EXECUTION VERSION
EIGHTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment"), dated as of August 25, 1998, is entered into by and among:
(1) XXXX MICROPRODUCTS INC., a California corporation
("Borrower");
(2) Each of the financial institutions listed in Schedule I to
the Credit Agreement referred to in Recital A below (such financial
institutions to be referred to herein collectively as the "Existing
Banks");
(3) SUMITOMO BANK OF CALIFORNIA, a California banking
corporation, as agent for the Banks (in such capacity, "Agent"); and
(4) SANWA BANK CALIFORNIA, a California banking corporation
and U.S. BANK NATIONAL ASSOCIATION, a national banking association,
that will each become a party to the Credit Agreement pursuant to this
Amendment (such financial institutions to be referred to herein
collectively as the "New Banks").
RECITALS
A. Borrower, the Existing Banks and Agent are parties to a Second
Amended and Restated Credit Agreement dated as of May 23, 1995, as amended by
that certain First Amendment to Second Amended and Restated Credit Agreement
dated as of June 25, 1996, as further amended by that certain Second Amendment
to Second Amended and Restated Credit Agreement dated as of September 30, 1996,
as further amended by that certain Third Amendment to Second Amended and
Restated Credit Agreement dated as of June 17, 1997, as further amended by that
certain Fourth Amendment to Second Amended and Restated Credit Agreement dated
as of September 1, 1997, as further amended by that certain Fifth Amendment to
Second Amended and Restated Credit Agreement dated as of November 7, 1997, as
further amended by that certain Sixth Amendment to Second Amended and Restated
Credit Agreement dated as of March 31, 1998, and as further amended by that
certain Seventh Amendment to Amended and Restated Credit Agreement dated as of
June 30, 1998 (as so amended, the "Credit Agreement"). Pursuant to the Credit
Agreement, the Existing Banks provided to Borrower certain credit facilities in
the aggregate principal amount of $100,000,000.
B. Borrower has requested the Existing Banks and Agent to amend the
Credit Agreement in certain respects.
C. Because only certain of the Existing Banks are willing to so amend
the Credit Agreement (such Existing Banks, the "Amending Existing Banks"),
Borrower has requested that the Existing Banks that are unwilling to amend the
Credit Agreement (the "Replaced Existing
Banks") be replaced with the New Banks and that the Credit Agreement be amended
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 Amending Existing Banks, the Replaced Existing
Banks, the New Banks 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 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. Replacement of Replaced Existing Banks; Allocation of Outstanding
Revolving Loans and Letters of Credit Among Amending Existing Banks and New
Banks. Borrower, the Replaced Existing Banks, the Amending Existing Banks, the
New Banks and Agent hereby agree as follows:
(a) On and after the Effective Date (as hereinafter defined),
all rights, duties and obligations of the Replaced Existing Banks under
the Credit Agreement and the other Credit Documents (including without
limitation the Replaced Existing Banks' interest in each Revolving Loan
Borrowing and each participation in each Letter of Credit then
outstanding) are hereby assigned and delegated to the Amending Existing
Banks and the New Banks; and
(b) On and after the Effective Date (as hereafter defined),
(i) each Amending Existing Bank and each New Bank shall be a Bank under
the Credit Agreement and the other Credit Documents with Revolving Loan
Commitments as set forth on Schedule I of the Credit Agreement (as
amended pursuant to this Amendment), with the rights, duties and
obligations of such a Bank under the Credit Agreement and the other
Credit Documents and (ii) the Replaced Existing Banks shall cease to be
a Bank thereunder.
To effectuate the foregoing assignment and delegation by the Replaced Existing
Banks, on the Effective Date, Agent shall calculate (i) the Proportionate Share
of each Amending Existing Bank and each New Bank in each Revolving Loan
Borrowing and each participation in each Letter of Credit which are then
outstanding. Based upon such calculation, the Amending Existing Banks and the
New Banks shall purchase from the Replaced Existing Banks and from each other
such shares in the outstanding Revolving Loans and participations in each
outstanding Letter of Credit as Agent determines are necessary to cause each
Amending Existing Bank and each New Bank to hold Revolving Loans in each
outstanding Revolving Loan Borrowing and participations in each outstanding
Letter of Credit in a principal amount equal to such Amending
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Existing Bank's and each New Bank's Proportionate Share of such Revolving Loan
Borrowings and Letters of Credit.
