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Exhibit 10.48
SECOND AMENDMENT TO CONTINUING GUARANTY
THIS SECOND AMENDMENT TO CONTINUING GUARANTY (this
"Amendment") is made as of December 19, 1997, by and between Xxx Research
Corporation, a Delaware corporation ("Guarantor"), and The Sakura Bank, a
Japanese banking corporation ("Lender").
WHEREAS, the parties hereto have entered into that certain
Continuing Guaranty dated as of June 26, 1996 and amended on March 30, 1997 (as
amended, the "Guaranty") with respect to the Term Loan Agreement of even date
therewith and amended on January 22, 1997 (as amended, the "Loan Agreement"),
pursuant to which Lender agreed to lend to Xxx Research Co., Ltd., a Japanese
corporation, ("Borrower") and Borrower agreed to borrow from Lender a certain
sum, subject to the terms and conditions contained in the Loan Agreement; and
WHEREAS, the parties hereto mutually desire to amend the
Guaranty, as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants contained in the Loan Agreement and Guaranty, the parties
hereto 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 Guaranty, as amended by this
Amendment.
2. Amendments to Guaranty. The Guaranty is hereby amended as follows:
(a) The definition of "EBIT" set forth in Section 3.1.1 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:
(i) The net income or net loss of such
Person and its Subsidiaries (excluding interest
income) for such period before provision for income
taxes;
PLUS
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(ii) 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 (i) above).
(b) The definition of "Interest Expenses" set forth in Section
3.1.1 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 "Equity Securities" set forth in Section
3.1.1 is amended to read in its entirety as follows:
"EQUITY SECURITIES" of any Person shall mean (i) 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 (ii) 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.
(d) The definition of "Subordinated Debt" set forth in Section
3.1.1 is amended to read in its entirety as follows:
"SUBORDINATED DEBT" shall mean, collectively, (i)
Guarantor's $310,000,000 Five Percent (5%) Convertible
Subordinated Notes due 2002, and (ii) and any other
subordinated debt permitted by Section 6.1(xi) of the Loan
Agreement.
(e) Section 3.1.1 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;
(i) The EBIT of such Person and its
Subsidiaries for such quarter;
to
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(ii) The sum of (a) all Interest Expenses of
such Person and its Subsidiaries for such quarter and
(b) 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 (i).
(f) Section 3.1.1 is amended by deleting in their entirety the
definitions of "Interest Coverage Ratio", "Leverage Ratio" and "Total
Liabilities" set forth therein.
(g) Section 3.1.2 is hereby amended to read in its entirety as
follows:
3.1.2 FINANCIAL COVENANTS. Guarantor covenants that
until all Obligations have been fully and completely
satisfied, Guarantor shall comply with, and cause compliance
with, each of the following covenants:
(a) QUICK RATIO. Guarantor shall not permit its
Quick Ratio during any period to be less than 1.10 to
1.00.
(b) DEBT SERVICE COVERAGE RATIO. Guarantor 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.
(c) SENIOR INDEBTEDNESS RATIO. Guarantor shall
not permit its Senior Indebtedness Ratio during any
period to be greater than 0.35 to 1.00.
(d) TANGIBLE NET WORTH. Guarantor 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:
(i) Ninety percent (90%) of
Guarantor's and its Subsidiaries Tangible
Net Worth as of September 30, 1997, as set
forth in the Financial Statements of
Guarantor and its
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Subsidiaries for the fiscal quarter ending
on September 30, 1997;
(ii) Seventy-five percent (75%) of
the sum of Guarantor's consolidated
quarterly net income (ignoring any quarterly
losses) for each quarter ending after the
base date through and including the quarter
ending immediately prior to the
determination date;
(iii) One hundred percent (100%) of
the Net Proceeds of all Equity Securities
issued by Guarantor and its Subsidiaries
during the period commencing on the base
date and ending on the determination date;
and
(iv) One hundred percent (100%) of
the aggregate decrease in the total
liabilities of Guarantor and its
Subsidiaries resulting from conversions of
convertible Subordinated Indebtedness or
other liabilities of Guarantor and its
Subsidiaries into Equity Securities of
Guarantor and its Subsidiaries during the
period commencing on the base date and
ending on the determination date.
(E) NET INCOME. Guarantor shall generate a net profit
of at least $1.00, determined in accordance with GAAP, for the
fiscal quarter ending December 31, 1997.
3. Balance of Agreement Unaffected. Except as expressly set forth
herein, the Guaranty shall not be affected hereby and shall remain in full force
and effect in accordance with its terms.
4. Reaffirmation of Obligations. Guarantor hereby reaffirms all
obligations under the Guaranty, as amended by this Amendment.
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5. Governing Law. This Amendment shall in all respects be governed by
and construed in accordance with the laws of the State of California applicable
to agreements made and to be performed entirely within such state, including all
matters of construction, validity and performance.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the date first above written.
LENDER:
The Sakura Bank, Limited
a Japanese banking corporation
By: /s/ T. Nakajima
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Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
GUARANTOR:
Xxx Research Corporation,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President, General
Counsel and Secretary
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