UNSIGNED
EXECUTION COPY
CREDIT AGREEMENT
Dated as of October 7, 1996
Between
KOMAG, INCORPORATED
as Borrower
and
THE DAI-ICHI KANGYO BANK, LIMITED,
acting through its San Francisco Agency
as Lender
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms ....................................... 1
SECTION 1.02. Computation of Time Periods ................................. 10
SECTION 1.03. Accounting Terms ............................................ 10
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances ................................................ 11
SECTION 2.02. Making the Advances ......................................... 11
SECTION 2.03. Repayment of Advances ....................................... 12
SECTION 2.04. Termination or Reduction of the Commitments ................. 12
SECTION 2.05. Prepayments ................................................. 12
SECTION 2.06. Interest .................................................... 12
SECTION 2.07. Fees ........................................................ 13
SECTION 2.08. Conversion of Advances ...................................... 13
SECTION 2.09. Increased Costs, Etc ........................................ 14
SECTION 2.10. Payments and Computations ................................... 16
SECTION 2.11. Taxes ....................................................... 16
SECTION 2.12. Use of Proceeds ............................................. 18
SECTION 2.13. Extension of Scheduled Termination Date ..................... 18
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Borrowing ................... 19
SECTION 3.02. Conditions Precedent to Each Borrowing ...................... 20
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower .............. 20
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants ....................................... 23
SECTION 5.02. Financial Covenants ......................................... 26
SECTION 5.03. Negative Covenants .......................................... 26
SECTION 5.04. Effect of Dastek Increase Notice ............................ 27
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default ........................................... 28
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc ............................................. 30
SECTION 7.02. Notices, Etc ................................................ 31
SECTION 7.03. No Waiver; Remedies ......................................... 31
SECTION 7.04. Costs, Expenses ............................................. 31
SECTION 7.05. Right of Set-off ............................................ 32
SECTION 7.06. Binding Effect .............................................. 32
SECTION 7.07. Assignments and Participation ............................... 32
SECTION 7.08. Execution in Counterparts ................................... 33
SECTION 7.09. Confidentiality ............................................. 33
SECTION 7.10. Governing Law ............................................... 34
ii
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Confidentiality Agreement
Exhibit D - Form of Compliance Computation Schedule
iii
EXECUTION COPY
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of October 7, 1996 (this
"Agreement") between Komag, Incorporated, a Delaware corporation (the
"Borrower"), and The Dai-Ichi Kangyo Bank, Limited (the "Lender"), acting
through its San Francisco Agency. The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Advance" has the meaning set forth in Section 2.01.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 5% or more of the Voting Stock of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or
otherwise.
"Applicable Lending Office" means, the Lender's Domestic
Lending Office in the case of a Base Rate Advance or Federal Funds Rate
Advance and the Lender's LIBOR Lending Office in the case of a LIBOR
Advance.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the rate of interest announced publicly by the Lender in New
York, New York, from time to time, as the Lender's base rate (which
rate is not necessarily the lowest rate of interest charged by the
Lender).
"Base Rate Advance" means an Advance that bears interest as
provided in Section 2.06(a)(i).
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"Borrower" has the meaning specified in the recital of parties
to this Agreement.
"Borrower's Account" means the account of the Borrower
maintained by the Borrower with Xxxxx Fargo Bank, N.A. at its office at
000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx 00000, Account No.
684501705.
"Borrowing" means a borrowing consisting of an Advance of a
single Type made by the Lender.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in San Francisco or New York
City and, if the applicable Business Day relates to any LIBOR Advances
or Federal Funds Rate Advances, on which dealings are carried on in the
London interbank market or Federal funds market, respectively.
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"Commitment" means, at any time, the amount set forth opposite
the Lender's name on the signature pages hereto under the caption
"Commitment," as such amount may be reduced at or prior to such time by
reductions in the Unused Commitment pursuant to Section 2.04.
"Confidentiality Agreement" means a confidentiality agreement
in substantially the form of Exhibit C.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP; provided, however, that Asahi Komag Co., Ltd.
shall not be deemed to be a Consolidated Subsidiary of the Borrower for
purposes of this Agreement.
"Conversion", "Convert" and "Converted" each refer to a
conversion of an Advance of one Type into an Advance of another Type
pursuant to Section 2.08 or 2.09.
"Dastek Increase Notice" has the meaning specified in Section
5.03(c).
"Dastek(M)" means Dastek(M) SDN BHD, a Malaysian corporation.
"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.
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"Domestic Lending Office" means the office of the Lender
specified as its "Domestic Lending Office" on the signature pages
hereto or such other office of the Lender as the Lender may from time
to time specify to the Borrower.
"EBITDA" means, for any period, the sum, determined on a
Consolidated basis, of (a) net income (or net loss), (b) interest
expense, (c) income tax expense, (d) depreciation expense and (e)
amortization expense, in each case of the Borrower and its
Subsidiaries, determined in accordance with GAAP for such period.
"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, any Environmental Permit or Hazardous Material or arising from
alleged injury or threat 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 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, writ, judgment,
injunction, 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.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Consolidated Subsidiary of the
Borrower that for purposes of Title IV of ERISA is a member of the
controlled group of the Borrower, or under common control with the
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
4
subsection (2) of such Section) are met with respect to 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 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 grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"Events of Default" has the meaning specified in Section 6.01.
"Federal Funds Advance Rate" means, for any Federal Funds
Interest Period, a fluctuating interest rate per annum equal from time
to time during such Federal Funds Interest Period to the Federal Funds
Rate as in effect from time to time during such Federal Funds Interest
Period.
"Federal Funds Interest Period" means, for each Federal Funds
Rate Advance, the period commencing on the date of such Federal Funds
Rate Advance or the date of the Conversion of any Base Rate Advance or
LIBOR Advance into such Federal Funds Rate Advance, and ending on the
last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Federal Funds Interest Period
and ending on the last day of the period selected by the Borrower
pursuant to the provisions below. The duration of each such Federal
Funds Interest Period shall be one, two, three, six, nine or twelve
months, as the Borrower may, upon notice received by the Lender not
later than 10:00 A.M. (San Francisco time) on the Business Day that is
the first day of such Federal Funds Interest Period, select; provided,
however, that:
5
(a) whenever the last day of any Federal Funds
Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Federal Funds Interest
Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would
cause the last day of such Federal Funds Interest Period to
occur in the next following calendar month, the last day of
such Federal Funds Interest Period shall occur on the next
preceding Business Day; and
(b) whenever the first day of any Federal Funds
Interest Period occurs on a day of an initial calendar month
for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by
the number of months equal to the number of months in such
Federal Funds Interest Period, such Federal Funds Interest
Period shall end on the last Business Day of such succeeding
calendar month.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"Federal Funds Rate Advance" means an Advance that bears
interest as provided in Section 2.06(a)(iii).
"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means (a) petroleum or petroleum
products, by-products 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.
