EXHIBIT 10.2
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Fourth Amendment") is made
and dated as of the 18th day of April, 2000, by and among QAD INC., a Delaware
corporation (the "Borrower"), the Lenders, and BANK ONE, NA, formerly known as
The First National Bank of Chicago, as agent for the Lenders (in such capacity,
the "Agent").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of April 19, 1999 by
and among the Borrower, the Lenders, and the Agent (as amended from time to
time, the "Credit Agreement"), the Lenders agreed to extend credit to the
Borrower on the terms and subject to the conditions set forth therein. All
capitalized terms not otherwise defined herein shall have the meanings given to
such terms in the Credit Agreement.
B. The Borrower has requested that the Agent and the Lenders amend the
Credit Agreement in certain respects and waive an existing Event of Default and
the Agent and the Lenders have agreed to do so on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing Recitals and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. WAIVER. The Agent and the Lenders hereby agree that the Event of Default
existing under the Credit Agreement as a result of the failure of the Company to
be in compliance with the financial covenant set forth in Section 6.23.4 of the
Credit Agreement at the end of the fiscal quarter and fiscal year ended January
31, 2000 is hereby waived.
2. RESERVATION OF RIGHTS. The Borrower hereby acknowledges and agrees that
nothing contained herein shall constitute any agreement by the Agent or any
Lender to waive: (a) any future Event of Default under Section 6.23.4 of the
Credit Agreement, or (b) any other Event of Default, whether existing on the
date hereof or arising in the future and whether or not known to the Agent and
the Lenders or which should be known to the Agent and the Lenders in the course
of their business.
3. AMENDMENT OF FINANCIAL COVENANTS. To reflect the agreement of the Agent
and the Lenders to amend certain of the financial covenants set forth in the
Credit Agreement:
(a) Section 6.23.1 is hereby amended to read in its entirety as
follows:
"6.23.1. INTEREST COVERAGE RATIO. The Borrower will not permit the
ratio, determined as of the end of each of its fiscal quarters, commencing with
the fiscal quarter ending July 31, 2000, for the then most-recently ended four
fiscal quarters, of (i) Consolidated EBITDA plus Consolidated Rentals to (ii)
Consolidated Interest Expense plus Consolidated Rentals to be less than 1.30 to
1.0."
(b) Section 6.23.2 is hereby amended to read in its entirety as
follows:
"6.23.2. LEVERAGE RATIO. The Borrower will not permit the ratio,
determined as of the end of each of its fiscal quarters, commencing with the
fiscal quarter ending July 31, 2000, of (i) Consolidated Funded Indebtedness to
(ii) Consolidated EBITDA less Consolidated Capital Expenditures for the then
most-recently ended four fiscal quarters to be greater than 2.00 to 1.0."
(c) Section 6.23.3 is hereby amended to read in its entirety as
follows:
"6.23.3. MINIMUM NET WORTH. The Borrower will at all times
maintain Consolidated Net Worth of not less than the sum of (i) $66,000,000 plus
(ii) 75% of Consolidated Net Income earned in each fiscal quarter beginning with
the quarter ending April 30, 2000 (without deduction for losses), and plus (iii)
100% of the net proceeds from any equity offering of the Borrower or any of its
Subsidiaries."
(d) Section 6.23.4 is hereby amended to read in its entirety as
follows:
"6.23.4. MINIMUM EBITDA. The Borrower will: (i) not have a
negative Consolidated EBITDA of more than $3,250,000 for the fiscal quarter
ending April 30, 2000, and (ii) thereafter, at all times maintain Consolidated
EBITDA of not less than: (1) for the fiscal quarter ending July 31, 2000,
$6,500,000, (2) for the fiscal quarter ending October 31, 2000, $7,500,000, and
(3) for the fiscal quarter ending January 31, 2001 and for each fiscal quarter
end thereafter, $10,000,000."
