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EXHIBIT 10.45
READ-RITE CORPORATION
FIFTH AMENDMENT
TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is dated as of September 29, 1996 and entered into
among Read-Rite Corporation, a Delaware corporation (the "Borrower"), the
financial institutions named on the signature pages hereof (each a "Bank" and
collectively, the "Banks"), CIBC Inc., as agent for the Banks (the "Agent"), and
Canadian Imperial Bank of Commerce, New York Agency (the "Designated Issuer")
and is made with reference to that certain Third Amended and Restated Credit
Agreement dated as of December 14, 1994, subject to that certain Limited Waiver
dated as of February 1, 1995, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement dated as of February 24, 1995, and
as further amended by that certain Second Amendment to Third Amended and
Restated Credit Agreement dated as of June 30, 1995, and as further amended by
that certain Third Amendment to Third Amended and Restated Credit Agreement
dated as of September 22, 1995, subject to that certain Limited Waiver dated as
of November 8, 1995, and as further amended by that certain Fourth Amendment to
Third Amended and Restated Credit Agreement dated as of March 1, 1996, subject
to that certain Limited Waiver dated as of June 27, 1996 (collectively, the
"Credit Agree ment") among the Borrower, the Banks, the Designated Issuer and
the Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the Borrower and the Banks desire to amend, delete
and to add certain covenants contained in the Credit Agreement as set forth
below;
NOW, THEREFORE, in consideration of the promises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO DEFINITIONS
A. Section 1.01 of the Credit Agreement is hereby
amended by adding the definition of Annualized Consolidated Cash Flow as
follows:
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"'Annualized Consolidated Cash Flow': The product of (A) four
(4) multiplied by (B) the sum of the following amounts for the
Borrower on a consolidated basis determined in accordance with
GAAP for the most recently ended fiscal quarter: (i)
Consolidated Net Income plus (ii) provisions for income taxes
plus (iii) Consolidated Interest Expense plus (iv)
depreciation and amortization plus (v) non-cash charges
(except for non-cash charges that are expected to result in
cash payments)."
1.2 AMENDMENTS TO SECTION 6.02: NEGATIVE COVENANTS
A. Section 6.02(a) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(a) Quick Ratio. Permit the ratio of Consolidated Quick Assets to
Consolidated Quick Liabilities (i) on the last day of each of the fiscal
quarters of the Borrower ending on or about September 30, 1996 and thereafter to
be less than 0.95 to 1.00."
B. Section 6.02(b) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(b) Consolidated Tangible Net Worth. Permit Consolidated Tangible
Net Worth at any time to be less than $400,000,000 plus (i) 80% of Consolidated
Net Income (but not loss) for each fiscal quarter of the Borrower commencing
with the quarter beginning on or about July 1, 1996 plus (ii) 100% of the net
increase in Consolidated Tangible Net Worth occurring after July 1, 1996
resulting from the issuance of equity securities of the Borrower after July 1,
1996."
C. Section 6.02(c) of the Credit Agreement is hereby amended
to read in its entirety as follows:
"(c) Leverage Ratio. Permit the Leverage Ratio on the last day of
each of the fiscal quarters of the Borrower to be greater than the correlative
amount set forth below:
Quarter Ending Ratio
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September 30, 1996 1.00:1.00
December 31, 1996 1.05:1.00
March 31, 1997 1.05:1.00
June 30, 1997 1.05:1.00
September 30, 1997 1.00:1.00"
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D. Section 6.02(d) of the Credit Agreement is hereby amended
to read in its entirety as follows:
"(d) Consolidated Net Income.
(i) Permit Consolidated Net Income to be less than $0 for any
two consecutive fiscal quarters beginning on or after April 1, 1997 calculated
as of the last day of each fiscal quarter of the Borrower; and
(ii) Permit the net losses on the last day of each fiscal
quarter of the Borrower to be greater than the correlative amount below:
Amount of Loss
Quarter Ending Not to Exceed
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September 30, 1996 $65,000,000
December 31, 1996 $20,000,000
March 31, 1997 $10,000,000"
E. Section 6.02(f) of the Credit Agreement is hereby amended
by deleting the word "and" at the end of clause (x) thereof and replacing the
period at the end of clause (xi) thereof with "; and" and adding a new clause
(xii) thereto to read as follows:
"(xii) The indebtedness evidenced by the Term Loan Agreement dated as
of June 28, 1996 among Read-Rite Corporation, as borrower and the financial
institutions named therein as banks and Canadian Imperial Bank of Commerce, New
York Agency, as agent, in a principal amount not in excess of $50,000,000."
