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EXHIBIT 4.3
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LOAN RESTRUCTURE
AGREEMENT
AMONG
KOMAG, INCORPORATED,
AS BORROWER,
FLEET NATIONAL BANK,
AS RESTRUCTURE AGENT
AND
THE RESTRUCTURE LENDERS PARTY HERETO
DATED AS OF MAY 25, 2000
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EXECUTION COPY
TABLE OF CONTENTS
Page
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ARTICLE 1 RECITALS..........................................................................1
ARTICLE 2 DEFINITIONS.......................................................................2
SECTION 2.1 DEFINED TERMS...................................................................2
SECTION 2.2 OTHER DEFINITIONAL PROVISIONS..................................................11
ARTICLE 3 THE EXISTING LOANS...............................................................11
SECTION 3.1 AMENDMENT AND RESTATEMENT OF EXISTING FACILITIES...............................11
SECTION 3.2 ACKNOWLEDGMENT OF EXISTING LOANS...............................................11
SECTION 3.3 ACKNOWLEDGMENT OF EVENTS OF DEFAULT BY THE BORROWER
AND WAIVER THEREOF BY RESTRUCTURE LENDERS......................................12
(a) Net Worth.............................................................................12
(b) Profitability.........................................................................12
(c) Leverage Ratio........................................................................12
(d) Debt Service..........................................................................12
(e) Quick Ratio...........................................................................13
(f) WD Asset Acquisition..................................................................13
(g) No Other Event of Default.............................................................12
(h) Waiver................................................................................13
ARTICLE 4 THE RESTRUCTURED LOANS...........................................................13
SECTION 4.1 THE RESTRUCTURED LOANS.........................................................13
(a) Restructured Notes....................................................................13
(b) Restructure Fee.......................................................................14
SECTION 4.2 REPAYMENT......................................................................14
(a) Mandatory Repayments..................................................................14
(b) Amortization Payments.................................................................14
(c) Optional Payment......................................................................14
(d) Capital Raising Events................................................................15
(e) Asset Sales...........................................................................15
(f) Cash Balance..........................................................................15
(g) Implied Consent.......................................................................15
(h) Allocation of Payments................................................................15
(i) Sharing of Payments...................................................................16
SECTION 4.3 INTEREST RATE AND PAYMENT DATES................................................16
(a) Payment of Interest...................................................................16
(b) Base Rate.............................................................................17
(c) Catch-Up Interest.....................................................................17
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ARTICLE 5 GENERAL PROVISIONS CONCERNING
THE RESTRUCTURED LOANS.........................................................17
SECTION 5.1 DEFAULT INTEREST...............................................................17
SECTION 5.2 COMPUTATION OF INTEREST........................................................17
(a) Calculations..........................................................................17
(b) Determination by Restructure Agent....................................................17
SECTION 5.3 PAYMENTS.......................................................................18
SECTION 5.4 PAYMENT ON NON-BUSINESS DAYS...................................................18
SECTION 5.5 REDUCED RETURN.................................................................18
SECTION 5.6 INDEMNITIES....................................................................18
SECTION 5.7 REQUIREMENTS OF LAW............................................................19
SECTION 5.8 IBJ BANK GROUP II SWAP TRANSACTIONS............................................20
(a) Interest Rate Swap Deferral Fee.......................................................20
(b) Borrower's Election...................................................................21
(c) Breakage Costs........................................................................21
ARTICLE 6 CONDITIONS PRECEDENT.............................................................21
SECTION 6.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT.........................21
ARTICLE 7 REPRESENTATIONS AND WARRANTIES....................................................23
SECTION 7.1 REPRESENTATIONS AND WARRANTIES.................................................23
(a) Organization..........................................................................23
(b) Authorization.........................................................................23
(c) Governmental Consents.................................................................23
(d) Validity..............................................................................23
(e) Financial Condition...................................................................23
(f) Litigation............................................................................24
(g) Employee Benefit Plans................................................................24
(h) Disclosure............................................................................24
(i) Margin Stock..........................................................................24
(j) Environmental Matters.................................................................24
(k) Employee Matters......................................................................25
(l) Status of Dastek, Inc., Dastek (M) and DHC............................................25
(m) Year 2000 Compliance..................................................................25
ARTICLE 8 COVENANTS........................................................................25
SECTION 8.1 AFFIRMATIVE COVENANTS..........................................................26
(a) Financial Information.................................................................26
(b) Notices and Information...............................................................27
(c) Corporate Existence, Etc..............................................................28
(d) Payment of Taxes and Claims...........................................................29
(e) Maintenance of Properties; Insurance..................................................29
(f) Inspection............................................................................29
(g) Compliance with Laws, Etc.............................................................29
(h) Proceeds of Assets and Capital Raising Events.........................................30
(i) Notification of Debt Instrument Default...............................................30
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SECTION 8.2 NEGATIVE COVENANTS.............................................................30
(a) Adjusted Tangible Net Worth...........................................................30
