EXHIBIT 10.40
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AMENDMENT TO CONTINUING GUARANTY
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THIS AMENDMENT TO CONTINUING GUARANTY (this "Amendment") is made as of
March 30, 1997, by and between Xxx Research Corporation, a Delaware corporation
("Borrower"), and The Sakura Bank, a Japanese banking corporation ("Lender").
WHEREAS, the parties hereto have entered into that certain Continuing
Guaranty ("Guaranty") dated as of June 26, 1996 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. Amendments to Guaranty. The Guaranty is hereby amended as follows:
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(a) Section 3.1.1 is amended by adding thereto, in the appropriate
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alphabetical order, a definition of the term "1997 Inventory Charge" to
read in its entirety as follows:
"1997 Inventory Charge" shall mean a non-recurring charge, not
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exceeding $74,000,000 (pre-tax), taken by Guarantor in the quarter
ending March 30, 1997 as a result of write-offs of excess and obsolete
inventory, additional warranty expenses and other miscellaneous
charges.
(b) Section 3.1.1 is further amended by changing the definition of
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"EBIT" set forth therein by adding at
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the end thereof a new sentence to read in its entirety as follows:
In determining EBIT of Guarantor for any period which includes the
quarter ending March 30, 1997, the net income of Guarantor and its
subsidiaries before provision for income taxes for such period (clause
(a)) shall be calculated without deduction of the 1997 Inventory
Charge.
(c) Section 3.1.1 is further amended by changing the definition of
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"Interest Coverage Ratio" set forth therein to read in its entirety as
follows:
"Interest Coverage Ratio" shall mean, with respect to any Person
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for any period, the ratio, determined on a consolidated basis in
accordance with GAAP where applicable, of:
(a) EBIT of such Person and its Subsidiaries for such
period;
to
--
(b) All Interest Expenses of such Person and its
Subsidiaries for such period.
(d) Section 3.1.2(b) is amended to read in its entirety as follows:
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(ii) Guarantor shall not permit its Interest Coverage Ratio for
each period set forth below to be less than the ratio set forth
opposite such period below:
Each consecutive four quarter
period ending December 31, 1995,
March 31, 1996, June 30, 1996,
September 30 1996, and December
31, 1996 . . . . . . . . . . . . 5.00;
The consecutive four quarter
period ending March 30, 1997 . . 6.00;
Each consecutive four quarter
period ending June 30, 1997
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and September 30, 1997 . . . . . 2.00;
The consecutive four quarter
period ending December 31, 1997. 4.00;
Each consecutive four quarter
period ending on the last day
of each quarter thereafter . . . 6.00.
(f) Section 3.1.2(e) is further amended by (i) changing the date "June
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30, 1995" to "March 30, 1997" and (ii) changing the amount "$375,000,000"
appearing in subclause (i) thereof to "$538,000,000".
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(g) Section 3.1.2 is further amended by adding at the end thereof a
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new sentence to read in its entirety as follows:
In determining the net income of Guarantor for purposes of Sections
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3.1.2(e) and (f) for any period which includes the quarter ending
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March 30, 1997, the net income of Guarantor before provision for
income taxes for such period shall be calculated without deduction of
the 1997 Inventory Charge (and the provision for income taxes for such
period shall be increased as appropriate in light of such expense
reduction).
2. Balance of Agreement Unaffected. Except as expressly set forth herein,
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the Guaranty shall not be affected hereby and shall remain in full force and
effect in accordance with its terms.
3. Reaffirmation of Obligations. Guarantor hereby reaffirms all
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obligations under the Guaranty, as amended by this Amendment.
4. Governing Law. This Amendment shall in all respects be governed by and
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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.
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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: ___________________________
Name:
Title:
GUARANTOR:
Xxx Research Corporation,
a Delaware corporation
By: ___________________________
Name:
Title:
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