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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT") is entered into as of December 29,
1995 between Maxtor Corporation, a Delaware corporation (the "BORROWER"), and
Hyundai Electronics America (the "LENDER"), a California corporation.
Capitalized terms used in this Agreement and not defined elsewhere herein
shall have the meanings set forth in Section 8.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lender and Hyundai Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Lender ("HAI"), have entered
into that certain Agreement and Plan of Merger dated November 2, 1995 (the
"MERGER AGREEMENT") pursuant to which HAI offered to purchase any and all
outstanding shares of the common stock of the Borrower and to merge with the
Borrower upon the terms and conditions set forth therein;
WHEREAS, the Borrower has requested that the Lender loan funds to the
Borrower for working capital purposes; and
WHEREAS, the Lender is willing to advance the Borrower up to $100,000,000
on a revolving basis for working capital purposes on the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lender and the Borrower hereby agree as follows:
SECTION 1. THE LOANS
1.1 REVOLVING LOAN COMMITMENT.
a. THE COMMITMENT. From time to time prior to the Maturity Date, the
Lender, on a revolving basis, agrees to provide to the Borrower advances in
accordance with the terms and conditions of this Agreement (the "CREDIT
FACILITY"). The total principal amount of all advances outstanding under this
Agreement may not exceed at any one time One Hundred Million Dollars
($100,000,000.00). Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow amounts loaned under the Credit Facility. The
Borrower may, from time to time, deliver to the Lender in the form of Exhibit A
hereto a request for loan in an amount not less than $1,000,000 or more than
$30,000,000, in which shall be certified certain information as required thereby
("REQUEST CERTIFICATE"); provided, however, if the principal amount remaining
available for draw under the Credit Facility is less than $1,000,000, then the
Borrower may submit a Request Certificate to the Lender only for the entire
principal amount remaining
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available for draw under the Credit Facility. At no time shall the Borrower
deliver a Request Certificate to the Lender more frequently than once a week.
b. FUNDING OF LOANS. Within two (2) Business Days of oral notice by the
Borrower of a request for an advance and within one (1) Business Day of receipt
by the Lender of a Request Certificate relating to such advance, the Lender
shall determine in good faith the completeness and accuracy of the information
set forth therein (such determination to be conclusive) and shall, if such
determination is favorable, remit to the Borrower the amount specified therein
(such advances being herein referred to individually as a "LOAN" and
collectively as "LOANS").
c. THE NOTE. The Borrower shall execute and deliver to Lender a
promissory note in the form of Exhibit B hereto (the "NOTE"). The Lender is
hereby authorized to reflect on the schedule to the Note each advance of a Loan
thereunder and the amounts indicated thereon shall be conclusive (in the absence
of manifest error) in determining interest and principal balances from time to
time outstanding, as provided in the Note.
d. INTEREST RATE. The outstanding principal balance of each Loan shall
bear interest at a fixed rate per annum equal to the sum of (i) the three-month
LIBOR rate quoted in The Wall Street Journal on the date of the making of the
Loan, plus (ii) sixty-five (65) basis points; provided, however, at no time
shall the rate of interest charged on any Loan exceed the maximum amount
permitted by any applicable usury law. All interest hereunder shall be computed
on the basis of a 360-day year. Any principal or interest on any Loan which is
not paid when due (whether as stated, by acceleration or otherwise) shall bear
interest at a rate equal to the sum of the interest rate for such Loan (as
determined above) plus two hundred (200) basis points.
e. PRINCIPAL AND INTEREST PAYMENTS. The outstanding principal balance
and all accrued and unpaid interest under the Note shall become due and payable
on the earlier of (i) April 10, 1996, (ii) the date that is 90 days after the
closing of the Merger (as that term is defined in the Merger Agreement), (iii)
the date (whichever comes first) that any Person (other than the Lender or any
of its Affiliates) shall (A) acquire ownership or control, directly or
indirectly, of more than 50% of the voting power of the Borrower, (B) merge with
or into the Borrower, or (C) have transferred to it all or substantially all of
the assets of the Borrower, or (iv) the date of the termination of the Merger
Agreement under Section 7.1(b)(i) thereof (the earlier of all of such dates is
herein called the "MATURITY DATE"). Prior to the Maturity Date, the Borrower may
pay all or part of the outstanding principal balance of any Loan or Loans upon
at least two (2) Business Days' oral notice to the Lender (which notice shall be
immediately confirmed in writing) in an amount not less than $1,000,000,
together with payment of all accrued and unpaid interest on the principal amount
so prepaid. Said notice shall specify the Loan or Loans being paid down and such
notice, when given, shall be irrevocable and commit the Borrower to pay down the
Loan or Loans as set forth in such notice.
f. PREPAYMENT; TAXES. All payments of principal and interest paid or
accrued in accordance with the provisions of this Agreement shall be made under
the Note as set forth therein. All payments in respect of this Agreement shall
be made by the Borrower to the Lender without defense, setoff or counterclaim
and free and clear of all present and future taxes, levies,
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imposts, fees, duties and withholdings or other deductions whatsoever, but
excluding any taxes imposed on the net income of the Lender (collectively,
"TAXES"). If any such Tax becomes payable in respect of this Agreement or any
amendment, modification, extension or renewal hereof or thereof, the Borrower
agrees to pay the same, together with any interest or penalties assessed
thereon, plus an amount which, after provision for such Tax, is necessary to
yield and remit to the Lender payments at the applicable rate set forth herein,
and agrees to hold the Lender harmless with respect thereto. The Borrower shall
provide evidence that Taxes in respect of which indemnification is provided
under this Agreement shall have been paid to the appropriate taxing authorities
by delivery to the Lender of the official tax receipts or notarized copies of
such receipts within 30 days after the payment of any such Tax. If the Borrower
fails to make any such payments when due, the Borrower shall indemnify the
Lender for any additions to Tax, interest or penalties that may become payable
by the Lender as a result of any such failure.
g. USE OF PROCEEDS OF LOANS. The proceeds of the Loans shall be used
for working capital purposes for the Borrower and its Subsidiaries as specified
in any Request Certificate delivered in connection with each such Loan. Without
limiting the foregoing sentence in any way, the Borrower agrees that none of the
proceeds of any Loan shall be used to pay down any Existing Debt (as defined in
Section 2.12).
1.2 SECURITY. The obligations of the Borrower to pay all sums due, and to
do all things and perform all obligations and agreements of any nature (whether
direct or contingent, liquidated or unliquidated, or otherwise), hereunder and
under each of the Loan Documents, as the same may be amended, modified, extended
or renewed from time to time (the "OBLIGATIONS"), shall be secured by a first
priority security interest in all of the accounts receivable of the Borrower, as
evidenced by that certain Security Agreement executed by Borrower and delivered
to Lender in the form of Exhibit C hereto (the "SECURITY AGREEMENT").
SECTION 2. REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to
the Lender on the date of this Agreement, on the date of each Request
Certificate and on the date of the making of each Loan:
2.1 LEGAL STATUS. Each of the Borrower and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority and governmental approvals would not have a Materially Adverse Effect.
The Borrower and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in all jurisdictions in which such qualification
or licensing is required or in which the failure to so qualify or to be so
licensed could have a Materially Adverse Effect. A list of all Subsidiaries of
the Borrower as of the date hereof is set forth on Schedule 2.1.
2.2 AUTHORIZATION AND VALIDITY. Each of the Loan Documents has been duly
authorized, and upon the execution and delivery thereof by the Borrower in
accordance with the provisions of
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this Agreement will constitute legal, valid and binding agreements and
obligations of the Borrower enforceable in accordance with their respective
terms.
2.3 CORPORATE POWERS; NO VIOLATION. The execution, delivery and
performance by the Borrower of each of the Loan Documents and the consummation
of the transactions contemplated thereby are within the Borrower's corporate
powers and have been duly authorized by all necessary corporate action, and do
not (i) except as set forth in Schedule 2.3, require the consent or approval
of any Person, (ii) violate any provision of any law or regulation, (iii)
contravene any provision of its charter or by-laws, or (iv) result in a
breach of or constitute a default under any contract, obligation, indenture
or other instrument to which the Borrower is a party or by which the Borrower
is or may be bound. The Borrower has not amended its Certificate of
Incorporation or By-Laws since the date of the Merger Agreement.
2.4 LITIGATION. To the best of the Borrower's knowledge, except as set
forth on Schedule 2.4, there are no pending or threatened actions, claims,
investigations, suits or proceedings before any governmental authority, court or
administrative agency, including, without limitation, any Environmental Action,
which may (i) have a Materially Adverse Effect, or (ii) affect the legality,
validity or enforceability of any of the Loan Documents. Neither the Borrower
nor any of its Subsidiaries is in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority.