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money, (b) that portion of obligations
with respect to Capitalized Leases which is classified as a liability
on a balance sheet in conformity with GAAP, (c) notes payable and
drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (d) any obligation owed
for all or any part of the deferred purchase price of property or
services which purchase price is (i) due more than six months from the
date of incurrence of the obligation in respect thereof or (ii)
evidenced by a note or similar written instruments, (e) all
Indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the Indebtedness secured thereby
shall have been assumed by that Person
6
or is non-recourse to the credit of that Person and (f) all
Indebtedness of others referred to in clauses (a) through (e) above
where both (i) such Indebtedness has become due and payable and demand
for such payment has been made and (ii) such Indebtedness is guaranteed
directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement
(A) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (B) 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 Indebtedness or to assure the holder of such
Indebtedness against loss, (C) 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 (D) otherwise to assure a creditor
against loss.
"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.
"Interest Period" means (i) in reference to any LIBOR Advance,
the LIBOR Interest Period for such Advance and (ii) in reference to any
Federal Funds Rate Advance, the Federal Funds Interest Period for such
Advance.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Lender" has the meaning specified in the recital of parties
to this Agreement.
"Lender's Account" means the account of the Lender maintained
by the Lender at The Dai-Ichi Kangyo Bank, Limited, New York Branch,
Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; ABA No. 000-000-000;
Account No. 000-000-000000; Reference: Komag, Incorporated; Attention:
DKB San Francisco Agency.
"LIBO Rate" means, for any Interest Period for all LIBOR
Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing
(i) the higher of (A) the rate per annum displayed at
9:00 A.M. (San Francisco time) two Business Days before the first day
of such Interest Period on Telerate page 3750 (or such other page as
may replace such page on the Telerate service for the purpose of
displaying interest rates at which deposits in U.S. dollars are offered
by prime banks in the London interbank market) for deposits in U.S.
dollars in an amount substantially equal to the Advance to which such
Interest Period pertains and for a period equal to such Interest Period
and (B) the rate per annum at which deposits in U.S. dollars are
offered by the principal office of the Lender in London, England, to
prime banks in the London interbank market at 9:00 A.M. (San
7
Francisco time) two Business Days before the first day of such Interest
Period in an amount substantially equal to the Advance to which such
Interest Period pertains and for a period equal to such Interest
Period; by
(ii) a percentage equal to 100% minus the LIBOR
Reserve Percentage for such Interest Period.
"LIBOR Advance" means an Advance that bears interest as
provided in Section 2.06(a)(ii).
"LIBOR Interest Period" means, for each LIBOR Advance, the
period commencing on the date of such LIBOR Advance or the date of the
Conversion of any Base Rate Advance or Federal Funds Rate Advance into
such LIBOR Advance, and ending on the last day of the period selected
by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately
preceding LIBOR Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such LIBOR Interest Period shall be one, two, three,
six, nine or twelve months, as the Borrower may, upon notice received
by the Lender not later than 10:00 A.M. (San Francisco time) on the
third Business Day prior to the first day of such LIBOR Interest
Period, select; provided, however, that:
(a) whenever the last day of any LIBOR Interest
Period would otherwise occur on a day other than a Business
Day, the last day of such LIBOR Interest Period shall be
extended to occur on the next succeeding Business Day,
provided, however, that, if such extension would cause the
last day of such LIBOR Interest Period to occur in the next
following calendar month, the last day of such LIBOR Interest
Period shall occur on the next preceding Business Day; and
(b) whenever the first day of any LIBOR Interest
Period occurs on a day of an initial calendar month for which
there is no numerically corresponding day in the calendar
month that succeeds such initial calendar month by the number
of months equal to the number of months in such LIBOR Interest
Period, such LIBOR Interest Period shall end on the last
Business Day of such succeeding calendar month.
"LIBOR Lending Office" means the office of the Lender
specified as its "LIBOR Lending Office" on the signature pages hereto,
or such other office of the Lender as the Lender may from time to time
specify to the Borrower.
"LIBOR Reserve Percentage" for any LIBOR Interest Period for
all LIBOR Advances comprising part of the same Borrowing means the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal
8
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal
Reserve System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference
to which the interest rate on LIBOR Advances is determined) having a
term equal to such LIBOR Interest Period.
"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 the Note, in each
case as amended or otherwise modified from time to time.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance or properties of the Borrower and its Consolidated
Subsidiaries, taken as a whole.
"Material Adverse Effect" means any material adverse effect on
(a) the business, condition (financial or otherwise), operations or
properties of the Borrower taken separately or on the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies
of the Lender under this Agreement or the Note or (c) the ability of
the Borrower to perform its obligations under this Agreement and the
Note.
"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 plan 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 the 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 the 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.
"Net Worth" of any Person means the positive excess of (i) the
Consolidated total assets of such Person and its Subsidiaries over (ii)
the Consolidated total liabilities of such Person and its Subsidiaries,
in each case determined in accordance with GAAP.
9
"Note" means a promissory note of the Borrower payable to the
order of the Lender, in substantially the form of Exhibit A hereto,
evidencing the indebtedness of the Borrower to the Lender resulting
from the Advances made by the Lender.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"OECD" means the Organization for Economic Cooperation and
Development.
"Other Taxes" has the meaning specified in Section 2.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Scheduled Termination Date" means the fourth anniversary of
the date of this Agreement or such later anniversary thereof as the
Lender shall have agreed to as the Scheduled Termination Date pursuant
to Section 2.13.
"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 the Borrower and the ERISA Affiliates or (b) was so maintained and
in respect of which the 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.
"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 partnership, joint
venture or limited liability company 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.
"Tangible Net Worth" means, at any date of determination, the
positive excess of total assets over total liabilities of the Borrower
and its Consolidated Subsidiaries determined on a Consolidated basis,
excluding, however from the determination of total assets (i) all
intangible assets, including, without limitation, goodwill (whether
10
representing the excess cost over book value of assets acquired or
otherwise), patents, trademarks, trade names, copyrights, franchises,
and deferred charges (including, without limitation, unamortized debt
discount and expense, organization and research and product development
costs), (ii) treasury stock, (iii) cash set apart and held in a sinking
or other analogous fund established for the purpose of redemption or
other retirement of capital stock, and (iv) to the extent not already
deducted from total assets, reserves for depreciation, depletion,
obsolescence, and/or amortization of properties and all other reserves
or appropriation of retained earnings which, in accordance with GAAP,
should be established in connection with the business conducted by the
relevant entity.
"Taxes" has the meaning specified in Section 2.11(a).
"Termination Date" means the earlier of (i) the Scheduled
Termination Date and (ii) the date of termination in whole of the
Commitments pursuant to Section 2.04 or 6.01.
"Total Capitalization" of any Person means the sum of (i) the
amount of Consolidated Indebtedness of such Person and its Subsidiaries
plus (ii) the amount of the Consolidated Net Worth of such Person and
its Subsidiaries.
"Type" refers to the distinction between Advances bearing
interest at the Base Rate, Advances bearing interest at the LIBO Rate
and Advances bearing interest at the Federal Funds Advance Rate.
"Unused Commitment" means, at any time, (a) the Lender's
Commitment at such time minus (b) the sum of (i) the aggregate
principal amount of all Advances made by the Lender and outstanding at
such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the
happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles
11
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01(e) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. The Lender agrees, on the terms
and conditions hereinafter set forth, to make advances (each an "Advance") to
the Borrower from time to time on any Business Day during the period from the
date hereof until the Termination Date in an amount for each such Advance not to
exceed the Lender's Unused Commitment at such time. Each Borrowing shall be in
an aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof. Within the limits of the Lender's Unused Commitment in effect from time
to time, the Borrower may borrow under this Section 2.01(a), prepay pursuant to
Section 2.05 and reborrow under this Section 2.01(a).