(e) Section 6.23.5 is hereby amended to read in its entirety as
follows:
"6.23.5. CAPITAL EXPENDITURES. The Borrower will not, nor will it
permit any Subsidiary to, expend or be committed to expend in excess of
$3,000,000 in the aggregate for the Borrower and such Subsidiaries for Capital
Expenditures during each of the fiscal quarters ending April 30, 2000 and July
31, 2000."
(f) Schedule I to the Compliance Certificate is hereby amended to
conform to the amendments to the financial covenants set forth in this Paragraph
3.
4. PRICING MODIFICATION. In consideration of the agreement of the Agent and
the Lenders to enter into this Fourth Amendment, the parties hereto hereby agree
as follows:
(a) From and after the date of this Fourth Amendment the Eurocurrency
pricing option incorporated in the Credit Agreement shall no longer be
available. All Advances funded from and after such date shall be denominated in
Dollars and funded as Floating Rate Advances and Floating Rate Advances
outstanding shall not be permitted to be converted into Eurocurrency Advances.
All Eurocurrency Advances outstanding on the date of this Fourth Amendment shall
be automatically converted into Floating Rate Advances payable in Dollars, it
being agreed by the Agent and the Lenders that any funding indemnification which
would otherwise be payable by the Borrower pursuant to Section 3.3 of the Credit
Agreement as a result of the conversion of outstanding Eurocurrency Advances
prior to the last day of the Interest Period therefor as required hereunder is
hereby waived by the Lenders.
(b) The Pricing Schedule dated as of July 1, 1999 (the "Existing
Pricing Schedule") is hereby amended and restated to read in its entirety as set
forth on the Pricing Schedule attached hereto as AMENDMENT EXHIBIT 1 (the
"Amended Pricing Schedule"), which Amended Pricing Schedule shall replace and
supercede the Existing Pricing Schedule. It is expressly acknowledged and agreed
by the Borrower that from and after the date of this Fourth Amendment there
shall be no pricing differential based upon the Leverage Ratio of the Borrower
and that the "Level I Status" and "Level II Status" provisions contained in the
Existing Pricing Schedule are hereby deleted in their entirety.
(c) The Credit Agreement and the other Loan Documents are hereby
amended to conform to the amendment to the pricing provisions of the Credit
Agreement as provided above.
5. EFFECTIVE DATE. This Fourth Amendment shall be effective, retroactive to
the date first above written, upon the date upon which the Agent has received:
(a) A copy of this Fourth Amendment, duly executed by all parties
hereto; and
(b) Such corporate resolutions, incumbency certificates and other
authorizing documentation as the Agent may require.
6. REAFFIRMATIONS. The Borrower hereby affirms and agrees that: (a) the
execution and delivery by the Borrower of and the performance of its obligations
under this Fourth Amendment shall not in any way impair, invalidate or otherwise
affect any of the obligations of the Borrower or the rights of the Agent and the
Lenders under the Borrower Security Agreement or any other document, agreement
or instrument made or given by the Borrower or any Subsidiary Borrower in
connection therewith, (b) the term "Secured Obligations" as used in the Borrower
Security Agreement and any Subsidiary Borrower Security Agreement includes,
without limitation, the Obligations of the Company under the Credit Agreement as
amended to date, including, without limitation, pursuant to this Fourth
Amendment, and (c) each of the Borrower Security Agreement and any Subsidiary
Borrower Security Agreement remains in full force and effect and continues to
constitute a first priority security interest in and lien upon the Collateral.
7. NO OTHER AMENDMENT. Except as expressly amended herein, the Credit
Agreement and other Loan Documents shall remain in full force and effect as
currently written.
8. COUNTERPARTS. This Fourth Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
9. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Agent and each Lender as follows:
(a) The Borrower has the corporate power and authority and the legal
right to execute, deliver and perform this Fourth Amendment and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Fourth Amendment. This Fourth Amendment has been duly executed and
delivered on behalf of the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms.
(b) At and as of the date of execution hereof and at and as of
effective date hereof: (1) the representations and warranties of the Borrower
contained in the Credit Agreement and the other Loan Documents are accurate and
complete in all respects, and (2) other than the Event of Default described in
Paragraph 1 above, there has not occurred an Event of Default or Potential
Default under the Credit Agreement.