2.5 CORRECTNESS OF FINANCIAL STATEMENTS. The audited Consolidated financial
statements of the Borrower dated for its fiscal year ended March 25, 1995, and
the unaudited Consolidated financial statements of the Borrower for the six
months ended September 30, 1995, heretofore delivered by the Borrower to the
Lender, are complete and correct and present fairly and accurately the financial
condition of the Borrower and its Subsidiaries, disclose all liabilities of the
Borrower and its Subsidiaries that are required to be reflected or reserved
against under generally accepted accounting principles ("GAAP"), whether
liquidated or unliquidated, fixed or contingent, and have been prepared in
accordance with GAAP consistently applied. Since September 30, 1995, there has
been no change likely to cause any Materially Adverse Effect except as disclosed
in Schedule 2.5 hereto.
2.6 TAXES. All federal, state and other tax returns of the Borrower and its
Subsidiaries required by law to be filed have been duly filed, and all taxes and
other governmental charges or levies upon Borrower, its Subsidiaries or any of
their respective properties, income, profits and assets which are due and
payable have been paid. The charges, accruals and reserves on the books of
Borrower and its Subsidiaries in respect of taxes are adequate. The Borrower has
paid all employment taxes required by law, including without limitation, payroll
taxes.
2.7 NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which the Borrower is a party or by which the Borrower may be
bound that requires the subordination in right of payment of any Obligation of
the Borrower.
2.8 PERMITS, FRANCHISES. Each of the Borrower and its Subsidiaries
possesses, and will hereafter possess, all permits, memberships, franchises,
contracts and licenses required to enable it to conduct the business in which it
is now engaged other than where failure to so obtain the same is not likely to
have a Materially Adverse Effect.
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2.9 ERISA.
a. COMPLIANCE Each of the Borrower and its Subsidiaries is in
compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and no
ERISA Event has occurred or is reasonably expected to occur with respect to any
Plan covering the employees of the Borrower or any of its Subsidiaries
thereunder.
b. FUNDED CURRENT LIABILITIES. As of the last annual actuarial
valuation date, the funded current liability percentage, as defined in Section
302(d)(8) of ERISA, of each Plan exceeds 90% and there has been no change likely
to cause any Materially Adverse Effect in the funding status of any such Plan
since such date.
c. WITHDRAWAL LIABILITY. Neither Borrower nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan that has had or is reasonably likely to have a Materially
Adverse Effect.
d. REORGANIZATION OR TERMINATION. Neither Borrower nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, within the meaning of
Title IV of ERISA.
e. SFAS 106. Except as set forth in the financial statements referred
to in Section 2.5 and in Section 4.3, each of the Borrower and its Subsidiaries
has no material liability with respect to "expected post retirement benefit
obligations" within the meaning of Statement of Financial Accounting Standards
No. 106.
2.10 OTHER OBLIGATIONS. Neither the Borrower nor any of its Subsidiaries is
in default on any Debt or any other material lease, commitment, contract,
instrument or obligation.
2.11 ENVIRONMENTAL LAWS. Each of the Borrower and its Subsidiaries is in
compliance with all applicable Environmental Laws and Environmental Permits,
except where non-compliance would not have a Materially Adverse Effect. The
Borrower is not aware that it or any of its Subsidiaries is under investigation
by any local, state, federal or foreign agency designed to enforce any
Environmental Laws and Environmental Permits. Any past non-compliance by
Borrower or its Subsidiaries with such Environmental Laws and Environmental
Permits has been resolved without ongoing obligations or costs, and no
circumstances exist that could be reasonably likely to (i) form the basis of an
Environmental Action against the Borrower or any of its Subsidiaries or any of
their properties that could have a Materially Adverse Effect, or (ii) cause any
such property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law that could have a Materially Adverse
Effect.
2.12 EXISTING DEBT. Set forth on Schedule 2.12 hereto is a complete and
correct list of all Debt of the Borrower and its Subsidiaries to any Person
which has a principal balance in excess of $100,000 or borrowing availability in
excess of $500,000 (the "EXISTING DEBT").
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2.13 SECURITY AGREEMENT REPRESENTATIONS. Each of the representations and
warranties of Borrower set forth in the Security Agreement are true and correct
on the date hereof. Without limiting the foregoing in any way, (i) there are no
Liens on any Collateral (as that term is defined in the Security Agreement)
except for Permitted Liens and Liens set forth on Schedule 2.13 hereto and (ii)
to the Borrower's knowledge, there are no Liens on any other property or assets
of the Borrower or any of its Subsidiaries except for Permitted Liens and Liens
set forth on Schedule 2.13 hereto (collectively, "EXISTING LIENS").
SECTION 3. CONDITIONS PRECEDENT
3.1 INITIAL LOAN. The obligation of the Lender hereunder to make the
initial Loan shall be subject to the satisfaction by the Borrower of all of the
following conditions precedent on or prior to the date hereof:
a. APPROVAL OF THE LENDER'S COUNSEL. All legal matters and
documentation incidental hereto shall be reasonably satisfactory to counsel for
the Lender.
b. THE NOTE, ETC. The Lender shall have received the Note and all of
the other Loan Documents, duly and validly executed by the Borrower.
c. CONSENTS, ETC. The Lender shall have received the consent of all
Persons that are required for the making of the Loans to the Borrower, the
incurrence of any of the Obligations by the Borrower or the incurrence of any
Liens in connection therewith, with each such consent to be in form and
substance reasonably satisfactory to the Lender.
d. RESOLUTIONS, ETC. The Lender shall have received an incumbency
certificate of persons authorized to execute the Loan Documents for the Borrower
and a copy of the resolutions authorizing, approving and ratifying the Loan
Documents and the transactions contemplated herein and therein, duly adopted by
the Board of Directors of the Borrower, together with a certificate of the
Secretary of the Borrower, dated the date of the initial Loan, that such copy is
a true and correct copy of resolutions duly adopted at a meeting, or by the
unanimous written consent, of the Board of Directors of the Borrower and that
such resolutions have not been modified, amended, rescinded or revoked in any
respect and are in full force and effect as of the date hereof.
e. SPECIAL COMMITTEE APPROVAL. The Lender shall have received a written
certification from the Borrower that the Loan Documents and the transactions
contemplated thereunder have been approved by the Special Committee.
f. LEGAL OPINION. The Lender shall have received the legal opinion of
counsel to the Borrower, dated as of the date of the initial Loan, and addressed
to the Lender in form and substance satisfactory to the Lender and its counsel.
g. PERFECTED SECURITY INTEREST. The Security Agreement shall create in
favor of the Lender a valid, perfected security interest in the property
described therein or contemplated thereby, free of Liens except for Permitted
Liens and the Lender shall have received evidence of Lien searches, through a
date satisfactory to the Lender, showing no Liens affecting the property or
assets covered thereby other than Permitted Liens.
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h. GOOD STANDING CERTIFICATES. The Borrower shall have delivered to the
Lender good standing certificates, as of a recent date satisfactory to the
Lender, from California, Colorado and Delaware.
i. NO ACTION, SUIT, ETC. Other than set forth on Schedule 2.4, there
shall exist no action, suit, investigation, litigation or proceeding affecting
either the Borrower or any of its Subsidiaries pending or threatened before any
court, governmental agency or arbitrator that (i) could be reasonably likely to
have a Materially Adverse Effect, or (ii) purports to affect the legality,
validity or enforceability of this Agreement or any other Loan Document or the
consummation of the transactions contemplated hereby.
j. OTHER MATTERS. The Lender shall have received all other documents,
instruments, agreements, opinions, certificates, insurance policies, consents
and evidences of other legal matters, in form and substance reasonably
satisfactory to the Lender and its counsel, as the Lender may reasonably
request.
3.2 ALL LOANS. The obligations of the Lender hereunder to make any Loan
(including the initial Loan) shall be subject to the further satisfaction by the
Borrower of all of the following conditions precedent on or prior to the date
hereof:
a. NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing, and the Borrower shall be in compliance with all of the covenants
contained in this Agreement.
b. REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties contained in the Loan Documents shall be true on and as of the date
of the making of such Loan as though such representations and warranties had
been made on and as of such date (unless such representation and warranty
specifically relates to an earlier date).
c. CERTIFICATE. The Lender shall have received a certificate (which
may, at the Borrower's option, be one of the Request Certificates) of an officer
of the Borrower, dated the date of each Loan, that (i) each of the
representations and warranties contained in the Loan Documents is true and
correct on and as of the date thereof with the same force and effect as if made
on and as of such date; (ii) all Obligations, covenants, agreements and
conditions contained in the Loan Documents, to be performed or satisfied by the
Borrower on or prior to the date thereof have been performed or satisfied in all
respects, (iii) except as set forth on Schedule 2.5, there has been no
Materially Adverse Effect since September 30, 1995; and (d) no Default or Event
of Default shall have occurred and be continuing or shall exist.