F. Section 6.02(h)(i) of the Credit Agreement is hereby
amended by inserting the phrase "and current maturities of all existing Debt of
the Borrower" after the words "Revolving Loans" and before the words "by at
least $100,000,000."
G. Section 6.02(k) of the Credit Agreement is hereby amended
to read in its entirety as follows:
"(k) Operating Performance Ratio. Commencing the fiscal quarter
beginning October 1, 1996, permit, as of the last day of each of the fiscal
quarters of the Borrower, the ratio of (i) Annualized Consolidated Cash Flow as
of such date to (ii) the sum of (A) the current portion of long term debt
(determined for the Borrower and its consolidated Subsidiaries in accordance
with GAAP) as of such date, plus (B) the aggregate Revolving Loans outstanding
on such date, plus (C) the product of four
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(4) multiplied by Consolidated Interest Expense for the fiscal quarter ending on
such date, to be less than 2.50 to 1.00."
H. Section 6.02(o) of the Credit Agreement is hereby amended
to read in its entirety as follows:
"(o) [Intentionally Omitted]."
1.3 AMENDMENTS TO EXHIBITS
A. Exhibit C to the Credit Agreement is hereby amended in its
entirety and replaced with the Exhibit C attached hereto.
SECTION 2. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective as of September 29,
1996, only upon the satisfaction of the conditions precedent that: (a) on or
before the aforementioned date, the Agent shall have received for each Bank
counterparts hereof duly executed on behalf of the Borrower, the Agent, and all
of the Banks, or notice of the approval of this Amendment by all of the Banks
satisfactory to the Agent; (b) Borrower and each of those parties to whom
Borrower has issued a Senior Note shall enter into an agreement, effective on or
before the Fifth Amendment Closing Date, modifying each of the Senior Notes to
provide for substantially the same terms and conditions as provided in this
Amendment; (c) Borrower and each of those parties to the Term Loan Agreement
dated as of June 28, 1996 shall enter into an agreement, effective on or before
the Fifth Amendment Closing Date, modifying the Term Loan Agreement to provide
for substantially the same terms and conditions as provided in this Amendment;
and (d) Borrower shall have delivered to the Agent copies of all amendments to
its by-laws dated on or after October 27, 1992. (The date of satisfaction of
such conditions being referred to herein as the "Fifth Amendment Closing Date.")
SECTION 3. THE BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Amendment and
to amend the Credit Agreement in the manner provided herein, the Borrower
represents and warrants to each Bank that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. The Borrower has all
requisite corporate power and authority to enter into this Amendment and to
carry out the
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transactions contemplated by, and perform its obligations under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of the Borrower.
C. NO CONFLICT. The execution and delivery by the Borrower of this
Amendment do not and will not contravene (i) any law or any governmental rule or
regulation applicable to the Borrower or any of its Subsidiaries, (ii) the
Certificate of Incorporation or Bylaws of the Borrower, (iii) any order,
judgment or decree of any court or other agency of government binding on the
Borrower or any of its Subsidiaries or (iv) any material agreement or instrument
binding on the Borrower or any of its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower of the Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement
have been duly executed and delivered by the Borrower and are the binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except in each case as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors' rights.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Article V of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Fifth Amendment Closing Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date and except as described in a separate letter to the Banks dated September
24, 1996.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
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SECTION 4. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
OTHER LOAN AGREEMENTS.
(i) On and after the Fifth Amendment Closing Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Agreements to the
"Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Agreements shall remain in full
force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power
or remedy of the Agent or any Bank under, the Credit Agreement or any
of the other Loan Agreements.
B. FEES AND EXPENSES. The Borrower acknowledges that all
costs, fees and expenses as described in Section 9.05 of the Credit Agreement
incurred by the Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of the
Borrower.
C. HEADINGS. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
BORROWER:
READ-RITE CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
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Title: V.P. Finance and CFO
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AGENT
CIBC, INC., as Agent
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Managing Director
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BANKS:
CIBC INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Managing Director
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THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Xxx X. Xxxxxx
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Title: Vice President
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ABN AMRO BANK N.V.
By: /s/ Xxx X. Xxxxxx
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Title: V.P. and Director
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By: /s/ Xxxxxx Xxxxxxxxx
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Title: S.V.P. & Managing Director
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XXXXX FARGO BANK (FORMERLY FIRST
INTERSTATE BANK OF CALIFORNIA)
By: /s/ Xxxx Xxxxx
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Title: V.P.
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DESIGNATED ISSUER:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Senior Agent
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