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EXHIBIT 10.41
SECOND AMENDMENT TO AND LIMITED WAIVER OF
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AND LIMITED WAIVER OF CREDIT AGREEMENT (this
"AMENDMENT"), dated effective as of November 1, 2000, is among PEREGRINE
SYSTEMS, INC. ("BORROWER"), a Delaware corporation, each of the banks or other
lending institutions which is a party hereto (individually, each a "LENDER", and
collectively the "LENDERS") and BANK OF AMERICA, N.A., as administrative agent
for itself and the other Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
RECITALS:
A. Borrower, the Administrative Agent and the Lenders have entered into
that certain Credit Agreement dated as of July 30, 1999 (as amended, restated,
or modified from time to time, the "CREDIT AGREEMENT").
B. Borrower has advised the Administrative Agent that Borrower intends to
issue certain convertible subordinated promissory notes (the "CONVERTIBLE
SUBORDINATED NOTES"), each due in calendar year 2007, in the maximum aggregate
principal amount of $400,000,000.
C. In connection with the offering by Borrower of the Convertible
Subordinated Notes, Borrower has requested that the Lenders amend the Credit
Agreement and waive Borrower's non-compliance with SECTION 11.3 of the Credit
Agreement in certain respects and the Lenders are willing to comply with such
requests subject to the terms and provisions of this Amendment.
NOW, THEREFORE, BE IT RESOLVED, THAT, in consideration of the premises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Credit Agreement, as modified hereby.
ARTICLE 2
AMENDMENTS
Section 2.1 AMENDMENT TO DEFINITION OF CAPITAL STOCK. The definition of
"Capital Stock" set forth in SECTION 1.1 of the Credit Agreement is hereby
amended by deleting the period at the end thereof and adding a clause at the end
thereof to read in its entirety as follows:
;PROVIDED, that the term "CAPITAL STOCK" shall not include the Convertible
Subordinated Notes.
Section 2.2 AMENDMENT TO DEFINITION OF FUNDED DEBT. THe definition of
"Funded Debt" set forth in SECTION 1.1 of the Credit Agreement is hereby amended
by replacing the word "and" after clause (b) with a semicolon, deleting the
period at the end of clause (c) and adding a clause at the end thereof to read
in its entirety as follows:
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and (d) only with respect to Borrower, Debt evidenced by the Convertible
Subordinated Notes or any Junior Securities; PROVIDED, HOWEVER, all such
Debt evidenced by the Convertible Subordinated Notes or any Junior
Securities, other than interest payable therefor in the ordinary course,
which will be or is scheduled to become due and payable within four Fiscal
Quarters of the date of determination shall constitute Funded Debt.
Section 2.3 ADDITION OF DEFINITIONS. SECTION 1.1 Of the Credit Agreement is
hereby amended by adding thereto in proper alphabetical order definitions of
"Convertible Subordinated Notes" and "Junior Securities," each to read in their
entirety as follows:
"CONVERTIBLE SUBORDINATED NOTES" means the convertible subordinated
promissory notes issued by the Borrower, each due in calendar year 2007, in
the maximum aggregate principal amount of $400,000,000, such promissory
notes being in conformance, in all applicable material respects, with the
terms set forth in the "Description of Notes" delivered to the Lenders for
review on November 2, 2000.
"JUNIOR SECURITIES" means (a) any Capital Stock of Borrower issued in
exchange of or upon conversion of the Convertible Subordinated Notes or (b)
any other Securities of Borrower issued in exchange of or upon conversion
of the Convertible Subordinated Notes that are expressly subordinated to
the Obligations on terms acceptable to the Lenders and in no case to a
lesser extent than the Convertible Subordinated Notes are so subordinated.
Without the express written consent of the Lenders, none of the terms of
any Junior Security defined by the foregoing CLAUSE (b) may provide for a
shorter maturity date, greater interest rate payable or greater outstanding
principal amount due than such terms of the Convertible Subordinated Notes
being exchanged or converted into such Junior Securities.