SECTION 4. AFFIRMATIVE COVENANTS
The Borrower covenants that so long as any Obligations of the Borrower to
the Lender under any of the Loan Documents remain outstanding, and until final
payment or satisfaction in full of all indebtedness of the Borrower to the
Lender subject to this Agreement, the Borrower shall (and shall cause its
Subsidiaries to):
4.1 PAYMENT OF OBLIGATIONS AND PERFORMANCE OF COVENANTS. Make full and
timely payment of all Obligations as required under each of the Loan Documents,
at the time and place and
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in the manner specified therein, including without limitation the Note, together
with any fees or other liabilities due under any of the other Loan Documents at
the times and place and in the manner specified therein.
4.2 ACCOUNTING RECORDS. Maintain adequate books and records in accordance
with GAAP consistently applied, and from time to time as requested by the Lender
upon reasonable prior notice, permit a representative of the Lender at any
reasonable time to inspect, audit and examine such books and records, to make
copies of the same and to inspect the properties of the Borrower.
4.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Furnish to the Lenders:
a. MONTHLY FINANCIALS. As soon as available and in any event within 20
days after the end of each monthly fiscal period, Consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the end of such
monthly fiscal period and Consolidated and consolidating statements of income
and cash flows of the Borrower and its Subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such monthly
fiscal period, duly certified (subject to year-end audit adjustments) by the
chief financial officer of the Borrower as having been prepared in accordance
with GAAP, provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also provide a
statement of reconciliation conforming such financial statements to GAAP;
b. QUARTERLY FINANCIALS. As soon as available and in any event within
45 days after the end of each quarterly fiscal period, Consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the end
of such quarterly fiscal period and Consolidated and consolidating statements of
income and cash flows of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarterly fiscal period, duly certified (subject to year-end audit
adjustments) by the chief financial officer of the Borrower as having been
prepared in accordance with GAAP, provided that in the event of any change in
GAAP used in the preparation of such financial statements, the Borrower shall
also provide a statement of reconciliation conforming such financial statements
to GAAP;
c. ANNUAL FINANCIALS. As soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries, containing
Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidated and
consolidating statements of income and cash flows of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an opinion
acceptable to the Lender by independent public accountants reasonably acceptable
to the Lender, provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also provide a
statement of reconciliation conforming such financial statements to GAAP;
d. DEFAULT. As soon as possible and in any event within five (5) days
after any officer of the Borrower has knowledge of the occurrence of a Default
continuing on the date of such statement, a statement of the chief financial
officer of the Borrower setting forth details of
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such Default and the action that the Borrower has taken and proposes to take
with respect thereto;
e. FILINGS, ETC. Promptly after the sending or filing thereof, copies
of all reports and registration statements that the Borrower or any of its
Subsidiary files with the Securities and Exchange Commission or any national
securities exchange;
f. PROCEEDINGS. Promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or arbitrator
affecting the Borrower or any of its Subsidiaries of the type described in
Section 2.4;
g. ERISA EVENT. (i) Promptly and in any event within 10 days after the
Borrower or any ERISA Affiliate knows or has reason to know that any ERISA Event
has occurred, a statement of the chief financial officer of the Borrower
describing such ERISA Event and the action, if any, that such Borrower or such
ERISA Affiliate has taken and proposes to take with respect thereto, and (ii) on
the date any records, documents or other information must be furnished to the
PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such
records, documents and information;
h. PBGC NOTICES. Promptly and in any event within two Business Days
after receipt thereof by the Borrower or any ERISA Affiliate, copies of each
notice from the PBGC stating its intention to terminate any Plan or to have a
trustee appointed to administer any Plan;
i. FUNDED CURRENT LIABILITY NOTICES. Promptly and in any event within
30 days after the receipt thereof by the Borrower or any ERISA Affiliate, a copy
of the annual actuarial report for each Plan the funded current liability
percentage (as defined in Section 302(d)(8) of ERISA) of which is less than 90%
or the unfunded current liability or which exceeds $1,000,000;
j. MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any ERISA Affiliate from
the sponsor of a Multiemployer Plan, copies of each notice concerning (i) the
imposition of Withdrawal Liability by any such Multiemployer Plan, (ii) the
reorganization or termination, within the meaning of Title IV of ERISA, of any
such Multiemployer Plan, or (iii) the amount of liability incurred, or that may
be incurred, by the Borrower or any ERISA Affiliate in connection with any event
described in clause (i) or (ii);
k. ENVIRONMENTAL MATTERS. Promptly after the assertion or occurrence
thereof, notice of any Environmental Action against or of any noncompliance by
the Borrower or any of its Subsidiaries with any Environmental Law or
Environmental Permit that could reasonably be expected to have a Materially
Adverse Effect; and
l. OTHER INFORMATION. Such other information respecting the Borrower or
any of its Subsidiaries as the Lender may from time to time reasonably request.
4.4 EXISTENCE; COMPLIANCE WITH LAW. Preserve and maintain its existence and
all of its licenses, permits, governmental approvals, rights, privileges and
franchises, conduct its business in an orderly and regular manner, comply with
the provisions of all documents pursuant to which the Borrower is organized
and/or which govern the Borrower's continued existence and comply with the
provisions of all documents pursuant to which the Borrower is organized and/or
which govern the Borrower's continued existence and comply with the
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requirements of all applicable laws, rules, regulations, orders of any
governmental authority and requirements for the maintenance of the
Borrower's insurance, licenses, permits, governmental approvals, rights,
privileges and franchises, such compliance to include, without limitation,
compliance with ERISA, Environmental Laws and Environmental Permits, except
in each case where failure to do so is not likely to cause a Materially
Adverse Effect.
4.5 INSURANCE. Maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business similar to the Borrower's,
including but not limited to fire, extended coverage, public liability, property
damage and workers' compensation, carried by insurers and in amounts reasonably
satisfactory to the Lender and deliver to the Lender from time to time at the
Lender's request schedules setting forth all insurance then in effect.
4.6 FACILITIES. Keep all of the Borrower's properties useful or necessary
to the Borrower's business in good repair and condition, and from time to time
make necessary repairs, renewals and replacements thereto so that the Borrower's
properties shall be fully and efficiently preserved and maintained.
4.7 PAYMENT OF TAXES AND CLAIMS. Pay and discharge all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or upon any properties belonging to it prior to the date on which penalties
attach thereto, and all lawful claims for labor, materials and supplies which,
if unpaid, might become a Lien upon any of its properties and timely file all
information returns required by foreign, federal, state or local tax authorities
to be filed by each of them; provided, however, that neither the Borrower nor
any of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by proper
proceedings and as to which appropriate cash reserves are being maintained,
unless and until any Lien resulting therefrom attaches to its property and
becomes enforceable against its other creditors.
4.8 TRANSACTIONS WITH AFFILIATES. Conduct all transactions otherwise
permitted under the Loan Documents with any of their Affiliates on terms that
are fair and reasonable and no less favorable to the Borrower or such Subsidiary
than it would obtain in a comparable arms-length transaction with a Person not
an Affiliate.
SECTION 5. NEGATIVE COVENANTS
The Borrower further covenants that so long as any Obligations of the
Borrower to the Lender under any of the Loan Documents remain outstanding, and
until final payment in full or satisfaction of all indebtedness of the Borrower
to the Lender subject to this Agreement, the Borrower shall not (and shall not
permit its Subsidiaries to), without prior written consent of the Lender:
5.1 ADDITIONAL DEBT. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt
other than:
a. SUBORDINATED. in the case of the Borrower, Subordinated Debt;
b. SUBSIDIARIES. in the case of any of its Subsidiaries, Debt owed to
the Borrower or to a wholly-owned Subsidiary of the Borrower; and
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c. OTHER. in the case of the Borrower and any of its Subsidiaries,
(i) Debt under the Loan Documents,
(ii) Capitalized Leases not to exceed in the aggregate $10,000,000
at any time outstanding,
(iii) the Existing Debt and any Debt extending the maturity of, or
refunding or refinancing, in whole or in part, any Existing Debt, provided that
the terms of any such extending, refunding or refinancing Debt, and of any
agreement entered into and of any instrument issued in connection therewith, are
otherwise permitted by the Loan Documents, and provided further that the
principal amount of such Existing Debt shall not be increased above the
principal amount thereof outstanding immediately prior to such extension,
refunding or refinancing, and the direct and contingent obligors therefor shall
not be changed, as a result of or in connection with such extension, refunding
or refinancing.
(iv) endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business, and
(v) other Debt the aggregate principal amount of which, together
with the aggregate indebtedness secured by the Liens referred to in Section
5.2(b), shall not exceed $35,000,000 in the aggregate at any time outstanding.