SECTION 2.02. Making the Advances. (a) Each Borrowing shall be
made on notice, given not later than 10:00 A.M. (San Francisco time) on the
third Business Day prior to the date of the proposed Borrowing, in the case of a
Borrowing consisting of a LIBOR Advance, or the Business Day that is the date of
the proposed Borrowing, in the case of a Borrowing consisting of a Base Rate
Advance or Federal Funds Rate Advance, by the Borrower to the Lender. Each such
notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, in substantially the form of
Exhibit B hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Type of Advance comprising such Borrowing, (iii) amount of the Advance to
comprise such Borrowing and (iv) in the case of a Borrowing consisting of a
LIBOR Advance or Federal Funds Rate Advance, initial LIBOR Interest Period or
Federal Funds Interest Period, as the case may be, for such Advance. The Lender
shall, before 2:00 P.M. (San Francisco time) on the date of such Borrowing, make
available for the account of its Applicable Lending Office to the Borrower,
subject to fulfillment of the applicable conditions set forth in Article III,
funds in the amount of the Advance made in such Borrowing by crediting the
Borrower's Account.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select a LIBOR Advance or Federal
Funds Rate Advance, as the case may be in an amount of less than $1,000,000 or
if the obligation of the Lender to make LIBOR Advances or Federal Funds Rate
Advances, as the case may be, shall then be suspended pursuant to Section 2.08
or Section 2.09 and (ii) not more than six Advances may be outstanding at any
time.
(c) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of a LIBOR Advance or Federal Funds Rate
Advance, the Borrower shall
12
indemnify the Lender against any loss, cost or expense incurred by the Lender as
a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by the Lender to fund the Advance to be made by the Lender in such Borrowing
when such Advance, as a result of such failure, is not made on such date.
SECTION 2.03. Repayment of Advances. The Borrower shall repay
to the Lender on the Termination Date the aggregate outstanding principal amount
of the Advances then outstanding.
SECTION 2.04. Termination or Reduction of the Commitments. The
Borrower may, upon at least five Business Days' notice to the Lender, terminate
in whole or reduce in part the Unused Commitment; provided, however, that each
such partial reduction shall be in an aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof.
SECTION 2.05. Prepayments. The Borrower may, upon at least one
Business Day's notice in the case of Base Rate Advances or Federal Funds Rate
Advances and three Business Days' notice in the case of LIBOR Advances, in each
case to the Lender stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Borrower shall, prepay the
outstanding aggregate principal amount of an Advance in whole or in part,
together with (i) accrued interest to the date of such prepayment on the
aggregate principal amount prepaid; provided, however, that (x) each partial
prepayment shall be in an aggregate principal amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof and (y) if any prepayment of a
LIBOR Advance or Federal Funds Rate Advance is made on a date other than the
last day of an Interest Period for such Advance the Borrower shall also pay any
amounts owing pursuant to Section 7.04(b).
SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to the
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the Base
Rate in effect from time to time, payable in arrears monthly on the
first day of each month during such periods and on the date such Base
Rate Advance shall be Converted or paid in full.
(ii) LIBOR Advances. During such periods as such Advance is a
LIBOR Advance, a rate per annum equal at all times during each LIBOR
Interest Period for such Advance to the sum of (A) the LIBO Rate for
such Interest Period for such Advance plus (B) 0.375%, payable in
arrears on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day
13
that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such LIBOR Advance
shall be Converted or paid in full.
(iii) Federal Funds Rate Advances. During such periods as such
Advance is a Federal Funds Rate Advance, a rate per annum equal at all
times during each Federal Funds Interest Period for such Advance to the
sum of (A) the Federal Funds Advance Rate in effect from time to time
during such Interest Period plus (B) 0.375%, payable in arrears on the
last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day that occurs during such
Interest Period every three months from the first day of such Interest
Period and on the date such Federal Funds Rate Advance shall be
Converted or paid in full.
(b) Default Interest. To the fullest extent permitted by law,
the Borrower shall pay interest on the amount of any principal, interest, fee or
other amount payable hereunder that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of principal or interest, on the Type of Advance comprised of such
principal or on which such interest has accrued pursuant to clause (a)(i),
(a)(ii) or (a)(iii) above, and, in all other cases, on Base Rate Advances
pursuant to clause (a)(i) above.
SECTION 2.07. Fees. (a) Facility Fee. The Borrower shall pay
to the Lender a facility fee, payable quarterly on the first Business Day of
each December, March, June and September, commencing December 1, 1996, and on
the Termination Date, accruing from the date hereof until the Termination Date
at the rate of 0.1875% per annum on the amount of the Lender's Commitment as in
effect on such due date for payment.
(b) Upfront Fee. The Borrower agrees to pay to the Lender an
upfront fee in the amount $35,000 (being 0.10% of the Commitment on the date
hereof), payable upon execution of this Agreement.
(c) Administration Fee. The Borrower agrees to pay the Lender
an administration fee of $1000 per annum, payable in advance in semiannual
installments of $500 each, with the first such installment to be paid on the
date of execution of this Agreement and each subsequent installment to be paid
on the last day of each six month period after the date of this Agreement until
such time as all obligations under the Credit Agreement have been paid in full
and the Commitment terminated.
SECTION 2.08. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Lender not later than
10:00 A.M. (San Francisco time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.06 and 2.09,
Convert an Advance of one Type into an
14
Advance of another Type; provided, however, that (i) any Conversion of a LIBOR
Advance into a Base Rate Advance or Federal Funds Rate Advance, and any
Conversion of a Federal Funds Rate Advance into a Base Rate Advance or LIBOR
Advance, shall be made only on the last day of an Interest Period for such LIBOR
Advance or Federal Funds Rate Advance, as the case may be, (ii) any Conversion
of an Advance into a LIBOR Advance or Federal Funds Rate Advance shall be in an
amount not less than the minimum amount specified in Section 2.02(b) and (iii)
no Conversion of any Advance shall result in more Advances being outstanding
than permitted under Section 2.02(b). Each such notice of Conversion shall,
within the restrictions specified above, specify (x) the date of such
Conversion, (y) the Advance to be Converted and (z) if such Conversion is into a
LIBOR Advance or Federal Funds Rate Advance, the duration of the initial
Interest Period for such Advance. Each notice of Conversion shall be irrevocable
and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of any LIBOR Advance or Federal Funds Rate Advance, as the case
may be, shall be reduced, by payment or prepayment or otherwise, to less than
$1,000,000, such Advance shall automatically Convert into a Base Rate Advance.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any LIBOR Advance or Federal Funds Rate Advance, as the case
may be, in accordance with the provisions contained in the definition of "LIBOR
Interest Period" or "Federal Funds Interest Period", as the case may be, in
Section 1.01, the Lender will forthwith so notify the Borrower, whereupon each
such LIBOR Advance or Federal Funds Rate Advance, as the case may be, will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance.
