SECOND AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER
This SECOND AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER (this
"Amendment") is entered into as of December 18, 1998 by and among DITECH
CORPORATION, a California corporation ("Borrower"), and BANKBOSTON, N.A., a
national banking association ("Lender"), with reference to the following facts:
A. Borrower and Lender are parties to that certain Credit Agreement dated
as of August 20, 1997, by and among the Borrower and the Lender (as amended, the
"Credit Agreement"). The Credit Agreement and all related and supporting
documents collectively are referred to in this Amendment as the "Loan
Documents."
B. The parties desire to amend and waive certain provisions of the Credit
Agreement, in accordance with the terms of this Amendment.
NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. DEFINED TERMS. Capitalized terms not otherwise defined herein shall
have the same meanings as set forth in the Credit Agreement.
2. WAIVER. Subject to the terms and conditions contained herein, and in
reliance on the representations and warranties of the Borrower set forth herein,
the Lender hereby waives Borrower's obligation to comply with Section 6.2(r) of
the Credit Agreement for the fiscal quarter ended October 31, 1998. Without
limiting the generality of the provisions of Section 8.1 of the Credit
Agreement, the waiver set forth herein shall be limited precisely as written and
relates solely to the waiver of compliance by the Borrower with Section 6.2(r)
in the manner and to the extent described above, and nothing in this Amendment
shall be deemed to (i) constitute a waiver of compliance by the Borrower with
Section 6.2(r) in any other instance, or (ii) constitute a waiver of any other
Event of Default or other failure by Borrower to perform in accordance with the
Loan Documents or this Amendment, or (iii) prejudice any right or remedy that
the Lender may now have or may have in the future under or in connection with
the Credit Agreement or the Loan Documents.
3. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
(a) The following new defined term is added to Section 1.1 in its
proper alphabetical order:
"DEFERRED REVENUE LIABILITIES:" At any date of determination,
the deferred revenue liabilities of the Borrower and its consolidated
Subsidiaries, on a consolidated basis and determined in accordance with GAAP.
(b) Section 6.2(r) is amended to read as follows:
(r) ADJUSTED QUICK RATIO. As at the end of any fiscal quarter
of the Borrower through and including the fiscal quarter ended April 30, 1999,
permit the ratio of (a) Consolidated Quick Assets to (b) the sum of
(i) Consolidated Current Liabilities (excluding any Deferred Revenue
Liabilities) plus (ii) the aggregate principal amount of outstanding Revolving
Loans to be less than 1.20 to 1.00.
(c) EXHIBIT D is replaced with EXHIBIT D hereto.
4. CONDITIONS TO EFFECTIVENESS.
This Amendment shall become effective as of December 18, 1998 (the
"Closing Date"), only upon:
(i) receipt by the Lender of the following (each of which shall be in
form and substance satisfactory to the Lender and its counsel):
(a) counterparts of this Amendment duly executed on behalf of
the Borrower and the Lender;
(b) copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower, authorizing the execution and delivery of
this Amendment; and
(ii) completion of such other matters and delivery of such other
agreements, documents and certificates as Lender may reasonably request.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender to
enter into this Amendment, the Borrower represents and warrants to the Lender
that the following statements are true, correct and complete as of the effective
date of this Amendment:
(a) CORPORATE POWER AND AUTHORITY. The Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement"). The Articles
of Incorporation and Bylaws of the Borrower have not been amended since the
copies previously delivered to the Lender.
(b) AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance by the Borrower 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, (ii) the Articles 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 (iv) any material
agreement or instrument binding on the Borrower.
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(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 and equitable principles relating to or affecting creditors'
rights.
(f) INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5.1 of the
Credit Agreement are correct on and as of the effective date of this Amendment
as though made on and as of such date (except to the extent such representations
and warranties expressly refer to an earlier date, in which case they were true
and correct as of such earlier date).
(g) ABSENCE OF DEFAULT. After giving effect to this Amendment, 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.
6. MISCELLANEOUS.
(a) REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the 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
Documents 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 Documents 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
Lender under the Credit Agreement or any of the other Loan Documents.
(b) FEES AND EXPENSES. All costs and expenses of the Lender,
including, but not limited to, reasonable attorneys' fees, incurred by the
Lender in the preparation and negotiation of this Amendment constitute costs and
expenses in connection with the amendment
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and restructuring of the Loan Documents, and as such are payable by the Borrower
in accordance with Section 8.5 of the Credit Agreement.
(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.