5.2 LIENS. Create or suffer to exist, or permit any of its Subsidiaries to
create or suffer to exist, any Lien on or with respect to any of its properties,
whether now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any right to receive income, other than:
a. PERMITTED. Permitted Liens.
b. PURCHASE MONEY. Purchase money Liens upon or in any real property or
equipment acquired or held by the Borrower or any Subsidiary in the ordinary
course of business to secure the purchase price of such property or equipment or
to secure Debt incurred solely for the purpose of financing the acquisition of
such property or equipment, or Liens existing on such property or equipment at
the time of its acquisition (other than any such Liens created in contemplation
of such acquisition that were not incurred to finance the acquisition of such
property) or extensions, renewals or replacements of any of the foregoing for
the same or a lesser amount, or Liens of a lessor under an operating lease,
provided, however, that no such Lien shall extend to or cover any properties of
any character other than the real property or equipment being extended, renewed
or replaced, provided further that the aggregate principal amount of the
indebtedness secured by the Liens referred to in this clause (b) and the Debt
incurred in connection with Section 5.1(c)(v) shall not exceed $35,000,000 in
the aggregate at any time outstanding.
c. EXISTING. The Existing Liens, except that the Lien of the CIT Group,
Inc. in the assets of the Borrower may remain in place until, but shall have
been released by, the date of the making of the initial Loan.
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5.3 TRANSFER OF ASSETS, ETC. Make any substantial change in the nature of
the Borrower's business or acquire all or substantially all of the assets of any
Person.
5.4 LOANS; ADVANCES; INVESTMENTS. Make or commit to make any loans or other
advances to or investments of any kind in any Person; provided, however, that
the Borrower may make intercompany loans to any Subsidiary that is a
wholly-owned Subsidiary (i) solely for working capital purposes, and (ii) on
terms and in amounts consistent with past practice.
5.5 DISTRIBUTIONS. Declare or pay any distribution either in cash or any
other property of the Borrower to any of its stockholders or other security
holders (except that a wholly-owned Subsidiary of the Borrower may make such a
distribution solely to the Borrower).
5.6 REGULATIONS G, T AND U. Use the proceeds of any credit accommodation
hereunder, directly or indirectly, to purchase or carry any margin stock (within
the meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System) or extend credit to others for the purpose of purchasing or
carrying, directly or indirectly, any margin stock.
5.7 ACCOUNTING CHANGES. Make or permit, or permit any of its Subsidiaries
to, make or permit any change in accounting policies or reporting practices,
except as required or permitted by GAAP.
SECTION 6. EVENTS OF DEFAULT.
6.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" under this Agreement, whether such occurrence
shall be voluntary or involuntary, or come about or be effected by operation of
law or otherwise:
a. PAYMENT. The Borrower shall fail to pay any principal or interest
under any of the Loan Documents within two Business Days after such payment is
due and payable.
b. REPRESENTATIONS, ETC. Any representation or warranty made by the
Borrower under any of the Loan Documents shall prove to have been materially
incorrect in any respect when made.
c. COVENANTS. (i) The Borrower shall fail to perform or observe any
Obligation, term, covenant or agreement contained in Sections 5.1, 5.2, 5.3, 5.4
or 5.5, or (ii) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained in any Loan Document on its part to be performed
or observed (other than set forth in Section 6.1(a)) if such failure shall
remain unremedied for 15 days after written notice thereof shall have been given
to the Borrower by the Lender or its designated agent or representative;
d. CROSS-DEFAULT. The Borrower or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt that is outstanding in a
principal or notional amount of at least $5,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of the Borrower or such Subsidiary (as the
case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any
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agreement or instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or defeased,
or an offer to prepay, redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity thereof; or
e. INSOLVENCY, ETC. The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
either Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
either Borrower or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this Section 6.1(e); or
f. JUDGMENTS. Any judgment or order for the payment of money in excess
of $5,000,000 shall be rendered against the Borrower and/or any of its
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order, or (ii) there shall be any period of
10 consecutive days during which such judgment remains unsatisfied and a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
g. ERISA EVENT. Any ERISA Event shall have occurred with respect to a
Plan and the sum (determined as of the date of occurrence of such ERISA Event)
of the Insufficiency of such Plan and the Insufficiency of any and all other
Plans with respect to which an ERISA Event shall have occurred and then exist
(or the liability of the Borrower and the ERISA Affiliates related to such ERISA
Event) exceeds $5,000,000; or
h. WITHDRAWAL LIABILITY. Either Borrower or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower and the ERISA Affiliates as Withdrawal Liability (determined as of
the date of such notification), exceeds $5,000,000 or requires payments
exceeding $1,250,000 per annum; or
i. REORGANIZATION, ETC. OF MULTIEMPLOYER PLAN. Either Borrower or any
ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of
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ERISA, and as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and the ERISA affiliates to all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years of such Multiemployer Plans immediately preceding the
plan year in which such reorganization or termination occurs by an amount
exceeding $1,250,000;
j. DISSOLUTION, ETC. The dissolution or liquidation of the Borrower or
any of its Subsidiaries, or the Borrower shall take action seeking to effect the
dissolution or liquidation of the Borrower or its Subsidiaries or any of the
Borrower's Subsidiaries seeks to withdraw from the Borrower;
then, and in any such event, the Lender may (i) upon notice to the Borrower,
have no obligation to make further Loans to the Borrower regardless of whether a
Request Certificate has been submitted therefor (except in the case of the
occurrence of an Event of Default under Section 6.1(e), then the obligation of
the Lender to make further Loans to the Borrowers shall automatically be
terminated), (ii) upon notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to become immediately due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable
(except in the case of the occurrence of an Event of Default under Section
6.1(e), then the Notes, all interest thereon and all other amounts payable under
this Agreement and the other Loan Documents shall automatically become
immediately due and payable), without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and (iii) have all rights, powers and remedies available to Lender under each of
the Loan Documents, or accorded by law, including, without limitation, the right
to resort to any or all security subject hereto and to exercise any or all of
the rights of a beneficiary or secured party pursuant to applicable law and the
right to effect setoff against any Obligations of the Borrower outstanding of
any and all fees or payments due and owing from time to time by the Lender or
its Affiliates to the Borrower. All rights, powers and remedies of the Lender
may be exercised at any time by the Lender and from time to time after the
occurrence of any Event of Default. All rights, powers and remedies of the
Lender in connection with each of the Loan Documents are cumulative and not
exclusive and shall be in addition to any other rights, powers or remedies
provided by law or equity.
SECTION 7. GENERAL
7.1 NO WAIVER. No delay, failure or discontinuance of the Lender, or any
holder of any promissory note or other evidence of indebtedness subject hereto,
in exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by the Lender of any breach of or default under any of the Loan Documents
must be in writing and shall be effective only to the extent set forth in such
writing.
7.2 NOTICES. All notices, requests and demands given to or made upon any
party hereto must be in writing and shall be deemed to have been given or made
when personally delivered or
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sent via telecopier with answer back received or two (2) days after any of the
same are deposited in the U.S. mail, air mail and postage prepaid, addressed as
follows:
Borrower: Maxtor Corporation
000 Xxxxx Xxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxxxx Xxxxxx
Vice President of Finance & Treasurer
with a copy to: Maxtor Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, Esq.
General Counsel
Lender: Hyundai Electronics America
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Senior Vice President of
Finance & Administration
or to such other address or addresses as any party may designate by written
notice to all other parties.
7.3 SUCCESSORS: ASSIGNMENT. This Agreement shall be binding on and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided, however, that this Agreement
may not be assigned by the Borrower without the prior written consent of the
Lender. Any purported assignment in violation of the foregoing prohibition on
assignment shall be null and void. The Lender reserves the right, subject to the
Borrower's approval (such approval not to be unreasonably withheld, and except
that no approval shall be required for any assignment or transfer to any
Affiliate of the Lender) to sell, assign, transfer, negotiate or grant
participation in all or any part of or any interest in the Lender's rights and
benefits under each of the Loan Documents. In connection therewith, the Lender
may disclose, under an appropriate nondisclosure agreement, all documents and
information which the Lender now has or may hereafter acquire relating to credit
extended by the Lender to the Borrower or its businesses, or any collateral
required hereunder.
7.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and each other of the Loan
Documents constitutes the entire agreement between the Borrower and the Lender
with respect to any extension of credit by the Lender to the Borrower and
supersede all prior negotiations, communications, discussions and correspondence
concerning the subject matter hereof and thereof, and may be amended or modified
only by a written instrument executed by each party hereto and thereto.
7.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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7.6 TIME. Time is of the essence of each and every provision of the Loan
Documents.
7.7 SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
7.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
conflict of laws principles.