(b) Minimum Cash Balance..................................................................30
(c) Minimum Net Working Capital...........................................................30
(d) Capital Expenditures..................................................................30
(e) Liens, Etc............................................................................30
(f) Dividends, Etc........................................................................31
(g) Consolidation, Merger or Acquisition..................................................31
(h) Loans, Investments, Secondary Liabilities.............................................31
(i) Asset Sales...........................................................................33
ARTICLE 9 RESTRUCTURE EVENTS OF DEFAULT....................................................33
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SECTION 9.1 RESTRUCTURE EVENT OF DEFAULT...................................................33
ARTICLE 10 RESTRUCTURE AGENT...............................................................36
SECTION 10.1 RESTRUCTURE AGENT.............................................................37
SECTION 10.2 DELEGATION OF DUTIES, ETC.....................................................37
SECTION 10.3 INDEMNIFICATION...............................................................37
SECTION 10.4 EXCULPATORY PROVISIONS........................................................37
SECTION 10.5 KNOWLEDGE OF DEFAULT..........................................................38
SECTION 10.6 RESTRUCTURE AGENT IN ITS INDIVIDUAL CAPACITY..................................39
SECTION 10.7 PAYEE OF RESTRUCTURED NOTES TREATED AS OWNER..................................39
SECTION 10.8 RESIGNATION OF RESTRUCTURE AGENT..............................................39
ARTICLE 11 CONVERSION LENDER OPTION.........................................................40
SECTION 11.1 ELECTION......................................................................40
SECTION 11.2 CONVERSION LENDER.............................................................40
SECTION 11.3 CONVERSION DATE RIGHTS........................................................40
ARTICLE 12 MISCELLANEOUS....................................................................41
SECTION 12.1 AMENDMENTS, ETC...............................................................41
SECTION 12.2 NOTICES, ETC..................................................................42
SECTION 12.3 RIGHT OF SETOFF...............................................................42
SECTION 12.4 NO WAIVER; REMEDIES...........................................................42
SECTION 12.5 COSTS AND EXPENSES............................................................43
SECTION 12.6 ASSIGNMENTS; PARTICIPATIONS...................................................44
SECTION 12.7 EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW..................................46
SECTION 12.8 CONSENT TO JURISDICTION; VENUE; AGENT FOR SERVICE OF PROCESS..................46
SECTION 12.9 ENTIRE AGREEMENT..............................................................46
SECTION 12.10 SEVERABILITY OF PROVISIONS...................................................47
SECTION 12.11 EXECUTION IN COUNTERPARTS....................................................47
SECTION 12.12 SURVIVAL OF CERTAIN AGREEMENTS...............................................47
SECTION 12.14 REVIVAL CLAUSE...............................................................47
SECTION 12.14 RELEASE OF ALL CLAIMS........................................................47
SECTION 12.15 ADDITIONAL ASSURANCES........................................................48
SECTION 12.16 CONFIDENTIALITY..............................................................48
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EXHIBIT A FORM OF RESTRUCTURED PROMISSORY NOTE
EXHIBIT B FORM OF ASSIGNMENT AGREEMENT
EXHIBIT C FORM OF NONDISCLOSURE STATEMENT
EXHIBIT D CONVERSION DOCUMENTS (SECURITIES PURCHASE AGREEMENT,
CONVERTIBLE NOTE AND REGISTRATION RIGHTS AGREEMENT)
EXHIBIT E JANUARY PROJECTED PERFORMANCE
SCHEDULE 1 SCHEDULE OF COMMITMENTS
SCHEDULE 2 SUBSIDIARIES AND CONSOLIDATED SUBSIDIARIES
SCHEDULE 3 EXISTING LIENS AND SECURITY INTERESTS
SCHEDULE 4 LITIGATION
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LOAN RESTRUCTURE AGREEMENT
This Loan Restructure Agreement (as amended, supplemented or modified
from time to time after the date hereof, the "Agreement") dated as of May 25,
2000 is entered into among KOMAG, INCORPORATED, a Delaware corporation (the
"Borrower"), the lenders and their participants, if any, from time to time party
hereto, together with their respective successors and assigns (each a
"Restructure Lender" and collectively the "Restructure Lenders"), and FLEET
NATIONAL BANK f/k/a BANKBOSTON, N.A., a national banking association ("Fleet"),
as agent for the Restructure Lenders (in such capacity, the "Restructure
Agent").
ARTICLE 1
RECITALS
WHEREAS, the Borrower and the FNB Bank Group are parties to that
certain Amended and Restated Credit Agreement dated as of June 20, 1997 and the
other agreements and documents related thereto, as amended (collectively, the
"FNB Facility"); and
WHEREAS, as of May 25, 2000 the aggregate outstanding principal
balance due from the Borrower to the FNB Bank Group under the FNB Facility is
$100,000,000.00, together with interest thereon as set forth herein; and
WHEREAS the Borrower and DKB are parties to that certain Credit
Agreement dated as of October 7, 1996 and the other agreements and documents
related thereto, as amended (collectively, the "DKB Facility"); and
WHEREAS, as of May 25, 2000 the outstanding principal balance
due from the Borrower to DKB under the DKB Facility is $35,000,000.00, together
with interest thereon as set forth herein; and
WHEREAS, the Borrower and the IBJ Bank Group I are parties to
that certain Credit Agreement dated as of December 15, 1995 and the other
agreements and documents related thereto, as amended (collectively, the "IBJ
Facility I"); and
WHEREAS, as of May 25, 2000 the outstanding principal balance
due from the Borrower to the IBJ Bank Group I under the IBJ Facility I is
$50,000,000.00, together with interest thereon as set forth herein; and
WHEREAS, the Borrower and the IBJ Bank Group II are parties to
that certain Credit Agreement dated as of February 7, 1997 and the other
agreements and documents related thereto, as amended (collectively, the "IBJ
Facility II"); and
WHEREAS, as of May 25, 2000 the outstanding principal balance
due from the Borrower to the IBJ Bank Group II under the IBJ Facility II is
$75,000,000.00, together with interest thereon as set forth herein; and
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NOW, THEREFORE, based upon the recitals contained above, which
are expressly made a part of this Agreement, and the terms and conditions set
forth herein, the parties agree as follows:
ARTICLE 2
DEFINITIONS
SECTION 2.1 DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Affiliate": 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 fifty
percent or more of the securities having ordinary voting power to elect the
directors of such Person.
"Agreement": As set forth in the introductory paragraph of this
Agreement.
"Adjusted Net Working Capital": At any date of determination,
Current Assets minus Non-Cash Deferred Tax Assets included in Current Assets
plus Future Cumulative Cash Restructuring Charges minus Current Liabilities
(excluding Current Maturities of Long Term Debt).
"Adjusted Tangible Net Worth": At any date of determination,
Consolidated Total Assets plus Q3 99 Restructuring/Impairment Charges plus
Future Restructuring/Impairment Charges minus Goodwill minus Consolidated Total
Liabilities.
"Assignment Agreement": As set forth in Section 12.6(a) and
attached hereto as Exhibit B.
