WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
("Waiver and Amendment"), dated as of December 18 , 1996, is entered into by and
between FILENET CORPORATION (the "Borrower") and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (the "Bank").
RECITALS
A. The Bank and the Borrower are parties to an Amended and Restated Credit
Agreement (Multicurrency) dated as of August 8,1995, effective as of May 1,
1995, as amended by that Waiver and Amendment to Credit Agreement dated as of
July 11, 1996 (as so amended, the "Credit Agreement"), pursuant to which the
Bank has extended certain credit facilities to the Borrower.
B. The Borrower has reported to the Bank the existence of an Event of
Default under the Credit Agreement. The Borrower has requested that the Bank
waive such Event of Default and agree to an amendment to the Credit Agreement.
C. The Bank is willing to waive such Event of Default under the Credit
Agreement, and to amend the Credit Agreement, subject to the terms and
conditions of this Waiver and 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. Default and Waiver.
(a) For purposes of this Waiver and Amendment, the "Existing Default"
shall mean the Event of Default existing on this date under Section 8.01(c)
of the Credit Agreement as a consequence of a breach of the negative
covenant set forth at Section 7.13 of the Credit Agreement solely for the
quarter ended September 30, 1996.
(b) Subject to and upon the terms and conditions hereof, the Bank
hereby waives the Existing Default.
(c) Nothing contained herein shall be deemed a waiver of (or otherwise
affect the Bank's ability to enforce) any other default or Event of
Default, including without limitation (i) any default or Event of Default
as may now or hereafter exist and arise from or otherwise be related to
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the Existing Default (including without limitation any cross-default
arising under the Credit Agreement by virtue of any matters resulting from
the Existing Default), and (ii) any default or Event of Default arising at
any time after the Effective Date and which is the same as the Existing
Default.
3. Amendments to Credit Agreement.
(a) Section 7.13 of the Credit Agreement shall be amended and restated in
its entirety so as to read as follows:
"7.13 Tangible Net Worth. The Borrower shall not permit at any time on a
consolidated basis its Tangible Net Worth to be less than $115,000,000 plus
the sum of (i) 75% of net income after income taxes (without subtracting
losses) earned in each quarterly accounting period commencing after
September 30, 1996, (ii) the net proceeds from any equity securities issued
after September 30, 1996, and (iii) any increase in stockholders' equity
resulting from the conversion of debt securities to equity securities after
September 30, 1996."
(b) Schedule 2 to the Compliance Certificate shall be amended and
restated in its entirety so as to read as in the schedule attached hereto
as Schedule 2.
4. Representations and Warranties. The Borrower hereby represents and
warrants to the Bank as follows:
(a) Other than the Existing Default, no Default or Event of Default
has occurred and is continuing.
(b) The execution, delivery and performance by the Borrower of this
Waiver and 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 Waiver and Amendment constitutes the
legal, valid and binding obligations of the Borrower, enforceable against
it in accordance with its respective terms. without defense, counterclaim
or offset.
(c) Subject to the Existing Default, all representations and
warranties of the Borrower contained in the Credit Agreement are true and
correct.
(d) The Borrower is entering into this Waiver and 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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5. Effective Date. This Waiver and Amendment will become effective as of
the date first above written (the "Effective Date"), provided that each of the
following conditions precedent are satisfied.
(a) The Bank has received from the Borrower a duly executed original
(or, if elected by the Bank, an executed facsimile copy) of this Waiver and
Amendment; and
(b) All representations and warranties contained herein are true and
correct as of the Effective Date.
6. Reservation of Rights. The Borrower acknowledges and agrees that neither
the Bank's forbearance in exercising its rights and remedies in connection with
the Existing Default, nor the execution and delivery by the Bank of this Waiver
and Amendment, shall be deemed (i) to create a course of dealing or otherwise
obligate the Bank to forbear or execute similar waivers under the same or
similar circumstances in the future, or (ii) to waive, relinquish or impair any
right of the Bank to receive any indemnity or similar payment from any person or
entity as a result of any matter arising from or relating to the Existing
Default.
7. 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 to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Waiver and Amendment. This
Waiver and Amendment shall be deemed incorporated into, and a part of, the
Credit Agreement.
(b) This Waiver and 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 Waiver and Amendment.
(c) This Waiver and Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Waiver and 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
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(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 Borrower shall bind the
Borrower, 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 Waiver and Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Waiver and
Amendment supersedes all prior drafts and communications with respect
thereto. This Waiver and Amendment may not be amended except in accordance
with the provisions of Section 9.05 of the Credit Agreement.