(iii) Upon the occurrence and during the continuance of any
Event of Default, (x) each LIBOR Advance and each Federal Funds Rate Advance
will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance and (y) the obligation of the Lender
to make, or to Convert Advances into, LIBOR Advances or Federal Funds Rate
Advances shall be suspended.
SECTION 2.09. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in, or in any written interpretation by any
central bank or other governmental authority of competent jurisdiction of, any
law or regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to the Lender of agreeing to make
or of making, funding or maintaining LIBOR Advances (excluding for purposes of
this Section 2.09 any such increased costs resulting from (i) taxes covered by
the gross-up and indemnification provisions of Section 2.11 and (ii) changes in
the basis of taxation of overall net income or overall gross income by the
United States or by the foreign jurisdiction or state under the laws of which
the Lender is organized or has its Applicable Lending Office or any political
subdivision thereof), then the Borrower shall from time to time, upon demand by
the Lender, pay to the Lender additional amounts sufficient to compensate the
Lender for such increased cost; provided, however, that if the Lender should
15
claim additional amounts under this Section 2.09(a) the Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost that may thereafter accrue and would not, in the reasonable
judgment of the Lender, be otherwise disadvantageous to the Lender. A
certificate as to the amount of such increased cost set forth in reasonable
detail, submitted to the Borrower by the Lender, shall be presumptive evidence
of such increased cost.
(b) If, due to either (i) the introduction of or any change
in, or in any written interpretation by any central bank or other governmental
authority of competent jurisdiction of, any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required or expected to be maintained by
the Lender as a result of or based upon the existence of the Lender's commitment
to lend hereunder and other commitments of such type, then, upon demand by the
Lender, the Borrower shall pay to the Lender, from time to time as specified by
the Lender, additional amounts sufficient to compensate the Lender in the light
of such circumstances, to the extent that such increase in capital is allocable
to the existence of the Lender's commitment to lend hereunder. A certificate as
to such amounts submitted to the Borrower by the Lender shall be presumptive
evidence of such increased cost.
(c) If, with respect to any LIBOR Advance or Federal Funds
Rate Advance the Lender reasonably determines that the LIBO Rate or Federal
Funds Interest Rate, as the case may be, for any Interest Period for such
Advance will not adequately reflect the cost to the Lender of making, funding or
maintaining such LIBOR Advance or Federal Funds Rate Advance, as the case may
be, for such Interest Period, the Lender shall forthwith so notify the Borrower,
whereupon (i) such LIBOR Advance or Federal Funds Rate Advance, as the case may
be, will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lender
to make, or to Convert Advances into, LIBOR Advances or Federal Funds Rate
Advances, as the case may be, shall be suspended until the Lender shall notify
the Borrower that it has determined that the circumstances causing such
suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in, or in any written interpretation by any
central bank or other governmental authority of competent jurisdiction of, any
law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for the Lender or its
LIBOR Lending Office to perform its obligations hereunder to make LIBOR Advances
or to continue to fund or maintain LIBOR Advances hereunder, then, on notice
thereof and demand therefor by the Lender to the Borrower, (i) each LIBOR
Advance will automatically, upon such demand, Convert into a Base Rate Advance
and (ii) the obligation of the Lender to make, or to Convert Advances into,
LIBOR Advances shall be suspended until the Lender shall notify the Borrower
that it has determined that the circumstances causing such suspension no longer
exist; provided, however, that, before making any such demand, the Lender agrees
to use reasonable efforts (consistent with its
16
internal policy and legal and regulatory restrictions) to designate a different
LIBOR Lending Office if the making of such a designation would allow the Lender
or its LIBOR Lending Office to continue to perform its obligations to make LIBOR
Advances or to continue to fund or maintain LIBOR Advances and would not, in the
reasonable judgment of the Lender, be otherwise significantly disadvantageous to
the Lender.
SECTION 2.10. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Note, irrespective of any right
of counterclaim or set-off, not later than 11:00 A.M. (San Francisco time) on
the day when due in U.S. dollars to the Lender at the Lender's Account in same
day funds, which shall be applied for the account of the Lender's Applicable
Lending Office.
(b) The Borrower hereby authorizes the Lender, if and to the
extent payment owed to the Lender is not made when due hereunder or under the
Note, to charge from time to time against any or all of the Borrower's accounts
with the Lender any amount so due. The Lender agrees promptly to notify the
Borrower after any such charge to the Borrower's accounts; provided, however,
that the failure to give such notice shall not affect the validity of such
charge.
(c) All computations of interest based on the Base Rate or
Federal Funds Rate shall be made by the Lender on the basis of a year of 365 or
366 days, as the case may be, and all computations of interest based on the LIBO
Rate and of fees shall be made by the Lender on the basis of a year of 360 days,
in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period, if any, for which such interest
or fees are payable. Each determination by the Lender of an interest rate
hereunder or fee payable under Section 2.07, as the case may be, shall be
conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Note shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or accruing fees, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of any LIBOR Advance or Federal Funds Rate Advance
to be made in the next following calendar month, such payment shall be made on
the next preceding Business Day.
SECTION 2.11. Taxes. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.10, free and clear of and
without deduction for any and all future (after the date hereof) taxes, levies,
imposts or withholdings, and all liabilities with respect thereto, excluding net
income taxes that are imposed on the Lender by the United States or any other
governmental entity (all such non-excluded taxes, levies, imposts, withholdings
and liabilities in respect of payments hereunder being referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to the Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions
17
applicable to additional sums payable under this Section 2.11) the Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes that arise from any
payment made hereunder or from the execution, delivery or registration of,
performing under, or otherwise with respect to, this Agreement or the Note (all
such non-excluded taxes being referred to as "Other Taxes").
(c) The Borrower shall indemnify the Lender for the full
amount of Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 2.11, imposed on or paid by
the Lender and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be made within 30 days from the date the Lender makes written demand
therefor accompanied by a reasonably detailed explanation thereof.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Lender, at its address referred to in Section
7.02, the original receipt of payment thereof or a certified copy of such
receipt, unless such payment has been made to or through the Lender. In the case
of any payment hereunder by or on behalf of the Borrower through an account or
branch outside the United States or by or on behalf of the Borrower by a payor
that is not a United States person, if the Borrower determines that no Taxes are
payable in respect thereof, the Borrower shall furnish to the Lender a
certificate of the Borrower certifying that such payment is exempt from Taxes.
For purposes of this subsection (d) and subsection (e), the terms "United
States" and "United States person" shall have the meanings specified in Section
7701 of the Internal Revenue Code.
(e) The Lender shall, on or prior to the date of its execution
and delivery of this Agreement, and from time to time thereafter as requested in
writing by the Borrower (but only so long thereafter as the Lender remains
lawfully able to do so), provide the Borrower with two original Internal Revenue
Service forms 1001 or 4224, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that the Lender is exempt
from or entitled to a reduced rate of United States withholding tax on payments
pursuant to this Agreement or the Note. If the forms provided by the Lender at
the time the Lender first becomes a party to this Agreement indicate a United
States interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes unless and until the Lender
provides the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form. If any form or document referred to in this
subsection (e) requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service form 1001 or 4224, that the Lender reasonably
considers to be
18
confidential, the Lender shall give notice thereof to the Borrower and shall not
be obligated to include in such form or document such confidential information.