"Bankruptcy Code": Title 11 of the United States Code, as the
same may be amended from time to time.
"Base Rate": The higher of (a) the annual rate of interest
announced from time to time by Fleet at Fleet's Head Office in Boston,
Massachusetts, as its "base rate" and (b) one-half of one percent 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 Restructure Agent from
three (3) funds brokers of recognized standing selected by Restructure Agent.
"Borrower": As set forth in the introductory paragraph of this
Agreement.
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"Borrower's Election": As set forth in Section 5.8(b).
"Breakage Costs": As set forth in Section 5.8(c).
"Business Day": A day other than a Saturday, Sunday or a day on
which commercial banks in California or Massachusetts are authorized or required
by law to close.
"Capital Expenditures": With respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Debt) by such
Person during any measuring period for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of at
least one year or that are required to be capitalized under GAAP, in the case of
the Borrower, as reflected in the cash flow statements required to be delivered
pursuant to Section 8.1 hereof.
"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.
"Cash": Shall mean cash, cash equivalents or other investments
of the type permitted in Section 8.2(h)(1).
"Catch-Up Interest": As set forth in Section 4.3(c).
"Claims": As set forth in Section 3.2(b).
"Closing Costs": As set forth in Section 4.2(d).
"Closing Date": The date when this Agreement became effective
pursuant to Section 6.1.
"Closing Date Conversion Notice": As set forth in Section 11.1.
"Closing Date Conversion Notice": As set forth in Section
11.1."Consolidated Subsidiary" or "Consolidated Subsidiaries": Any corporation
or other Person more than fifty percent of the outstanding voting stock of which
shall at the time be owned by the Borrower or another Consolidated Subsidiary,
excluding from this definition Asahi Komag Co., Ltd., a Japanese corporation.
"Consolidated Total Assets": As determined in accordance with
GAAP.
"Consolidated Total Liabilities": As determined in accordance
with GAAP.
"Conversion Date": As set forth in Section 11.3.
"Conversion Documents": As set forth in Section 11.1.
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"Conversion Lender": As set forth in Section 11.2.
"Crossroads": As set forth in Section 6.1(d).
"Cumulative EBITDA Test": As set forth in Section 8.2(d).
"Current Assets": Shall mean, with respect to any Person, all
current assets of such Person as of any date of determination calculated in
accordance with GAAP, but excluding debts due from Affiliates.
"Current Liabilities": Shall mean, with respect to any Person,
all liabilities which should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Debt payable on demand or within
one year from any date of determination without any option on the part of the
obligor to extend or renew beyond such year, all accruals for federal or other
taxes based on or measured by income and payable within such year, but excluding
debts owed to Affiliates and Current Maturities of Long Term Debt.
"Current Maturities of Long Term Debt": As determined in
accordance with GAAP.
"DKB": The Dai-Ichi Kangyo Bank, Limited.
"DKB Bank Group": The Dai-Ichi Kangyo Bank, Limited and its
successor or permitted assignee.
"DKB Facility": As set forth in the Recitals to this Agreement.
"Dastek (M)": Dastek (M) SDN BHD, a Malaysian corporation.
"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 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.
"Debt Instrument": As set forth in Section 8.2(h)(11).
"Default Rate": As set forth in Section 5.1.
"DHC": Dastek Holding Company, a California corporation.
"Dollars" and "$": Dollars in lawful currency of the United
States of America.
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"EBITDA": Earnings (not including equity income in Asahi Komag
Co. Ltd. or minority interests in Komag Material Technology, Inc.) before
Interest Expense plus cash income taxes plus depreciation expense plus
amortization expense.
"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 the Borrower or any ERISA
Affiliate of the 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.
"Existing Defaults": As set forth in Section 3.3.
"Existing Loans": Collectively, the loans respectively made by
the lenders and participants in (i) the FNB Bank Group pursuant to the FNB
Facility, (ii) the DKB Bank Group pursuant to the DKB Facility, (iii) the IBJ
Bank Group I pursuant to the IBJ Facility I and (iv) the IBJ Bank Group II
pursuant to the IBJ Facility II, and in each case, in the outstanding principal
amount plus accrued and unpaid interest specified on Schedule 1 as at the
Closing Date.
"Existing Facilities": The FNB Facility, the DKB Facility, the
IBJ Facility I and the IBJ Facility II.
"Existing Maturity Date": With respect to each Existing
Facility, the Maturity Date or Scheduled Termination Date, as the case may be,
as defined in such Existing Facility.
"Existing Notes": The separate promissory notes executed by the
Borrower to each lender of the FNB Bank Group, IBJ Bank Group I, IBJ Bank Group
II and DKB Bank Group, respectively, in connection with the Existing Facilities.
"Fleet": As set forth in the introductory paragraph of this
Agreement.
"FNB Bank Group": Fleet, Bank of Montreal, Bear, Xxxxxxx & Co.
Inc., Comerica Bank - California, Olympus Securities, Ltd., Xxxxxx Partners
Ltd., Bank of Nova Scotia, Union Bank of California, N.A., Loeb Partners
Corporation and their respective successors or permitted assignees.
"FNB Facility": As set forth in the Recitals to this Agreement.
"Funded Debt": Shall mean, with respect to any Person, all Debt
for borrowed money evidenced by notes, bonds, debentures, or similar evidences
of indebtedness and which has a stated maturity of at least one year from its
date of issuance, or is directly or indirectly renewable or extendable at such
Person's option to have a maturity of at least one year from its
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date of issuance, and specifically including financial obligations with respect
to any Capital Lease, Current Maturities of Long Term Debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of the Borrower, the Restructured Loans and, without
duplication, guaranties of Debt of other Persons.
"Future Cumulative Cash Restructuring Charges": Any cash
restructuring charges taken in the first quarter of 2000 and beyond.
"Future Restructuring/Impairment Charges": Any
restructuring/impairment charges taken in the first quarter of 2000 and beyond.
"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.