(f) If any term or provision of this Waiver and Amendment shall be
deemed prohibited by or invalid under any applicable law, such provision
shall be invalidated without affecting the remaining provisions of this
Waiver and Amendment or the Credit Agreement, respectively.
(g) The Borrower covenants to pay to or reimburse the Bank at cost,
upon 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 Waiver and
Amendment and the administration of the Existing Default.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Waiver and Amendment as of the date first above written.
FILENET CORDORATION
By: /s/ Xxxx X. St. Xxxxx
Typed Name: Xxxx X. St. Clare
Title: Chief Financial Officer
By: /s/ Xxxxxxx X. Xxxxxx
Typed Name: Xxxxxxx X. Xxxxxx
Title: Controller/Chief Accounting Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Xxxx Xxxxxxxx
Typed Name: Xxxx Xxxxxxxx
Title: Managing Director
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Date: , 199
For the fiscal quarter/year
ended , 199
SCHEDULE 2
to Compliance Certificate
Actual Required/Permitted
------ ------------------
1. Section 7.01(d) Other Bank Borrowings
by Subsidiaries
Indebtedness of Subsidiaries for
borrowed money from other bank Not to exceed $5,000,000
2. Section 7.01(e) Purchase Money
Obligations and Section 7.02 purchase
Money Liens
Purchase money obligations and
related liens Not to exceed $10,000,000
3. Section 7.03 Capital Assets
Obligations for the acquisition of
fixed or capital assets during
current fiscal year Not to exceed $25,000,000
4. Section 7.07(d) Sale and Leaseback
Financing under sale and leaseback
agreements of fixed or capital assets Not to exceed $5,000,000
A11 amounts determined on a consolidated basis.
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Actual Required/Permitted
------ ------------------
5. Section 7.11 Quick Ratio
A. (i) cash
(ii) net accounts receivable
(iii) short-term cash
investments
(iv) investment grade marketable
securities not classified
as long- term investments
(v) long-term investments in
compliance with the
Investment Guidelines (not
to exceed $25,000.000)
(i) + (ii) + (iii) + (iv) + (v) =
B. Current liabilities (including
all funded and unfunded
obligations under the credit
Agreement and other Credit
Documents, including undrawn
amounts (or the Equivalent Amount
thereof) of all letters of credit
and Bank Guaranties and drawn and
unreimbursed obligations with
respect thereto
A
= B = Not less than 1.75 to 1.00
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Actual Required/Permitted
------ ------------------
6. Section 7.l2 Total Liabilities to
Total Net Worth
the ratio of
A. total liabilities (including all
funded and unfunded obligations
under the Credit Agreement and
other Credit Documents. including
undrawn amounts (or the
Equivalent Amount thereof) of all
letters of credit and Bank
Guaranties and drawn and
unreimbursed obligations with
respect thereto
B. Tangible Net Worth
the difference of:
(i) gross book value of
assets
less
(ii) goodwill, patents, trademarks, trade names,
organization expense, capitalized software,
treasury stock, unamortized debt
discount and expense, deferred charges, and
other like intangibles, monies due from
affiliates, officers, directors. or
shareholders of the Borrower or any of its
Subsidiaries. and value placed on any leasehold
(other than leasehold improvements)
less
(iii)applicable reserves
less
(iv) all liabilities
(including accrued and deferred income taxes)
(i) - (ii) - (iii) - (iv) =
A =
B Not greater than 0.75 to 1.00
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Actual Required/Permitted
------ ------------------
7. Section 7.13 Tangible Net Worth
Tangible Net Worth (from 6 above) Not less than the sum of:
A.$115,000,000 $115,000,000
plus
B.75% of net income
after taxes (with-out
subtracting losses)for
each fiscal quarter
commencing after 9/30/96
plus
C.100% of net proceeds
from the issuance of
any equity securities
issued after 9/30/96
plus
D.100% of any increase
in shareholders' equity
from conversion of debt
to equity after 9/30/96
= A + B + C + D =
8. Section 7.24 Consecutive Quarterly
Losses: Losses in One Quarter
A. (i) Net (after tax) income
(loss) for fiscal quarter
reported on Not in excess of ($5,000,000)
(ii) Operating income (loss) for
fiscal quarter reported on Not in excess of ($5,000.000)
B. (i) Net (after tax) income
(loss) immediately
preceding fiscal quarter
(ii) Net (after tax) income
(loss) for fiscal quarter If (i) is a loss, (ii) shall
reported on not be a loss.
C. (i) Operating income (loss) for
the immediately preceding
fiscal quarter
(ii) Operating income (loss) for If (i) is a loss, (ii) shall not be
fiscal quarter reported on a loss.
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