7.9 ARBITRATION. Any action, claim or controversy arising out of, related
to or in connection with this Agreement, the Note or any other Loan Document
shall be submitted to arbitration in San Jose, California, before a single
arbitrator in accordance with the Commercial Rules of Arbitration of the
American Arbitration Association. The costs and expenses of such arbitration,
including, without limitation, the compensation of the arbitrator and any
stenographer employed by such arbitrator, shall be borne by the party against
whom the arbitrator renders a decision as herein provided. In addition, the
party against whom the arbitrator renders a decision shall be liable for the
attorneys' fees and expenses of the prevailing party. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced in
any court of competent jurisdiction.
7.10 FURTHER ASSURANCES. At any time or from time to time upon the Lender's
request, the Borrower will execute and deliver such further documents and do
such other acts and things as the Lender may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for the payment of any Loans made hereunder and interest thereon in
accordance with the terms of the Loan Documents.
7.11 EXPENSES. The Borrower shall reimburse the Lender on demand for 50% of
the reasonable fees and expenses of the Lender's counsel in the negotiation,
preparation and closing of the Loan Documents. If there shall occur an Event of
Default, all such reasonable out-of-pocket expenses incurred by the Lender
(including fees and disbursements of counsel) in connection with such Event of
Default and collection and other enforcement proceedings (including bankruptcy
proceedings) resulting therefrom shall be paid by the Borrower, whether or not
suit is actually commenced to obtain any relief provided hereunder; provided,
however, that in any action on this Agreement or any other Loan Documents, the
parties who are determined to be the prevailing party thereon, whether such
party or parties have instituted the action, shall be entitled to reasonable
attorneys' fees in addition to other costs and any other relief to which such
party or parties may be entitled.
7.12 CURRENCY. All currency expressed under this Agreement are in U.S.
Dollars.
SECTION 8. DEFINITIONS.
"AFFILIATE" means with respect to the Borrower, any other Person that
directly or indirectly controls, is controlled by or is under direct or indirect
common control with the Borrower; provided, however, that neither the Lender nor
any of its Affiliates is an Affiliate of the Borrower or vice-versa.
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"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which commercial banks are permitted or authorized to close in California by
law.
"CAPITALIZED LEASES" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"CONSOLIDATED" means the consolidation of accounts in accordance with GAAP.
"DEBT" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services, (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (d)
all obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person as lessee under Capitalized
Leases, (f) all obligations, contingent or otherwise, of such Person in respect
of acceptances, letters of credit or similar extensions of credit, (g) all Debt
of others referred to in clauses (a) through (f) above or clause (h) below
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (1) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss,
(3) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (4) otherwise to assure a
creditor against loss, and (h) all Debt referred to in clauses (a) through (g)
above secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt.
"DEFAULT" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, judgment, decree or judicial or
agency interpretation, policy or guidance relating to pollution or protection of
the environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.
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"ENVIRONMENTAL PERMITS" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of ERISA
is a member of Borrower's controlled group, or under common control with
Borrower, within the meaning of Section 414 of the Internal Revenue Code.
"ERISA EVENT" means (a) (i) the occurrence of a reportable event within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with a contributing sponsor,
as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10) (11), (12) or (13) of Section 4043(c) of ERISA is reasonably
expected to occur with respect to such Plan within the following 30 days; (b)
the application for a minimum funding waiver with respect to a Plan; (c) the
provision by the administrator of any Plan of a notice of intent to terminate
such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d)
the cessation of operations at a facility of the Borrower or any ERISA Affiliate
in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal
by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a
plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under
Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the
adoption of an amendment to a Plan requiring the provision of security to such
Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
constitutes ground for the termination of, or the appointment of a trustee to
administer, a Plan.
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"LIEN" means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"LOAN DOCUMENTS" means this Agreement and any and all documents or
agreements heretofore or hereafter entered into by or for the benefit of the
Borrower in favor of the Lender or any of its Affiliates in connection herewith
or therewith, including, without limitation, the Note, the
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Request Certificates and the Security Agreement. The term "Loan Documents" shall
not include the Merger Agreement.
"MATERIALLY ADVERSE EFFECT" means materially adverse to the condition
(financial or other), results of operations, performance, properties,
obligations, liabilities, operations, business or prospects of the Borrower and
its Subsidiaries, taken as a whole.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Borrower
or any ERISA Affiliate and at least one Person other than the Borrower and the
ERISA Affiliates or (b) was so maintained and in respect of which Borrower or
any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor).
"PERMITTED LIENS" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Lien for taxes, assessments and governmental charges or levies to the extent
not required to be paid under Section 4.7 hereof; (b) Liens imposed by law, such
as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and
other similar Liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days; (c) pledges
or deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (d) easements, rights
of way and other encumbrances on title to real property that do not render title
to the property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes; (e) Liens consisting of
judgment or judicial attachment liens, provided that the enforcement of such
Liens is effectively stayed; (f) Liens on assets of corporations that become
Subsidiaries after the date of this Agreement, provided, however, that such
Liens existed at the time the respective corporations became Subsidiaries and
were not created in anticipation thereof or in connection with the creation of
such Subsidiaries; (g) Liens securing Capitalized Lease obligations on assets
subject to such Capitalized Leases, provided that such Capitalized Leases are
permitted under subsection 5.1(c)(ii); (h) Liens arising solely by virtue of any
statutory or common law provisions relating to banker's liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution, provided that (i) such deposit account
is not a dedicated cash collateral account and is not subject to restrictions
against access by the Borrower in excess of those set forth by regulations
promulgated by the Federal Reserve Board, and (ii) such deposit account is not
intended by the Borrower or any of its Subsidiaries to provide collateral to the
depository institution.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
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"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or
any ERISA Affiliate and no Person other than Borrower and the ERISA Affiliates,
or (b) was so maintained and in respect of which Borrower or any ERISA Affiliate
could have liability under Section 4069 of ERISA in the event such plan has been
or were to be terminated.
"SUBORDINATED DEBT" means any Debt of the Borrower that is subordinated to
the Obligations of the Borrower under the Loan Documents on, and that otherwise
contains, terms and conditions satisfactory to the Lenders.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such person's other Subsidiaries.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed and delivered as of the day and year first written above.
MAXTOR CORPORATION
By: Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President, Finance
HYUNDAI ELECTRONICS AMERICA
By: X. X. Xxx
-------------------------------------
Name: X. X. Xxx
Title: President
20
21
List of Exhibits
Exhibit A - Request Certificate
Exhibit B - Note
Exhibit C - Security Agreement
21
22
List of Schedules
Schedule 2.1 - Subsidiaries
Schedule 2.3 - Required Consents
Schedule 2.4 - Litigation
Schedule 2.5 - Materially Adverse Changes
Schedule 2.12 - Existing Debt
Schedule 2.13 - Existing Liens
22
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EXHIBIT A
REQUEST CERTIFICATE
Pursuant to that certain Credit Agreement dated as of December 29,
1995 (the "CREDIT Agreement") between Maxtor Corporation (the "BORROWER") and
Hyundai Electronics America (the "LENDER") (and all capitalized terms used
herein without definition have the meanings given to them in the Credit
Agreement), the Borrower hereby requests a Loan in the principal amount of
$100 million to be used for the following purpose(s):
Amount (Approximate) Purpose*
In connection with the above request, the Borrower hereby certifies to
the Lender, as of the date hereof, as follows:
1. Each of the representations and warranties of the Borrower set
forth in the Loan Documents is true and correct on the date hereof with the same
force and effect as if made on and as of the date hereof.
2. All Obligations to be performed or satisfied by the Borrower
prior to the date hereof have been performed and satisfied in all material
respects.
3. Except as set forth on Schedule 2.5 to the Credit Agreement, or
as disclosed in writing to and accepted by the Lender subsequent to the date of
the Credit Agreement, there has been no Materially Adverse Effect since
September 30, 1995.
4. No Default or Event of Default by the Borrower exists under the
Credit Agreement or any of the other Loan Documents as of the date written
below.
IN WITNESS WHEREOF, the undersigned has executed this Request
Certificate as of the date written below.
MAXTOR CORPORATION
By:
---------------------------------
Name:
Title:
Dated:
------------------------------
--------------
* E.g., payroll, purchase of inventory, financing of receivables, accounts
payable, etc.