[REMAINDER INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
DITECH CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: VP/CFO
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BANKBOSTON, N.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Director
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EXHIBIT D
COMPLIANCE CERTIFICATE
1. This Compliance Certificate ("Compliance Certificate") is
executed and delivered by Ditech Corporation, a California corporation (the
"Borrower") to BankBoston, N.A. (the "Lender") pursuant to
Section 6.1(a)(iii)(B) of the Credit Agreement dated as of August 20, 1997
between the Borrower and the Lender. Any terms used herein and not defined
herein shall have the meanings defined in the Credit Agreement. This Compliance
Certificate covers the Borrower's:
Fiscal quarter ended _________, 19__
Fiscal year ended ________, 19__
2. The following paragraphs set forth calculations in compliance
with obligations pursuant to Section 6.2(a), (b), (c), (d), (r), (s), and (t) of
the Credit Agreement, as of the end of the fiscal period set forth in
paragraph 1 hereof.
A. DEBT COVERAGE RATIO (SEC 6.2(a)):
(a) Consolidated Debt $___________
(b) Consolidated Cash Flow for the four-quarter $___________
period ending on the last day of the most
recently ended fiscal quarter
Ratio (a) to (b) ____________
Maximum Permitted Ratio:
Quarter Ending Ratio
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April 30, 1999 3.40 : 1.00
July 31, 1999 2.75 : 1.00
October 31, 1999 2.50 : 1.00
January 31, 2000 2.25 : 1.00
April 30, 2000 and thereafter 2.00 : 1.00
D-1
B. CASH FLOW COVERAGE RATIO (SEC 6.2(b)):
(a) Consolidated Cash Flow for the $___________
four-quarter period ending on the last
day of the most recently ended fiscal
quarter
(b) Consolidated Interest Expense for $___________
the four-quarter period ending on the
last day of the most recently ended
fiscal quarter
Ratio (a) to (b)
Maximum Permitted Ratio:
Quarter Ending Ratio
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April 30, 1999 2.75 : 1.00
July 31, 1999 3.50 : 1.00
October 31, 1999 4.25 : 1.00
January 31, 2000 and thereafter 5.00 : 1.00
C. FIXED CHARGE COVERAGE RATIO (SEC 6.2(c)):
(a) $___________
(i) Consolidated Cash Flow for the $___________
four-quarter period ending on
the last day of the most
recently ended fiscal quarter
(ii) minus Consolidated Capital $___________
Expenditures for such period
(iii) minus Consolidated Taxes $___________
for such period
(b) Consolidated Debt Service for such $___________
period
Ratio (a) to (b) ____________
D-2
Minimum Permitted Ratio
Quarter Ending Ratio
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April 30, 1999 1.00 : 1.00
July 31, 1999 1.05 : 1.00
October 31, 1999 and thereafter 1.20 : 1.00
D. CONSOLIDATED NET INCOME (SEC. 6.2(d)):
(a) Consolidated Net Income $___________
Required: (Commencing April 30, 1999)
(a) > $0
E. ADJUSTED QUICK RATIO (SEC. 6.2(r):
(a) Consolidated Quick Assets $___________
(b)
(i) Consolidated Current $___________
Liabilities (excluding Deferred
Revenue Liabilities)
(ii) plus outstanding Revolving $___________
Loans
Ratio (a) to (b) ____________
Minimum Permitted Ratio 1.20 : 1.00
F. MINIMUM CONSOLIDATED CASH FLOW (SEC. 6.2(s):
(a) Consolidated Cash Flow for fiscal $___________
quarter ended July 31, 1998
Required: (a) > $200,000
G. MINIMUM ROLLING 2 QUARTER CASH FLOW (SEC 6.2(t):
(a) Consolidated Cash Flow for 2 $___________
quarter period ended October 31, 1998
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(b) Consolidated Cash Flow for 2 $___________
quarter period ended January 31, 1999
Required: (a) > $560,000
(b) > $985,000
3. The undersigned has reviewed the terms of the Credit Agreement
and has made, or caused to be made under his/her supervision, a review in
reasonable detail of the transactions and condition of the Borrower and its
Subsidiaries during the fiscal period covered by this Compliance Certificate.
The undersigned does not (either as a result of such review or otherwise) have
any knowledge of the existence as of the date of this Compliance Certificate of
any condition or event that constitutes an Event of Default or a Potential Event
of Default, with the exception set forth below in response to which the Borrower
is taking or proposes to take the following actions (if none, so
state):_________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
4. This Compliance Certificate is executed on _______________, ____
by the Chief Executive Officer, Chief Financial Officer, or Controller of the
Borrower. The undersigned hereby certifies that each and every matter contained
herein is derived from the Borrower's books and records and is, to the best
knowledge of the undersigned, true and correct.
DITECH CORPORATION
a California corporation
By:
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Title:
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