(c) Each of the representations and warranties set forth in the
Acknowledgment and Agreement attached hereto by each of the Subsidiary Borrowers
are accurate and complete in all respects.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be executed as of the day and year first above written.
QAD INC., a Delaware corporation
By________________________________________
Name______________________________________
Title_____________________________________
BANK ONE, NA, formerly known as THE FIRST
NATIONAL BANK OF CHICAGO, as the
sole Lender and as the Agent
By _______________________________________
Xxxxx X. Xxxxx, Senior Vice President
ACKNOWLEDGMENT AND AGREEMENT
OF SUBSIDIARY BORROWERS
Each of the undersigned Subsidiary Borrowers hereby acknowledges and agrees
and represents and warrants as follows:
1. Such Subsidiary Borrower has reviewed and acknowledges the effectiveness
of the Fourth Amendment and all previous amendments to the Credit Agreement and
related Loan Documents and confirms that the Fourth Amendment constitutes, and
each such previous amendment concurrently constituted, a conforming amendment to
the Related Facility Agreement to which such Subsidiary Borrower is party and
all documents, agreements and instruments made or given by such Subsidiary
Borrower in connection therewith. Without limiting the generality of the
foregoing, such Subsidiary Borrower acknowledges that the modifications to
pricing described in Paragraph 4 of the Fourth Amendment are applicable to the
pricing provisions of said Related Facility Agreement.
2. The execution and delivery by the Borrower and agreement by the Borrower
to the terms of the Fourth Amendment and the performance by the Borrower of its
obligations under the Fourth Amendment are conclusively binding upon such
Subsidiary Borrower and shall not in any way impair, invalidate or otherwise
affect any of the obligations of such Subsidiary Borrower or the rights of the
Agent and the Lenders under the Subsidiary Borrower Loan Documents to which such
Subsidiary Borrower is a party, including, without limitation, under the Related
Facility Agreement and the Subsidiary Borrower Security Agreement.
3. Such Subsidiary Borrower has the corporate power and authority and the
legal right to execute, deliver and perform this Acknowledgment and Agreement
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Acknowledgment and Agreement. This
Acknowledgment and Agreement has been duly executed and delivered on behalf of
such Subsidiary Borrower and constitutes the legal, valid and binding obligation
of such Subsidiary Borrower, enforceable against such Subsidiary Borrower in
accordance with its terms.
4. At and as of the date of execution hereof and at and as of effective
date hereof: (a) the representations and warranties of such Subsidiary Borrower
contained in the Related Facility Agreement and the Subsidiary Borrower Security
Agreement to which it is party are accurate and complete in all respects, and
(b) other than the Event of Default described in Paragraph 1 of the Fourth
Amendment, there has not occurred an Event of Default or Potential Default under
said Related Facility Agreement.
5. This Acknowledgment and Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
Dated as of April 18, 2000.
QAD AUSTRALIA PTY LIMITED
By: __________________________
Xxxxx Xxxxxxxx, Director
QAD EUROPE BV
By: __________________________
Xxxxx Xxxxxxxx, Director
QAD EUROPE LIMITED
By: ___________________________
Xxxxx Xxxxxxxx, Director
AMENDMENT EXHIBIT 1
PRICING SCHEDULE
(as of April 18, 2000)
------------------------------------------------------------- ----------------------------------------------------------
APPLICABLE MARGIN
------------------------------------------------------------- ----------------------------------------------------------
Floating Rate Advances 1.00%
------------------------------------------------------------- ----------------------------------------------------------
------------------------------------------------------------- ----------------------------------------------------------
APPLICABLE MARGIN
------------------------------------------------------------- ----------------------------------------------------------
Letter of Credit Fee 3.25%
------------------------------------------------------------- ----------------------------------------------------------
Commitment Fee 0.625%
------------------------------------------------------------- ----------------------------------------------------------