(f) For any period with respect to which the Lender has failed
to provide the Borrower with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), the Lender shall not be entitled to
indemnification under subsection (a) or (c) with respect to Taxes imposed by the
United States by reason of such failure; provided, however, that should the
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as the Lender shall reasonably
request to assist the Lender to recover such Taxes.
(g) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations of the Borrower contained in Section
2.09 and this Section 2.11 shall survive the payment in full of principal,
interest and all other amounts payable hereunder; provided, however, that the
Borrower's obligation in respect of any claim under Section 2.09 or this Section
2.11 shall terminate on the earlier to occur of (i) the 180th day after the
expiration of all applicable periods under statutes of limitations applicable to
the matters underlying such claims and (ii) the 180th day after any officer of
the Lender having principal responsibility for administering this Agreement on
behalf of the Lender has actual knowledge of the facts giving rise to such
claim. The word "hereunder" as used in this Section 2.11 also includes under the
Note.
SECTION 2.12. Use of Proceeds. The proceeds of the Advances
shall be available solely to provide working capital for the Borrower and for
general corporate purposes of the Borrower.
SECTION 2.13. Extension of Scheduled Termination Date. At
least 45 but not more than 75 days prior to the then current Scheduled
Termination Date, the Borrower, by written notice to the Lender, may request
that the Scheduled Termination Date be extended one calendar year from such then
current Scheduled Termination Date. The Lender shall in turn, within 30 days
after receipt of such extension request notice from the Borrower, notify the
Borrower in writing regarding whether the Lender will consent to such extension.
If, and only if, the Lender consents in writing to such extension prior to the
30th day after its receipt of such extension request notice from the Borrower,
the Scheduled Termination Date shall be so extended for such one calendar year
and references herein to the "Scheduled Termination Date" shall refer to such
"Scheduled Termination Date" as so extended. It is understood that the Lender
shall not have any obligation whatsoever to agree to any request made by the
Borrower for an extension of the Scheduled Termination Date.
19
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Borrowing. The
obligation of the Lender to make an Advance on the occasion of the initial
Borrowing hereunder is subject to the satisfaction of the following conditions
precedent before or concurrently with the initial Borrowing:
(a) The Borrower shall have paid all accrued fees and expenses
of the Lender (including the accrued fees (up to an amount equal to not
more than the lesser of (x) $19,000 and (y) the sum of $14,000 plus 50%
of such fees in excess of $14,000) and expenses of counsel to the
Lender) to the extent requested as of the date of the initial
Borrowing.
(b) The Lender shall have received on or before the day of the
initial Borrowing the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Lender:
(i) A Note payable to the order of the Lender in the
face amount of the Lender's Commitment.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower, approving this Agreement and the
Note, and of all documents evidencing other necessary
corporate action and governmental and other third party
approvals and consents, if any, with respect to this Agreement
and the Note.
(iii) A copy of a certificate of the Secretary of
State of the jurisdiction of the Borrower's incorporation,
dated reasonably near the date of the initial Borrowing,
listing the charter of the Borrower and each amendment thereto
on file in his office and certifying that (A) such amendments
are the only amendments to the Borrower's charter on file in
the Secretary of State's office, (B) the Borrower has paid all
franchise taxes to the date of such certificate and (C) the
Borrower is duly incorporated and in good standing under the
laws of the State of the jurisdiction of its incorporation.
(iv) A certificate of the Borrower, signed on behalf
of the Borrower by its Secretary or any Assistant Secretary,
dated the date of the initial Borrowing (the statements made
in which certificate shall be true on and as of the date of
the initial Borrowing), certifying as to (A) the absence of
any amendments to the charter of the Borrower since the date
of the Secretary of State's certificate referred to in Section
3.01(b)(iii) and (B) a true and correct copy of the bylaws of
the Borrower as in effect on the date of the initial
Borrowing.
20
(v) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign
this Agreement, the Note and the other documents to be
delivered hereunder.
(vi) A certificate of the Borrower certifying that on
and as of the date of such certificate no event has occurred
or circumstance exists that would reasonably be expected to
result in any Material Adverse Change.
SECTION 3.02. Conditions Precedent to Each Borrowing. The
obligation of the Lender to make an Advance on the occasion of each Borrowing
(including the initial Borrowing) shall be subject to the further conditions
precedent that on the date of such Borrowing (a) the following statements shall
be true (and each of the giving of the applicable Notice of Borrowing and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that both on the date of such notice
and on the date of such Borrowing such statements are true):
(i) the representations and warranties contained in Article IV
hereof are correct on and as of such date, before and after giving
effect to such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date ; and
(ii) no event has occurred and is continuing, or would result
from such Borrowing or from the application of the proceeds therefrom,
that constitutes a Default;
and (b) the Lender shall have received such other approvals or documents as the
Lender may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
indicated at the beginning of this Agreement.
(b) The execution, delivery and performance by the Borrower of
this Agreement and the Note are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, and (i) do
not and will not contravene, conflict with or result in a breach of or
default under (a) the Borrower's charter or
21
by-laws or (b) except in the case of any noncompliance that would not
reasonably be expected to have a Material Adverse Effect, any law or
any contractual provision binding on or affecting the Borrower or any
of its Consolidated Subsidiaries and (ii) do not and will not result in
or require the creation or imposition of any Lien upon or in respect of
any of the properties of the Borrower or any of its Consolidated
Subsidiaries. . (c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority, regulatory
body or other third party is required for the due execution, delivery
and performance by the Borrower of this Agreement or the Note.
(d) This Agreement is, and the Note when delivered hereunder
will be, the legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt, moratorium and other
similar laws affecting creditors' rights generally and to the effect of
general principles of equity.
(e) The Consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 1995, and the related Consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for the fiscal year then ended, accompanied by an opinion
of Ernst & Young, independent public accountants, and the Consolidated
balance sheets of the Borrower and its Subsidiaries as at June 30,
1996, and the related Consolidated statements of income and cash flows
of the Borrower and its Subsidiaries for the six months then ended,
copies of all of which have been furnished to the Lender, fairly
present the financial condition of the Borrower and its Subsidiaries as
at such dates and the results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates (subject, in the case
of such statements as at June 30, 1996, to customary fiscal year-end
adjustments), all in accordance with generally accepted accounting
principles consistently applied, and since June 30, 1996, there has
been no Material Adverse Change.
(f) There is no pending or, to the Borrower's knowledge,
threatened action, suit, investigation, litigation or proceeding
affecting the Borrower or any of its Consolidated Subsidiaries before
any court, governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, or any arbitrator which would
reasonably be expected to result in a Material Adverse Effect.
(g) No proceeds of the Advances will be used to acquire any
equity security, including, without limitation, any equity security of
a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, except to the extent permitted under Section
5.03(b).
22
(h) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of the Advances will be used
to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
(i) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan.
(j) 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 Material Adverse Change
arising from the funding status of any such Plan since such date.
(k) Neither the Borrower nor any ERISA Affiliate has incurred
or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.
(l) Neither the 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.