"GAAP Changes": As set forth in Section 2.2(b).
"Goodwill": As determined in accordance with GAAP.
"IBJ Bank Group I": The Industrial Bank of Japan, Limited, San
Francisco Agency, as Agent and Lender; Sanwa Bank California; The First National
Bank of Chicago; The Mitsubishi Trust and Banking Corporation, as participants,
and their respective successors or permitted assignees.
"IBJ Bank Group II": The Industrial Bank of Japan, Limited, San
Francisco Agency, as Agent and Lender; The Fuji Bank, Limited; The Mitsubishi
Trust and Banking Corporation; The Sumitomo Bank Limited, as lenders, and their
respective successors or permitted assignees.
"IBJ Facility I": As set forth in the Recitals to this
Agreement.
"IBJ Facility II": As set forth in the Recitals to this
Agreement.
"IBJ Bank Group II Swap Transactions": As set forth in Section
5.8.
"Indemnified Liabilities": As set forth in Section 5.6.
"Interest Expense": Shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person and amortization of interest for the relevant period that has been
capitalized on the balance sheet of such Person.
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"Interest Payment Date": As to each Restructured Loan until
payment in full, the Restructure Maturity Date and the first Business Day of
each month commencing on the first such day to occur after the Closing Date.
"Interest Period": As set forth in Section 4.2(c).
"Interest Rate Swap Deferral Fee": As set forth in Section
5.8(a).
"Internal Revenue Code": The Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"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).
"Majority Restructure Lenders": At any time when any
Restructured Loans remain outstanding, the Restructure Lenders having
Restructured Loans with an unpaid principal balance equal to at least fifty-one
percent of the Restructured Loans then outstanding.
"Material Adverse Effect": As set forth in Section 7.1(f).
"Multiemployer Plan": A "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of the Borrower or
any ERISA Affiliate of the Borrower.
"Net Working Capital": Shall mean Current Assets less Current
Liabilities excluding Current Maturities of Long Term Debt, in each case
calculated on a consolidated basis for the Borrower and its Subsidiaries.
"Non-Cash Deferred Tax Assets": Shall mean, with respect to any
Person, any non-cash portion of deferred tax assets included in Current Assets.
"Non-Cash Net Working Capital": Shall mean Current Assets
(excluding cash and cash equivalents) less Current Liabilities excluding Current
Maturities of Long Term Debt, in each case calculated on a consolidated basis
for the Borrower and its Subsidiaries.
"Nondisclosure Agreement": As set forth in Section 12.6(c) and
attached hereto as Exhibit C.
"Payment Date": As set forth in Section 5.8(a).
"PBGC": The Pension Benefit Guaranty Corporation, and as set
forth in Section 8.1(b)(2).
"Pension Plan": Any employee plan which is subject to Section
412 of the Internal Revenue Code and which is maintained for employees of the
Borrower or any ERISA Affiliate of the Borrower, other than a Multiemployer
Plan.
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"Permitted Liens": A lien, security interest, encumbrance or
charge (a) for taxes, assessments, charges or claims of the Borrower or a
Consolidated Subsidiary either not yet due or being contested in good faith by
appropriate proceedings, (b) arising out of judgments or awards against the
Borrower or a Consolidated Subsidiary 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 the Borrower to the Restructure Agent or the Restructure Lenders
pursuant to or in connection with 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 the Borrower's or a Consolidated Subsidiary's business, (f)
purchase money security interests incurred or assumed with respect to property
acquired, conditional sale agreements or other title retention agreements
(including Capital Leases) with respect to property acquired or leased;
provided, however, that no such security interest or agreement shall extend to
any property other than such after-acquired or leased 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 3 attached hereto and incorporated herein by reference 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 or contingent liabilities the principal amount of which shall not
exceed in the aggregate $2,000,000.00, (j) liens in property of Asahi Komag Co.,
Ltd., a Japanese corporation, (k) liens taken by the 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., the Borrower, Dastek, Inc.
and DHC and the other documents executed in connection therewith, and (iii) the
purchase of claims of third parties by the Borrower and Asahi Glass Co., Ltd.
and/or its affiliates against DHC and Dastek (M).
"Person": An individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Post-Closing Conversion Documents": As set forth in Section
11.1.
"Post-Closing Date Conversion Notice": As set forth in Section
11.1.
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"Potential Restructure Event of Default": A condition or event
which, after notice or lapse of time or both, would constitute a Restructure
Event of Default if that condition or event were not cured or removed within any
applicable grace or cure period.
"Prohibited Assignee": As set forth in Section 12.6.
"Q3 99 Restructuring/Impairment Charges": The
restructuring/impairment charges taken in the third quarter of 1999 in the
amount of $183,644,000.00.
"Regulation T, U and X": Regulations 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.
"Requirement": As set forth in Section 5.5.
"Requirements": As set forth in Section 5.7.
"Restructure Agent": As set forth in the introductory paragraph
of this Agreement.
"Restructure Event of Default": As set forth in Section 9.1.
"Restructure Lender or Restructure Lenders": As set forth in the
introductory paragraph of this Agreement.
"Restructured Loan": The principal amount plus accrued and
unpaid interest of each Existing Loan of the Restructure Lenders specified in
Schedule 1 being restructured pursuant to the terms of this Agreement.
"Restructure Loan Documents": This Agreement, the Restructured
Notes, the Warrant Agreement and all other documents executed in connection
therewith, including, without limitation, all amendments, waivers and consents
relating thereto.
"Restructure Maturity Date": The earliest of June 30, 2001 and
the date of termination of Restructure Lenders' obligations to permit existing
Restructured Loans to remain outstanding pursuant to Section 9.1.
"Restructured Loans Percentage": With respect to each
Restructure Lender, the percentage equivalent of the ratio which the principal
amount plus accrued and unpaid interest of such Restructure Lender's
Restructured Loan bears to the aggregate principal amount plus accrued and
unpaid interest of the Restructured Loans, as specified in Schedule 1.
"Restructured Notes": As set forth in Section 4.1(a).