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EXHIBIT B
PROMISSORY NOTE
$100,000,000 ___________, 1995
FOR VALUE RECEIVED, the undersigned, MAXTOR CORPORATION, a Delaware
corporation (the "Company"), hereby promises to pay to the order of HYUNDAI
ELECTRONICS AMERICA, a California corporation (the "LENDER"), at the office of
the Lender at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, or such other
address of the Lender as the Lender may from time to time direct, the principal
sum of One Hundred Million Dollars ($100,000,000) or, if less, the aggregate
unpaid principal amount of the Loans made by the Lender to the Company pursuant
to that certain Credit Agreement, dated _____________, 1995 between the Company
and the Lender (as amended from time to time, the "CREDIT AGREEMENT"), in lawful
money of the United States of America and in immediately available funds, in the
amounts and at the times provided by the Credit Agreement, and to pay interest
on the unpaid principal amount from time to time outstanding on this Note, at
such office, in like money and funds, at the applicable rates and on the dates
provided in the Credit Agreement.
This Note is given under the Credit Agreement and evidences the Loans
made by the Lender thereunder. Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement. Reference is made
to the Credit Agreement for provisions regarding mandatory and optional
prepayments of the principal of this Note and for the acceleration of the
maturity of this Note upon the occurrence of the Events of Default specified
therein, and regarding the rate of interest which may be charged or collected by
the Lender under the Credit Agreement. In no event shall the rate of interest
charged under this Note exceed the maximum rate permitted by applicable law.
This Note is secured by the Security Agreement, and reference is made
thereto for a description of the Collateral securing the Obligations and the
rights of the Lender with respect thereto.
The amount and date of the Loans made by the Lender and all repayments
of the principal thereof shall be recorded by the Lender in its records (which,
absent manifest error, shall be conclusive) and, prior to any transfer of this
Note, endorsed by the Lender on the reverse of this Note or on a schedule
attached to this Note or any continuation thereof; provided that any failure by
the Lender to make any such endorsement shall not affect the obligations of the
Company under the Credit Agreement and this Note.
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IN WITNESS WHEREOF, the Company has caused this Promissory Note to be
duly executed as of the date first above written.
MAXTOR CORPORATION
By:
----------------------------
Name:
Title:
2
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Principal Schedule
--------------------------------------------------------------------------------
Date
--------------------------------------------------------------------------------
Principal Added
--------------------------------------------------------------------------------
Principal Paid
--------------------------------------------------------------------------------
Principal Balance
--------------------------------------------------------------------------------
Initials
--------------------------------------------------------------------------------
3
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EXHIBIT C
SECURITY AGREEMENT
This Security Agreement (the "AGREEMENT"), dated as of December 29,
1995, is entered into between Maxtor Corporation, a Delaware corporation
("DEBTOR"), and Hyundai Electronics America, a California corporation
("SECURED PARTY").
This Agreement is contemplated by Section 1.2 of that certain Credit
Agreement, dated as of December 29, 1995 (the "CREDIT AGREEMENT"), between
Debtor and Secured Party, pursuant to which Debtor has agreed to grant Secured
Party a security interest in the collateral described below.
Therefore, Debtor and Secured Party agree as follows:
1. DEFINITIONS. All capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement. In addition, all
terms used in Section 3 hereof but not expressly defined therein which are
defined in the California Uniform Commercial Code (the "CODE") shall have the
same meaning herein as in the Code.
2. GRANT OF SECURITY INTEREST. Debtor hereby pledges and delivers to
Secured Party, and grants to Secured Party a security interest in, the
Collateral, as defined in Section 3 hereof, to secure the payment and
performance of all of the Obligations.
3. COLLATERAL. The collateral in which Secured Party is granted a
security interest by this Agreement (herein referred to collectively as the
"COLLATERAL") is:
(a) All of Debtor's accounts, instruments, documents and chattel
paper due or to become due to Debtor of any kind (the "RECEIVABLES"), whether
now existing or hereafter arising, and whether now owned or hereafter acquired,
and all rights now or hereafter existing in and to all guarantees, security
agreements or other agreements or instruments securing or otherwise relating to
any such Receivables (the "RELATED AGREEMENTS"); and
(b) All proceeds and products of any and all of the foregoing
Collateral (including, without limitation, proceeds which constitute property of
the types described in clause (a) of this Section 3 and proceeds of any tort
claims relating to any of the foregoing Collateral) and, to the extent not
otherwise included, all payments under insurance or in connection with any
indemnity, warranty or guarantee payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral;
excluding, however, from all of the above all hazardous and non-hazardous
wastes, including but not limited to recyclable waste materials. The inclusion
of proceeds in this Agreement does not authorize Debtor to sell, dispose of or
otherwise use the Collateral in any manner not specifically authorized hereby.
28
The term "INTANGIBLE COLLATERAL" as used herein shall mean all
Receivables and Related Agreements.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Debtor hereby
represents, warrants and covenants as follows:
4.1 ORGANIZATIONAL STATUS. Debtor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is in good standing as a foreign corporation in the State of
California, the State of Colorado and any other state in which the nature of its
business requires it to be so qualified or failure to be qualified would have a
Materially Adverse effect on Debtor.
4.2 POWER AND AUTHORITY. Debtor has full power and authority to
enter into this Agreement, grant to Secured Party a valid security interest in
the Collateral and perform all of its obligations under this Agreement. The
execution, delivery and performance by Debtor of this Agreement do not
contravene Debtor's restated certificate of incorporation or amended and
restated bylaws or violate any provision of any statute, law, rule, regulation,
judgment, order or decree applicable to Debtor and will not conflict with, or
constitute a breach or default under, any indenture, loan agreement, contract or
other agreement or instrument to which Debtor is a party or by which Debtor or
any of its property is bound.
4.3 GOVERNMENTAL AUTHORIZATION. No authorization, consent or
approval or other action by, and no notice to or other filing with, any Person
is required for the grant by Debtor of the security interest granted hereby, the
due execution and delivery by Debtor of this Agreement or the performance by
Debtor of any of its obligations hereunder.
4.4 TITLE TO COLLATERAL. Except for the security interest
granted hereby and Permitted Liens, on the date of the funding of the initial
Loan Debtor is, and as to any Collateral acquired by Debtor after the date
thereof will be, the legal and beneficial owner and holder of all the
Collateral, free and clear of any Lien, and Debtor will defend all of the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein, and will take all steps to maintain the
security interest of Secured Party as a valid and fully perfected Lien.
4.5 PLACE OF BUSINESS AND NAME. Debtor's chief place of business
and chief executive office is at the address set forth in Section 7.2 of the
Credit Agreement and has not been moved or relocated within the four-month
period commencing on the date of this Agreement. Debtor has no other offices or
facilities of any type located in the United States of America where documents
comprising the Collateral or records regarding the Collateral are kept except
for its offices and facilities in Longmont, Colorado. Debtor will not change its
name or the location of its chief place of business and chief executive office
or open any other office or facility in the United States of America, without
giving at least 30 days' prior written notice to Secured Party of any such
proposed change. Debtor has not utilized any trade names in the conduct of its
business and, unless it shall have first given at least 30 days' prior written
notice to Secured Party, Debtor will not utilize any such trade names or other
trade names.
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4.6 FINANCING STATEMENTS; RELATED INSTRUMENTS.
(a) No financing statement or other document evidencing a
Lien on any of the Collateral or any proceeds thereof is on file in any
public office in any jurisdiction, other than financing statements and
other appropriate documents in favor of Secured Party and the financing
statements, if any, identified on Schedule 2.13 to the Credit Agreement. At
the request of Secured Party, Debtor will execute and deliver to Secured
Party one or more financing statements and other appropriate documents in
form and substance reasonably satisfactory to Secured Party and will pay
the cost of filing the same in all public offices where filing is deemed by
Secured Party to be necessary or desirable to perfect the Liens intended to
be created hereunder. Debtor authorizes Secured Party to prepare and file
financing statements and other appropriate documents without the signature
of Debtor where permitted by law and, if Debtor's signature shall be
required, Debtor hereby irrevocably appoints Secured Party as Debtor's
agent and attorney-in-fact for the purpose of signing and filing such
financing statements, other appropriate documents and schedules in all
public offices deemed necessary or desirable by Secured Party. If any
financing statements, other appropriate documents and/or schedules are so
signed by Secured Party, Secured Party shall send a copy thereof to Debtor.
Debtor promises to pay to Secured Party all fees and expenses incurred in
filing financing statements and other appropriate documents and any
continuation statements or amendments thereto, which fees and expenses
shall become a part of the Obligations secured by this Agreement. A carbon,
photographic or other reproduction of this Agreement or any financing
statement or other appropriate document covering the Collateral or any part
thereof shall be sufficient as a financing statement or other appropriate
document, and may be filed by Secured Party in accordance with the
provisions of this Section.
(b) Debtor shall duly endorse and deliver to Secured Party
upon request all instruments or documents, the possession of which is
necessary to perfect Secured Party's interest in any of the Collateral
hereunder.