(m) Except as set forth in the financial statements referred
to in this Section 4.01 and in Section 5.01, the Borrower and its
Consolidated Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(n) The operations and properties of the Borrower and each of
its Consolidated Subsidiaries comply in all material respects with all
applicable Environmental Laws and Environmental Permits, all material
past non-compliance with such Environmental Laws and Environmental
Permits has been resolved without material ongoing obligations or
costs, and no circumstances exist that would reasonably be expected to
form the basis of an Environmental Action against the Borrower or any
of its Consolidated Subsidiaries or any of their properties that would
reasonably be expected to have a Material Adverse Effect.
(o) Neither the Borrower nor any of its Consolidated
Subsidiaries is undertaking, and has not completed, either individually
or together with other potentially responsible parties, any remedial or
response action relating to any actual or threatened release, discharge
or disposal of Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any governmental or
regulatory authority or the requirements of any Environmental Law,
which such release, discharge or disposal would reasonably be expected
to have a Material Adverse Effect; and all Hazardous Materials
generated, used, treated, handled or
23
stored at, or transported to or from, any property currently or
formerly owned or operated by the Borrower or any of its Consolidated
Subsidiaries have been disposed of in a manner that would not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any amount of
principal or interest or other amount shall remain payable hereunder or under
the Note or the Lender shall have any Commitment hereunder, the Borrower will,
unless the Lender shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Consolidated Subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders, such compliance to
include, without limitation, compliance with ERISA and the Racketeer
Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970, except for such noncompliance as would not
reasonably be expected to result in a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Consolidated Subsidiaries (except Dastek(M)) to pay and
discharge, before the same shall become delinquent, (i) all taxes,
assessments and governmental charges or levies imposed upon it or upon
its property and (ii) all lawful claims that, if unpaid, would be
likely by law to become a Lien upon its property; provided, however,
that neither the Borrower nor any of its Consolidated 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 reserves are being maintained,
unless and until any Lien resulting therefrom attaches to its property,
becomes enforceable against its other creditors and secures an amount
that would be material to the Borrower and its Consolidated
Subsidiaries, taken as a whole.
(c) Compliance with Environmental Laws. Comply, and cause each
of its Consolidated Subsidiaries and all lessees and other Persons
operating or occupying its properties to comply, in all material
respects, with all applicable Environmental Laws and Environmental
Permits; obtain and renew and cause each of its Consolidated
Subsidiaries to obtain and renew all Environmental Permits necessary
for its operations and properties; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of
its properties, in accordance with the requirements of all
Environmental Laws except, in each case, where the failure to do so
would not reasonably be expected to result in a Material Adverse
Effect; provided, however, that neither the
24
Borrower nor any of its Consolidated Subsidiaries shall be required to
undertake any such cleanup, removal, remedial or other action to the
extent that its obligation to do so is being contested in good faith
and by proper proceedings and appropriate reserves are being maintained
with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Consolidated Subsidiaries (except Dastek(M)) to maintain, insurance
with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which the Borrower or such Consolidated Subsidiary
operates.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Consolidated Subsidiaries (except
Dastek(M) and Dastek Holding Company) to preserve and maintain, its
existence, legal structure, legal name, rights (charter and statutory),
permits, licenses, approvals, privileges and franchises except, in the
case of any Consolidated Subsidiary, where failure to do so would not
reasonably be expected to result in a Material Adverse Effect;
provided, however, that the Borrower and its Consolidated Subsidiaries
may consummate any merger or consolidation permitted under Section
5.03(a).
(f) Visitation Rights. At any reasonable time, upon reasonable
prior notice, and from time to time, permit the Lender or any agents or
representatives thereof to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
the Borrower and any of its Consolidated Subsidiaries (except Dastek(M)
and Dastek Holding Company), and to discuss the affairs, finances and
accounts of the Borrower and any of its Consolidated Subsidiaries
(except Dastek(M) and Dastek Holding Company) with any of their
officers or directors and with their independent certified public
accountants.
(g) Keeping of Books. Keep, and cause each of its Consolidated
Subsidiaries to keep, proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the
assets and business of the Borrower and each such Consolidated
Subsidiary in accordance with GAAP.
(h) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Consolidated Subsidiaries (except Dastek(M) and
Dastek Holding Company) to maintain and preserve, all of its properties
that are used or useful in the conduct of its business in good working
order and condition, except for ordinary wear and except for any
dispositions of, or alterations in, such properties as would not
reasonably be expected to result in a Material Adverse Effect.
(i) Reporting Requirements. Furnish to the Lender:
25
(i) as soon as available and in any event within 60
days after the end of each of the first three quarters of each
fiscal year of the Borrower, Consolidated balance sheets of
the Borrower and its Consolidated Subsidiaries as of the end
of such quarter and Consolidated statements of income and cash
flows of the Borrower and its Consolidated Subsidiaries for
the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, certified by the
chief financial officer of the Borrower as having been
prepared in accordance with GAAP, together with (i) a
certificate of said officer stating that no Default or Event
of Default has occurred and is continuing or, if a Default or
Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action that the Borrower has
taken and proposes to take with respect thereto and (ii) a
schedule, in substantially the form of Exhibit D, setting
forth the computations used by the Borrower in determining
compliance, as at the end of such fiscal quarter, with the
covenants contained in Section 5.02;
(ii) as soon as available and in any event within 120
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 Consolidated Subsidiaries, containing Consolidated balance
sheets of the Borrower and its Consolidated Subsidiaries as at
the end of such fiscal year and Consolidated statements of
income and cash flows of the Borrower and its Consolidated
Subsidiaries for such fiscal year, in each case accompanied by
an opinion reasonably acceptable to the Lender of Ernst &
Young or other independent public accountants of recognized
standing acceptable to the Lender, together with (i) a
certificate of the chief financial officer of the Borrower
stating that no Default or Event of Default has occurred and
is continuing or, if a Default or Event of Default has
occurred and is continuing, a statement as to the nature
thereof and the action that the Borrower has taken and
proposes to take with respect thereto and (ii) a schedule, in
substantially the form of Exhibit D, setting forth of the
computations used by the Borrower in determining compliance,
as at the end of the such fiscal year, with the covenants
contained in Section 5.02;
(iii) as soon as possible and in any event within
three Business Days occurrence of each Default or Event of
Default or any event, development or occurrence reasonably
likely to have a Material Adverse Effect continuing on the
date of such statement, a statement of the chief financial
officer of the Borrower setting forth the material details of
such Default, Event of Default or event, development or
occurrence and the action that the Borrower has taken and
proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and
reports that the Borrower or any of its Consolidated
Subsidiaries sends in a general distribution to its security
holders, and copies of all reports and registration statements
that the Borrower or any
26
of its Consolidated Subsidiaries files with the Securities and
Exchange Commission or any national securities exchange;
(v) (i) promptly and in any event within 10 Business
Days after the Borrower or any ERISA Affiliate knows 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 the Borrower or such ERISA Affiliate has
taken and proposes to take with respect thereto and (ii)
promptly after the filing or receiving thereof, copies of all
material reports and notices that the Borrower or any of its
Consolidated Subsidiaries files under ERISA with the Internal
Revenue Service or the PBGC or the U.S. Department of Labor or
that the Borrower or any of its Consolidated Subsidiaries
receives from the PBGC; and
(vi) such other information respecting the condition
or operations, financial or otherwise, of the Borrower or any
of its Consolidated Subsidiaries as the Lender may from time
to time reasonably request.