"Restructure Fee": As set forth in Section 4.1(b).
"Stock": Means all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or
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equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subordinated Promissory Note": Shall mean the Subordinated
Promissory Note in the principal amount of $30,077,357.00 dated as of April 8,
1999 by the Borrower in favor of Western Digital Corporation (or any other
holder thereof) .
"Subsidiary": A corporation or other Person of which at least
fifty percent of the outstanding voting stock or profit interests shall at the
time be owned by the 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 PBGC
under such regulations), or (b) the withdrawal of the 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
PBGC, (e) any other event or condition which might constitute grounds under
ERISA for the termination of, or the appointment by the PBGC 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.
"Transfer": As set forth in Section 8.2(i).
"Voidable Transfers": As set forth in Section 12.13.
"WD Asset Acquisition". Means that certain transaction pursuant
to which the Borrower or one of its Subsidiaries will acquire substantially all
of the assets of the Santa Xxxxx Disk Media operations of Western Digital
Corporation ("WDC").
"WD Asset Acquisition Documents:" Means the Asset Purchase
Agreement, the Volume Purchase Agreement, the Joint Development Agreement, the
Registration Rights Agreement, the License Agreement, the Transitional Services
Agreement, and the Subordinated Promissory Note, each dated as of April 8, 1999,
by and among the Borrower and WDC.
"Warrant Agreement": The Registration Rights Agreement and the
Warrant Agreement, each dated as of even date herewith, between the Borrower and
the Restructure Lenders and all documents executed in connection therewith,
including but not limited to any warrant certificate(s).
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SECTION 2.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Restructured Notes or any schedule, certificate or
other document made or delivered pursuant hereto.
(b) As used herein and in the Restructured Notes, and any
schedule, certificate or other document made or delivered pursuant hereto,
accounting terms not defined in Section 2.1, and accounting terms partly defined
in Section 2.1 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 the Borrower's equity or net worth or related calculations. If any
changes in GAAP from those used in the preparation of the financial statements
referred to in Section 7.1(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 any 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 the
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 3
THE EXISTING LOANS
SECTION 3.1 AMENDMENT AND RESTATEMENT OF EXISTING FACILITIES. This
Agreement is intended to and does completely amend and restate, without
novation, the Existing Facilities subject to Section 12.13 hereof. Any financial
accommodations extended by the Restructure Lenders after the Closing Date shall
be made under the conditions set forth in, and shall be governed by, the terms
of this Agreement and the other Restructure Loan Documents.
SECTION 3.2 ACKNOWLEDGMENT OF EXISTING LOANS.
(a) The Borrower acknowledges and agrees that as of the Closing
Date it is currently indebted to each applicable Restructure Lender for its
Existing Loan.
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(b) The Borrower further acknowledges and agrees that it has no
claims, demands, damages, suits, cross complaints, counterclaims, conditions,
causes of action, debts, offsets, disgorgements or assertions of any kind or
nature whatsoever, whether known or unknown, and whenever or however arising
that can be asserted to reduce or eliminate all or any part of its liability to
repay the Existing Loans, or each of them, or to seek any affirmative relief or
damages of any kind or nature from Restructure Lenders, or each of them, that
arises out of or relates to the Existing Loans or Existing Facilities
(collectively, "Claims"). To the extent any such Claims exist, they are fully,
forever and irrevocably released as provided in Section 12.14 hereof.
(c) The Borrower acknowledges, reaffirms and ratifies the terms
of the Existing Facilities.
(d) The Borrower acknowledges and agrees that the Existing Loans
and Existing Facilities shall not be modified in accordance with the terms set
forth herein unless all conditions precedent set forth herein have been
satisfied, as determined in Restructure Agent's and Restructure Lenders' sole
discretion.
(e) The Borrower acknowledges and agrees that the execution of
this Agreement shall not be deemed or construed as a commitment on the part of
Restructure Lenders or Restructure Agent to provide any future financing, loan
extension, forbearance or any other type of financial accommodation to the
Borrower.
(f) The Borrower acknowledges and agrees that any unused loan
commitments or obligations of the Restructure Lenders to provide any financing
under the Existing Facilities is terminated and the Borrower shall have no
further right to additional advances under the Existing Facilities.
SECTION 3.3 ACKNOWLEDGMENT OF EVENTS OF DEFAULT BY THE BORROWER AND
WAIVER THEREOF BY RESTRUCTURE LENDERS. The Borrower acknowledges and agrees that
the following Events of Default under the Existing Facilities have occurred and
are continuing (the "Existing Defaults"):
(a) Net Worth. The Borrower has breached its financial covenants
regarding its Consolidated Tangible Net Worth (as defined in the Existing
Facilities) from the second fiscal quarter of 1998 through the date hereof.
(b) Profitability. The Borrower has breached its financial
covenants regarding profitability from the second fiscal quarter of 1998 through
the date hereof.
(c) Leverage Ratio. The Borrower has breached its financial
covenants regarding the maintenance of specified leverage ratios from the second
fiscal quarter of 1998 through the date hereof.
(d) Debt Service. The Borrower has breached its financial
covenants regarding the maintenance of specified debt service coverage ratios
from the second fiscal quarter of 1998 through the date hereof.
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(e) Quick Ratio. The Borrower has breached its financial
covenants regarding its quick ratio from the second fiscal quarter of 1998
through the date hereof.
(f) WD Asset Acquisition. The Borrower may have breached
additional covenants regarding Permitted Liens and permitted consolidations,
mergers and acquisitions of assets in connection with the consummation of the WD
Asset Acquisition.
(g) No Other Event of Default. Except as set forth in this
Section 3.3 (a), (b), (c), (d), (e) and (f), and that such Events of Default
under the Existing Facilities may continue through the date of the Agreement,
and the cross-defaults arising out of the Existing Defaults, the Borrower
represents and warrants that no other Event of Default under the Existing
Facilities has occurred as of the Closing Date; provided, however, that the
covenants described above include the corresponding covenants, regardless of
definitional or other differences, as set forth in each of the Existing
Facilities.