4.7 TRANSFERS; OTHER LIENS. Neither Debtor nor its agents,
servants or employees will sell, assign or offer to sell or assign or otherwise
transfer any part of the Collateral, without the prior written consent of
Secured Party. Debtor will not, without the prior written consent of Secured
Party, create or permit to exist any Lien on any of the Collateral, other than
the security interest in favor of Secured Party created by this Agreement and
Permitted Liens.
4.8 SCHEDULES, INSPECTION OF BOOKS AND RECORDS. Debtor will
furnish to Secured Party from time to time (i) statements and schedules further
identifying and describing the Collateral, and (ii) such other reports in
connection with the Collateral as Secured Party may reasonably request, all in
reasonable detail. Debtor will permit Secured Party or its duly authorized
representatives to examine its books and records during business hours upon
reasonable prior notice and shall furnish to Secured Party such financial
statements and other financial data as Secured Party may reasonably request from
time to time. Secured Party agrees
3
30
to, and agrees to cause its agents and representatives to, take reasonable
precautions to preserve the confidentiality of all such data, reports and
information obtained from or on behalf of Debtor.
4.9 INTANGIBLE COLLATERAL. With respect to the Intangible
Collateral:
(a) Debtor's records concerning all Intangible Collateral
are and will be kept at the address indicated in the first sentence of
Section 4.5 hereof as Debtor's chief place of business and chief executive
office. Debtor will not remove any of such records from such address
without the prior written consent of Secured Party. Without in any way
excusing a breach of the foregoing sentence by Debtor, if for any reason
any of such records concerning the Intangible Collateral shall at any time
be moved to another location or locations, Debtor will promptly notify
Secured Party of any such change in the location of such records and will
execute and deliver such financing statements and other appropriate
documents and do such other acts and things as Secured Party may reasonably
request pursuant to Section 7 hereof.
(b) To the best of Debtor's knowledge, each item of the
Receivables is, or at such time as it becomes part of the Collateral will
be, a bona fide, valid and legally enforceable obligation of the account
debtor or other obligor in respect thereof, subject to no defense, setoff
or counterclaim against Debtor and in connection with which there is no
default with respect to any payment or performance on the part of Debtor or
any other party.
(c) Debtor will at all times keep accurate and complete
records of payment and performance by Debtor, the respective account
debtors and all other parties obligated on Intangible Collateral.
(d) After the occurrence and during the continuance of any
Event of Default, Debtor hereby authorizes Secured Party, upon prior notice
to Debtor, to cure any default in payment or performance by Debtor with
respect to Intangible Collateral; provided, however, that Secured Party
shall be under no obligation to do so and, provided further, that the
curing by Secured Party of any default shall not constitute a waiver by
Secured Party of any default hereunder. Debtor agrees to reimburse Secured
Party on demand with interest at the highest rate applicable to any Loan
for any payment made or any expense reasonably incurred by Secured Party
pursuant to the foregoing authorization, and any payment made or expense
reasonably incurred by Secured Party pursuant to the foregoing
authorization shall be part of the Obligations.
(e) Notwithstanding the security interest in the Intangible
Collateral granted hereunder, Debtor shall have the right to collect such
Intangible Collateral and, so long as an Event of Default has not occurred
and is continuing, use the proceeds therefrom in the ordinary course of its
business. Upon request of Secured Party after the occurrence and during the
continuation of an Event of Default, Debtor shall, and Secured Party may,
in the name of Secured Party or Debtor, at any time notify the account
debtor or other obligor on any item of Intangible Collateral of Secured
Party's security interest. Secured Party may, in its own name or the name
of Debtor, at any time
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31
after the occurrence and during the continuation of an Event of Default
hereunder, upon prior notice to Debtor, demand, xxx for, collect or receive
any money or property payable or receivable on any Intangible Collateral
and settle, release, compromise, adjust, xxx upon, foreclose, realize upon
or otherwise enforce any item of Intangible Collateral as Secured Party may
determine, and for the purpose of realizing Secured Party's rights herein,
Secured Party may receive, open and dispose of mail addressed to Debtor and
endorse notes, checks, drafts, money orders, documents of title or other
forms of payment on behalf of and in the name of Debtor. Secured Party may
at any time in its discretion, after the occurrence and during the
continuance of any Event of Default hereunder, transfer any notes,
securities or other Intangible Collateral into its own name or that of its
nominee and receive the income thereon and hold the same as Collateral for
the Obligations or apply the same to the payment of principal or interest
due on the Obligations. Debtor agrees to reimburse Secured Party on demand
with interest at the highest rate applicable to any Loan for any payment
made or any expense reasonably incurred by Secured Party pursuant to the
foregoing authorization, and any payment made or expense reasonably
incurred by Secured Party pursuant to the foregoing authorization shall be
part of the Obligations.
5. RIGHTS AND REMEDIES UPON DEFAULT.
(a) Upon the occurrence and during the continuation of any
Event of Default, Secured Party shall have, in addition to all other rights
and remedies provided herein, in the Credit Agreement, or by applicable
law, all of the rights and remedies of a Secured Party under the Code, and
under the Uniform Commercial Code as enacted in any jurisdiction in which
the Collateral may be found, or in which Debtor becomes involved in
proceedings in insolvency or bankruptcy.
(b) Debtor agrees that, to the extent notice of sale shall
be required by law, at least 10 days' notice to Debtor of the time and
place of any public sale or the time after which any private sale or any
other intended disposition is to be made shall constitute reasonable
notification of such sale or disposition. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(c) Secured Party may, instead of exercising the powers of
sale provided for herein and under the Code, proceed by a suit or suits, at
law or in equity, to foreclose the security interest granted under this
Agreement and sell the Collateral, or any portion thereof, under a judgment
or decree of any court or courts of competent jurisdiction. Secured Party
shall also have the right to apply for and have a receiver appointed by a
court of competent jurisdiction in any action taken by Secured Party to
enforce its rights and remedies hereunder, to manage, protect and preserve
the Collateral or continue the operation of the business of Debtor, and
Secured Party shall be entitled to collect all revenues and profits thereof
and apply the same to the payment of all expenses and other charges of such
receivership,
5
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including the compensation of the receiver, and to the payment of the
Obligations until a sale or other disposition of such Collateral shall be
finally made and consummated.
(d) In the event of any disposition or collection of or any
other realization upon all or any part of the Collateral, Secured Party
shall apply the proceeds of such disposition, collection or other
realization as follows:
(i) First, to the payment of the reasonable costs and
expenses of Secured Party in exercising or enforcing its rights
hereunder, including, but not limited to, costs and expenses incurred
in retaking, holding and/or preparing the Collateral for sale, lease
or other disposition, and in collecting or attempting to collect any
of the Collateral, and to the payment of all amounts payable to
Secured Party pursuant to Section 6 hereof;
(ii) Second, to the payment of the Obligations; and
(iii) Third, after payment in full of all of the
Obligations, the surplus, if any, shall be paid to Debtor or to
whomsoever may be lawfully entitled to receive such surplus.
6. INDEMNITY AND EXPENSES. Debtor agrees to indemnify Secured
Party from and against any and all claims, losses, liabilities and obligations
arising out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement or any actions taken by Secured Party pursuant to
Section 7 of this Agreement) except claims, losses, liabilities or obligations
resulting from Secured Party's own gross negligence or willful misconduct.
Debtor will on demand pay to Secured Party the amount of any and all reasonable
out of pocket costs and expenses, including but not limited to the reasonable
fees and disbursements of its counsel and of any experts or agents, which
Secured Party may incur in connection with (i) the exercise or enforcement by
Secured Party of any of its rights or remedies hereunder, or (ii) any failure by
Debtor to perform any of the Obligations.
7. FURTHER ASSURANCES AND POWER OF ATTORNEY. Debtor will execute
and deliver to Secured Party, at Secured Party's request, at any time and from
time to time, such financing statements and other instruments and documents (and
pay the cost of filing or recording the same in all public offices deemed
necessary or desirable by Secured Party) and do such other acts and things as
Secured Party may reasonably deem necessary or desirable in order to establish
and maintain a valid Lien in the Collateral in favor of Secured Party (free and
clear of all other Liens, except for Permitted Liens) or in order to facilitate
the collection of the Collateral. To effectuate the rights and remedies of
Secured Party hereunder, Debtor hereby irrevocably appoints Secured Party
attorney-in-fact for Debtor in the name of Debtor or Secured Party, with full
power of substitution, after the occurrence and during the continuance of any
Event of Default, to sign, execute and deliver any and all instruments,
documents, licenses, sublicenses, registrations, filings and other writings and
do any and all acts and things to the same extent as Debtor could do, to sell,
assign and transfer any Collateral, including, but not limited to, taking all
action necessary or desirable to obtain the approval of any governmental
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body to the transfer or issuance to Secured Party or any other person, firm or
corporation of any Collateral.
8. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (ii) the exercise by Secured Party of any of
its rights hereunder shall not release Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(iii) Secured Party shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Secured Party be obligated to perform any of the obligations or duties
of Debtor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
9. (INTENTIONALLY LEFT BLANK)
10. WAIVERS; REMEDIES CUMULATIVE. Debtor waives notice of the
acceptance of this Agreement and all other notices, demands or protests to which
Debtor might otherwise be entitled by law in respect to this Agreement, the
Obligations or the Collateral, and which may be lawfully waived. Secured Party
shall have no duty as to the collection or protection of the Collateral or any
income thereon, nor as to the preservation of rights against prior parties, nor
as to the preservation of any rights pertaining to the Collateral beyond
reasonable care in the custody or preservation thereof. Secured Party may
exercise its rights and remedies with respect to the Collateral without
resorting or regard to other security or sources for payment. All rights and
remedies of Secured Party hereunder or with respect to the Obligations or the
Collateral shall be cumulative and may be exercised singularly or concurrently.
11. ASSIGNMENT. If at any time or times by sale, assignment,
negotiation, pledge or otherwise, Secured Party transfers any of the
Obligations, such transfer shall carry with it such Secured Party's rights and
remedies under this Agreement with respect to the Obligations transferred, and
the transferee shall become vested with such rights and remedies whether or not
they are specifically referred to in the transfer. If and to the extent Secured
Party retains any other Obligations, Secured Party shall continue to have the
rights and remedies herein set forth with respect thereto.
12. NOTICES. Any notice or communication required or permitted to
be given or delivered under this Agreement shall be in writing and shall be
given in accordance with the procedures set forth in Section 7.2 of the Credit
Agreement. Debtor's address and Secured Party's address for notices or
communications shall be as stated in the Credit Agreement.
13. GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California applicable to contracts made
and to be performed in the State of California, except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of California. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law,
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34
but if any provision of this Agreement shall be prohibited or invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
14. MISCELLANEOUS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. This Agreement shall be
binding upon Debtor and its successors and assigns, and all persons claiming
under or through Debtor or any such successor or assign, and shall inure to the
benefit of and be enforceable by Secured Party and its successors and assigns.
Upon payment in full and performance of the Obligations, this Agreement shall
terminate and be of no further force and effect, and Secured Party will
redeliver and reassign to Debtor the remaining Collateral and take all action
necessary to terminate the security interest of the Secured Party in the
Collateral.
15. COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements hereto and thereto 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. Each
such agreement shall become effective upon the execution of a counterpart hereof
or thereof by each of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Security
Agreement as of the day and year first above written.
DEBTOR:
MAXTOR CORPORATION
By: Xxxxxx Xxxxxx
--------------------------------------
Title: Vice President, Finance
-----------------------------------
SECURED PARTY:
HYUNDAI ELECTRONICS AMERICA
By: X. X. Xxx
--------------------------------------
Title: President
-----------------------------------
8
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SCHEDULE 2.1
MAXTOR SUBSIDIARIES
Wholly owned subsidiaries:
Maxtor Peripherals (S) Pte. Limited
Maxtor Hong Kong Limited
Maxtor Thailand Limited
IMS International Manufacturing Services, Ltd.
Maxtor Ireland Limited
IMS Thailand Limited
Partially owned subsidiary:
Storage Dimensions, Inc. - 32.8% ownership interest
36
SCHEDULE 2.3
REQUIRED CONSENTS
1. Approval of the Special Committee of the Maxtor Board
2. Consent of Required Lenders in the Citibank $100,000,000
Syndicated Credit Facility
37
SCHEDULE 2.4
LITIGATION
1) Maxtor Corporation v. MiniScribe Corporation and Rodime PLC
2) Maxtor Corporation, a Delaware corporation, Plaintiff, v. Zilog Asia
Limited, a corporation, et al.
3) Xxxxxxx Xxxxxxxxxx, Xx. v. Maxtor Corp., et al.
4) Xxxxxx Xxxxxxxxx, Plaintiff v. Xxxxxxx X. Xxxxx, et al., Defendants
5) Xxxxxx Xxxxxx, Plaintiff, v. Maxtor Corporation, et al., Defendants
6) Xxxxxxx Xxxxxx Xxxxxxxxxx, Plaintiff, v. Xxxxxxx X. Xxxxx, et al.,
Defendants
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SCHEDULE 2.5
MATERIALLY ADVERSE EFFECT
1. Continued accumulation of operating losses since September 30, 1995 through
March 30, 1996 of up to $35 million.
2. Continued decline of the Company's combined net worth and convertible
subordinated debt to no less than $55 million.
39
SCHEDULE 2.12
EXISTING DEBT
1. $100 Million Syndicated Credit Agreement between Maxtor Corporation and
Citibank, N.A. as Agent and Lender, dated August 31, 1995.
2. $2 Million Term Loan Agreement between Maxtor Corporation and General
Electric Capital Corporation, dated April 14, 1992.
3. $4 Million Loan and Security Agreement between Maxtor Corporation and
Household Bank, f.s.b. dated December 11, 1992.
4. $4 Million Term Loan Agreement between Maxtor (Hong Kong) Ltd. and General
Electric Capital Corporation, dated September 25, 1992.
5. $100 Million Indenture dated as of March 1, 1987 by Maxtor Corporation, a
Delaware Corporation and Maxtor Corporation, a California Corporation, in
favor of Security Pacific National Bank, as trustee.
6. $2 Million Loan and Security Agreement between Maxtor Corporation and
Household Bank, f.s.b. dated June 14, 1993.
40
SCHEDULE 2.13
EXISTING LIENS WITH THE CIT GROUP
JURISDICTION DATE FILED INSTRUMENT #
------------ ---------- ------------
CALIFORNIA 8/17/93 93165241
COLORADO 8/17/93 00-0000000
FLORIDA 8/17/93 930000172738
GEORGIA 8/20/93 000798007
ILLINOIS 8/17/93 3157309
MASSACHUSETTS 8/19/93 Bk ccll Page 95
MASSACHUSETTS 8/17/93 180381
MINNESOTA 8/17/93 1609856
NEW HAMPSHIRE 8/17/93 406864
NEW HAMPSHIRE 8/18/93 93-26
NORTH CAROLINA 8/17/93 025701
NORTH CAROLINA 8/17/93 93-13137
TEXAS 8/17/93 158834
VIRGINIA 8/17/93 93-007748
VIRGINIA 8/17/93 9308177716
41
SCHEDULE 2.13
OTHER EXISTING LIENS
INSTRUMENT
JURISDICTION SECURED PARTY DATE FILED NUMBER
------------ --------------------------------- ---------- ----------
California Comdisco, Inc. 7/24/95 9520860873
California New England Capital Corporation
(assignee of Capital
Associates Intl. Inc.) 9/7/93 93182538
California The CIT Group/Business Credit
Inc. As Agent 8/17/93 93165241
California Xxxxxx Financial Inc. (assignee
of Capital Associates Intl. Inc.) 7/29/93 93154359
California U. S. Leasing Intl. Inc. 7/13/93 93141104
California Household Commercial of CA Inc. 6/24/93 93128843
California Capital Associates Intl. Inc. and
Xxxxxx Financial Inc. 5/5/93 93091286
California Erskine Omi of CA 5/3/93 93089414
California Hewlett-Packard Co. 3/29/93 93062948
California Hewlett-Packard Co. 3/29/93 93063004
California Household Bank 12/17/92 92268286
California Hewlett-Packard Co. 9/10/92 92197107
California Hewlett-Packard Co. 6/4/92 92122942
California Chrysler Capital Corp., And GE
Capital Corp. 4/17/92 92078310
California Hewlett Packard 2/28/92 92040433
California Hewlett Packard 10/7/91 91217087
California Hewlett Packard 7/29/91 91164675
California Hewlett Packard 4/26/91 91091971
42
California Hewlett Packard 2/4/91 91022158
California Marine Midland Bank 9/19/86 86235488
(continuation
4/15/91)
California Leasing Service Corp. 6/17/86 86154140
(Assignee of
Venturelease I) (continuation
4/15/91)
California Textron Financial Corp. 6/6/86 86144705
(continuation
1/28/91)
California Leasing Service Corp. 4/23/86 86101767
(Assignee of
Venturelease I) (continuation
2/28/91)
California Leasing Service Corp. 4/23/86 86101767
(Assignee of
Venturelease I) (continuation
2/28/91)
California Leasing Service Corp. 4/22/86 86099419
(Assignee
of Venturelease I) (continuation
2/28/91)
California Textrol Financial Corp. 4/14/86 86094865
(continuation
1/8/91)
California Textron Financial Corp. 4/14/86 86094867
(continuation
1/8/91)
California Textron Financial Corp. 4/14/86 86094868
(continuation
1/8/91)