3. Amendment to Credit Agreement. Subject to the conditions set forth
in paragraph 5 below, the Credit Agreement is hereby amended as follows:
(a) Subparagraph 2.01(a) is hereby amended by changing the
definition of "Revolving Loan Maturity Date" set forth therein from
"July 31, 1999" to "May 31, 2000".
(b) Subparagraph 2.01(c) is hereby amended to read in its
entirety as follows:
(c) Revolving Loan Interest Rates. Borrower shall pay
interest on the unpaid principal amount of each Revolving Loan
from the date of such Revolving Loan until the maturity
thereof, at one of the following rates per annum:
(i) During such periods as such Revolving
Loan is a Revolving Prime Rate Loan, at a rate per
annum equal to the Prime Rate, such rate to change
from time to time as the Prime Rate shall change; and
(ii) During such periods as such Revolving
Loan is a Revolving LIBOR Loan, (A) at all times
prior to the Eighth Amendment Effective Date, at a
rate per annum equal at all times during each
Interest Period for such Revolving LIBOR Loan to the
LIBO Rate for such Interest Period plus one and
four-tenths percent (1.400%) and (B) on and after the
Eighth Amendment Effective Date, at a rate per annum
equal at all times during each Interest Period for
such Revolving Loan to the LIBO Rate for such
Interest Period plus the Applicable Margin therefor,
such rate to change from time to time during such
Interest Period as the Applicable Margin shall
change;
provided, however, that each of the rates set forth in clauses
(i) and (ii) of this Subparagraph 2.01(c) shall be increased
by one percent (1.00%) per annum on the date an Event of
Default occurs and shall continue at such increased rate
unless and until such Event of Default is waived or cured in
accordance with this Agreement. All Revolving Loans in each
Revolving Loan Borrowing shall, at any given time prior to
maturity, bear interest at one, and only one, of the above
rates.
(c) Clause (iii) of Subparagraph 5.01(a) is hereby amended to
read in its entirety as follows:
(iii) Contemporaneously with the quarterly
and year-end financial statements required by the
foregoing clauses (i) and (ii), a certificate of the
president or chief financial officer of Borrower
setting forth in such detail as Agent may reasonably
request (A) the calculations
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conducted to verify that Borrower is in compliance
with each of the financial covenants set forth in
Paragraph 5.02(m) and stating that no Event of
Default and no Default has occurred and is
continuing, or, if any such Event of Default or
Default has occurred and is continuing, a statement
as to the nature thereof and what action Borrower
proposes to take with respect thereto and (B) a
calculation of Borrower's Funded Debt to EBITDA Ratio
for the immediately preceding fiscal quarter;
(d) Clause (ii) of Subparagraph 5.02(m) is hereby amended to
read in its entirety as follows:
(ii) Its Working Capital to be less than
$60,000,000 at any time;
(e) Clause (iii) of Subparagraph 5.02(m) is hereby amended to
read in its entirety as follows:
(iii) Its Tangible Net Worth to be less than
the sum on any date of determination of (1)
$70,000,000 plus (2) fifty percent (50%) of the sum
of Borrower's Net Income After Tax for each quarter
(excluding any quarter in which such amount was
negative) beginning with the quarter ending June 30,
1998;
(f) Clause (v) of Subparagraph 5.02(m) is hereby amended to
read in its entirety as follows:
(v) Its Interest Coverage Ratio (A) for the
period beginning on April 1, 1998 and ending on June
30, 1998 to be less than 1.50 to 1.00; (B) for the
two quarter period beginning on April 1, 1998 and
ending on September 30, 1998 to be less than 1.50 to
1.00; (C) for the three quarter period beginning on
April 1, 1998 and ending on December 31, 1998 to be
less than 2.00 to 1.00; and (D) for any consecutive
four-quarter period thereafter to be less than 2:00
to 1:00; or
(g) Schedule I is hereby amended to read in its entirety as
set forth on Attachment 1 hereto.