(h) Waiver. Subject to the terms and conditions in this
Agreement and the other Restructure Loan Documents, the Restructure Lenders, and
each of them, waive the Existing Defaults effective as of the date hereof.
ARTICLE 4
THE RESTRUCTURED LOANS
SECTION 4.1 THE RESTRUCTURED LOANS.
(a) Restructured Notes. Each of the Restructure Lenders
severally agrees, on the terms and conditions set forth in this Agreement, to
restructure the Existing Facilities and Existing Notes. The Restructured Loans
shall be evidenced by promissory notes of the Borrower, substantially in the
form of Exhibit A, with appropriate insertions (the "Restructured Notes"),
payable to the order of each Restructure Lender and representing the obligation
of the Borrower to pay the aggregate unpaid principal amount of the Restructured
Loan owed by the Borrower to such Restructure Lender, with interest thereon as
prescribed in Sections 4.3, 5.1 and 5.2 hereof. Upon receipt by the Restructure
Agent of the Restructured Notes executed by the Borrower to the order of the
respective Restructure Lenders, the Existing Notes shall be canceled, subject to
Section 12.13 hereof. Each Restructure Lender is hereby authorized to record in
its respective books and records, and on any exhibit annexed to the Restructured
Notes, the date and amount of each Restructure Loan made by said Restructure
Lender, and the date and amount of each payment of principal thereof, and any
such recordation shall be prima facie evidence of the accuracy of the
information so recorded; provided, however, that failure by any Restructure
Lender to effect such recordation(s) shall not effect the Borrower's obligations
hereunder. Prior to the transfer of a Restructured Note, each Restructure Lender
shall record such information on any exhibit annexed to and forming a part of
such Restructured Note. Upon surrender of any Restructured Note at the office of
the Borrower by reason of any permitted assignment, transfer or other
disposition of any Restructured Loan portion thereof, the Borrower
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shall execute and deliver one or more new Restructured Notes of like tenor and
of a like aggregate principal amount in the name of the designated holder or
holders of such Restructured Loan or Restructured Loan or portion thereof. Any
such new Restructured Note shall thereafter be considered a Restructured Note
under this Agreement. Any such new Restructured Note shall carry the rights to
accrued and unpaid interest which were carried by the Restructured Note so
exchanged so that neither gain nor loss of interest shall result from such
event.
(b) Restructure Fee. On or before the Closing Date, the Borrower
shall pay to Restructure Agent a fee of $1,950,000.00 (the "Restructure Fee").
Such fees shall be distributed to each agent of the Existing Facilities pro rata
in accordance with the amounts of the Existing Facilities and then disbursed to
the Restructure Lenders in a manner to be determined by the agent of the
Existing Facility applicable to each Restructure Lender.
SECTION 4.2 REPAYMENT.
(a) Mandatory Repayments. The Borrower shall repay
$15,000,000.00 of the principal amount of the Restructured Loans on the Closing
Date. The aggregate outstanding principal amount of the Restructured Loans
outstanding on the Restructure Maturity Date, together with accrued interest
thereon, shall be due and payable in full on the Restructure Maturity Date.
(b) Amortization Payments. In addition to the amortization
payment set forth in Section 4.2(a) above, the Borrower shall make minimum
mandatory principal amortization payments in the amount of $1,000,000.00 for
each fiscal quarter commencing with the fiscal quarter ending July 2, 2000. Such
minimum mandatory principal amortization payments for each fiscal quarter shall
be due and payable on the tenth calendar day of the month succeeding the end of
each applicable fiscal quarter from and after the fiscal quarter ending July 2,
2000. Such minimum mandatory principal amortization payments may be deferred by
the Borrower if and only if, as a result of such payment, the Borrower's cash
balance would be less than $35,000,000.00 after giving effect to such minimum
mandatory principal amortization payment. In the event that any such payment is
so deferred, each such deferred payment shall be made up by the Borrower in the
scheduled quarterly minimum mandatory principal amortization payments for the
following fiscal quarters to the extent that such payments would not result in a
cash balance of less than $35,000,000.00, until all such payments have been made
in full.
(c) Optional Payment. The Borrower may at its option and without
penalty repay the Restructured Loans, in whole or in part, on any Business Day,
prior to the Restructure Maturity Date, from time to time, provided Restructure
Agent shall have received from the Borrower notice of any such payment at least
one Business Day prior to the date of the proposed payment. For Restructured
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
$1,000,000.00 and in an integral multiple of $100,000.00 for the Restructured
Loans. Restructure Agent shall promptly inform the Restructure Lenders by
telecopy of receipt of each such payment.
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(d) Capital Raising Events. If the Borrower or any Consolidated
Subsidiary issues or sells Stock (other than pursuant to employee benefit plans
consistent with past practice) or any Debt Instruments (other than the
conversion of a Restructured Loan into a convertible Debt Instrument pursuant to
Article 11 hereof) no later than the Business Day following the date of receipt
of the proceeds thereof, the Borrower shall prepay the Restructured Loans in an
amount equal to thirty-three percent of the first $50,000,000.00, and fifty
percent of the amount exceeding $50,000,000.00, of such proceeds, but net of
commissions and other reasonable and customary transactions costs, fees and
expenses properly attributable to such transaction and payable by the Borrower
or Consolidated Subsidiary in connection therewith, including, without
limitation, professionals' and consultants' fees ("Closing Costs").
(e) Asset Sales. The Borrower shall prepay the Restructured
Loans in an amount equal to fifty percent of the proceeds of any Transfer of all
or any part of the Borrower's or any of its Consolidated Subsidiary's business
property or fixed assets (including condemnation proceeds) which in the
aggregate is in excess of $2,000,000.00 in any fiscal year. Such payments shall
be made to the Restructure Agent for the ratable benefit of the Restructure
Lenders when the amount due the Restructure Lenders equals or exceeds
$500,000.00, but in no event later than the end of each fiscal quarter of the
Borrower.