Section 2.4 AMENDMENT TO SECTION 3.2. SECTION 3.2 of the Credit Agreement
is hereby amended by replacing the table set forth therein to read in its
entirety as follows:
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
Total Funded Debt to EDITDA Ratio BASE RATE LIBOR RATE COMMITMENT
(Leverage Ratio) MARGIN MARGIN FEE RATE
-----------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.25x 1.00% 2.25% 0.50%
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Greater than or equal to 1.00x but less 0.50% 1.75% 0.40%
than 1.25x
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Greater than or equal to 0.50x but less 0.125% 1.375% 0.30%
than 1.00x
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Less than 0.50x 0% 1.00% 0.30%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Section 2.5 AMENDMENT TO SECTION 4.4. SECTION 4.4(a)(iii) of the Credit
Agreement is hereby amended by adding, immediately preceding the phrase ("DEBT
OFFERING)" appearing in the fourth line thereof, a clause to read in its
entirety as follows:
"and except for the offering of the Convertible Subordinated Notes"
Section 2.6 AMENDMENT TO SECTION 9.1. SECTION 9.1 of the Credit Agreement
is hereby amended by deleting the word "and" after CLAUSE (h), replacing the
period at the end of the CLAUSE (i) with a semicolon, adding the word "and"
after CLAUSE (i), and adding a clause at the end thereof to read in its entirety
as follows:
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(j) CONVERTIBLE SUBORDINATED NOTES PAYMENTS. Promptly after receipt by
Borrower of notice that any outstanding amount due under any Convertible
Subordinated Note or Junior Security, other than interest payable therefor
in the ordinary course, will become due and payable within four Fiscal
Quarters of the date of such notice, a written notice thereof.
Secction 2.7 AMENDMENT TO SECTION 10.1. SECTION 10.1 of the Credit
Agreement is hereby amended by deleting the word "and" after CLAUSE (h),
replacing the period at the end of CLAUSE (i) with a semicolon, adding the word
"and" after CLAUSE (i), and adding a clause at the end thereof to read in its
entirety as follows:
(j) Debt evidenced by the Convertible Subordinated Notes or in respect
of any Junior Securities.
Section 2.8 AMENDMENT TO SECTION 10.4 SECTION 10.4 of the Credit Agreement
is hereby amended by deleting the word "and" after CLAUSE (ii), replacing the
period at the end of CLAUSE (iii) with a semicolon, adding the word "and" after
CLAUSE (iii), and adding a clause at the end thereof to read in its entirety as
follows:
(iv) Borrower may (x) honor any conversion request by any holder of
any Convertible Subordinated Note by issuing its common stock or any Junior
Securities, (y) pay cash to any holder of any Convertible Subordinated Note
upon conversion thereof in an amount representing the value of any
fractional shares owing in connection with such conversion, or (z) exchange
or redeem any Convertible Subordinated Note the consideration for which
Borrower's common stock or Junior Securities.
Section 2.9 AMENDMENT TO SECTION 11.1. SECTION 11.1 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
Section 11.1 MAXIMUM LEVERAGE RATIO. As of the end of each Fiscal Quarter,
beginning with the Fiscal Quarter ending December 31, 2000, Borrower shall not
permit its Leverage Ratio to exceed 1.25 to 1.0.
Section 2.10 AMENDMENT TO SECTION 11.2. SECTTION 11.2 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:
Section 11.2 MINIMUM EBITDA. As of the end of each Fiscal Quarter,
beginning with the Fiscal Quarter ending December 31, 2000, Borrower shall not
permit its EBITDA to be less than (i) zero dollars (0$) for such Fiscal Quarter
and (ii) $50,000,000 for the four Fiscal Quarter period then ended.
Section 2.11 AMENDMENT TO SECTION 12.1. SECTION 12.1 of the Credit
Agreement is hereby amended by adding a clause at the end thereof to read in its
entirety as follows:
(n) The occurrence of any "Event of Default" under any Convertible
Subordinated Note or the indenture between Borrower and State Street Bank
and Trust Company of California, National Association, as trustee, pursuant
to which the Convertible Subordinated Notes are issued.
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ARTICLE 3
LIMITED WAIVER
Section 3.1 WAIVER. Borrower's failure to comply with Section 11.3 of the
Credit Agreement is hereby waived for the Fiscal Quarter ending September 30,
2000.
Section 3.2 LIMITATION OF WAIVER. The waiver granted in SECTION 3.1 of this
Amendment shall be limited strictly as written and shall not be deemed to
constitute a waiver of, or any consent to noncompliance with, any term or
provision of any Loan Document (including strict compliance with SECTION 11.3 at
all times on or after September 30, 2000) except as expressly set forth herein.
Further, the waiver granted in SECTION 3.1 of this Amendment shall not
constitute a waiver of any other Default arising as a result of the violation of
any other term or provision of any Loan Document, or a waiver of any rights or
remedies arising as a result of any such other Defaults.