(h) A new Schedule II is hereby added to the Credit Agreement
immediately after Schedule 1 to read in its entirety as set forth on
Attachment 2 hereto.
(i) Schedule 1.01 is hereby amended by adding thereto, in the
appropriate alphabetical order, the definitions of the terms
"Applicable Margin", "EBITDA", "Eighth Amendment Effective Date",
"Funded Indebtedness", "Funded Indebtedness to EBITDA Ratio", "Pricing
Grid" and "Pricing Period" to read in their entirety as follows:
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"Applicable Margin" shall mean, with respect to any
Revolving LIBOR Loan at any time, the per annum margin which
is determined pursuant to the Pricing Grid and added to the
LIBO Rate for such Revolving LIBOR Loan. The Applicable
Margins shall be determined as provided in the Pricing Grid
and may change for each Pricing Period.
"EBITDA" 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 for such period before
provision for income taxes;
plus
(b) The sum (to the extent deducted in
calculating net income or loss in clause (a) above)
of (i) all Interest Expenses of such Person and its
Subsidiaries accruing during such period and (ii) all
depreciation and amortization of such Person and its
Subsidiaries accruing during such period.
"Eighth Amendment Effective Date" shall mean August
25, 1998.
"Funded Indebtedness" shall mean and include with
respect to any Person at any time, without duplication, the
following:
(a) The current and long-term portion of all
monetary obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments
and all other obligations of such Person for borrowed
money (excluding any monetary obligations arising
under a revolving credit facility or similar
agreement, but including, with respect to Borrower,
monetary obligations of Borrower arising under this
Agreement);
(b) All monetary obligations of such Person
for the deferred purchase price of property or
services (including obligations under letters of
credit and other credit facilities which secured or
financed such purchase price), other than trade
payables incurred by such Person in the ordinary
course of its business on ordinary terms;
(c) All monetary obligations of such Person
under conditional sale or other title retention
agreements with respect to property acquired by such
Person other than pursuant to leases classified as
operating leases under GAAP (to the extent of the
value of such property if the rights and remedies of
the seller or lender under such agreement in the
event of default are limited solely to repossession
or sale of such property); and
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(d) All monetary obligations of such Person
as lessee with respect to the capitalized portion of
Capital Leases of such Person (other than capitalized
interest) calculated in accordance with GAAP.
"Funded Indebtedness to EBITDA Ratio" shall mean,
with respect to Borrower on the last day of any fiscal
quarter, the ratio, determined on a consolidated basis in
accordance with GAAP, of (a) the sum of the Funded
Indebtedness of Borrower at such time to (b) the EBITDA of
Borrower for the consecutive four-quarter period which ended
on the last day of such fiscal quarter; provided, however,
that (i) for purposes of determining Borrower's Funded
Indebtedness to EBITDA Ratio for the fiscal quarter period
ending on June 30, 1998, EBITDA used in clause (b) shall be
Borrower's EBITDA for the fiscal quarter period beginning on
April 1, 1998 and ending on June 30, 1998 times four (4); (ii)
for purposes of determining Borrower's Funded Indebtedness to
EBITDA Ratio for the fiscal quarter period ending on September
30, 1998, EBITDA used in clause (b) shall be Borrower's EBITDA
for the two fiscal quarter periods beginning on April 1, 1998
and ending on September 30, 1998 times two (2); and (ii) for
purposes of determining Borrower's Funded Indebtedness to
EBITDA Ratio for the fiscal quarter period ending on December
31, 1998, EBITDA used in clause (b) shall be Borrower's EBITDA
for the three fiscal quarter periods beginning on April 1,
1998 and ending on December 31, 1998 times one and one-third
(1 and 1/3).
"Pricing Grid" shall mean Schedule II.