(f) Cash Balance. Commencing with the Borrower's fiscal quarter
ended on July 2, 2000 and for each fiscal quarter thereafter until the
Restructure Maturity Date, the Borrower shall prepay the outstanding
Restructured Loans on the tenth day of the month following the end of the
Borrower's fiscal quarter in an amount equal to fifty percent of the Cash
balance at the quarter ended in excess of $40,000,000.00 up to a maximum payment
each quarter of $7,500,000.00; provided, however, that the amount of any
proceeds received by the Borrower in connection with a capital raising event
described in Section 4.2(d) or any sale of assets subject to the prepayment
requirement set forth in Section 4.2(e) shall be excluded from the calculation
of the Cash balance for purposes of this Section 4.2(f); and provided, further,
however, that any amounts representing minimum mandatory principal amortization
payments for the applicable quarter pursuant to Section 4.1(b) shall be included
in calculating the aforementioned $7,500,000.00 limit for each quarter. Each
such payment shall be accompanied by a certificate signed by the Borrower's
chief financial officer certifying the manner in which the Cash balance and the
resulting prepayment were calculated, which certificate shall be in form and
substance reasonably satisfactory to Restructure Agent. Notwithstanding the
foregoing, the portion of any excess cash flow payment due pursuant to this
Section 4.2(f) that, if timely paid, would be the sole cause of the Borrower
being in breach of Section 8.2(b) or 8.2(c) shall be deferred until such time as
the Borrower can pay such sum without being in breach of Section 8.2(b) or
8.2(c), and such deferral shall not constitute a Restructure Event of Default.
(g) Implied Consent. Nothing in this Section 4.2 shall be
construed to constitute either Restructure Agent's or any Restructure Lender's
consent to any transaction referred to in Sections 4.2(d) or (e) above which are
not expressly permitted by other provisions of the Restructure Loan Documents.
(h) Allocation of Payments. Prior to the occurrence of a
Restructure Event of Default, all amounts received by Restructure Agent on
account of the Restructured Loans, except
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expressly as set forth to the contrary in other Sections of this Agreement,
shall be disbursed by Restructure Agent to the Restructure Lenders pro rata in
accordance with their respective Restructured Loans Percentage in inverse order
of maturity by wire transfer on the date of receipt if received by Restructure
Agent before 1:00 p.m. (Eastern Time) or, if received later, by 1:00
p.m.(Eastern Time) on the next succeeding Business Day, without further interest
payable by Restructure Agent. Following the occurrence of a Restructure Event of
Default, all amounts received by Restructure Agent on account of the
Restructured Loans shall be disbursed by Restructure Agent as follows:
(1) first, to the payment of expenses incurred by
Restructure Agent in the performance of its duties and enforcement of the rights
under the Restructure Loan Documents, including, without limitation, all costs
and expenses of collection, attorneys' fees and court costs;
(2) then, to the payment of expenses incurred by the
agents of the Existing Facilities in the performance of their duties and
enforcement of their rights under the Restructure Loan Documents, including,
without limitation, all costs and expenses of collection, attorneys' fees and
court costs;
(3) then, to the Restructure Lenders, pro rata in
accordance with their respective Restructured Loans Percentage until all
outstanding Restructured Loans and interest accrued thereon have been paid in
full; and
(4) then, to such Persons as may be legally entitled
thereto.
(i) Sharing of Payments. Except where a provision of this
Agreement provides for non-pro rata treatment, if any Restructure Lender shall
receive and retain any payment, whether by setoff, application of the deposit
balance or security, or otherwise, in respect of the Restructured Loans in
excess of such Restructure Lender's Restructured Loans Percentage, then such
Restructure Lender shall purchase from the other Restructure Lenders for cash
and at face value and without recourse, such participation in the Restructured
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
Restructure Lender, the related purchases from the other Restructure Lenders
shall be rescinded ratably and the purchase price restored as to the portion of
such excess payment so recovered, but without interest. Each Restructure Lender
agrees to exercise any and all rights of setoff, counterclaim or banker's lien
first fully against the Restructured Loans held by such Restructure Lender, and
only then to any other obligations of the Borrower to such Restructure Lender.
SECTION 4.3 INTEREST RATE AND PAYMENT DATES.
(a) Payment of Interest. Interest with respect to each
Restructured Loan shall be payable in arrears on each Interest Payment Date. In
no event shall interest on a Restructured Loan exceed the maximum rate permitted
by applicable law.
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(b) Base Rate. The Restructured Loans shall bear interest on the
unpaid principal amount thereof from the Closing Date through the Restructure
Maturity Date at a rate per annum equal to the Base Rate plus 125 basis points.
The Restructure Agent shall notify the Borrower and each Restructure Lender of
the amount and the effective date of each adjustment in the Base Rate; provided,
however, that no failure or delay in giving any such notice shall affect or
delay the making of any such adjustments or the obligation of the Borrower to
pay in a timely manner the interest due on such Restructured Loans.
(c) Catch-Up Interest. The Borrower shall, on or before the
Closing Date, pay interest ("Catch-Up Interest") to each Restructure Lender
which is a lender (or participant) under the IBJ Facility I, IBJ Facility II or
DKB Facility in an amount equal to the product of the difference between the
applicable interest rates for each applicable interest period under such
applicable facility and the FNB Facility from June 30, 1998 through the Closing
Date, multiplied by the outstanding principal amount of such Restructure
Lender's Existing Loan during each such period.
ARTICLE 5
GENERAL PROVISIONS CONCERNING THE RESTRUCTURED LOANS
SECTION 5.1 DEFAULT INTEREST. So long as a Potential Restructure Event
of Default or Restructure Event of Default shall have occurred and be continuing
under Section 9.1(f), and without the necessity of notice from Restructure Agent
or any Restructure Lender to the Borrower, or so long as any other Potential
Restructure Event of Default or Restructure Event of Default shall have occurred
and be continuing and, at the election of Restructure Agent and Majority
Restructure Lenders, confirmed by written notice from Restructure Agent to the
Borrower, the interest rate applicable to the Restructured Loans shall be
increased by 200 basis points per annum above such rate otherwise applicable to
the Restructured Loans (the "Default Rate") and each Restructure Loan shall bear
interest at the Default Rate. Interest at the Default Rate shall accrue from the
initial date of such Potential Restructure Event of Default or Restructure Event
of Default until that Potential Restructure Event of Default or Restructure
Event of Default is cured or waived and shall be payable upon demand.
