) is amended to read in its entirety as set
forth in Attachment "A" hereto.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Agent and the Lenders that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in paragraph 2 above, the following will be true and correct on the Effective
Date (as defined below):
(a) The representations and warranties of Borrower set forth in
Paragraph 4.01 of the Credit Agreement and in the other Credit Documents
are true and correct in all material respects;
(b) No Default or Event of Default has occurred and is continuing
(except such Defaults or Events of Default that have been previously
disclosed by Borrower to the Agent); and
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(c) Each of the Credit Documents is in full force and effect.
(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
4. AMENDMENT FEE. On the Effective Date (as defined below), Borrower
shall pay to the Agent for distribution to the Lenders in accordance with their
respective Proportionate Shares a nonrefundable amendment fee (the "Amendment
Fee") of $105,000.
5. EFFECTIVE DATE. The amendments effected by paragraph 2 above shall
become effective on October 7, 1997 (the "Effective Date"), subject to receipt
by Agent and the Lenders on or prior to the Effective Date of the following,
each in form and substance satisfactory to Agent, the Lenders and their
respective counsel:
(a) This Amendment duly executed by Borrower and the Lenders;
(b) A favorable written opinion of Xxx Xxxx, counsel to Borrower,
as to such matters as Agent may reasonably request;
(c) The Amendment Fee payable to each Lender which has executed
this Amendment on or prior to the Effective Date; and
(d) Such other evidence as Agent or any Lender may reasonably
request to establish the accuracy and completeness of the
representations and warranties and the compliance with the terms and
conditions contained in this Amendment and the other Credit Documents.
6. EFFECT OF THIS AMENDMENT. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
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shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Lenders or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.
7. MISCELLANEOUS.
(a) Counterparts. This Amendment may be executed in any number of
identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience of
reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.
IN WITNESS WHEREOF, Borrower, Agent and the Lenders executing this
Amendment have caused this Amendment to be executed as of the day and year first
above written.
BORROWER: XXX RESEARCH CORPORATION
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxxxx
---------------------------------
Title: V.P., CFO
---------------------------------
AGENT: ABN AMRO BANK, N.V., SAN FRANCISCO
INTERNATIONAL BRANCH
By: /s/ Xxxxx X. Xxx
----------------------------------------
Name: Xxxxx X. Xxx
---------------------------------
Title: Group Vice President
---------------------------------
By: /s/ Xxxxxxx X. Xxx
----------------------------------------
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Name: Xxxxxxx X. Xxx
---------------------------------
Title: Corporate Banking Officer
---------------------------------
LENDERS: ABN AMRO BANK, N.V., SAN FRANCISCO
INTERNATIONAL BRANCH
By: /s/ Xxxxx X. Xxx
----------------------------------------
Name: Xxxxx X. Xxx
---------------------------------
Title: Group Vice President
---------------------------------
By: /s/ Xxxxxxx X. Xxx
----------------------------------------
Name: Xxxxxxx X. Xxx
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Title: Corporate Banking Officer
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Xxxxx Xx Xxxxx
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Name: Xxxxx Xx Xxxxx
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Title: Managing Director
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BANQUE NATIONALE DE PARIS, SAN
XXXXXXXXX XXXXXX
By: /s/ Xxxxxxx X. Xx Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xx Xxxxxx
---------------------------------
Title: Vice President
---------------------------------
By: /s/ Xxxxxxx X. Day
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Name: Xxxxxxx X. Day
---------------------------------
Title: Assistant Vice President
---------------------------------
COMERICA BANK-CALIFORNIA
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
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Title: Vice President
---------------------------------
XXXXX FARGO BANK, N.A.
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
---------------------------------
Title: Assistant Vice President
---------------------------------
By:
----------------------------
Name:
----------------------
Title:
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BANKBOSTON, N.A.
By: /s/ Xxxxxx X. Massimo
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Name: Xxxxxx X. Massimo
---------------------------------
Title: Vice President
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UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
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Title: Vice President
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THE INDUSTRIAL BANK OF JAPAN, LIMITED,
SAN FRANCISCO AGENCY
By: /s/ Xxxxxxxx Xxxxxx
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Name: Xxxxxxxx Xxxxxx
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Title: Deputy General Manager
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ATTACHMENT A TO THIRD AMENDMENT
SCHEDULE 1.01(A)
PRICING GRID
XXXXX 0 XXXXX 0 XXXXX 0
------- ------- -------
APPLICABLE MARGINS:
Base Rate Loans 0.00% 0.00% 0.00%
LIBOR Loans 0.55% 0.65% 0.75%
COMMITMENT FEE PERCENTAGE: 0.20% 0.225% 0.25%
-------------------------
LC USAGE FEE PERCENTAGE:
------------------------
Non-Financial Performance
Letters of Credit 0.275%* 0.325%* 0.375%*
Financial Performance Letters
of Credit 0.55%* 0.65%* 0.75%*
* Does not include LC Issuance Fees payable to Issuing Bank
EXPLANATION
1. The Applicable Margin for each Borrowing and Loan, the Commitment Fee
Percentage, and the LC Usage Fee Percentage will be determined as
provided below and will vary depending upon whether Xxxxx 0 xxxxxxx,
Xxxxx 0 pricing or Level 3 pricing is applicable.
2. From the Closing Date until the date that either Paragraph 3 or
Paragraph 4 below is applicable, Xxxxx 0 pricing shall apply.
3. At all times that Paragraph 4 does not apply, commencing on the
fifteenth day following the date Borrower is first required to deliver
the Financial Statements and information under Subparagraphs 5.01(a)(i)
and (iii) of the Credit Agreement, pricing will vary depending upon
Borrower's Senior Indebtedness Ratio as set forth in such Financial
Statements and information:
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(a) If the Senior Indebtedness Ratio is less than 0.175, Level 1
pricing will apply.
(b) If the Senior Indebtedness Ratio is equal to or greater than
0.175 but less than or equal to 0.25, Level 2 pricing will apply.
(c) If the Senior Indebtedness Ratio is greater than 0.25, Level 3
pricing will apply.
4. On and after the fifteenth day following the Borrower's failure to
deliver to Agent the Financial Statements and information required under
Subparagraphs 5.01(a)(i) and (iii) of the Credit Agreement within the
time periods set forth therein, and until the fifteenth day following
receipt by Agent of such Financial Statements and information (at which
time Paragraph 3 above will apply), Xxxxx 0 pricing will apply.
5. Examples:
(a) The Senior Indebtedness Ratio for the fiscal quarter ending
December 31, 1997 is 0.14. Assuming the Financial Statements and
information are delivered within the time periods required under
the Credit Agreement, commencing March 6, 1998, Level 1 pricing
will apply.
(b) The Senior Indebtedness Ratio for the fiscal quarter ending March
31, 1998 is 0.18. Assuming the Financial Statements and
information are delivered within the time periods set forth in
the Credit Agreement, commencing June 4, 1998, Level 2 pricing
will apply.
1.01(a)-2