"Pricing Period" shall mean (a) the period commencing
on the Eighth Amendment Effective Date and ending on August
31, 1998, (b) the period commencing on September 1, 1998 and
ending on November 30, 1998, and (c) each consecutive
three-calendar month period thereafter which commences on the
day following the last day of the immediately preceding
three-calendar month period and ends on the last day of that
time period as follows:
(i) December 1st through February 28th or
February 29th (as applicable);
(ii) March 1st through May 31st;
(iii) June 1st through August 31st; and
(iv) September 1st through November 30th.
4. Representations and Warranties. Borrower hereby represents and
warrants to Agent, the Amending Existing Banks and the New Banks that, on the
date of this Amendment and after giving effect to the amendments set forth in
paragraph 3 above on the Effective Date (as defined below), the following are
and shall be true and correct on each such date:
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(a) The representations and warranties set forth in Paragraph
4.01 of the Credit Agreement are true and correct in all material
respects;
(b) No Event of Default or Default has occurred and is
continuing; and
(c) Each of the Credit Documents is in full force and effect.
5. Effective Date. The replacement of the Replaced Existing Banks
effected by paragraph 2 above and the amendments to the Credit Agreement
effected by paragraph 3 above shall become effective on August 25, 1998 (the
"Effective Date"), subject to receipt by the Amending Existing Banks, the
Replaced Existing Banks, the New Banks and Agent, as applicable, on or prior to
the Effective Date of the following, each in form and substance satisfactory to
the Amending Existing Banks, the Replaced Existing Banks, the New Banks, Agent
and their respective counsel, as applicable:
(a) This Amendment duly executed by Borrower, each Replaced
Existing Bank, each Amending Existing Bank, each New Bank and Agent;
(b) New Revolving Loan Notes, appropriately completed and duly
executed by Borrower, to the extent required by changes in the
Revolving Loan Commitments of the Amending Existing Banks and the New
Banks;
(c) A Certificate of the Secretary of Borrower, dated the
Effective Date, certifying that (i) the Articles of Incorporation and
Bylaws of Borrower, in the form previously delivered to Agent in
connection with the Credit Agreement, are in full force and effect and
have not been amended, supplemented, revoked or repealed since the date
of delivery to Agent and (ii) that attached thereto are true and
correct copies of resolutions duly adopted by the Board of Directors of
Borrower and continuing in effect, which authorize the execution,
delivery and performance by Borrower of this Amendment and the
consummation of the transactions contemplated hereby;
(d) An amendment fee of $20,000 to be shared among the
Amending Existing Banks and New Banks pro rata in accordance with such
Amending Existing Banks and New Banks respective Proportionate Shares;
(e) A favorable written opinion of Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, counsel to Borrower, dated the Effective Date, addressed to
Agent, the Amending Existing Banks and the New Banks and covering such
matters as are set forth on Attachment 3;
(f) Payment by Borrower to each of the Replaced Existing Banks
of all outstanding Loans, accrued interest and fees and any
unreimbursed expenses payable by Borrower; and
(g) Such other evidence as Agent or any Replaced Existing
Bank, Amending Existing Bank or New Bank may reasonably request to
establish the accuracy and
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completeness of the representations and warranties and the compliance
with the terms and conditions contained in this Amendment.
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
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Banks or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.
7.
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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.
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IN WITNESS WHEREOF, Borrower, Agent, the Replaced Existing Banks, the
Amending Existing Banks and the New Banks have caused this Amendment to be
executed as of the day and year first above written.
BORROWER: XXXX MICROPRODUCTS INC.