ARTICLE 4
CONDITIONS
Section 4.1 CONDITIONS PRECEDENT. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent:
(a) The representations and warranties contained herein and in all
other Loan Documents, as modified hereby, shall be true and correct in all
material respects as of the date hereof as if made on the date hereof,
except for such representations and warranties limited by their terms to a
specific date;
(b) After giving effect to ARTICLE 3 hereof, no Default or Event of
Default shall have occurred and be continuing;
(c) Borrower and the Lenders shall have delivered to the
Administrative Agent an executed original copy of this Amendment;
(d) Borrower shall have paid to the Administrative Agent and each
Lender all fees, costs and expenses owed to and/or incurred by each of the
Administrative Agent and each Lender arising in connection with this
Amendment, including, without limitation, an amendment fee to each Lender
in an amount equal to 20 basis points of the amount of each Lender's
Commitments; and
(e) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documentation and other legal
matters incident thereto shall be satisfactory to the Administrative Agent.
Section 4.2 CONDITION SUBSEQUENT. Borrower shall, within 10 Business
Days after the closing of this Amendment, pay to the Administrative Agent
all of the reasonable fees, costs and expenses of the Administrative
Agent's legal counsel, Jenkens & Gilchrist, a Professional Corporation.
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ARTICLE 5
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 5.1 RATIFICAITONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Credit Agreement and, except as expressly modified and superseded
by this Amendment, the terms and provisions of the Credit Agreement and the
other Loan Documents are ratified and confirmed and shall continue in full force
and effect. Borrower, the Administrative Agent and the Lenders agree that the
Credit Agreement as modified hereby and the other Loan Documents shall continue
to be legal, valid, binding and enforceable in accordance with their respective
terms.
Section 5.2 REPRESENTATIONS AND WARRANTIES. Borrower hereby
represents and warrants to the Administrative Agent and the Lenders that (i)
the execution, delivery and performance of this Amendment and any and all
other Loan Documents executed and/or delivered in connection herewith have
been authorized by all requisite action on the part of Borrower and will not
violate the articles of incorporation or bylaws of Borrower; (ii) the
representations and warranties contained in the Credit Agreement, as modified
hereby, and any other Loan Document are true and correct on and as of the
date hereof as though made on and as of the date hereof (except to the extent
that such representations and warranties were expressly, in the Credit
Agreement, made only in reference to a specific date); (iii) after giving
effect to this Amendment, no Default or Event of Default has occurred and is
continuing; and (iv) Borrower is in full compliance with all covenants and
agreements contained in the Credit Agreement, as modified hereby, and the
other Loan Documents.
ARTICLE 6
MISCELLANEOUS
Section 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment or any other Loan Document
including any Loan Document furnished in connection with this Amendment shall
survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by the Administrative Agent or any Lender shall
affect the representations and warranties or the right of the Administrative
Agent or any Lender to rely upon them.
Section 6.2 REFERENCE TO CREDIT AGREEMENT. Each of the Loan Documents,
including the Credit Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Credit Agreement as modified hereby, are hereby
amended so that any reference in such Loan Documents to the Credit Agreement
shall mean a reference to the Credit Agreement as amended hereby.
Section 6.3 EXPENSES OF ADMINISTRATIVE AGENT. As provided in the Credit
Agreement, Borrower agrees to pay on demand all reasonable costs and expenses
incurred by Administrative Agent in connection with the preparation,
negotiation, and execution of this Amendment and the other Loan Documents
executed pursuant hereto.
Section 6.4 SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
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Section 6.5 APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
Section 6.6 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of the Administrative Agent, the Lenders, and
Borrower and their respective successors and assigns, except Borrower may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of all the Lenders.
Section 6.7 COUNTERPARTS. This Amendment may be executed in one or
more counterparts, and on telecopy counterparts each of which when so
executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.
Section 6.8 EFFECT OF WAIVER. No consent or waiver, express or implied,
by the Administrative Agent or any Lender to or for any breach of or deviation
from any covenant, condition or duty by Borrower or any Loan Party shall be
deemed a consent or waiver to or of any other breach of the same or any other
covenant, condition or duty.
Section 6.9 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 6.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
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IN WITNESS WHEREOF, the parties herto have executed and delivered this
Amendment effective as of the date first written above.
BORROWER:
--------
PEREGRINE SYSTEMS, INC.
By: /s/ Signature
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
LENDERS:
-------
BANK OF AMERICA, N.A.,
as the Administrative Agent and as a
Lender
By: /s/ Signature
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
FLEET NATIONAL BANK
By: /s/ Signature
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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