SECTION 5.02. Financial Covenants. So long as any amount of
principal or interest or other amount shall remain payable hereunder or under
the Note or the Lender shall have any Commitment hereunder, the Borrower will,
unless the Lender shall otherwise consent in writing:
(a) Fixed Charge Coverage Ratio. Maintain, at the end of each
fiscal quarter of the Borrower, a ratio of Consolidated EBITDA of the
Borrower and its Consolidated Subsidiaries for the four-quarter period
of such fiscal quarter and the immediately preceding three fiscal
quarters of the Borrower to the sum of (i) interest expense plus (ii)
scheduled principal amounts payable, in each case, by the Borrower and
its Consolidated Subsidiaries during such four-quarter period, of not
less than 2.00 to 1.00.
(b) Debt to Capitalization Ratio. Maintain, at all times, a
ratio of the Consolidated Indebtedness of the Borrower and its
Consolidated Subsidiaries to the Consolidated Total Capitalization of
the Borrower and its Consolidated Subsidiaries of not more that 0.60 to
1.00.
(c) Tangible Net Worth. Maintain, at the end of each fiscal
quarter of the Borrower, a Consolidated Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries of not less that the sum of
(i) $400,000,000 plus (ii) 50% of the cumulative Consolidated positive
net income of the Borrower and its Consolidated Subsidiaries for the
fiscal year of the Borrower ending on or most recently prior to the
last day of such fiscal quarter.
SECTION 5.03. Negative Covenants. So long as any amount of
principal or interest or other amount shall remain payable hereunder or under
the Note or the Lender
27
shall have any Commitment hereunder, the Borrower will not, without the written
consent of the Lender:
(a) Mergers, Etc. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, any Person, or
permit any of its Consolidated Subsidiaries (except Dastek(M)) to do
so, except that any Subsidiary of the Borrower may merge or consolidate
with or into, or dispose of assets to, any Consolidated Subsidiary of
the Borrower and except that any Subsidiary of the Borrower may merge
into or dispose of assets to the Borrower, provided in each case that,
immediately after giving effect to such proposed transaction, no
Default or Event of Default would exist and in the case of any such
merger to which the Borrower is a party, the Borrower is the surviving
corporation.
(b) Use of Proceeds. Use the proceeds of any Advance to
acquire any equity security, including, without limitation, any equity
security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 unless prior to such acquisition the
Lender shall have received written evidence, in form reasonably
satisfactory to the Lender, of the prior approval of such acquisition,
to the extent required under applicable law or the organizational
documents of the issuer of such equity security for the effective
consummation of such acquisition, by the board of directors or
equivalent governing body of such issuer and the holders of stock or
other equity of such issuer.
(c) Dastek(M) and Dastek Holding Company. Make or permit any
material increase in the investment of the Borrower or any of its
Subsidiaries in Dastek(M) or Dastek Holding Company or in the
obligations of Dastek(M) or Dastek Holding Company owing to the
Borrower or any of its Subsidiaries or permit any material increase in
the operations of or business of Dastek(M) or Dastek Holding Company
unless, in any case, the Borrower shall have notified the Lender of
such increase in investment or operations in respect of Dastek(M) or
Dastek Holding Company, as the case may be, in a notice dated and
delivered before the effectiveness of such increase (such notice being
a "Dastek Increase Notice").
SECTION 5.04. Effect of Dastek Increase Notice. In the event
that the Borrower should deliver a Dastek Increase Notice in respect of
Dastek(M) or Dastek Holding Company, as the case may be, then (i) on and after
the date of such Dastek Increase Notice, in the case of a Dastek Increase Notice
in respect of Dastek(M), the terms of this Agreement shall apply, and this
Agreement shall be construed, without regard to any exception set forth in the
terms hereof for Dastek (M) and (ii) on and after the date of such Dastek
Increase Notice, in the case of a Dastek Increase Notice in respect of Dastek
Holding Company, the terms of this Agreement shall apply, and this Agreement
shall be construed, without regard to any exception set forth in the terms
hereof for Dastek Holding Company.
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower (i) shall fail to pay any principal of the
Advances under this Agreement when the same becomes due and payable or
(ii) shall fail to pay any interest on the Advances under this
Agreement or any fee payable hereunder within five Business Days after
such interest or fee becomes due and payable; or
(b) Any representation or warranty made by the Borrower herein
or by the Borrower (or any of its officers) in connection with this
Agreement or in any certificate or document delivered in connection
herewith shall prove to have been incorrect in any material respect
when made; or
(c) The Borrower shall fail to perform or observe (i) any
term, covenant or agreement contained in Sections 5.01(a), (c) or (e),
Section 5.02 or Section 5.03 or (ii) any other term, covenant or
agreement contained in this Agreement on its part to be performed or
observed if such failure referred to in this clause (ii) shall remain
unremedied for 30 days after written notice thereof shall have been
given to the Borrower by the Lender; or
(d) The Borrower or any of its Consolidated Subsidiaries
(except Dastek(M)) shall fail to pay (after written demand therefor)
any amount on any Indebtedness (other than Indebtedness under this
Agreement) under any agreement, document or instrument (or related
group thereof) providing for Indebtedness in an aggregate principal or
notional amount of $20,000,000 or more 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 agreements,
documents or instruments relating to such Indebtedness; or any other
event shall occur or condition shall exist under any agreement,
document or instrument relating to any such Indebtedness and shall
continue after the applicable grace period, if any, specified in such
agreement, document or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or any such Indebtedness shall be
declared in a written notice to be due and payable, or required in a
written notice to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or
(e) The Borrower or any of its Consolidated Subsidiaries
(except Dastek(M)) 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 the
29
Borrower or any of its Consolidated Subsidiaries (except Dastek(M))
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
the Borrower or any of its Consolidated Subsidiaries (except Dastek(M))
shall take corporate action to authorize any of the actions set forth
above in this subsection (e); or
(f) Any single judgment or order for the payment of money in
excess of $15 million (and which is not covered at least 75% by
insurance or an indemnity of a Person that is not an Affiliate of the
Borrower) shall be rendered against the Borrower or any of its
Consolidated Subsidiaries (except Dastek(M)) 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 30 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(g) (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of Voting Stock of the
Borrower (or other securities convertible into such Voting Stock)
representing 50% or more of the combined voting power of all Voting
Stock of the Borrower; or (ii) during any period of up to 24
consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 24-month period
were directors of the Borrower shall cease for any reason to constitute
a majority of the board of directors of the Borrower (excluding
ordinary course attrition of directors, which shall not be counted when
determining if the test in this clause (ii) has been satisfied and
which shall not in any way be restricted by this clause (ii)); or (iii)
any Person or two or more Persons acting in concert shall have acquired
by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, 50% or
more of the combined voting power of all Voting Stock of the Borrower;
or
(h) 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
30
of the Borrower and the ERISA Affiliates related to such ERISA Event)
exceeds $15 million; or
(i) the 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 $15 million
or requires per annum payments exceeding $15 million; or
(j) the 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 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
$15 million;
then, and in any such event, the Lender (i) may, by notice to the Borrower,
declare any obligation to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) may, by notice to the Borrower, declare the
Advances and the Note, all interest thereon and all other amounts payable
thereunder and under this Agreement to be forthwith due and payable, whereupon
the Advances and the Note, all such interest and all such amounts shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to the Borrower under the Federal Bankruptcy
Code (11 U.S.C. xx.xx. 101 et seq., as amended, or its successor), (A) any
obligation of the Lender to make any Advance shall automatically be terminated
and (B) the Advances and the Note, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
31
SECTION 7.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered, if to the Borrower, at its
address at 000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxx Xxxxx, Treasurer; if to the Lender, at its address at 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx Xxxxx; or,
as to either party, at such other address as shall be designated by such party
in a written notice to the other party. All such notices and communications
shall, when mailed or telecopied, be effective when deposited in the mails or
transmitted by telecopier, respectively, except that notices and communications
to the Lender pursuant to Article II or III shall not be effective until
received by the Lender. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement shall be effective as
delivery of a manually executed counterpart thereof.