By:__________________________________
Name:
Title:
AGENT: SUMITOMO BANK OF CALIFORNIA,
As Agent
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
AMENDING
EXISTING BANKS: SUMITOMO BANK OF CALIFORNIA,
As a Bank
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
00
XXXXX XXXX XX XXXXXXXXXX, X.X.,
As a Bank
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
COMERICA BANK-CALIFORNIA,
As a Bank
By:__________________________________
Name:
Title:
REPLACED
EXISTING BANKS: BANKBOSTON, N.A.,
(formerly known as
The First National Bank of
Boston), As a Bank
By:__________________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED,
As a Bank
By:__________________________________
Name:
Title:
By:__________________________________
Name:
11
Title:
12
NEW BANKS: SANWA BANK CALIFORNIA,
As a Bank
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
As a Bank
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
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ATTACHMENT 1
SCHEDULE I
BANKS
Revolving
Loan
Bank Commitment
SUMITOMO BANK OF CALIFORNIA $25,000,000
Applicable Lending Office:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Address for Notices:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Relationship Manager
Xxxx Microproducts
Telephone: (000) 000-0000
Telecopier (000) 000-0000
UNION BANK OF CALIFORNIA, N.A. $25,000,000
Applicable Lending Office:
00 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Address for Notices:
00 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier (000) 000-0000
1-1
COMERICA BANK - CALIFORNIA $25,000,000
Applicable Lending Office:
California Corporate Banking
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Address for Notices:
California Corporate Banking
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier (000) 000-0000
SANWA BANK CALIFORNIA $15,000,000
Applicable Lending Office:
San Xxxx CBC
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000-0000
Address for Notices:
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier (000) 000-0000
1-2
U.S. BANK NATIONAL ASSOCIATION $10,000,000
Applicable Lending Office:
U.S. Bank National Association
Corporate Banking Center
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Address for Notices:
U.S. Bank National Association
California Corporate Banking
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier (000) 000-0000
1-3
ATTACHMENT 2
SCHEDULE II
PRICING GRID
XXXXX 0 XXXXX 0 XXXXX 0
PERIOD PERIOD PERIOD
APPLICABLE MARGINS: 1.20% 1.40% 1.60%
EXPLANATION
1. The Applicable Margin for each Revolving LIBOR Loan will be set for
each Pricing Period and will vary depending upon whether such period is
a Level 1 Period, a Level 2 Period or a Level 3 Period.
2. The first Pricing Period, which commences on the Eighth Amendment
Effective Date and ends on August 31, 1998, will be a Level 2 Period.
3. Each Pricing Period thereafter will be a Level 1 Period, a Level 2
Period or a Level 3 Period depending upon Borrower's Funded
Indebtedness to EBITDA Ratio (as calculated pursuant to the definition
of "Funded Indebtedness to EBITDA Ratio" set forth in Schedule 1.01)
for the most recent consecutive four-fiscal quarter period ending prior
to the first day of such Pricing Period as follows:
(a) If, during any Pricing Period, Borrower's Funded Indebtedness
to EBITDA Ratio is less than 2.00 to 1:00, Borrower's pricing
will be a Level 1 Period.
(b) If, during any Pricing Period, Borrower's Funded Indebtedness
to EBITDA Ratio is greater than or equal to 2:00 to 1:00 but
less than 4:00 to 1:00, Borrower's pricing will be a Level 2
Period.
(c) If, during any Pricing Period, Borrower's Funded Indebtedness
to EBITDA Ratio is greater than 4.00 to 1.00, Borrower's
pricing will be a Level 3 Period.
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ATTACHMENT 3
MATTERS TO BE COVERED BY LEGAL OPINION
1. Borrower (a) is a corporation duly incorporated and validly existing in
good standing under the laws of its jurisdiction of incorporation and
(b) has the requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now conducted.
2. Borrower has the requisite corporate power and authority to enter into
the Amendment and to carry out the transactions contemplated thereby,
and by the Credit Agreement as amended by the Amendment.
3. The Amendment has been duly authorized, executed and delivered by
Borrower, and the Amendment and the Credit Agreement as amended by the
Amendment, each constitutes a legally valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.
4. The performance by Borrower of its obligations under the Amendment, and
the Credit Agreement as amended by the Amendment, will not (a) violate
any provision of the Certificate of Incorporation or the bylaws of
Borrower, (b) to our knowledge, violate any provision of any law, rule,
regulation, order, writ, judgement, injunction, decree, determination
by a court having jurisdiction over Borrower, (c) result in a breach
of, constitute a default under, or permit the acceleration of any
obligation owed under any Reviewed Agreement listed on Annex A hereto
binding upon Borrower, or (d) to our knowledge, result in the
attachment of a Lien (other than a Permitted Lien) upon any assets of
Borrower.
3-1
