________________________________________________________________________________
exh.10.23
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
KOMAG, INCORPORATED,
BANKBOSTON, N.A.
AS AGENT,
AND THE BANKS PARTY HERETO
________________________________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.............................................................. 1
SECTION 1.1 DEFINED TERMS............................................... 1
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS............................... 9
ARTICLE II
THE REVOLVING LOANS..................................................... 9
SECTION 2.1 THE REVOLVING LOANS........................................ 9
SECTION 2.2 REPAYMENT.................................................. 13
SECTION 2.3 INTEREST RATE AND PAYMENT DATES............................ 15
SECTION 2.4 CONTINUATION AND CONVERSION OPTIONS........................ 16
ARTICLE III
GENERAL PROVISIONS CONCERNING THE REVOLVING LOANS....................... 17
SECTION 3.1 USE OF PROCEEDS............................................ 17
SECTION 3.2 POST MATURITY INTEREST..................................... 17
SECTION 3.3 COMPUTATION OF INTEREST.................................... 17
SECTION 3.4 PAYMENTS................................................... 17
SECTION 3.5 PAYMENT ON NON-BUSINESS DAYS............................... 17
SECTION 3.6 REDUCED RETURN............................................. 18
SECTION 3.7 INDEMNITIES................................................ 18
SECTION 3.8 FUNDING SOURCES............................................ 19
SECTION 3.9 INABILITY TO DETERMINE INTEREST RATE....................... 19
SECTION 3.10 REQUIREMENTS OF LAW....................................... 20
SECTION 3.11 ILLEGALITY................................................ 21
SECTION 3.12 SUBSTITUTION OF BANKS..................................... 21
ARTICLE IV
CONDITIONS OF LENDING................................................... 22
SECTION 4.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT.... 22
SECTION 4.2 CONDITIONS PRECEDENT TO EACH BORROWING..................... 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES.......................................... 24
SECTION 5.1 REPRESENTATIONS AND WARRANTIES............................. 24
i
ARTICLE VI
COVENANTS............................................................ 27
SECTION 6.1 AFFIRMATIVE COVENANTS................................... 27
SECTION 6.2 NEGATIVE COVENANTS...................................... 30
ARTICLE VII
EVENTS OF DEFAULT.................................................... 34
SECTION 7.1 EVENTS OF DEFAULT....................................... 34
ARTICLE VIII
THE AGENT............................................................ 37
SECTION 8.1 THE AGENT............................................... 37
SECTION 8.2 DELEGATION OF DUTIES, ETC............................... 37
SECTION 8.3 INDEMNIFICATION......................................... 38
SECTION 8.4 EXCULPATORY PROVISIONS.................................. 38
SECTION 8.5 KNOWLEDGE OF DEFAULT.................................... 39
SECTION 8.6 THE AGENT IN ITS INDIVIDUAL CAPACITY.................... 39
SECTION 8.7 PAYEE OF REVOLVING NOTE TREATED AS OWNER................ 40
SECTION 8.8 RESIGNATION OR REMOVAL OF THE AGENT..................... 40
ARTICLE IX
MISCELLANEOUS........................................................ 41
SECTION 9.1 AMENDMENTS, ETC......................................... 41
SECTION 9.2 NOTICES, ETC............................................ 42
SECTION 9.3 RIGHT OF SETOFF......................................... 43
SECTION 9.4 NO WAIVER; REMEDIES..................................... 43
SECTION 9.5 COSTS AND EXPENSES...................................... 43
SECTION 9.6 ASSIGNMENTS; PARTICIPATIONS............................. 44
SECTION 9.7 EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW............ 45
SECTION 9.8 CONSENT TO JURISDICTION; VENUE; THE AGENT FOR........... 45
SERVICE OF PROCESS
SECTION 9.9 ENTIRE AGREEMENT....................................... 46
SECTION 9.10 SEPARABILITY OF PROVISIONS............................. 46
SECTION 9.11 EXECUTION IN COUNTERPARTS.............................. 46
SECTION 9.12 SURVIVAL OF CERTAIN AGREEMENTS......................... 46
SECTION 9.13 EFFECT OF AMENDMENT AND RESTATEMENT.................... 46
SECTION 9.14 CERTAIN CLOSING DATE TRANSITIONAL MATTERS.............. 47
ii
Exhibit A: AMENDED AND RESTATED PROMISSORY NOTE
Exhibit B: FORM OF BORROWING REQUEST
Schedule 1: SCHEDULE OF COMMITMENTS
Schedule 2: EXISTING LIENS AND SECURITY INTERESTS
Schedule 3: SUBSIDIARIES AND CONSOLIDATED SUBSIDIARIES
Schedule 4: BANK ORIGINAL AND CLOSING DATE PERCENTAGES
iii
AMENDED AND RESTATED
CREDIT AGREEMENT
This Amended and Restated Credit Agreement (as amended, supplemented or
modified from time to time after the date hereof, the "Agreement") dated as of
June 20, 1997 is entered into among KOMAG, INCORPORATED, a Delaware corporation
("Borrower"), the banks from time to time party hereto, together with their
respective successors and assigns (each a "Bank" and collectively the "Banks"),
and BANKBOSTON, N.A., a national banking association ("BankBoston"), as agent
for the Banks (in such capacity, the "Agent"). This Agreement amends and
restates in its entirety that certain Credit Agreement (as amended, supplemented
or modified prior to the date hereof, the "Prior Agreement") dated as of
December 15, 1994 among Borrower, Xxxxx Fargo Bank, National Association (the
"Prior Agent"), and the banks party thereto. The parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Agent": As set forth in the introductory paragraph of this
Agreement.
"Aggregate Commitment": The sum of the Commitments as set forth
on Schedule 1, as such amount may be reduced pursuant to Section 2.1(d) and as
such Schedule may be revised from time to time according to the terms hereof.
"Agreement": As set forth in the introductory paragraph of this
Agreement.
"Assignment Agreement": As set forth in Section 9.6(a).
"Bank" or "Banks": Those Banks set forth on Schedule 1, as such
Schedule may be revised from time to time according to the terms hereof.
"Bank Affiliate": means, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power to
vote 50% or more of the securities having ordinary voting power of the election
of directors of such Person.
1
"BankBoston": As set forth in the introductory paragraph of
this Agreement.
"Base Rate": The higher of (a) the annual rate of interest
announced from time to time by the Agent at the Agent's Head Office in Boston,
Massachusetts, as its "base rate" and (b) one-half of one percent (1/2%) above
the Federal Funds Effective Rate. For the purposes of this definition, "Federal
Funds Effective Rate" shall mean for any day the rate per annum equal 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 on such transactions received by the Agent from three
(3) funds brokers of recognized standing selected by the Agent.
"Base Rate Loan": A Revolving Loan that bears interest based on
the Base Rate.
"Borrower": As set forth in the introductory paragraph of this
Agreement.
"Borrowing": As defined in Section 2.1(a).
"Business Day": A day other than a Saturday, Sunday or a day on
which commercial banks in California are authorized or required by law to close.
"Capital Lease": As applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which would,
in accordance with GAAP, be required to be accounted for as a capital lease on
the balance sheet of that Person.
"Closing Date": The date when this Agreement becomes effective
pursuant to Section 4.1.
"Closing Date Percentage": As defined in Section 9.14.
"Commitment": With respect to each Bank, the Commitment of such
Bank to make Revolving Loans to Borrower pursuant to Article II up to, but not
exceeding, at any time outstanding the amount or amounts referred to in Schedule
1, as such Schedule may be revised from time to time according to the terms
hereof.
"Commitment Percentage": With respect to each Bank, the
percentage equivalent of the ratio which such Bank's Commitment bears to the
Aggregate Commitment, as specified in Schedule 1, as such Schedule may be
revised from time to time according to the terms hereof.
2
"Consolidated Capital": At any date of determination,
Consolidated Funded Debt plus Consolidated Tangible Net Worth.
"Consolidated Funded Debt": At any date of determination,
without duplication, all Debt (excluding minority interests) of the Borrower and
its Consolidated Subsidiaries, determined in accordance with GAAP which is for
borrowed money including (a) contingent obligations with respect to "off balance
sheet" or "synthetic" leases (i.e., leases where for tax purposes the lessee is
treated as the owner of the leased property but for GAAP purposes the lease is
treated as an operating lease and the lessor is treated as the owner of the
leased property) and (b) securitizations, but in each such case only to the
extent there is recourse to the Borrower in connection therewith and the amount
of all such contingent obligations is in excess of $3,000,000. For the purpose
of calculating the amount of Consolidated Funded Debt, Debt of the Borrower to
its Consolidated Subsidiaries, Debt of the Borrower's Consolidated Subsidiaries
to the Borrower and Debt of Consolidated Subsidiaries to other Consolidated
Subsidiaries shall not be included in the calculation.
"Consolidated Subsidiary" or "Consolidated Subsidiaries": Any
corporation or other Person more than fifty percent (50%) of the outstanding
voting stock of which shall at the time be owned by Borrower or another
Consolidated Subsidiary, excluding from this definition Asahi Komag Co., Ltd., a
Japanese corporation.
"Consolidated Tangible Net Worth": At any date of
determination, the excess of total assets over consolidated liabilities
(excluding minority interests) of Borrower and its Consolidated Subsidiaries
determined on a consolidated basis, excluding, however from the determination of
total assets (a) all intangible assets, including, without limitation, goodwill
(whether 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 but excluding
deferred income taxes), (b) treasury stock, (c) 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 (d) 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 corporation.
"Cut-Off Date": As set forth in Section 2.1(f).
"Dastek (M)": Dastek (M) SDN BHD, a Malaysian corporation.
3
"Debt": As applied to any Person, (a) all indebtedness for
borrowed money, (b) that portion of obligations with respect to Capital Leases
which is properly 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 (6) months from the
date of incurrence of the obligation in respect thereof, or (ii) evidenced by a
note or similar written instrument, and (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 or is
non-recourse to the credit of that Person.
"DHC": Dastek Holding Company, a California corporation.
"Dollars" and "$": Dollars in lawful currency of the United
States of America.
"Employee Benefit Plan": Any Pension Plan, any employee welfare
benefit plan, or any other employee benefit plan which is described in Section
3(3) of ERISA and which is maintained for employees of Borrower or any ERISA
Affiliate of Borrower.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate": As applied to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
Section 414(b) or (c) of the Internal Revenue Code, but excluding any Subsidiary
or other Person that is not a Consolidated Subsidiary.
"Event of Default": As defined in Article VII.
"GAAP": Generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, as may be in effect from time to time.
"Interest Payment Date": As to any Base Rate Loan until payment
in full, the Maturity Date and the last day of each December, March, June and
September commencing on the first of such days to occur after a Base Rate Loan
is made. As to any LIBOR Rate Loan with an Interest Period of thirty (30) days
or less, the last day of such Interest Period and the Maturity Date, and as to
any LIBOR Rate
4
Loan with an Interest Period in excess of thirty (30) days, (a) the last day of
each December, March, June and September following the beginning of such
Interest Period, (b) the last day of such Interest Period and (c) the Maturity
Date.
"Interest Period":
With respect to any LIBOR Rate Loan:
(a) initially, the period commencing on, as the case may be,
the Borrowing or conversion date with respect to such LIBOR Rate Loan and ending
at least one (1) month, two (2) months, three (3) months, six (6) months, nine
(9) months, or twelve (12) months thereafter as selected by Borrower in the
notice of Borrowing as provided in Section 2.1(b) or the notice of conversion as
provided in Section 2.4 so long as the LIBOR Rate is quoted for such period in
the London interbank market; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such LIBOR Rate Loan and ending at
least one (1) month, two (2) months, three (3) months, six (6) months, nine (9)
months, or twelve (12) months thereafter as selected by Borrower in the notice
of continuation as provided in Section 2.4 so long as the LIBOR Rate is quoted
for such period in the London interbank market;
provided, that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period for a LIBOR Rate Loan would
otherwise end on a day which is not a LIBOR Business Day, that Interest Period
shall be extended to the next succeeding LIBOR Business Day unless such next
succeeding LIBOR Business Day falls in another calendar month, in which case
that Interest Period shall end on the preceding LIBOR Business Day; and
(ii) there shall be no more than six (6) Interest Periods
outstanding at any time.
"Internal Revenue Code": The Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"LIBOR Business Day": A day which is a Business Day and on
which dealings in Dollar deposits may be carried out in the London interbank
market.
"LIBOR Rate": For each Interest Period (a) the rate of interest
determined by the Agent at which deposits for the relevant Interest Period would
be offered to the Agent or good quality U.S. Banks in the approximate amount of
the relevant LIBOR Rate Loan for the Interest Period requested by Borrower in
the
5
London interbank market selected by the Agent, upon request to the Agent by
11:00 A.M. (San Francisco time) on the day which is three (3) LIBOR Business
Days prior to the first day of such Interest Period, divided by (b) a number
equal to 1.00 minus the aggregate (but without duplication) of the rates, if
any, (expressed as a decimal fraction) of reserve requirements in effect on the
day which is three (3) LIBOR Business Days prior to the beginning of such
Interest Period (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as in effect at the time the Agent quotes the rate to Borrower)
for Eurocurrency funding of domestic assets (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) which are required to
be maintained by a member bank of such System (such rate to be adjusted to the
next higher 1/16 of 1%).
"LIBOR Rate Loans": Revolving Loans hereunder at such time as
they accrue interest at a rate based upon the LIBOR Rate.
"Lien": Any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan Documents": This Agreement, the Revolving Notes and other
documents executed in connection with this Agreement and/or the Revolving Loans
extended hereunder, including, without limitation, all amendments, waivers and
consents relating thereto.
"Majority Banks": At any time when any Commitments remain
outstanding, the Banks having Commitments equal to at least 51% of the Aggregate
Commitment, and at any time after the termination of all Commitments, the Banks
with outstanding Revolving Loans having an unpaid principal balance equal to at
least 51% of all Revolving Loans outstanding.
"Material Adverse Effect": As defined in Section 5.1(f).
"Maturity Date": June 20, 2002, unless an extension shall occur
under Section 2.1, in which case "Maturity Date" shall mean the amended Maturity
Date resulting from such extension.
"Multiemployer Plan": A "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower or any
ERISA Affiliate of Borrower.
"Nondisclosure Agreement": Borrower's standard Nondisclosure
Agreement in the form delivered to the Agent and the Banks.
6
"Original Percentage": As defined in Section 9.14.