SECTION 7.03. No Waiver; Remedies. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder or under
the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 7.04. Costs, Expenses. (a) The Borrower agrees to pay
within 30 days after demand in the form of a reasonably detailed xxxx therefor
(i) all reasonable costs and expenses of the Lender in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents and the other documents to be delivered hereunder (including,
without limitation, the reasonable fees and expenses of counsel for the Lender
with respect thereto, with respect to advising the Lender as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with the
Borrower or with other creditors of the Borrower or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto); provided,
however, that the Borrower's obligation hereunder to pay the fees of the
Lender's counsel, to the extent such fees are incurred in connection with the
preparation, execution and delivery of the Loan Documents and accrued through
the time of the initial Borrowing hereunder, shall be limited to an amount not
in excess of the lesser of (x) $19,000 and (y) the sum of $14,000 plus 50% of
such fees in excess of $14,000, and (ii) all reasonable costs and expenses of
the Lender in connection with the enforcement of the Loan Documents, whether in
any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for the Lender with respect thereto;
provided, however, that (1) the Borrower's obligations under this Section
7.04(a) to pay fees and expenses of counsel retained by the Lender in respect of
any matter referred to in clause (i) hereof or in respect of any single action,
suit, litigation or proceeding referred to in clause (ii) hereof shall not apply
beyond the fees and expenses of one firm of general outside counsel together
with one firm of local counsel in each relevant jurisdiction for each such
matter, action, suit, litigation
32
or proceeding and (2) nothing contained herein shall obligate the Borrower to
pay the fees or expenses of any counsel retained by any assignee of the Lender
hereunder.
(b) If any payment of principal of, or Conversion of, any
LIBOR Advance or Federal Funds Rate Advance is made by the Borrower to or for
the account of the Lender other than on the last day of the Interest Period for
such Advance, as a result of a payment or Conversion pursuant to Section
2.08(b)(i) or 2.09(d), acceleration of the maturity of the Note pursuant to
Section 6.01 or for any other reason, the Borrower shall, upon demand by the
Lender (accompanied with a written statement explaining in reasonable detail the
basis of the demand), pay to the Lender any amounts required to compensate the
Lender for any additional losses, costs or expenses that it reasonably incurs as
a result of such payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund or maintain such Advance but not
including loss of anticipated profits.
SECTION 7.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the declaration of the
Note due and payable pursuant to the provisions of Section 6.01, the Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and otherwise apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement and the Note, irrespective of whether
the Lender shall have made any demand under this Agreement or the Note. The
Lender agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Lender
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that the Lender may have.
SECTION 7.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Lender and
thereafter shall be binding upon and inure to the benefit of the Borrower and
the Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender.
SECTION 7.07. Assignments and Participation. (a) The Lender
may assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note held by it); provided,
however, that (i) each such assignment (other than to an Affiliate of the
Lender) shall be made only with the written approval of the Borrower and (ii) no
such assignment shall result in the Lender holding a combination of Advances and
Unused Commitment in an aggregate amount of less than 51% of the aggregate
amount of the Advances and Unused Commitment.
33
(b) The Lender may sell participations to one or more Persons
(other than (x) the Borrower or any of its Affiliates or (y) any Person that is,
or has Affiliates that are, engaged in any line of business in competition with
the Borrower or any of the Borrower's Affiliates) in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Advances owing to it and the Note held
by it); provided, however, that (i) the Lender's obligations under this
Agreement (including, without limitation, its Commitment) shall remain
unchanged, (ii) the Lender shall remain solely responsible to the Borrower for
the performance of such obligations, (iii) the Lender shall remain the holder of
its Note for all purposes of this Agreement, (iv) the Borrower shall continue to
deal solely and directly with the Lender in connection with the Lender's rights
and obligations under this Agreement and (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Note or any fees payable to the
Lender or other amounts payable hereunder, in each case to the extent subject to
such participation, postpone any date fixed for any payment of principal of, or
interest on, the Note or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation.
(c) The Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
7.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to the Lender by
or on behalf of the Borrower; provided, however, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
received by it from the Lender on the terms provided for in the Confidentiality
Agreement.
(d) Notwithstanding any other provision set forth in this
Agreement, the Lender may at any time assign any of its rights and obligations
under this Agreement to any of its Affiliates without notice to or consent of
the Borrower; and the Lender or its Affiliates may at any time create a security
interest in all or any portion of its rights under this Agreement (including,
without limitation, the Advances owing to it and the Note held by it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System without notice to or consent of the
Borrower.
SECTION 7.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 7.09. Confidentiality. Concurrently with its execution
and delivery of this Agreement, the Lender will execute and deliver a
Confidentiality Agreement to the Borrower.
34
SECTION 7.10. Governing Law. This Agreement and the Note shall
be governed by, and construed in accordance with, the laws of the State of
California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
KOMAG, INCORPORATED
By ______________________________________________
Name:
Title:
THE DAI-ICHI KANGYO BANK,
LIMITED, acting through its San Francisco Agency
By ______________________________________________
Name:
Title:
Commitment: $35,000,000
Domestic Lending Office:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
LIBOR Lending Office:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
EXHIBIT A
to
Credit Agreement dated as of October 7, 1996
PROMISSORY NOTE
$35,000,000.00 Dated: ______________
FOR VALUE RECEIVED, the undersigned, Komag, Incorporated, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
The Dai-Ichi Kangyo Bank, Limited (the "Lender"), acting through its San
Francisco Agency for the account of its Applicable Lending Office (as defined in
the Credit Agreement referred to below) the aggregate principal amount of the
Advances (as defined below) owing to the Lender by the Borrower pursuant to the
Credit Agreement dated as of October 7, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms defined
therein being used herein as therein defined) between the Borrower and the
Lender, on the Termination Date.
The Borrower promises to pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to the Lender at the Lender's Account (as defined in
the Credit Agreement), in same day funds. Each Advance owing to the Lender by
the Borrower and the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto, which is part of this Promissory
Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of advances (the "Advances") by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Advance being evidenced by
this Promissory Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on
2
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
KOMAG, INCORPORATED
By ______________________________________________
Name:
Title:
