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EXHIBIT 10.18
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
February 18, 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 (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 "Applicable Rate" in its entirety to
read as follows:
"Applicable Rate" means, for any day, with respect to any
Offshore Rate Loan, CD Rate Loan or Base Rate Loan and the commitment and
standby letter of credit fees payable hereunder, as the case may be, the
applicable rate per annum set forth in the chart below under the caption
"Offshore Rate Margin," "CD Rate Margin," "Base Rate Margin," "Commitment Fee,"
and "Standby Letter of Credit Fee," as the case may be, based upon the
respective Performance Levels in effect on such day as set forth below.
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Offshore Base Standby
CD Rate Rate Rate Commit- Letter of
Margin Margin Margin ment Fee Credit Fee
-------------------------------------------------------------------------------------------------------
Performance Xxxxx 0 0.6250% 0.5000% 0.0000% 0.1000% 0.5000%
Net Funded Debt to EBITDA
Ratio
< 1.50 to 1.00
-------------------------------------------------------------------------------------------------------
Performance Xxxxx 0 0.7500% 0.6250% 0.0000% 0.1500% 0.6250%
Net Funded Debt to EBITDA
Ratio
< 2.00 to 1.00 but
>1.50 to 1.00
-
-------------------------------------------------------------------------------------------------------
Performance Xxxxx 0 1.1250% 1.0000% 0.0000% 0.2000% 1.0000%
Net Funded Debt to EBITDA
Ratio
< 2.50 to 1.00 but
>2.00 to 1.00
-------------------------------------------------------------------------------------------------------
Performance Xxxxx 0 1.3750% 1.2500% 0.2500% 0.3000% 1.2500%
Net Funded Debt to EBITDA
Ratio
>2.50 to 1.00
-------------------------------------------------------------------------------------------------------
The applicable Performance Level as of any day shall be
determined by reference to the Net Funded Debt to EBITDA Ratio as of the
last day of the fiscal quarter most recently ended on or prior to such
day, and any change in the Performance Level shall become effective upon
the delivery to the Bank of the Compliance Certificate required to
accompany the financial statements delivered pursuant to Section 7.01
upon which such change is based, which Compliance Certificate shall set
forth in reasonable detail the calculation of the Net Funded Debt to
EBITDA Ratio.
Each change in the Applicable Rate shall apply during the
period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change.
Notwithstanding the foregoing, at any time prior to the time the first
delivery of financial statements under Section 7.01 after the Closing
Date, the Applicable Rate shall be determined as if the Net Funded Debt
to EBITDA Ratio were at Performance Level 1.
(b) 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:
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(a) February 17, 1999; and
(b) the date on which the Commitment shall terminate in
accordance with the provisions of this agreement.
(c) 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 30, 1997 minus (b) the lesser of (i)
the amount of its stock repurchased by the Company after September
30, 1997; provided that such repurchases are otherwise permitted
hereunder, and (ii) $25,000,000 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 31, 1997 plus (d) 75% of the net proceeds of any equity
securities issued after September 30,1997 plus (e) 75% of any
increase in stockholders' equity resulting from the conversion of
debt securities to equity securities after September 30, 1997.
(d) 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,
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 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 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.
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4. Effective Date. This Amendment will become effective as of February
18, 1998 (the "Effective Date"), 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, along with an incumbency certificate.
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 execute similar
amendments under the same or similar 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 Credit 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.
(b) This Amendment shall be binding upon and inure to the benefit
of the parties hereto and thereto 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 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.
(e) This Amendment, together with the Credit Agreement, contains
the entire and exclusive agreement of the parties hereto with reference to the
matters discussed
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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 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
---------------------------------
Title: Xxxxxxx X. Xxxxxxx, Vice President
of Administration & Finance, Chief
Financial Officer
By: /s/ XXXX X. XXXXXXX
---------------------------------
Title: Xxxx X. Xxxxxxx, Vice President
Legal, Senior General Counsel, Secretary
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
---------------------------------
Title:
---------------------------------
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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:
---------------------------------
Title:
---------------------------------
By:
---------------------------------
Title:
---------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ XXXXX X. XXXXXXX
---------------------------------
Title: XXXXX X. XXXXXXX
---------------------------------
Managing Director
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Date: ,
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For the fiscal quarter/year
ended ,
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PLANTRONICS, INC.
SCHEDULE 2
to the Compliance Certificate
($ in 000's)(1)
Actual Required/Permitted
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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
----
(v) taxes on income
-------
plus
----
(vi) non-cash expenses or
charges for
management stock
compensation
-------
--------------------
(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
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(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:
(i) gross book value of assets _____ A. Tangible Net Worth as of 9/30/97.
less (1) gross book value of assets _____
----
(ii) goodwill, licensing agreements, less
patents, trademarks, trade names, ----
organization expenses, treasury stock, (ii) goodwill, licensing agreements, trademarks,
unamortized debt discount and premium, trade names, organization expenses, treasury
deferred charges and other like intangibles _____ stock, unamortized debt discount and premium,
deferred charges and other like intangibles. _____
less less
---- ----
(iii) reserves applicable to assets (including (iii) reserves applicable to assets (including
reserves for depreciation and amortization) _____ reserves for depreciation and amortization) _____
less less
---- ----
(iv) all liabilities (including accrued and (iv) all liabilities (including accrued and
deferred income taxes and any subordinated deferred income taxes and subordinated
liabilities) _____ liabilities) _____
(i)-(ii)-(iii)-(iv) = (i)-(ii)-(iii)-(iv) =
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x 90%
(6)
=====
LESS
----
B. Stock repurchases after 9/30/97 (not to exceed
$25,000,000) _____
plus
----
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(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
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C. 50% of net income after Income taxes (without
Subtracting losses) Earned after 9/30/97 ____
plus
----
D. 75% of net proceeds from any equity security
issued after 9/30/97 ____
plus
----
E. 75% of any increase in stockholder's equity
resulting from the conversion of debt
securities to equity securities after 9/30/97 ____
A - B + C + D + E =
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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
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(7) Calculated on a rolling four-quarter basis.
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