"Pension Plan": Any employee plan which is subject to Section
412 of the Internal Revenue Code and which is maintained for employees of
Borrower or any ERISA Affiliate of Borrower, other than a Multiemployer Plan.
"Permitted Liens": A lien, security interest, encumbrance or
charge (a) for taxes, assessments, charges or claims of Borrower either not yet
due or being contested in good faith by appropriate proceedings, (b) arising out
of judgments or awards against Borrower with respect to which an appeal or other
proceeding is being prosecuted in good faith and with respect to which there
shall have been secured a stay of execution pending such appeal or proceedings
or which is vacated or discharged within thirty (30) days after the termination
of such stay, (c) materialmen's, mechanics', workers', repairmen's, employee's
or other like liens arising in the ordinary course of business for amounts
either not yet due or being contested in good faith by appropriate proceedings,
(d) granted by Borrower to the Agent or Banks pursuant to this Agreement, (e)
liens, deposits or pledges made to secure statutory obligations, workers'
compensation claims, surety or appeal bonds, or bonds for the release of
attachments or for stay of execution, or to secure the performance of bids,
tenders, contracts (other than for the payment of borrowed money), leases or for
purposes of like general nature in the ordinary course of Borrower's business,
(f) purchase money security interests for property acquired, conditional sale
agreements or other title retention agreements with respect to property
acquired, provided, however, that no such security interest or agreement shall
extend to any property other than such after-acquired property and proceeds, (g)
refunding, refinancing or extension of the liens or security interests permitted
in the foregoing clause not exceeding the principal amount of indebtedness so
refunded, refinanced or extended at the time of the refunding, refinancing or
extension thereof, and applying only to the same property theretofore subject to
such lien or security interest, (h) liens existing on the date hereof and
identified in Schedule 2 attached hereto or incurred with any refunding,
refinancing or extension of any such indebtedness secured by such liens,
provided that such refinancing, refunding or extension shall not increase the
amount, as of the date of such refinancing, refunding or extension, secured by
any such lien or security interest, (i) other liens securing Debt the principal
amount of which shall not exceed $2,000,000, (j) liens in property of Asahi
Komag Co., Ltd., a Japanese corporation, (k) liens taken by Borrower on its
Subsidiaries, and (l) liens against DHC arising in conjunction with (i) loans
from Asahi Glass Co., Ltd., or any of its affiliates, (ii) that certain
Recapitalization Agreement dated as of March 1, 1993 among Asahi Glass Co.,
Ltd., Asahi Glass America, Inc., AGA Capital, Inc., Borrower, Dastek, Inc. and
DHC and the other documents executed in connection therewith, and (iii) the
purchase of claims of third parties by Borrower and Asahi Glass Co., Ltd. and/or
its affiliates against DHC and Dastek (M).
7
"Person": An individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Potential Event of Default": A condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"Prior Agent": As set forth in the introductory paragraph of
this Agreement.
"Prior Agreement": As set forth in the introductory paragraph
of this Agreement.
"Regulation G, T, U and X": Regulations G, T, U and X,
respectively, promulgated by the Board of Governors of the Federal Reserve
System, as amended from time to time, and any successors thereto.
"Revolving Loans": As defined in Section 2.1(a).
"Requirement": As defined in Section 3.6.
"Revolving Notes": As defined in Section 2.1(e).
"S.E.C.": The United States Securities and Exchange Commission
and any successor institution or body which performs the functions or
substantially all of the functions thereof.
"Subsidiary": A corporation or other Person of which at least
fifty percent (50%) of the outstanding voting stock or profit interests shall at
the time be owned by Borrower or another Subsidiary.
"Termination Event": (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
"Reportable Event" not subject to the provision for 30-day notice to the Pension
Benefit Guaranty Corporation under such regulations), or (b) the withdrawal of
Borrower or any of its ERISA Affiliates from a Pension Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(1)(2) or
4068(f) of ERISA, or (c) the filing of a notice of intent to terminate a Pension
Plan or the treatment of a Pension Plan amendment as a termination under Section
4041 of ERISA, or (d) the institution of proceedings to terminate a Pension Plan
by the Pension Benefit Guaranty Corporation, (e) any other event or condition
which might constitute grounds under ERISA for the termination of, or the
appointment by the Pension Benefit Guaranty Corporation of a trustee to
administer, any Pension Plan, or (f) the imposition of a lien pursuant to
Section 412(n) of the Internal Revenue Code.
8
"Transfer": As defined in Section 6.2(h).
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Revolving Notes or any certificate or other document
made or delivered pursuant hereto.
(b) As used herein and in the Revolving Notes, and any
certificate or other document made or delivered pursuant hereto, accounting
terms not defined in Section 1.1, and accounting terms partly defined in Section
1.1 to the extent not defined, shall have the respective meanings given to them
under GAAP, and all financial data required to be delivered hereunder shall be
prepared in accordance with GAAP, except that foreign currency translation
adjustments need not be included for purposes of determining Borrower's equity
or net worth. If any changes in GAAP from those used in the preparation of the
financial statements referred to in Section 5.1(e) ("GAAP Changes") hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in the method of calculation
of any of the financial covenants, standards or other terms or conditions found
in this Agreement, the parties hereto agree to enter into negotiations to amend
such provisions so as to reflect equitably such GAAP Changes with the desired
result that the criteria for evaluating the financial condition and performance
of Borrower and its Consolidated Subsidiaries shall be the same after such GAAP
Changes as if such GAAP Changes had not been made.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection and exhibit references are to this Agreement unless otherwise
specified.
ARTICLE II
THE REVOLVING LOANS
. SECTION 2.1 THE REVOLVING LOANS.
(a) The Aggregate Commitment. Each of the Banks severally
agrees, on the terms and conditions hereinafter set forth, to make loans
("Revolving Loans") to Borrower from time to time during the period from the
date hereof to and including the Maturity Date, pro rata in accordance with its
Commitment Percentage, in the aggregate principal amount not to exceed at any
one time outstanding its Commitment, as such amount may be reduced pursuant to
Section 2.1(d). Each borrowing under this Section (a "Borrowing") shall be in a
minimum amount of
9
$1,000,000 and in an integral multiple of $100,000 above such amount for a Base
Rate Loan and in a minimum amount of $1,000,000 and in an integral multiple of
$500,000 above such amount for a LIBOR Rate Loan. Within the limits of each
Commitment, Borrower may borrow, repay pursuant to Section 2.2(b) and reborrow
under this Section, provided that at no time shall the aggregate principal
amount of outstanding Revolving Loans exceed the Aggregate Commitment then in
effect.
(b) Making the Revolving Loans. Borrower may borrow under the
Aggregate Commitment on any Business Day if the Borrowing is to consist of a
Base Rate Loan and on any LIBOR Business Day if the Borrowing is to consist of a
LIBOR Rate Loan, provided that Borrower shall give the Agent irrevocable notice
in the form of Exhibit B (which notice must be received by the Agent prior to
9:00 A.M., San Francisco time and which when received, will obligate Agent and
Banks to fund at the interest rates quoted to Borrower by Agent for the
applicable Borrowing) (i) three (3) LIBOR Business Days prior to the requested
Borrowing date in the case of a LIBOR Rate Loan, and (ii) on or before the
requested Borrowing date in the case of a Base Rate Loan, specifying (A) the
amount of the proposed Borrowing, (B) the requested date of the Borrowing, (C)
whether the Borrowing is to consist of a Base Rate Loan or a LIBOR Rate Loan,
and (D) if the Revolving Loan is to be a LIBOR Rate Loan, the length of the
Interest Period therefor. The Agent shall notify each Bank by telecopy of each
Borrowing request promptly. Subject to the terms and conditions hereof, each
Bank shall make immediately available funds available to the Agent not later
than 12:00 P.M., San Francisco time, on such Borrowing date in an amount equal
to the product of (A) its respective Commitment Percentage and (B) the aggregate
principal amount of the Revolving Loan requested. The failure of any Bank to
advance its Commitment Percentage of a requested Borrowing shall not relieve any
other Bank of its obligation hereunder to advance its Commitment Percentage
thereof, and neither the Agent nor any Bank shall be responsible for the failure
of any other Bank to make such advance. Unless the Agent shall have received
prior notice from a Bank (which notice shall be given promptly by telecopy) that
such Bank will not make available to the Agent such Bank's share of the
Borrowing requested by Borrower, and provided that the Agent shall have given
such Bank timely notice of the applicable Borrowing request in accordance with
this Section, the Agent may assume that such Bank has made its share available
to the Agent on the applicable Borrowing date and the Agent in reliance upon
such assumption, may make available to Borrower on such Borrowing date an amount
corresponding to such Bank's Commitment Percentage of the Borrowing made on such
date. If and to the extent such Bank shall not have so made such share available
to the Agent, such Bank and Borrower agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon at the interest
rate applicable at the time to the subject Revolving Loans, for each day from
the date such amount is made available to Borrower until the date such amount is
repaid to the Agent, and such Bank and Borrower agree to repay to the Agent
forthwith on demand such out-of-pocket administrative and investigative expenses
incurred by the Agent in connection with the Agent's reasonable efforts to
obtain
10
such payments. If such Bank shall repay to the Agent such corresponding amount,
together with accrued interest, such amount so repaid shall constitute such
Bank's Revolving Loan for purposes of this Agreement. Upon satisfaction of the
applicable conditions set forth in this Section and in Article IV, the proceeds
of all such Revolving Loans will then be made available to Borrower by the Agent
by crediting the account of Borrower on the books of the Agent, or as otherwise
directed by Borrower.
The notice of Borrowing may be given orally (including
telephonically) or in writing (including telex or facsimile transmission) and
any conflict regarding a notice or between an oral notice and a written notice
applicable to the same Borrowing shall be conclusively determined by the Agent's
books and records. The Agent's failure to receive any written notice of a
particular Borrowing shall not relieve Borrower of its obligation to repay the
Borrowing made and to pay interest thereon. The Agent shall not incur any
liability to Borrower in acting upon any notice of Borrowing which the Agent
believes in good faith to have been given by a Person duly authorized to give
such notice on behalf of Borrower.
(c) Facility Fee. Borrower agrees to pay to the Agent, for the
pro rata benefit of the Banks in accordance with their respective Commitment
Percentages, a facility fee based on the Aggregate Commitment at the following
rates, each of which shall be calculated on the basis of a 360-day year for the
actual days elapsed beginning on the Closing Date, payable in arrears at the end
of each calendar quarter following the Closing Date. With respect to any fees
payable by Borrower under this Section 2.1(c), Borrower shall be given credit by
the Agent and the Banks for the amount of any fees paid in advance by Borrower
under Section 2.01(c) of the Prior Agreement for any period of time after the
Closing Date; provided, that the Agent shall not be required to extend such
credit to the Borrower to the extent that the Banks do not promptly give such
credit to the Borrower. Said rates shall be calculated quarterly based on
Borrower's performance for the immediately preceding quarter for which Borrower
has provided information to the Agent regarding the calculation of the rate and
shall be effective five (5) Business Days following the Agent's receipt of such
financial statements and the officer's certificate required to be delivered in
connection therewith pursuant to Section 6.1(a); provided that if Borrower shall
not have timely delivered its financial statements in accordance with Section
6.1(a) (after giving effect to any grace period set forth in Section 7.1(c)),
then commencing on the date upon which such financial statements should have
been delivered and continuing until such financial statements are actually
delivered, it shall be assumed for purposes of determining said rates that
Borrower's Consolidated Funded Debt to Consolidated Capital is equal to or
greater than .25 to 1.0.
If Borrower's Consolidated Funded Debt to Consolidated Capital
is less than .15 to 1.0: 15 basis points per annum;
11
If Borrower's Consolidated Funded Debt to Consolidated Capital
is equal to or greater than .15 to 1.0 but less than .25 to
1.0: 20 basis points per annum; and
If Borrower's Consolidated Funded Debt to Consolidated Capital
is equal to or greater than .25 to 1.0: 25 basis points per
annum.
(d) Reduction of the Aggregate Commitment. Borrower shall have
the right, upon at least three (3) Business Days' notice to the Agent, to
terminate in whole or reduce in part the unused portion of the Aggregate
Commitment, without premium or penalty, provided that each partial reduction
shall be in the aggregate amount of $5,000,000 or an integral multiple of
$5,000,000 thereof and that such reduction shall not reduce the Aggregate
Commitment to an amount less than the amount outstanding hereunder on the
effective date of the reduction. Such notice shall be irrevocable and such
reduction shall not be reinstated. The Agent shall promptly inform the Banks by
telecopy of receipt of said notice or notices.
(e) Revolving Notes. The Revolving Loans made by the Banks
pursuant hereto shall be evidenced by promissory notes of Borrower,
substantially in the form of Exhibit A, with appropriate insertions (the
"Revolving Notes"), payable to the order of each Bank and representing the
obligation of Borrower to pay the aggregate unpaid principal amounts of the
Revolving Loans made by such Bank to Borrower, with interest thereon as
prescribed in Section 2.3. Each Bank is hereby authorized to record in its
respective books and records and on any exhibit annexed to its Revolving Notes,
the date and amount of each Revolving Loan made by said Bank, and the date and
amount of each payment of principal thereof, and in the case of LIBOR Rate
Loans, the Interest Period and interest rate with respect thereto, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that failure by said Bank to effect such
recordation shall not affect Borrower's obligations hereunder. Prior to the
transfer of a Revolving Note, each Bank shall record such information on any
exhibit annexed to and forming a part of such Revolving Note. Upon surrender of
any Revolving Note at the office of Borrower by reason of any permitted
assignment, transfer or other disposition of any Commitment or portion thereof,
Borrower shall execute and deliver one or more new Revolving Notes of like tenor
and of a like aggregate principal amount in the name of the designated holder or
holders of such Commitment or portions thereof. Any such new Revolving Note
shall thereafter be considered a Revolving Note under this Agreement. Any such
new Revolving Note shall carry the rights to accrued and unpaid interest which
were carried by the Revolving Note so exchanged so that neither gain nor loss of
interest shall result from such event.
(f) Extension of Maturity Date. Notwithstanding anything to
the contrary contained in this Agreement, the Maturity Date of the Commitments
of the Banks may be extended for an additional one (1) year and for an
additional one (1)
12
year on each anniversary date of the original Closing Date if Borrower, the
Agent and the Banks agree in writing to said extension(s) on or before ten (10)
days prior to each such anniversary date. Said extension(s) shall be evidenced
by an executed amendment. Borrower shall submit an extension request (the
"Request") by delivering written notice thereof to the Agent, on or before
forty-five (45) days prior to the earlier of (i) the date the Borrower files its
Form 10-K Annual Report with the S.E.C. or (ii) one hundred and twenty (120)
days after the end of the immediately preceding fiscal year of the Borrower, and
the Agent shall notify each Bank of the Request promptly after the Agent's
receipt thereof from Borrower. Not later than fifteen (15) days prior to each
anniversary date (the "Cut-Off Date"), each Bank may in its sole discretion, by
written notice to the Agent, agree to the extension of the then current Maturity
Date with respect to its Commitment. In order for any extension of the then
current Maturity Date to be effective, at least one (1) of the Banks must elect
to extend, in which event the then current Maturity Date shall be extended with
respect to the Commitments of the consenting Bank or Banks for the period set
forth in the Request. The failure by any Bank to deliver an extension notice to
the Agent on or prior to the Cut-Off Date shall be deemed notice that such Bank
has declined to extend the then current Maturity Date, and a decision by any
Bank whether or not to so extend shall be in its sole discretion. In the event
that any of the Banks elects not to extend the Maturity Date (or are deemed to
have declined to so extend), the Agent shall use reasonable efforts to find
replacement banks (which can be one of the other Banks, if any). In such event,
if a replacement bank is found the parties agree to execute and deliver such
documentation as the Agent shall request to effectuate such replacement. If none
of the Banks agree to extend and if such a replacement bank is not found, the
Maturity Date shall not be extended with respect to the Commitment of any Bank.
If BankBoston shall elect not to extend but at least one (1) other Bank shall
extend, the agency duties of BankBoston shall be transferred to a continuing
Bank upon expiration of BankBoston's Commitment. In connection with the making
of any Request, Borrower shall provide to the Agent or any Bank or any
prospective replacement bank any documents, instruments, records, information or
access to management personnel that the Agent or such Bank or replacement bank
may reasonably request.
(g) Agency and Upfront/Arrangement Fees. Borrower shall pay to
the Agent, for its own account, an agency fee and an upfront/arrangement fee as
agreed to separately between Borrower and Agent under Option C of that certain
fee letter dated January 8, 1997 between Agent and Borrower, with said agency
fee to be payable annually in advance on each anniversary of the Closing Date
and said upfront/arrangement fee to be payable one time only on the Closing
Date.
. SECTION 2.2 REPAYMENT.
(a) Mandatory Repayments. The aggregate principal amount of the
Revolving Loans outstanding on the Maturity Date, together with accrued interest
thereon, shall be due and payable in full on the Maturity Date. If at any time
the
13
aggregate principal amount of outstanding Revolving Loans exceeds the Aggregate
Commitment then in effect, Borrower shall immediately repay the Revolving Loans
in an amount equal to the excess.
(b) Optional Payment. Borrower may at its option repay the
Revolving Loans, without penalty except as set forth in Section 3.7(b), in whole
or in part, on any Business Day, prior to the Maturity Date, from time to time,
provided the Agent shall have received from Borrower notice of any such payment
at least one (1) Business Day prior to the date of the proposed payment if such
date is not the last day of the then current Interest Period for each Revolving
Loan being paid, in each case specifying the date and the amount of payment. For
Base Rate Loans, each day shall be defined as and constitute an "Interest
Period." Partial payments hereunder shall be in an aggregate principal amount of
not less than the lesser of (i) $1,000,000 and in an integral multiple of
$100,000 for a Revolving Loan consisting of a Base Rate Loan; (ii) $1,000,000
and in an integral multiple of $500,000 for a Revolving Loan consisting of a
LIBOR Rate Loan; and (iii) the outstanding balance of the Revolving Loan being
paid. The Agent shall promptly inform the Banks by telecopy of receipt of each
such payment.
(c) Allocation of Payments. Prior to the occurrence of an Event
of Default and acceleration of the Revolving Loans, all amounts received by the
Agent on account of the Revolving Loans, except as set forth to the contrary in
other Sections of this Agreement, shall be disbursed by the Agent to the Banks
pro rata in accordance with their respective Commitment Percentages by wire
transfer on the date of receipt if received by the Agent before 12:00 Noon or,
if received later, by 12:00 Noon on the next succeeding Business Day, without
further interest payable by the Agent. Following the occurrence of an Event of
Default and acceleration of the Revolving Loans, all amounts received by the
Agent on account of the Revolving Loans shall be disbursed by the Agent as
follows:
(i) first, to the payment of expenses incurred by the Agent
in the performance of its duties and enforcement of the rights under the Loan
Documents, including, without limitation, all costs and expenses of collection,
attorneys' fees and court costs;
(ii) then, to the Banks, pro rata in accordance with their
respective Commitment Percentages until all outstanding Revolving Loans and
interest accrued thereon have been paid in full; and
(iii) then, to such Persons as may be legally entitled
thereto.
(d) Sharing of Payments. Except where a provision of this
Agreement provides for non-pro rata treatment, if any Bank shall receive and
retain any payment, whether by setoff, application of the deposit balance or
security, or otherwise, in respect of the Revolving Loans in excess of such
Bank's Commitment
14
Percentage thereof, then such Bank shall purchase from the other Banks for cash
and at face value and without recourse, such participation in the Revolving
Loans held by them as shall be necessary to cause such excess payment to be
shared ratably as aforesaid with each of them; provided, however, that if such
excess payment or part thereof is thereafter recovered from such purchasing
Bank, the related purchases from the other Banks shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so
recovered, but without interest. Each Bank agrees to exercise any and all rights
of setoff, counterclaim or banker's lien first fully against the Revolving Loans
held by such Bank, and only then to any other obligations of Borrower to such
Bank.
SECTION 2.3 INTEREST RATE AND PAYMENT DATES.
(a) Payment of Interest. Interest with respect to each
Revolving Loan shall be payable in arrears on each Interest Payment Date for
such Revolving Loan. In no event shall interest on a Revolving Loan exceed the
maximum rate permitted by applicable law.
(b) Base Rate Loans. Revolving Loans which are Base Rate Loans
shall bear interest on the unpaid principal amount thereof at a rate per annum
equal to the Base Rate from the date hereof through the Maturity Date. The Agent
shall promptly notify Borrower and each Bank of the amount and the effective
date of each adjustment in the Base Rate, provided that no failure or delay in
giving any such notice shall affect or delay the making of any such adjustments
or the obligation of Borrower to pay in a timely manner the interest due on such
Revolving Loans.
(c) LIBOR Rate Loans. Revolving Loans which are LIBOR Rate
Loans shall bear interest for each Interest Period with respect thereto on the
unpaid principal amount thereof at a rate per annum equal to the LIBOR Rate
determined for such Interest Period plus an amount determined in accordance with
following schedule:
If Borrower's Consolidated Funded Debt to Consolidated Capital
is less than .15 to 1.0: 35 basis points;
If Borrower's Consolidated Funded Debt to Consolidated Capital
is equal to or greater than .15 to 1.0 but less than .25 to
1.0: 42.5 basis points; and
If Borrower's Consolidated Funded Debt to Consolidated Capital
is equal to or greater than .25 to 1.0: 50 basis points.
Said rates shall be calculated quarterly based on Borrower's performance for the
immediately preceding quarter for which Borrower has provided information to the
Agent regarding the calculation of the rate and shall be effective five (5)
Business
15
Days following the Agent's receipt of such financial statements and the
officer's certificate required to be delivered in connection therewith pursuant
to Section 6.1(a); provided that if Borrower shall not have timely delivered its
financial statements in accordance with Section 6.1(a) (after giving effect to
any grace period set forth in Section 7.1(c)), then commencing on the date upon
which such financial statements should have been delivered and continuing until
such financial statements are actually delivered, it shall be assumed for
purposes of determining said rates that Borrower's Consolidated Funded Debt to
Consolidated Capital is equal to or greater than .25 to 1.0 (said calculations
shall apply to existing as well as new LIBOR Rate Loans).
SECTION 2.4 CONTINUATION AND CONVERSION OPTIONS. Borrower may elect
from time to time to convert outstanding Revolving Loans from Revolving Loans
bearing interest at a rate determined by reference to one basis to Revolving
Loans bearing interest at a rate determined by reference to an alternative basis
if Borrower gives the Agent (a) at any time irrevocable notice of an election to
convert LIBOR Rate Loans to Base Rate Loans and (b) at least three (3) LIBOR
Business Days prior irrevocable notice of an election to convert Base Rate Loans
to LIBOR Rate Loans, provided that any conversion of LIBOR Rate Loans to Base
Rate Loans shall only be made on the last day of an Interest Period with respect
thereto, and provided further that no Base Rate Loan may be converted to a LIBOR
Rate Loan so long as an Event of Default or Potential Event of Default has
occurred and is continuing. Borrower may elect from time to time to continue its
outstanding LIBOR Rate Loans upon the expiration of the Interest Period(s)
applicable thereto if Borrower gives to the Agent irrevocable notice of
continuation of such a LIBOR Rate at least three (3) LIBOR Business Days prior
to the expiration thereof and so long as an Event of Default or Potential Event
of Default has not occurred and is not continuing. Each notice electing to
convert or continue a Revolving Loan shall specify: (i) the proposed
conversion/continuation date; (ii) the amount of the Revolving Loan to be
converted/continued; (iii) the nature of the proposed continuation/conversion;
and (iv) in the case of a conversion to, or continuation of a LIBOR Rate Loan,
the requested Interest Period, and shall certify that no Event of Default or
Potential Event of Default has occurred and is continuing. On the date on which
such conversion or continuation is being made the Agent shall take such action
as is necessary to effect such conversion or continuation. In the event that no
notice of continuation or conversion is received by the Agent with respect to
outstanding LIBOR Rate Loans, upon expiration of the Interest Period(s)
applicable thereto, such LIBOR Rate Loans shall convert to Base Rate Loans.
Subject to the limitations set forth in this Section and in the definition of
Interest Period, all or any part of outstanding Revolving Loans may be converted
or continued as provided herein, provided that partial conversions or
continuations shall be in an aggregate principal amount of not less than (A)
$1,000,000 and in an integral multiple of $100,000 for a Revolving Loan
consisting of a Base Rate Loan; (B) $1,000,000 and in an integral multiple of
$500,000 above such amount for a LIBOR Rate Loan; and (C) the outstanding
balance of the Revolving Loan being converted or continued.
16
ARTICLE III
GENERAL PROVISIONS CONCERNING THE REVOLVING LOANS
SECTION 3.1 USE OF PROCEEDS. The proceeds of the Revolving Loans
hereunder shall be used by Borrower for general corporate purposes.
SECTION 3.2 POST MATURITY INTEREST. Notwithstanding anything to the
contrary contained in Section 2.3, if all or a portion of the principal amount
of any of the Revolving Loans made hereunder or any interest accrued thereon
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), any such overdue amount shall bear interest at a rate per annum
which is equal to the greater of (a) two percent (2%) above the rate which would
otherwise be applicable pursuant to Section 2.3 and (b) two percent (2%) above
the Base Rate, from the date of such nonpayment until paid in full (after as
well as before judgment), payable on demand. In addition, such Revolving Loan,
if a LIBOR Rate Loan, shall be converted to a Base Rate Loan at the end of the
then current Interest Period therefor.
SECTION 3.3 COMPUTATION OF INTEREST.
(a) Calculations. Interest in respect of the Base Rate Loans
shall be calculated on the basis of a 365-day year for the actual days elapsed.
Any change in the interest rate on a Base Rate Loan resulting from a change in
the Base Rate shall become effective as of the opening of business on the day on
which such change in the Base Rate shall become effective. Interest with respect
of the LIBOR Rate Loans shall be calculated on the basis of a 360-day year for
the actual days elapsed.
(b) Determination by the Agent. Each determination of an
interest rate or fee by the Agent pursuant to any provision of this Agreement
shall be conclusive and binding on the Banks and Borrower in the absence of
manifest error.
SECTION 3.4 PAYMENTS. Borrower shall make each payment of principal,
interest and fees referred to in Section 2.2 due from it hereunder and under the
Revolving Notes, without setoff or counterclaim, not later than 12:00 P.M. (San
Francisco time) on the day when due in lawful money of the United States of
America to the Agent, on behalf of the Banks, at the office of the Agent
designated from time to time in immediately available funds.
SECTION 3.5 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Revolving Notes shall be stated to be due on a day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
17
SECTION 3.6 REDUCED RETURN. If any Bank shall have determined that any
new or additional applicable law, regulation, rule or regulatory requirement
(collectively in this Section 3.6, "Requirement") regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by said Bank
with any new or additional request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on said Bank's capital as a consequence of its Commitment and obligations
hereunder to a level below that which would have been achieved but for such
Requirement, change or compliance (taking into consideration said Bank's
policies with respect to capital adequacy) by an amount deemed by said Bank to
be material (which amount shall be determined by said Bank's reasonable
allocation of the aggregate of such reductions resulting from such events), then
from time to time, within thirty (30) Business Days after written demand by said
Bank, Borrower shall pay to the Agent on behalf of said Bank such additional
amount or amounts as will compensate said Bank for such reduction.
Notwithstanding the foregoing, no additional compensation will be required from
Borrower under this Section 3.6 if the reason for said additional compensation
was based solely on said Bank's failure to comply with any existing or new law,
treaty, rule or regulation or requirement. In addition, said Bank shall promptly
notify Borrower of any proposed request for compensation under this Section 3.6
and shall provide Borrower with reasonable support therefor. Any request by said
Bank for additional compensation shall be structured to allocate such additional
costs over the term of the credit affected thereby.
SECTION 3.7 INDEMNITIES.
(a) General. Whether or not the transactions contemplated
hereby shall be consummated, Borrower agrees to indemnify, pay and hold the
Agent and the Banks, and the shareholders, officers, directors, employees and
agents of same, harmless from and against any and all claims, liabilities,
losses, damages, costs and expenses (whether or not any of the foregoing Persons
is a party to any litigation), including, without limitation, reasonable
attorneys' fees and costs (including. without limitation, the reasonable
estimate of the allocated cost of in-house legal counsel and staff) and costs of
investigation, document production, attendance at a deposition, or other
discovery, with respect to or arising out of (i) any proposed acquisition by
Borrower or any of its Consolidated Subsidiaries of any Person or any securities
(including a self-tender), (ii) this Agreement or any use of proceeds hereunder,
or (iii) any claim, demand, action or cause of action being asserted against
Borrower or any of its Consolidated Subsidiaries (collectively, the "Indemnified
Liabilities"), provided that Borrower shall have no obligation hereunder with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of any such Persons. If any claim is made, or any action, suit or
proceeding is brought against any Person indemnified pursuant to this Section,
the indemnified Person shall
18
notify Borrower of such claim or of the commencement of such action, suit or
proceeding, and Borrower will assume the defense of such action, suit or
proceeding, employing counsel selected by Borrower and reasonably satisfactory
to the indemnified Person, and pay the fees and expenses of such counsel. This
covenant shall survive termination of this Agreement and payment of the
outstanding Revolving Notes.
(b) Funding Losses. Borrower agrees to indemnify the Agent and
the Banks and to hold the Agent and the Banks harmless from any loss or expense
including, but not limited to, any such loss or expense arising from interest or
fees payable by the Banks to lenders of funds obtained by them in order to
maintain their LIBOR Rate Loans hereunder, which the Banks may sustain or incur
as a consequence of (i) default by Borrower in payment of the principal amount
of or interest on the LIBOR Rate Loans of the Banks, (ii) default by Borrower in
making a conversion or continuation after Borrower has given a notice thereof,
(iii) default by Borrower in making any payment after Borrower has given a
notice of payment or (iv) Borrower making any payment of a LIBOR Rate Loan on a
day other than the last day of the Interest Period for such Revolving Loan. For
purposes of this Section and Section 3.10, it shall be assumed that the Banks
had funded or would have funded one hundred percent (100%) of each LIBOR Rate
Loan in the London interbank market for a corresponding amount and term. The
determination of such amount by the affected Bank shall be presumed correct in
the absence of manifest error. Any Person making a claim for indemnification
hereunder must provide reasonably detailed information describing such claim to
the Borrower prior to requiring Borrower to pay any such claim. This covenant
shall survive termination of the Agreement and payment of the outstanding
Revolving Notes.
SECTION 3.8 FUNDING SOURCES. Nothing in this Agreement shall be deemed
to obligate any Bank to obtain the funds for any Revolving Loan in any
particular place or manner or to constitute a representation by any Bank that it
has obtained or will obtain the funds for any Revolving Loan in any particular
place or manner.
SECTION 3.9 INABILITY TO DETERMINE INTEREST RATE. In the event that the
Agent shall have determined (which determination shall be conclusive and binding
upon Borrower and the Banks) that by reason of circumstances affecting the
interbank LIBOR market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable pursuant to Section 2.3 for any Interest
Period with respect to a LIBOR Rate Loan that will result from a requested LIBOR
Rate Loan or that such rate of interest does not adequately cover the cost of
funding such Revolving Loan, the Agent shall forthwith give notice of such
determination to Borrower not later than 1:00 P.M. San Francisco time, on the
requested Borrowing date, the requested conversion date or the last day of an
Interest Period of a Revolving Loan which was to have been continued as a LIBOR
Rate Loan. If such notice is given and has not been withdrawn (a) any requested
LIBOR Rate Loan shall
19
be made as a Base Rate Loan, or, at Borrower's option, such Revolving Loan shall
not be made, (b) any Revolving Loan that was to have been converted to a LIBOR
Rate Loan, shall be continued as, or converted into, a Base Rate Loan and (c)
any outstanding LIBOR Rate Loan shall be converted, on the last day of the then
current Interest Period with respect thereto, to a Base Rate Loan. Until such
notice has been withdrawn by the Agent, no further LIBOR Rate Loans shall be
made and Borrower shall not have the right to convert a Revolving Loan to a
LIBOR Rate Loan. The Agent will review the circumstances affecting the London
interbank market from time to time and the Agent will withdraw such notice at
such time as it shall determine that the circumstances giving rise to said
notice no longer exist.
SECTION 3.10 REQUIREMENTS OF LAW. In the event that any law, regulation
or directive or any change therein or in the interpretation or application
thereof or compliance by any Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority,
agency or instrumentality:
(a) does or shall subject said Bank to any new or additional
tax of any kind whatsoever with respect to this Agreement, any Revolving Note or
any Revolving Loan made hereunder, or change the basis of taxation of payments
to said Bank of principal, commitment fee, non-utilization fee, interest or any
other amount payable hereunder (except for changes in the rate of tax on the
overall net income of said Bank);
(b) does or shall impose, modify or hold applicable any
reserve, assessment rate, special deposit, compulsory loan or other requirement
(collectively in this Section 3.10, "Requirements") against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
said Bank which Requirements are not otherwise included in the determination of
any LIBOR Rate at the last Borrowing, conversion or continuation date of a
Revolving Loan;
(c) does or shall impose, modify or hold applicable any of the
Requirements against the Commitments; or
(d) does or shall impose on said Bank any other new or
additional condition;
and the result of any of the foregoing is to increase the cost to said Bank of
making, renewing or maintaining its Commitment or the LIBOR Rate Loans or to
reduce any amount receivable thereunder by an amount determined by said Bank, in
its sole discretion, to be material (which increase or reduction shall be
determined by the Bank's reasonable allocation of the aggregate of such cost
increases or reduced amounts receivable resulting from such events), then, in
any such case, Borrower shall pay to the Agent on behalf of said Bank, within
thirty (30) Business Days of its
20
demand, any additional amounts necessary to compensate said Bank for such
additional cost or reduced amount receivable as determined by said Bank with
respect to this Agreement. If said Bank becomes entitled to claim any additional
amounts pursuant to this subsection, it shall notify Borrower of the event by
reason of which it has become so entitled. A statement incorporating the
calculation as to any additional amounts payable pursuant to the foregoing
sentence submitted by said Bank to Borrower shall be conclusive in the absence
of manifest error. Notwithstanding the foregoing, no additional compensation
will be required from Borrower under this Section 3.10 if the reason for said
additional compensation was based solely on said Bank's failure to comply with
any existing or new law, treaty, rule or regulation or requirement. In addition,
said Bank shall promptly notify Borrower of any proposed request for
compensation under this Section 3.10 and shall provide Borrower with reasonable
support therefor. Any request by said Bank for additional compensation shall be
structured to allocate such additional costs over the term of the credit
affected thereby.
SECTION 3.11 ILLEGALITY. Notwithstanding any other provisions herein,
if any law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful, impossible or
impracticable for any Bank to make or maintain LIBOR Rate Loans as contemplated
by this Agreement, (a) the commitment of said Bank hereunder to make LIBOR Rate
Loans or convert Base Rate Loans to LIBOR Rate Loans shall forthwith be
suspended and (b) said Bank's Revolving Loans then outstanding as LIBOR Rate
Loans, if any, shall be converted automatically to Base Rate Loans on the next
succeeding Interest Payment Date or within such earlier period as allowed by
law. Borrower hereby agrees to pay said Bank, within thirty (30) Business Days
of its demand, any additional amounts necessary to compensate said Bank for any
costs incurred by said Bank in making any conversion in accordance with this
Section, including, but not limited to, any interest or fees payable by said
Bank to lenders of funds obtained by it in order to make or maintain its LIBOR
Rate Loans hereunder (said Bank's notice of such costs, as certified to Borrower
to be conclusive absent manifest error). Notwithstanding the foregoing, no
additional compensation will be required from Borrower under this Section 3.11
if the reason for said additional compensation was based solely on said Bank's
failure to comply with any existing or new law, treaty, rule or regulation or
requirement. In addition said Bank shall promptly notify Borrower of any
proposed request for compensation under this Section 3.11 and shall provide
Borrower with reasonable support therefor. Any request by said Bank for
additional compensation shall be structured to allocate such additional costs
over the term of the credit affected thereby.
SECTION 3.12 SUBSTITUTION OF BANKS. Upon the receipt by Borrower from
any Bank (an "Affected Bank") of a claim for compensation pursuant to Section
3.6 or 3.10 or a notice pursuant to Section 3.11 Borrower may: (a) request the
Agent and/or Affected Bank to use its best efforts to obtain a replacement bank
or financial institution satisfactory to Borrower to acquire and assume all or
part of such
21
Affected Bank's Revolving Loans and Commitment (a "Replacement Bank"); (b)
request one or more of the other Banks to acquire and assume all or part of such
Affected Bank's Revolving Loans and Commitment, or (c) designate a Replacement
Bank. Any such designation of a Replacement Bank under clause (a) or (c) shall
be subject to the prior written consent of the Agent (which consent shall not be
unreasonably withheld). If no such Replacement Bank is obtained within thirty
(30) days following receipt of such claim or notice, Borrower shall have the
right to prepay, without penalty except as set forth in Section 3.7(b), the
Revolving Loans, in whole or in part, and reduce or terminate the Commitment, of
the Affected Bank.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT.
The effectiveness of this Agreement is subject to the conditions precedent that:
(a) The Agent (which shall promptly distribute such information
to each of the Banks) shall have received, for and on behalf of the Banks, on or
before the date of this Agreement, the following, each dated such day and in
form and substance satisfactory to the Agent:
(i) The Revolving Notes issued by Borrower to the order of
the respective Banks;
(ii) A copy of the Certificate of Incorporation, certified
as of a recent date by the Secretary of the State of Delaware;
(iii) A copy of the Bylaws of the Borrower, certified by
the Secretary or Assistant Secretary of the Borrower;
(iv) Copies of resolutions of the Board of Directors or
other authorizing documents of Borrower approving the Loan Documents and the
Borrowings hereunder;
(v) Borrower's certificate that the copy of the incumbency
certificate executed by the Secretary or an Assistant Secretary of Borrower or
equivalent document, certifying the names and signatures of the officers of
Borrower or other Persons authorized to sign the Loan Documents and the other
documents to be delivered hereunder heretofore provided to the Agent is in full
force and effect and has not been amended and/or supplemented;
(vi) Executed copies of all Loan Documents; and
22
(vii) An executed letter agreement with the Prior Agent
relating to the termination of its role as agent under the Prior Agreement and
with Xxxxx Fargo Bank, National Association, relating to the termination of its
role as a Bank under the Prior Agreement and cross indemnities in connection
therewith.
(b) All corporate and legal proceedings and all instruments and
documents in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in content, form and substance to the Agent and
its counsel, and the Agent and such counsel shall have received any and all
further information and documents which the Agent or such counsel may reasonably
have requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities.
(c) No Revolving Loans shall be outstanding as of the day
immediately prior to the Closing Date.
(d) Borrower shall have paid the upfront/arrangement fee to the
Agent described in Section 2.1(g).
SECTION 4.2 CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of
any Bank to make a Revolving Loan 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 the
Agent, on behalf of the Banks, shall have received the notice required by
Section 2.1(b), which notice shall be deemed to be a certification by Borrower
that:
(i) The representations and warranties contained in Section
5.1 are correct on and as of the date of such Borrowing as though made on and as
of such date (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct as of
such earlier date and except that Section 5.1(e) shall be deemed instead to
refer to the last day of the most recent fiscal year and fiscal quarter for
which financial statements have then been delivered),
(ii) No event has occurred and is continuing, or would
result from such Borrowing, which constitutes an Event of Default or Potential
Event of Default, and
(iii) All Loan Documents are in full force and effect,
and (b) the Agent shall have received such other approvals or documents as the
Agent may reasonably request.
23
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES. In order to induce each
Bank to make the Revolving Loans, Borrower represents and warrants as follows:
(a) Organization. Borrower is duly organized, validly existing
and in good standing under the laws of the state of its formation. Borrower is
also duly authorized, qualified and licensed in all applicable jurisdictions,
and under all applicable laws, regulations, ordinances or orders of public
authorities, to carry on its business in the locations and in the manner
presently conducted, to the extent that the failure to do so would not
reasonably be expected to have a Material Adverse Effect. All of the
Subsidiaries and Consolidated Subsidiaries of Borrower and the percentage of
Borrower's ownership interest therein as of the date of this Agreement are
identified on Exhibit 3.
(b) Authorization. The execution, delivery and performance by
Borrower of the Loan Documents, and the making of Borrowings hereunder, are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not contravene (i) Borrower's certificate of
incorporation, bylaws or other organizational documents or (ii) any law or
regulation (including Regulations G, T, U and X) or any contractual restriction
binding on or affecting Borrower.
(c) Governmental Consents. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (except routine reports required pursuant to the Securities
Exchange Act of 1934, as amended (if such act is applicable to Borrower), which
reports will be made in the ordinary course of business) is required for the due
execution, delivery and performance by Borrower of the Loan Documents.
(d) Validity. The Loan Documents are the binding obligations of
Borrower, enforceable in accordance with their respective terms; except in each
case as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors' rights.
(e) Financial Condition. The balance sheet of Borrower and its
Consolidated Subsidiaries as at the fiscal year ended December 29, 1996, and the
related statements of income, cash flows and stockholders' equity of Borrower
and its Consolidated Subsidiaries to that date for the fiscal year then ended,
copies of which have been furnished to the Agent and to the Banks, fairly
present the financial condition of Borrower and its Consolidated Subsidiaries as
of such date and the
24
results of the operations of Borrower and its Consolidated Subsidiaries for the
respective period ended on such date, all in accordance with GAAP, consistently
applied. Since December 29, 1996, there has been no material adverse change in
the business, operations, properties, assets or condition (financial or
otherwise) of Borrower and its Consolidated Subsidiaries, taken as a whole.
(f) Litigation. Except as set forth in the financial statements
delivered on or prior to the date hereof, to the best of Borrower's knowledge
there is no pending or threatened action or proceeding affecting Borrower or any
of its Consolidated Subsidiaries before any court, governmental agency or
arbitrator, which could reasonably be expected to materially adversely affect
the consolidated financial condition or operations of Borrower or which could
reasonably be expected to have a material adverse effect on Borrower's ability
to perform its obligations under the Loan Documents, having regard for its other
financial obligations (a "Material Adverse Effect").
(g) Employee Benefit Plans. Borrower and each of its ERISA
Affiliates is in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Employee Benefit Plans. No Termination Event has occurred or
is reasonably expected to occur with respect to any Pension Plan that would
reasonably be expected to have a Material Adverse Effect.
(h) Disclosure. No representation or warranty of Borrower
contained in this Agreement or any other document, certificate or written
statement furnished to the Agent and the Banks by or on behalf of Borrower for
use in connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a material fact (known
to Borrower in the case of any document not furnished by it) necessary in order
to make the statements contained herein or therein not misleading. To the best
of Borrower's knowledge, there is no fact known to Borrower (other than matters
of a general economic nature) which materially adversely affects the business,
operations, property, assets or condition (financial or otherwise) of Borrower
and its Consolidated Subsidiaries, taken as a whole, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Agent and the Banks for use in connection with the transactions
contemplated hereby.
(i) Margin Stock. The aggregate value of all margin stock (as
defined in Regulation U) directly or indirectly owned by Borrower and its
Consolidated Subsidiaries is less than 25% of the aggregate value of Borrower's
assets.
(j) Environmental Matters. Except as set forth in the financial
statements delivered on or prior to the date hereof and except for certain
claims associated with Great Western Chemical, neither Borrower nor any
Consolidated
25
Subsidiary, nor, to the best of their knowledge, any other person, has treated,
stored, processed, discharged, spilled, or otherwise disposed of any substance
defined as hazardous or toxic by any applicable federal, state or local rule,
regulation, order or directive, or any waste or by-product thereof, at any real
property or any other facility owned, leased or used by Borrower or any
Consolidated Subsidiary, in violation of any applicable statutes, regulations,
ordinances or directives of any governmental authority or court, which
violations may result in liability to Borrower or any Consolidated Subsidiary in
an amount for all such violations that could reasonably be expected to have a
Material Adverse Effect; and the unresolved violations set forth in the
financial statements delivered on or prior to the date hereof will not result in
liability to Borrower or any Consolidated Subsidiary in an amount for all such
unresolved violations that could reasonably be expected to have a Material
Adverse Effect. Except as set forth in the financial statements delivered on or
prior to the date hereof, no employee or other person has ever made a claim or
demand against Borrower or any Consolidated Subsidiary based on alleged damage
to health caused by any such hazardous or toxic substance or by any waste or
by-product thereof in an amount that could reasonably be expected to have a
Material Adverse Effect; and the unsatisfied claims or demands against Borrower
or any Consolidated Subsidiary set forth in the financial statements delivered
on or prior to the date hereof will not result in uninsured liability to
Borrower or any Consolidated Subsidiary or any of their respective officers,
employees, representatives, agents or shareholders in an amount that could
reasonably be expected to have a Material Adverse Effect for all such
unsatisfied claims or demands. Except as set forth in the financial statements
delivered on or prior to the date hereof, neither Borrower nor any Consolidated
Subsidiary has been charged by any governmental authority with improperly using,
handling, storing, discharging or disposing of any such hazardous or toxic
substance or waste or by-product thereof or with causing or permitting any
pollution of any body of water in an amount that could reasonably be expected to
have a Material Adverse Effect; and the outstanding charges set forth in the
financial statements delivered on or prior to the date hereof will not result in
liability to Borrower or any Consolidated Subsidiary or any of their respective
officers, employees, representatives, agents or shareholders in an amount that
could reasonably be expected to have a Material Adverse Effect for all such
outstanding charges.
(k) Employee Matters. There is no strike or work stoppage in
existence or, to the best of Borrower's knowledge, threatened involving Borrower
or its Consolidated Subsidiaries that would reasonably be expected to have a
Material Adverse Effect.
(l) Status of Dastek, Inc. Dastek (M) and DHC. Neither Dastek,
Inc. nor Dastek (M) is an active operating business. To the best knowledge of
the Borrower, none of Dastek, Inc., Dastek (M) or DHC have any material
outstanding liabilities in favor of any Persons that are not affiliated with the
DHC joint-venture.
26
ARTICLE VI
COVENANTS
SECTION 6.1 AFFIRMATIVE COVENANTS. So long as any Revolving Note shall
remain unpaid or the Banks shall have any Commitment hereunder, Borrower will,
unless the Majority Banks shall otherwise consent in writing:
(a) Financial Information. Furnish to the Agent and each of the
Banks:
(i) as soon as available, but in any event within one
hundred twenty (120) days after the end of each fiscal year of Borrower, a copy
of Borrower's consolidated balance sheet of itself and its Consolidated
Subsidiaries as at the end of each fiscal year and the related consolidated
statements of income, stockholders' equity and statement of cash flows for such
year, setting forth in each case in comparative form the figures for the
previous year, accompanied by an unqualified report and opinion thereon of Ernst
& Young or other independent certified public accountants acceptable to the
Majority Banks;
(ii) as soon as available, but in any event within sixty
(60) days after the end of each of Borrower's fiscal quarters, Borrower's
unaudited consolidated balance sheet of itself and its Consolidated Subsidiaries
as at the end of such period and the related unaudited consolidated statements
of income, stockholders' equity and statement of cash flows for such period and
year to date, setting forth in each case in comparative form the figures as at
the end of the previous fiscal year as to the balance sheet and the figures for
the previous corresponding period as to the other statements, certified by a
duly authorized officer of Borrower as being fairly stated in all material
respects subject to year end adjustments; all such financial statements to be
complete and correct in all material respects and to be prepared in reasonable
detail acceptable to the Majority Banks and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as approved by
such accountants and disclosed therein);
(iii) together with each delivery of financial statements
of Borrower and its Consolidated Subsidiaries pursuant to subdivisions (i) and
(ii) above, (A) an officer's certificate stating that the signers have reviewed
the terms of the Loan Documents and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
Borrower and its Consolidated Subsidiaries during the accounting period covered
by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the signers
do not have knowledge of the existence as at the date of the officer's
certificate, of any existing condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence
27
thereof and what action Borrower has taken, is taking and proposes to take with
respect thereto; and (B) a compliance certificate, in form and substance
satisfactory to Agent, setting forth in such detail as Agent may request the
calculation of the ratios and amounts necessary to determine Borrower's
compliance with Sections 6.2(b), 6.2(c) and 6.2(i) hereof for the accounting
period covered by such financial statements, certified by Borrower's chief
executive officer or chief financial officer; and
(iv) as soon as available, copies of all reports which
Borrower sends to any of its security holders, and copies of all reports and
registration statements which Borrower or any Subsidiary files with the S.E.C.
or any national securities exchange, including, but not limited to: Form 8-K
Current Report, Form 10-K Annual Report, Form 10-Q Quarterly Report, Annual
Report to Shareholders, Proxy Statements, and Registration Statements.
(b) Notices and Information. Deliver to the Agent and each of
the Banks:
(i) promptly upon any officer of Borrower obtaining
knowledge (A) of any condition or event which constitutes an Event of Default or
existing Potential Event of Default, (B) that any Person has given any notice to
Borrower or any Consolidated Subsidiary or taken any other action with respect
to a claimed default or event or condition of the type referred to in Section
7.1(e), (C) of the institution of any litigation involving an alleged liability
(including possible forfeiture of property) of Borrower or any of its
Consolidated Subsidiaries equal to or greater than $4,000,000 or any adverse
determination in any litigation involving a potential liability of Borrower or
any of its Consolidated Subsidiaries equal to or greater than $4,000,000, or (D)
of a material adverse change in the business, operations, properties, assets or
condition (financial or otherwise) of Borrower and its Consolidated
Subsidiaries, taken as a whole, an officer's certificate specifying the nature
and period of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or condition, and
what action Borrower has taken, is taking and proposes to take with respect
thereto;
(ii) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any (A) Termination Event, or (B) "prohibited
transaction," as such term is defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA, in connection with any Employee Benefit Plan or
any trust created thereunder, a written notice specifying the nature thereof,
what action Borrower has taken, is taking or proposes to take with respect
thereto, and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor, or the Pension Benefit Guaranty Corporation
with respect thereto;
28
(iii) with reasonable promptness copies of (A) all notices
received by Borrower or any of its ERISA Affiliates of the Pension Benefit
Guaranty Corporation's intent to terminate any material Pension Plan or to have
a trustee appointed to administer any Pension Plan; (B) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by
Borrower or any of its ERISA Affiliates with the Internal Revenue Service with
respect to each material Pension Plan; and (C) all notices received by Borrower
or any of its ERISA Affiliates from a Multiemployer Plan sponsor concerning the
material imposition or material amount of withdrawal liability pursuant to
Section 4202 of ERISA;
(iv) promptly, and in any event within thirty (30) days
after receipt thereof, a copy of any notice, summons, citation, directive,
letter or other form of communication from any governmental authority or court
in any way concerning any material action or omission on the part of Borrower or
any of its Consolidated Subsidiaries in connection with any substance defined as
toxic or hazardous by any applicable federal, state or local law, rule,
regulation, order or directive or any waste or by-product thereof, or concerning
the filing of a material lien upon, against or in connection with Borrower, its
Consolidated Subsidiaries, or any of their leased or owned real or personal
property, in connection with a Hazardous Substance Superfund or a Post-Closure
Liability Fund as maintained pursuant to ss. 9507 of the Internal Revenue Code;
and
(v) promptly, and in any event within ten (10) days after
request, such other information and data with respect to the business affairs
and financial condition of Borrower or any of its Consolidated Subsidiaries as
from time to time may be reasonably requested by the Agent and a Bank.
(c) Corporate Existence, Etc. At all times preserve and keep in
full force and effect Borrower's and its Consolidated Subsidiaries' corporate
existence and rights and franchises material to Borrower's business and those of
each of its Consolidated Subsidiaries; provided, however, that the corporate
existence of any such Consolidated Subsidiary may be terminated if such
termination is in the best interest of Borrower and is not materially
disadvantageous to the holder of any Revolving Note.
(d) Payment of Taxes and Claims. Pay, and cause each of its
Consolidated Subsidiaries (except Dastek (M) and DHC) to pay, all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business, income or
property before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a lien upon any of its properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; provided that no
such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
29
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
(e) Maintenance of Properties; Insurance. Maintain or cause to
be maintained in good repair, working order and condition all material
properties used or useful in the business of Borrower and its Consolidated
Subsidiaries (except Dastek (M) and DHC) and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof.
Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Consolidated Subsidiaries (except Dastek (M)
and DHC) against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations.
(f) Inspection. Permit any authorized representatives
designated by the Agent and/or any Bank to visit and inspect any of the
properties of Borrower or any of its Consolidated Subsidiaries (except Dastek
(M) and DHC), including its and their financial and accounting records, and to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants, all at such reasonable times during normal business hours and under
Borrower's supervision and as often as may be reasonably requested. Any such
additional information together with other nonpublic information received
hereunder shall be held in confidence by the Agent and the Banks and may not be
used for any purpose other than to monitor the credit worthiness of Borrower and
its Consolidated Subsidiaries (except Dastek (M) and DHC) and shall not be
disclosed or disseminated to any other Person for any reason, and the
Nondisclosure Agreements shall apply thereto.
(g) Compliance with Laws, Etc. Exercise, and cause each of its
Consolidated Subsidiaries to exercise, all due diligence in order to comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including, without limitation, all environmental laws,
rules, regulations and orders, noncompliance with which would have a Material
Adverse Effect.
SECTION 6.2 NEGATIVE COVENANTS. So long as any Revolving Note shall
remain unpaid or the Banks shall have any Commitment hereunder, Borrower will
not, without the written consent of the Majority Banks:
(a) Profitability. Permit, on a consolidated after-tax basis, a
net loss in two consecutive fiscal quarter periods after the Closing Date.
30
(b) Leverage Ratio. Permit Borrower's ratio of Consolidated
Funded Debt to Consolidated Capital, on a quarterly consolidated basis, to
exceed .5 to 1.0.
(c) Consolidated Tangible Net Worth. Permit Borrower's
Consolidated Tangible Net Worth, on a quarterly consolidated basis, to be less
than $600,000,000, plus (i) seventy-five percent (75%) of Borrower's future
fiscal year end consolidated net income (without deduction for any losses),
adjusted on an annual basis beginning after the end of Borrower's 1997 fiscal
year and including such fiscal year plus (ii) one hundred percent (100%) of the
net proceeds of equity investments and issues received by Borrower or its
Consolidated Subsidiaries adjusted on a consolidated quarterly basis in
accordance with GAAP, without duplication. For purposes hereof, the minimum
Consolidated Tangible Net Worth requirement shall not be increased by equity
issued through the exercise of employee stock options and/or employee stock
purchase plans.
(d) Liens, Etc. Create or suffer to exist, or permit any of its
Consolidated Subsidiaries (except Dastek (M) and DHC) to create or suffer to
exist, any Lien upon or with respect to any of its properties, whether now owned
or hereafter acquired, or assign, or permit any of its Consolidated Subsidiaries
(except Dastek (M) and DHC) to assign, any right to receive income, in each case
to secure any Debt of any Person other than (i) Liens in favor of the Banks,
(ii) Liens reflected on the financial statements referred to in Section 5.1(e)
and other Liens existing on the date hereof heretofore disclosed to the Agent
and the Banks; and (iii) Permitted Liens.
(e) Dividends, Etc. Declare or pay any dividends, purchase or
otherwise acquire for value its capital stock now or hereafter outstanding, or
make any distribution of assets to its stockholders as such, or permit any of
its Consolidated Subsidiaries (except Dastek (M) and DHC) to purchase or
otherwise acquire for value any stock of Borrower, except that (i) Borrower may
declare and deliver dividends and distributions payable in its capital stock,
and (ii) in any fiscal year (A) Borrower may declare and pay cash dividends to
its stockholders in an aggregate amount up to five percent (5%) of net income
after taxes of Borrower and its Consolidated Subsidiaries (except Dastek (M) and
DHC) for the immediately preceding fiscal year and (B) Borrower and each of its
Consolidated Subsidiaries may purchase or otherwise acquire shares of its own
outstanding capital stock for cash in an aggregate amount up to twenty-five
percent (25%) of net income after taxes of Borrower and its Consolidated
Subsidiaries (except Dastek (M) and DHC) for the immediately preceding fiscal
year; provided, further, that cash dividends paid together with stock
repurchases for cash shall not exceed an aggregate amount greater than
twenty-five percent (25%) of net income after taxes of Borrower and its
Consolidated Subsidiaries (except Dastek (M) and DHC) for the immediately
preceding fiscal year.
31
(f) Consolidation, Merger or Acquisition. Regarding Borrower
and its Consolidated Subsidiaries (except Dastek (M) and DHC), liquidate or
dissolve or enter into any consolidation, merger, acquisition, material
partnership, material joint venture, syndication or other combination without
the Majority Banks' prior written consent, which consent will not be
unreasonably withheld, except that Borrower may consolidate with, merge into or
acquire any other corporation or entity and that any corporation or entity may
consolidate with or merge into Borrower, provided that Borrower shall be the
surviving entity of such merger or consolidation, and provided further, that
immediately after the consummation of such consolidation or merger there shall
exist no condition or event which constitutes an Event of Default or a Potential
Event of Default. In addition Borrower may purchase any, all or substantially
all of the assets of any other Person in connection with acquisitions reasonably
related to Borrower's existing lines of business, provided that immediately
after the effectiveness of any such acquisition, there shall have occurred and
be continuing no Event of Default or Potential Event of Default.
(g) Loans, Investments, Secondary Liabilities. Make or permit
to remain outstanding, or permit any Consolidated Subsidiary (except Dastek (M)
and DHC) to make or permit to remain outstanding, any loan or advance to, or
guarantee, induce or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of or any other
interest in, or make any capital contribution to, any other Person, except that
Borrower and its Consolidated Subsidiaries may:
(i) own, purchase or acquire certificates of deposit, time
deposits and bankers' acceptances issued by the Banks, commercial paper rated
Moody's P-2 or better and/or Standard & Poor's A-2 or better, obligations or
instruments issued by or guaranteed by an entity designated as Standard & Poor's
A-2 or better, or Moody's P-2 or better or the equivalent by a nationally
recognized credit agency, municipal bonds and other governmental and corporate
debt obligations rated Standard & Poor's A or better and/or Moody's A-2 or
better, direct obligations of the United States of America or its agencies, and
obligations guaranteed or insured by the United States of America, and any funds
investing in any of the foregoing;
(ii) acquire and own stock, obligations or securities
received in connection with debts created in the ordinary course of business
owing to Borrower or a Subsidiary;
(iii) continue to own the existing capital stock of
Borrower's Subsidiaries;
(iv) endorse negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
32
(v) make loans, advances to or investments in a Subsidiary
or joint venture in connection with the normal operations of the business of
such Subsidiary or joint venture and allow Borrower's Subsidiaries or any joint
venture to which it is a party to make or permit to remain outstanding advances
from Borrower's Subsidiaries or such joint venture to Borrower;
(vi) make or permit to remain outstanding loans or advances
to Borrower's Subsidiaries or any joint venture to which it is a party or enter
into or permit to remain outstanding guarantees in connection with the
obligations of Borrower's Subsidiaries or such joint ventures;
(vii) make or permit to remain outstanding (A) loans and/or
advances to Borrower's officers, stockholders and/or employees, which, in the
aggregate, would not exceed $3,000,000 during the term of this Agreement, (B)
loans to Borrower's vendors, in the ordinary course of Borrower's business,
which, in the aggregate, do not exceed $5,000,000, (C) progress payments to
Borrower's vendors made in the ordinary course of Borrower's business, and (D)
(i) loans and/or advances for the purpose of purchasing Borrower's shares of
stock pursuant to its employee stock purchase or option plans, (ii) advances for
salary, travel and other expenses, advances against commission and other similar
advances made to officers or employees in the ordinary course of Borrower's
business, and (iii) loans and/or advances to or for the benefit of officers,
directors or employees in connection with litigation and other proceedings
involving such persons by virtue of their status as officers, directors or
employees, respectively;
(viii) make investments under Borrower's deferred
compensation plans for the benefit of the employees of Borrower and its
Subsidiaries; and
(ix) Komag Bermuda Ltd. and Komag Overseas Ltd. may
reallocate between each other their common stock ownership interests in Komag
USA (Malaysia) Sdn. and Asahi Komag Co., Ltd. may make an initial public
offering of its common stock.
(h) Asset Sales. Convey, sell, lease, transfer or otherwise
dispose of or write down or off on its books (individually, a "Transfer"), or
permit any Consolidated Subsidiary (except Dastek (M) or DHC) to Transfer, in
one transaction or a series of transactions, all or any part of its or its
Consolidated Subsidiary's (except Dastek (M) or DHC) business, property or fixed
assets outside the ordinary course of business, whether now owned or hereafter
acquired, except that (i) Borrower and its Consolidated Subsidiaries (except
Dastek (M) or DHC) may make Transfers of business, property or fixed assets in
transactions outside the ordinary course of business for consideration which in
the aggregate does not exceed 15% of Consolidated Tangible Net Worth in any
fiscal year of Borrower without the prior written
33
consent of the Majority Banks, which consent shall not be unreasonably withheld
and (ii) Borrower may Transfer Dastek (M) or DHC.
(i) Debt Service Coverage Ratio. Permit earnings before
interest expense plus taxes plus depreciation plus amortization ("EBITDA")
divided by interest expense plus scheduled principal payments, if any (in each
case measured for the Borrower and its Consolidated Subsidiaries), to be less
than 2.0 to 1.0 at the end of any fiscal quarter during the term of the
Agreement. This ratio will be calculated on a rolling prior four quarter basis
for Borrower and its Consolidated Subsidiaries. "Earnings before interest
expense" shall be calculated in this ratio to (i) exclude the undistributed
income of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or other distributions by such Subsidiary is not at the
time permitted by the terms of its charter or applicable law binding on such
Subsidiary; and (ii) exclude minority interests in the net income (or loss) of
Consolidated Subsidiaries.
(j) Transfer of Assets to Dastek, Inc. Dastek (M) or DHC.
Transfer any assets or property of the Borrower or its Consolidated Subsidiaries
to Dastek, Inc., Dastek (M) or DHC in excess of Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate without the prior written consent of the
Majority Banks.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) Borrower shall fail to pay any installment of the principal
of any Revolving Note outstanding hereunder when due or any installment of
interest on any Revolving Note or other amount payable hereunder within ten (10)
Business Days of the date when due; or
(b) Any representation or warranty made by Borrower herein or
by Borrower (or any of its officers) in connection with the Loan Documents shall
prove to have been incorrect in any material respect when made; or
(c) Borrower shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or in any and all documents
executed in conjunction with this Agreement, which failure continues uncured for
more than thirty (30) consecutive days. Notwithstanding the foregoing, any
failure of Borrower to perform or observe Sections 6.1(c) and (f) and/or 6.2(a),
(b), (c), (d), (e), (f), (h), (i) and (j) shall constitute an Event of Default
without regard to any lapse of time or cure period; or
34
(d) Borrower shall fail to perform or observe any term,
covenant or agreement contained in this Agreement other than those referred to
in Subsections 7.1(a), (b) and (c) above on its part to be performed or observed
and any such failure shall remain unremedied for thirty (30) days after Borrower
knows of such failure; or
(e) Borrower or any of its Consolidated Subsidiaries (except
Dastek (M) or DHC) shall fail to pay at maturity, or within any applicable
period of grace, any obligation for borrowed money in excess of $1,000,000 in
aggregate principal amount, or fail to observe or perform any material term,
covenant or agreement contained in any agreement for such indebtedness by which
it is bound, in each case for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders thereof or of
any obligations issued thereunder to accelerate the maturity thereof; or
(f) (i) Borrower or any of its Consolidated Subsidiaries
(except Dastek (M) or DHC) shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or Borrower or any of its Consolidated Subsidiaries (except Dastek (M)
or DHC) shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against Borrower or any of its Consolidated
Subsidiaries (except Dastek (M) or DHC) any case, proceeding or other action of
a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of thirty (30) days; or (iii)
there shall be commenced against Borrower or any of its Consolidated
Subsidiaries (except Dastek (M) or DHC) any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or (iv) Borrower or any of its Consolidated Subsidiaries (except
Dastek (M) or DHC) shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii) and (iii) above; or (v) Borrower or any of its Consolidated
Subsidiaries (except Dastek (M) or DHC) shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they become
due; or
(g) One judgment or decree shall be entered against Borrower or
any of its Consolidated Subsidiaries (except Dastek (M) or DHC) involving a
liability (not paid or at least seventy-five percent (75%) covered by insurance
or the third party
35
indemnity of a solvent indemnitor) equal to or greater than $5,000,000 or one or
more judgments or decrees shall be entered against Borrower or any of its
Consolidated Subsidiaries (except Dastek (M) or DHC) involving in the aggregate
a liability (not paid or at least seventy-five percent (75%) covered by
insurance or the third party indemnity of a solvent indemnitor) equal to or
greater than $10,000,000 and all such judgments or decrees shall not have been
vacated, discharged, or stayed or bonded pending appeal within thirty (30) days
from the entry thereof; or
(h) (i) Borrower or any of its ERISA Affiliates fails to make
full payment when due of all material amounts which, under the provisions of any
Pension Plan or Section 412 of the Internal Revenue Code, Borrower or any of its
ERISA Affiliates is required to pay as contributions thereto;
(ii) any material accumulated funding deficiency occurs or
exists, whether or not waived, with respect to any Pension Plan;
(iii) the excess of the actuarial present value of all
benefit liabilities under all material Pension Plans over the fair market value
of the assets of such Pension Plans (excluding in such computation Pension Plans
with assets greater than benefit liabilities) allocable to such benefit
liabilities are greater than five percent (5%) of Consolidated Tangible Net
Worth;
(iv) Borrower or any of its ERISA Affiliates enters into
any transaction which has as its principal purpose the evasion of liability
under Subtitle D of Title IV of ERISA;
(v) (A) Any material Pension Plan maintained by Borrower or
any of its ERISA Affiliates shall be terminated within the meaning of Title IV
of ERISA, or (B) a trustee shall be appointed by an appropriate United States
district court to administer any material Pension Plan, or (C) the Pension
Benefit Guaranty Corporation (or any successor thereto) shall institute
proceedings to terminate any material Pension Plan or to appoint a trustee to
administer any Pension Plan, or (D) Borrower or any of its ERISA Affiliates
shall withdraw (under Section 4063 of ERISA) from any material Pension Plan, if
as of the date of the event listed in subclauses (A)-(C) above or any subsequent
date, either Borrower or its ERISA Affiliates has any material liability (such
liability to include, without limitation, any material liability to the Pension
Benefit Guaranty Corporation, or any successor thereto, or to any other party
under Sections 4062, 4063 or 4064 of ERISA or any other provision of law)
resulting from or otherwise associated with the events listed in subclauses
(A)-(C) above;
(vi) As used in this subsection 7.1(h) the term
"accumulated funding deficiency" has the meaning specified in Section 412 of the
Internal Revenue Code, and the terms "actuarial present value" and "benefit
liabilities" have the meanings specified in Section 4001 of ERISA; or
36
(i) There shall be instituted against Borrower, or any of its
Consolidated Subsidiaries (except Dastek (M) or DHC), any proceeding for which
forfeiture (not paid or seventy-five percent (75%) covered by insurance or the
third party indemnity of a solvent indemnitor) of any property equal to or
greater than $5,000,000 is a potential penalty and such proceeding shall not
have been vacated or discharged within thirty (30) days of its institution;
THEN (i) upon the occurrence of any Event of Default described in clause (f)
above, the Aggregate Commitment shall immediately terminate and all Revolving
Loans hereunder with accrued interest thereon, and all other amounts owing under
this Agreement, the Revolving Notes, and the other Loan Documents shall
automatically become due and payable, and (ii) upon the occurrence and
continuance of any other Event of Default, the Agent, at the instruction of the
Majority Banks, shall, by notice to Borrower, declare the Aggregate Commitment
to be terminated forthwith, whereupon the Aggregate Commitment shall immediately
terminate; and by notice to Borrower, declare the Revolving Loans hereunder,
with accrued interest thereon, and all other amounts owing under this Agreement,
the Revolving Notes, and the other Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived. Notwithstanding any
other provision of this Agreement, including Section 8.2, notices to Borrower
pursuant to this Section may be communicated orally (including by telephone with
a written notice to Borrower to be subsequently provided by the Agent) or in
writing (including telex or facsimile transmission).
ARTICLE VIII
THE AGENT
SECTION 8.1 THE AGENT. BankBoston is hereby appointed as the Agent by
each of the Banks to perform such duties on behalf of the other Banks and
itself, and to have such powers, as are set forth herein and as are reasonably
incidental thereto. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Banks and does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency
or trust hereunder with or for Borrower. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any Bank, and nothing in
this Agreement, expressed or implied, is intended to or shall be so construed as
to impose upon the Agent any obligations in respect of this Agreement, the
Revolving Loans or the other instruments and agreements referred to herein
except as expressly set forth herein or therein.
SECTION 8.2 DELEGATION OF DUTIES, ETC. The Agent may execute any of its
duties and perform any of its powers hereunder by or through agents or
employees, and shall be entitled to consult with legal counsel and any
accountant or
37
other professional selected by it. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
SECTI0N 8.3 INDEMNIFICATION. The Banks agree to indemnify the Agent in
its capacity as such, to the extent not reimbursed promptly by Borrower, pro
rata according to their respective Commitment Percentages, from and against any
and all claims, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement or the Revolving Notes or
any action taken or omitted to be taken or suffered in good faith by the Agent
hereunder or thereunder, provided that no Bank shall be liable for any portion
of any of the foregoing items resulting from the gross negligence or willful
misconduct of the Agent. Without limitation of the foregoing, each Bank agrees
to reimburse the Agent promptly upon demand for its pro rata share of any
out-of-pocket expenses (including reasonable counsel fees and disbursements)
incurred by the Agent in connection with the preparation, execution,
administration or enforcement of, legal advice in respect of rights or
responsibilities under, or amendment, modification or waiver of any provision
of, this Agreement or the Revolving Notes, to the extent that the Agent is not
promptly reimbursed for such expenses by Borrower.
SECTION 8.4 EXCULPATORY PROVISIONS.
(a) Neither the Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted to be taken
or suffered in good faith by it or them hereunder or in connection herewith,
except that the Agent shall be liable for its own gross negligence or willful
misconduct. The Agent shall not be liable in any manner for the effectiveness,
enforceability, collectibility, genuineness, perfection, validity, sufficiency
or the due execution of this Agreement or the Revolving Notes or for the due
authorization, authenticity or accuracy of the representations and warranties
herein or in any other certificate, report, notice, consent, opinion, statement
or other document furnished or to be furnished hereunder, and shall be entitled
to rely upon any of the foregoing believed by it to be genuine and correct and
to have been signed and sent or made by the proper Person. The Agent shall be
under no duty or responsibility to the Banks to ascertain or to inquire into the
performance or observance by Borrower of any of the provisions hereof or of any
document executed and delivered in connection herewith. Each Bank acknowledges
that it has taken and will continue to take such action and to make such
investigation as it deems necessary to inform itself of the affairs of Borrower
and each Bank acknowledges that it had the opportunity to make, has made and
will continue to make its own independent investigation of the credit worthiness
and the business and operations of Borrower and that, in entering into this
Agreement, and in making its Revolving Loans, it has not relied and will not
38
rely upon any information or representations furnished or given by the Agent or
any other Bank.
(b) Each Bank expressly acknowledges that the Agent has not
made any representations or warranties to it and that no act taken by the Agent
shall be deemed to constitute any representation or warranty by the Agent to the
Banks.
(c) If the Agent shall request instruction from the Banks with
respect to any act or action (including the failure to take an action) in
connection with the Revolving Loans under this Agreement, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from all of the Banks or the Majority
Banks, as the case may be and as required herein. Without prejudice to the
generality of the foregoing, (i) the Agent shall be entitled to rely, and shall
be fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys, accountants, experts and
other professional advisors selected by it; and (ii) no Bank shall have any
right of action whatsoever against the Agent as a result of the Agent acting or
(where so instructed) refraining from acting under this Agreement with respect
to the Revolving Loans in accordance with the instructions of all of the Banks
or the Majority Banks, as the case may be.
SECTION 8.5 KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that the Agent shall be entitled to assume that no Event of Default has occurred
and is continuing, unless the officers of the Agent immediately responsible for
matters concerning this Agreement shall have actual knowledge of such occurrence
or shall have been notified in writing by any Bank that such Bank considers that
an Event of Default has occurred and is continuing and specifying the nature
thereof. In the event that the Agent shall have acquired actual knowledge of any
Event of Default, it shall promptly give notice thereof to the Banks.
SECTION 8.6 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to this
Agreement, and all Revolving Loans made by it and any renewals, extensions or
deferrals of the payment thereof and any Revolving Note issued to or held by it,
the Agent shall have the same rights and powers hereunder as any Bank, and may
exercise the same as though it were not the Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise requires, include the Agent in its
individual capacity. The Agent and each of its Bank Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Borrower or any Subsidiary or
Consolidated Subsidiary as if it were not performing the duties specified
herein, and may accept fees and other consideration from Borrower for services
in connection with this Agreement and otherwise without having to account for
the same to the Banks.
39
SECTION 8.7 PAYEE OF REVOLVING NOTE TREATED AS OWNER. The Agent may
deem and treat the payee of any Revolving Note as the owner thereof for all
purposes hereof unless and until an Assignment Agreement shall have been lodged
with the Agent as provided in Section 9.6. Any request, authority or consent of
any person or entity who, at the time of making such request or giving such
authority or consent, is the holder of any such Revolving Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Revolving Note or of any Revolving Note or Revolving Notes issued in exchange
therefor.
SECTION 8.8 RESIGNATION OR REMOVAL OF THE AGENT. If at any time the
Agent deems it advisable, in its sole discretion, it may submit to each of the
Banks and Borrower a written notification of its resignation as the Agent under
this Agreement, such resignation (subject to the further provisions of this
Section 8.8) to be effective on the thirtieth day after the date of such notice.
The Majority Banks may at any time remove the Agent, effective on the date
specified by them, by written notice to the Agent and Borrower. Upon any such
resignation or removal, the Majority Banks, subject to the prior written consent
of Borrower (which consent shall not be unreasonably withheld), shall have the
right to appoint a successor Agent, which successor Agent, provided that no
Event of Default shall have occurred and be continuing, shall be reasonably
satisfactory to Borrower. If no successor Agent shall have been so appointed by
the Majority Banks and accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which successor Agent
shall be either a Bank or if none of the Banks is willing to serve as successor
Agent, a bank having combined capital and surplus of at least $100,000,000. Any
such appointment of a successor Agent shall be subject to the prior written
approval of Borrower (which approval shall not be unreasonably withheld). Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
Borrower and the Banks shall execute such documents as shall be necessary to
effect such appointment. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Agent under this Agreement and the Revolving Notes. Notwithstanding the
foregoing provisions of this Section 8.8, if at any time there shall not be a
duly appointed and acting Agent, Borrower agrees to make each payment due
hereunder and under the Revolving Notes directly to the Banks entitled thereto
during such time.
40
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 AMENDMENTS, ETC.
(a) No amendment or waiver of any provision of the Loan
Documents, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Majority Banks, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that, without the written consent of all of the Banks, no amendment,
waiver or consent shall do any of the following:
(i) increase the amount, or extend the Maturity Date, of the
Commitments of the Banks or subject the Banks to any additional obligations;
(ii) reduce the principal of, or interest on, the Revolving
Loans or any fee or other amount payable to the Banks hereunder;
(iii) postpone any date fixed for any payment in respect of
principal of, or interest on, the Revolving Loans or any fee or other amount
payable to the Banks hereunder;
(iv) change the definition of "Majority Banks or any definition
or provision of this Agreement requiring the approval of Majority Banks or some
other specified amount of Banks;
(v) amend the provisions of Section 2.2 (d); or
(vi) amend the provisions of this Section 9.1; and
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Banks required hereinabove to take
such action, affect the rights, obligations or duties of the Agent under this
Agreement or any other Loan Document.
(b) Nonaccepting Entities.
(i) If Borrower requests a modification of the type specified
in clauses (i) through (iv) of subsection (a) above (a "Modification Request")
and any Bank (other than BankBoston), assignee of a Bank or a participant
refuses to agree to such modification (a "Nonaccepting Entity"), Agent shall use
good faith efforts to secure a substitute lender acceptable to Borrower and
Agent and willing to accept
41
such modification and the other provisions of this Agreement as a replacement
for the Nonaccepting Entity (an "Accepting Entity").
(ii) If Agent shall be unable to secure an Accepting Entity
within fifty (50) days from Agent's receipt from Borrower of the related
Modification Request in writing, then Borrower may, at its option and subject to
the remainder of this Section 9.1(b), prepay the Prepayment Amount (defined
below) (A) without obtaining the consent of any Person if the principal amount
of such Revolving Loan or participation interest is less than thirty-five
percent (35%) of the Commitment and (B) with the consent of the Majority Banks
(provided that for purposes of determining such Majority Banks such Revolving
Loan or participation interest of such Nonaccepting Entity shall not be
included) if the principal amount of such Revolving Loan or participation
interest is greater than thirty-five percent (35%) of the Commitment.
(iii) The prepayment described above shall only be available
and effective so long as (A) Borrower (1) provides Agent and Banks two (2)
Business Days written notice prior to any prepayment and (2) tenders the
Prepayment Amount (defined below) in immediately available funds, (B) no Event
of Default or Potential Event of Default would result from giving effect to such
prepayment, and (C) the amount of the Commitment, Aggregate Commitment and
respective Commitment Percentages shall be permanently reduced and adjusted by
the amount of the Revolving Loan or participation interest of such Nonaccepting
Entity. The prepayment option set forth in this Section 9.1(b) shall not apply
to BankBoston but shall apply to its assignees and participants.
For purposes of this Section 9.1(b), "Prepayment Amount" shall
mean the sum of (w) the outstanding principal amount of any such Nonaccepting
Entity's Revolving Loan or participation interest, (x) accrued and unpaid
interest thereon to the date of such prepayment, (y) the amount to which such
Nonaccepting Entity is entitled pursuant to Section 3.7(b) by reason of such
prepayment, and (z) all other amounts then due and owing hereunder by Borrower
to such Nonaccepting Entity for which the Borrower has received reasonably
detailed bills.
SECTION 9.2 NOTICES, ETC. Except as otherwise set forth in this
Agreement, all notices and other communications provided for hereunder shall be
in writing (including telegraphic, telex or facsimile communication) and mailed
or telegraphed or telexed or sent by facsimile or delivered, if to Borrower, at
Borrower's address set forth on the signature page hereof; and if to the Agent
and/or the Banks, at their respective addresses set forth on the signature page
hereof; or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and
communications shall be effective when deposited in the mails, delivered to the
telegraph company, sent by telex or sent by facsimile, respectively, except that
notices and communications to the Agent and the
42
Banks pursuant to Article II, VI or VII shall not be effective until received by
the Agent and the Banks.
SECTION 9.3 RIGHT OF SETOFF. Upon and after the occurrence of any Event
of Default, the Banks are hereby authorized by Borrower, at any time, after
having first obtained the written consent of the Agent, and from time to time,
without prior notice, (a) to set off against, and to appropriate and apply to
the payment of, the obligations and liabilities of Borrower under the Loan
Documents (whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts owing by the Banks to Borrower (whether
payable in Dollars or any other currency, whether matured or unmatured, and, in
the case of deposits, whether general or special, time or demand and however
evidenced) and (b) pending any such action, to the extent necessary, to hold
such amounts as collateral to secure such obligations and liabilities and to
return as unpaid for insufficient funds any and all checks and other items drawn
against any deposits so held as the Banks in their sole discretion may elect.
The Banks agree promptly to notify Borrower after any such setoff and
application made by the Banks. Upon and during the continuance of any Event of
Default and after having first obtained the written consent of the Agent, the
Banks are authorized to debit any account maintained with them by Borrower for
any amount of principal, interest or fees which are then due and owing to the
Banks by Borrower.
SECTION 9.4 NO WAIVER; REMEDIES. No failure on the part of the Agent,
on behalf of the Banks, or the Banks to exercise, and no delay in exercising,
any right under any of the Loan Documents shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under any of the Loan
Documents 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 9.5 COSTS AND EXPENSES. Borrower agrees to pay on demand all
costs and expenses (i) of the Agent (including reasonable and documented
attorney's fees and reasonable and documented costs of in-house counsel and
staff) in connection with the preparation (which in no event will exceed $7,500
for the Agent counsel's preparation and negotiation of this Agreement),
amendment or modification of the Loan Documents, and (ii) of the Agent and the
Banks in connection with the enforcement (including, without limitation, in
appellate, bankruptcy, insolvency, liquidation, reorganization, moratorium or
other similar proceedings) or restructuring of the Loan Documents (provided,
that, with respect to attorneys' fees, all such fees shall be reasonably
documented). With the concurrence of the Majority Banks, when an outside counsel
is required, one outside counsel will be retained to represent all of the Banks
in conjunction with any matters related to this Agreement. Notwithstanding the
preceding sentence, if the Majority Banks cannot agree on which outside counsel
should be retained, the Agent, on behalf of all of the Banks, shall make the
selection and all Banks shall be bound thereby.
43
SECTION 9.6 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Bank may assign, with the consent of the Agent and the
Borrower (provided that the consent of Borrower shall not be required (i) if
such assignment is to a Bank Affiliate of such assigning Bank or (ii) (A) after
the occurrence and (B) during the continuance of an Event of Default), from time
to time, all or any portion of its Commitment and its Revolving Notes (1) to a
Bank Affiliate of that Bank or to any regulatory agency, or (2) to any other
financial institution acceptable to the Agent and Borrower, provided that (x)
the amount of the Commitment of the assigning Bank being assigned pursuant to
each such assignment (determined as of the date of the Assignment Agreement with
respect to such assignment) shall in no event be less than $10,000,000 and
larger integral multiples of $1,000,000; and (y) the parties to each such
assignment shall execute and deliver to the Agent and Borrower an assignment
executed by the assigning Bank and the assignee in which the assignee agrees to
be bound as a Bank hereby, in form and substance satisfactory to the Agent (an
"Assignment Agreement). Notwithstanding the foregoing, no Bank may assign any
portion of its Commitment to another financial institution unless it retains at
least $10,000,000 thereof or another amount as agreed upon by Borrower and the
assigning Bank provided that such $10,000,000 retention requirement shall not
apply (aa) (i) after the occurrence and (ii) during the continuance of an Event
of Default, (bb) if such requirement conflicts with applicable law or the
instruction of government or regulatory agencies, or (cc) if such assignment is
to Bank Affiliate of such assigning Bank provided that such Bank Affiliate shall
be required to retain such $10,000,000 unless it assigns its interest to another
Bank Affiliate or meets the requirements of (aa) or (bb) herein. Upon such
execution and delivery, from and after the effective date specified in such
Assignment Agreement (X) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment Agreement, have the rights and obligations of a Bank
hereunder and (Y) the Bank assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights and be released from its obligations under this
Agreement, except with respect to those obligations set forth in the
Nondisclosure Agreement which the assignor had previously executed, and, in the
case of an Assignment Agreement covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto. The Commitments hereunder shall be modified to
reflect the Commitments of such assignor and assignee (and Schedule 1 shall be
deemed amended and revised to reflect such modification), and, if any such
assignment occurs while any Revolving Loan is outstanding, new Revolving Notes
shall, if requested by the assignor Bank or such assignee, upon the surrender of
the assigning Bank's Revolving Notes, be issued to such assignee and to the
assigning Bank as necessary to reflect the new Commitments of the assigning Bank
and of its assignee. Any assigning Bank shall pay the Agent a $2,500 fee in
connection with the effectiveness of any assignment it makes.
44
(b) Each Bank may sell, negotiate or grant participations to
Bank Affiliates in all or part of the obligations of Borrower outstanding under
the Loan Documents, without notice to or the approval of the Agent; provided
that any such sale, negotiation or participation shall be in compliance with the
applicable federal and state securities laws. No Bank shall transfer or grant
any participating interest under which the participant shall have rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent as described in the first
proviso to Section 9.1. No participant shall constitute a "Bank" under any Loan
Document, and Borrower shall continue to deal solely and directly with the Agent
and the Banks.
(c) Each Bank may disclose to any proposed approved assignee or
participant which is a financial institution any information relating to
Borrower or any of its Consolidated Subsidiaries; provided, that prior to such
disclosure such proposed assignee or participant shall have executed a
Nondisclosure Agreement.
SECTION 9.7 EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW. This
Agreement is being executed on the date hereof by Borrower, the Banks and
BankBoston (in its capacity as the Agent and Bank) and is binding on and
effective against each such party as of the date hereof. This Agreement shall
become effective when it shall have been executed by Borrower, the Agent and the
Banks and thereafter shall be binding upon and inure to the benefit of Borrower,
the Agent and the Banks and their respective permitted successors and assigns,
except that Borrower shall not have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Agent and the
Banks. THIS AGREEMENT AND THE REVOLVING NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING
EFFECT TO ITS CHOICE OF LAW DOCTRINE.
SECTION 9.8 CONSENT TO JURISDICTION; VENUE; THE AGENT FOR SERVICE OF
PROCESS. All judicial proceedings brought against Borrower with respect to this
Agreement and the Loan Documents may be brought in any state or federal court of
competent jurisdiction in the County of San Francisco in the State of
California, and by execution and delivery of this Agreement, Borrower accepts
for itself and in connection with its properties, generally and unconditionally,
the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.
Borrower irrevocably waives any right it may have to assert the doctrine of
forum non conveniens or to object to venue to the extent any proceeding is
brought in accordance with this Section. Borrower designates and appoints
Borrower's Chief Financial Officer, from time to time, Komag Incorporated, 0000
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx, 00000-0000, and such other Persons as
may hereafter be selected by Borrower irrevocably agreeing in writing to so
serve as its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service
45
being hereby acknowledged by Borrower to be effective and binding service in
every respect. A copy of any such process so served shall be mailed by
registered mail to Borrower at its address provided in the applicable signature
page hereto, except that unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of process.
If any agent appointed by Borrower refuses to accept service, Borrower hereby
agrees that service upon it by mail shall constitute sufficient notice. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of the Agent, on behalf of the Banks or the Banks,
to bring proceedings against Borrower in courts of any jurisdiction.
SECTION 9.9 ENTIRE AGREEMENT. This Agreement with Exhibits, the other
Loan Documents and the fee letter referred to in Section 2.1(g) embody the
entire agreement and understanding between the parties hereto and supersedes all
prior agreements and understandings relating to the subject matter hereof.
SECTION 9.10 SEPARABILITY OF PROVISIONS. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION 9.11 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.
SECTION 9.12 SURVIVAL OF CERTAIN AGREEMENTS. Notwithstanding anything
in this Agreement or implied by law to the contrary, the agreement of Borrower
set forth in Section 3.7(a) and the agreements of the Banks set forth in
Sections 8.2, 8.3, and 8.4 (as well as any obligations under any Nondisclosure
Agreements) shall survive the payment of the Revolving Loans and the Revolving
Notes and the termination of this Agreement. Notwithstanding anything in this
Agreement to the contrary, the agreement of Borrower set forth in Sections 3.6,
3.7(b) and 3.10 of the Agreement shall survive for one hundred and eighty (180)
days from the date of the later of (i) the payment of Revolving Loans and the
Revolving Notes and (ii) the termination of the Commitments.
SECTION 9.13 EFFECT OF AMENDMENT AND RESTATEMENT. This Agreement is
intended to and does completely amend and restate, without novation, the Prior
Agreement. Any new Revolving Loans made on or after the date of this Agreement
shall be made under the conditions set forth in, and shall be governed by, the
terms of this Agreement.
46
SECTION 9.14 CERTAIN CLOSING DATE TRANSITIONAL MATTERS.
(a) On the Closing Date, each Bank hereby sells and assigns,
without recourse, an amount of Revolving Loans equal to the product of (i) the
excess (if any) of its Original Percentage over its Closing Date Percentage
times (ii) the aggregate principal amount of Revolving Loans outstanding on such
date and each Bank hereby purchases an amount of Revolving Loans equal to the
product of (i) the excess (if any) of its Closing Date Percentage over its
Original Percentage times (ii) the aggregate principal amount of Revolving Loans
outstanding on such date. Each Bank selling Revolving Loans hereunder shall be
deemed to have sold (and each Bank purchasing Revolving Loans shall be deemed to
have purchased) a pro rata portion (based on the aggregate principal amount of
Revolving Loans then outstanding) of each of such selling Bank's Revolving
Loans. Payments by each Bank purchasing Revolving Loans hereunder shall be made
to the Agent not later than 12:00 noon, (San Francisco time) in immediately
available funds, without setoff, deduction or counterclaim, for the pro rata
account (based upon the outstanding principal amount of Revolving Loans being
sold) of each selling Bank in an amount equal to the aggregate principal amount
of outstanding Revolving Loans purchased by such Bank.
(b) On and after the Closing Date, each Bank shall be entitled
to receive a facility fee under Section 2.1(c) of the Agreement and interest and
fees on Revolving Loans and on any other amount due under any Loan Document, in
each case, (i) accrued and unpaid before the Closing Date in accordance with its
Original Percentage and (ii) accrued on and after the Closing Date in accordance
with its Closing Date Percentage.
(c) On and after the Closing Date, to the extent that any
commitment and the other rights and obligations of any Bank existing at the time
immediately preceding the Closing Date have been assigned or delegated, as
applicable, to any Bank hereunder, such assignee Bank hereby assumes such
commitment and other obligations and shall have the rights and obligations of a
Bank hereunder and under the other Loan Documents and, to the extent that any
commitment and other obligations of any Bank existing at the time immediately
preceding the Closing Date have been delegated by any Bank pursuant to this
Agreement, such assignor Bank shall be released from such commitment and its
obligations thereunder and under the other Loan Documents.
For purposes of this Section, (i) "Original Percentage" means, relative
to any Bank, the percentage set forth with respect to such Bank on the schedule
attached hereto as Schedule 4 and (ii) "Closing Date Percentage" means, relative
to any Bank, the percentage set forth with respect to such Bank on the schedule
attached hereto as Schedule 4.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
47
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: /s/ Xxxxxxx Xxxxxxx
Title:____________________________
Address:
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
BANKBOSTON, N.A.,
as the Agent and as a Bank
By: /s/ Xxxxx X. Xxxxxx
Title: Division Executive
Address:
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
COMERICA BANK - CALIFORNIA,
as a Bank
By: /s/ Xxxx Xxxxxxx
Title: First Vice President
Address:
000 Xxxxx Xxxxxx, Xxxxx 000
Mail Code: 4844
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
S-1
STANDARD CHARTERED BANK,
as a Bank
By: /s/ X X Xxxxxxx-Xxxxxxxx
Title: VP
By: /s/ ?????????????
Title: AVP
Address:
000 Xxxxxxxx Xxxx. X0
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx-Xxxxxxxx
BANQUE NATIONALE DE PARIS,
as a Bank
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Day
Title: Assistant Vice President
Address:
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
FLEET NATIONAL BANK,
as a Bank
By: /s/ Xxxxxxx Xxxxxxx
Title: Assistant Vice President
Address:
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
S-2
BANK OF MONTREAL, as a Bank
By: /s/ ???????????????
Title: Director
Address:
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
THE BANK OF NOVA SCOTIA,
as a Bank
By: /s/ Xxxxx Xxxxxxx
Title: Sr. Relationship Mgr.
Address:
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
UNION BANK OF CALIFORNIA, N.A.,
as a Bank
By: /s/ Xxxxxxx Xxxxxxx
Title: Assistant Vice President
Address:
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
S-3
ABN AMRO BANK, N.V.,
SAN XXXXXXXXX XXXXXX,
as a former Bank, as to Section 9.14
By: /s/ Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President
By: /s/ Xxxxx X. Xxxxxx
Title: Vice President
Address:
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxx
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
as former Agent and Bank, as to Section 9.14
By: /s/ Xxxxx X. Apple
Title: Vice President
Address:
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxx
S-3
EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
$_________________ ____________, 199_
FORVALUE RECEIVED, KOMAG, INCORPORATED (the "Borrower"), promises to
pay to the order of _____________________(the "Bank"), the principal amount of
________________ Dollars ($__________________), or, if less, the aggregate
amount of Revolving Loans (as defined in the Credit Agreement referred to
below), made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below, outstanding on the Maturity Date (as defined in the Credit
Agreement referred to below). All unpaid amounts of principal and interest shall
be due and payable in full on the Maturity Date as defined in the Credit
Agreement referred to below.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement referred to below.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of BankBoston, N.A., as "Agent" (as that term is defined in the Credit
Agreement referred to below), on behalf of the Bank, at the office of the Agent
located at 000 Xxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx 00000, or at such
other place as shall be designated in writing for such purpose in accordance
with the terms of the Credit Agreement referred to below. Until notified of the
transfer of this Note, the Borrower shall be entitled to deem the Bank or such
person who has been so identified by the transferor in writing to the Borrower
as the holder of this Note, as the owner and holder of this Note. Each of the
Bank and any subsequent holder of this Note agrees that before disposing of this
Note or any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been paid
on the schedule attached hereto, if any; provided, however, that the failure to
make notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Borrower hereunder with respect to payments of
principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, the
Amended and Restated Credit Agreement dated as of June 20, 1997 (as amended, the
"Credit Agreement") among Borrower, the Agent, the Bank and the other banks
described therein. The Credit Agreement, among other things, (i) provides for
the making of advances (the "Loans") by the Bank 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
Loan being evidenced by this Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Borrower, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note. The Borrower hereby consents to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waives diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
This Note amends, restates and supersedes in its entirety any
promissory notes delivered pursuant to the Prior Agreement (as defined in the
Credit Agreement) in favor of the Bank.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer, as of the date and the place first
above written.
KOMAG, INCORPORATED
By:_________________________
Its:________________________
EXHIBIT B
FORM OF BORROWING REQUEST
The undersigned, KOMAG, INCORPORATED (the "Borrower"), hereby certifies
to BANKBOSTON, N.A., as Agent for the Banks under (and as all capitalized terms
not otherwise defined herein are defined in) that certain Amended and Restated
Credit Agreement dated as of June 20, 1997 among the Borrower, the Agent and the
Banks (the "Agreement"), that it desires to borrow a LIBOR/BASE RATE (circle
one) Loan in the aggregate amount of $______________ (which amount is a minimum
of $1,000,000 and in an aggregate multiple of $100,000 above such amount for a
Base Rate Loan and is a minimum of $1,000,000) and in an aggregate multiple of
$500,000 above such amount for a LIBOR Rate Loan at the LIBOR Rate which is
________________ for an Interest Period of _____________________ on
______________________________ (the "Borrowing Date").
1. The Borrower hereby represents and warrants to the Agent on behalf
of each Bank the accuracy and completeness of the representations and warranties
set forth in Article V of the Agreement on and as of the Borrowing Date, except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date and
except that Section 5.1 (e) shall be deemed instead to refer to the last day of
the most recent fiscal year and fiscal quarter for which financial statements
have been delivered pursuant to Section 6.1 of the Agreement.
2. The Borrower hereby certifies that no Event of Default or Potential
Event of Default exists on or as of the Borrowing Date or would exist after
giving effect to the borrowings requested herein.
3. The Borrower hereby certifies that after giving effect to the
borrowings requested herein, the aggregate principal amount of any Bank's
Revolving Loans will not exceed its Commitment and the aggregate principal
amount of all Revolving Loans outstanding will not exceed the Aggregate
Commitment.
The Borrower hereby requests that the Agent telecopy this Borrowing
Request to the Banks on or before the close of business of the Agent on the date
hereof.
Dated this ____ day of _________________, 19___.
KOMAG, INCORPORATED
By:_________________________
Its:________________________
SCHEDULE 1
SCHEDULE OF COMMITMENTS
Commitment
Name of Bank Address Commitment Percentage
-----------------------------------------------------------------------------------------------------------------
The First National 000 Xxxxx Xxxxxx
Bank of Boston Xxxxx 000
Xxxx Xxxx, XX 00000 $35,000,000 20.0000000000%
Comerica Bank - 000 Xxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx Xxx Xxxx, XX 00000 $25,000,000 14.0000000000%
Standard 000 Xxxxxxxx Xxxx. X0
Xxxxxxxxx Xxxx Xxx Xxxxxxx, XX 00000 $21,000,000 12.0000000000%
Fleet National Bank 00 Xxxxx Xxxxxx, 0xx Xxx.
Xxxxxx, XX 00000 $24,000,000 13.7142857143%
The Bank of 000 Xxxxxxxxxx Xx., 00xx Xxx.
Xxxx Xxxxxx Xxx Xxxxxxxxx, XX 00000 $20,000,000 11.4285714286%
Union Bank 000 Xxxxxxxxxx Xx., 00xx Xxx.
xx Xxxxxxxxxx Xxx Xxxxxxxxx, XX 00000 $20,000,000 11.0000000000%
Bank of Montreal 000 X. Xxxxxxxx Xx., Xxx. 000
Xxx Xxxxxxx, XX 00000 $15,000,000 8.5714285714%
Banque Nationale 000 Xxxxxxxxxx Xxxxxx, 0x Flr.
de Paris Xxx Xxxxxxxxx, XX 00000 $15,000,000 8.5714285714%
TOTAL: $175,000,000 100%
SCHEDULE 2
EXISTING LIENS AND SECURITY INTERESTS
1. Purchase money security interests in equipment; and
2. UCC filings evidencing leased equipment.
SCHEDULE 3
SUBSIDIARIES AND CONSOLIDATED SUBSIDIARIES
Percentage of the
Borrower's Ownership
--------------------
1. Komag Material Technology, Inc. 80%
2. Komag Technology Partners 50%
3. Asahi Komag Co., Ltd. 0%*
4. Komag Bermuda Ltd. 100%
5. Komag Overseas Ltd. 100%
6. Komag USA (Malaysia) Sdn 0%**
7. Dastek Holding Company 60%
8. Dastek (M) SDN BHD 0%**
9. Asahi Komag (Thailand) Co., Ltd. 0%****
10. Komag (Barbados) Ltd. 100%
* The Borrower owns 50% of Komag Technology Partners, which owns 100% of
Asahi Komag Co., Ltd.
** Komag Bermuda Ltd. (97%) and Komag Overseas Ltd. (3%) own 100% of Komag
USA (Malaysia) Sdn.
*** Dastek Holding Company owns 100% of Dastek (M) SDN BHD.
**** Asahi Komag Co., Ltd. owns 100% of Asahi Komag (Thailand) Co., Ltd.
SCHEDULE 4
BANK ORIGINAL AND CLOSING DATE PERCENTAGES
BANK ORIGINAL PERCENTAGE CLOSING DATE PERCENTAGE
The First National
Bank of Boston 00.00% 20.000000000%
Comerica Bank -
California 25.00% 14.0000000000%
Standard
Chartered Bank 21.43% 12.0000000000%
Fleet National
Bank 00.00% 13.7142857143%
The Bank of
Nova Scotia 00.00% 11.4285714286%
Union Bank
of California 00.00% 11.0000000000%
Bank of Montreal 00.00% 8.0000000000%
Banque Nationale
de Paris 00.00% 8.5714285714%
ABN-AMRO Bank, NV 25.00% 0.00%
First Interstate
Bank of California 28.57% 0.00%