SECTION 5.2 COMPUTATION OF INTEREST.
(a) Calculations. Interest in respect of the Base Rate shall be
calculated on the basis of a 365-day year for the actual days elapsed. Any
change in the interest rate 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.
(b) Determination by Restructure Agent. Each determination of an
interest rate or fee by Restructure Agent pursuant to any provision of this
Agreement shall be conclusive and binding on the Restructure Lenders and the
Borrower in the absence of manifest error.
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SECTION 5.3 PAYMENTS. The Borrower shall make each payment of principal,
interest and fees due from it hereunder and under the Restructured Notes,
WITHOUT SETOFF OR COUNTERCLAIM AND FREE AND CLEAR OF, AND WITHOUT ANY DEDUCTION
OR WITHHOLDING FOR, ANY TAXES OR OTHER PAYMENTS, on or before 12:00 P.M.
(Eastern Time) on the day when due to Restructure Agent, on behalf of the
Restructure Lenders, at the head office of Restructure Agent OR SUCH OTHER PLACE
AS IT MAY FROM TIME TO TIME SPECIFY IN WRITING in immediately available UNITED
STATES DOLLARS.
SECTION 5.4 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Restructured Loans 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.
SECTION 5.5 REDUCED RETURN. If any Restructure Lender shall have
determined that any new or additional applicable law, regulation, rule or
regulatory requirement (collectively, in this Section 5.5, "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 Restructure Lender 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, in any such
case, effective after the Closing Date, has or would have the effect of reducing
the rate of return on said Restructure Lender's capital as a consequence of its
Restructured Loan and obligations hereunder to a level below that which would
have been achieved but for such Requirement, change or compliance (taking into
consideration said Restructure Lender's policies with respect to capital
adequacy) by an amount deemed by said Restructure Lender to be material (which
amount shall be determined by said Restructure Lender'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 Restructure
Lender, the Borrower shall pay to Restructure Agent on behalf of said
Restructure Lender such additional amount or amounts as will compensate said
Restructure Lender for such reduction. Notwithstanding the foregoing, no
additional compensation will be required from the Borrower under this Section
5.5 if the reason for said additional compensation was based solely on said
Restructure Lender's failure to comply with any existing or new law, treaty,
rule or regulation or requirement. In addition, said Restructure Lender shall
promptly notify the Borrower of any proposed request for compensation under this
Section 5.5 and shall provide the Borrower with reasonable support therefor. Any
request by said Restructure Lender for additional compensation shall be
structured to allocate such additional costs over the term of the credit
affected thereby. The Borrower may, at its option, replace any Restructure
Lender assessing additional charges under this Section 5.5 with a new
Restructure Lender with the prior written consent of the Restructure Agent,
which consent shall not be unreasonably withheld or delayed; provided, however,
the Borrower may not require, and this sentence shall not be deemed to be the
agreement of, any Restructure Lender to replace any other Restructure Lender.
SECTION 5.6 INDEMNITIES. Whether or not the transactions contemplated
hereby shall be consummated, the Borrower agrees to indemnify, pay and hold
Restructure Agent and
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the Restructure Lenders, 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 the
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 the
Borrower or any of its Consolidated Subsidiaries (collectively, the "Indemnified
Liabilities"); provided, however, that the Borrower shall have no obligation
hereunder with respect to Indemnified Liabilities arising from the gross
negligence or willful misconduct of any such Persons or the failure of such
Person to comply with applicable law, including, without limitation, the failure
of any non-U.S. Person to file the appropriate forms required by any taxing
authority having jurisdiction over such Person or this Agreement and the
transactions contemplated hereby. If any claim is made, or any action, suit or
proceeding is brought against any Person indemnified pursuant to this Section
5.6, the indemnified Person shall notify the Borrower of such claim or of the
commencement of such action, suit or proceeding, and the Borrower will assume
the defense of such action, suit or proceeding, employing counsel selected by
the 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 Restructured Loans.
SECTION 5.7 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 Restructure Lender with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority, agency or instrumentality, in any case, effective after
the Closing Date:
(a) does or shall subject said Restructure Lender to any new or
additional tax of any kind whatsoever with respect to this Agreement, any
Restructured Loan made hereunder, or change the basis of taxation of payments to
said Restructure Lender of principal, restructure fee, interest or any other
amount payable hereunder (except for changes in the rate of tax on the overall
net income of said Restructure Lender);
(b) does or shall impose, modify or hold applicable any reserve,
assessment rate, special deposit, compulsory loan or other requirement
(collectively in this Section 5.7, "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 Restructure Lender.
(c) does or shall impose, modify or hold applicable any of the
Requirements against the Restructure Loans Percentages; or
(d) does or shall impose on said Restructure Lender any other
new or additional condition;
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and the result of any of the foregoing is to increase the cost to said
Restructure Lender of making, renewing or maintaining its Restructured Loan or
to reduce any amount receivable thereunder by an amount determined by said
Restructure Lender, in its sole discretion, to be material (which increase or
reduction shall be determined by the Restructure Lender's reasonable allocation
of the aggregate of such cost increases or reduced amounts receivable resulting
from such events), then, in any such case, the Borrower shall pay to Restructure
Agent on behalf of said Restructure Lender, within thirty (30) Business Days of
its demand, any additional amounts necessary to compensate said Restructure
Lender for such additional cost or reduced amount receivable as determined by
said Restructure Lender with respect to this Agreement. If said Restructure
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall notify the 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
Restructure Lender to the Borrower shall be conclusive in the absence of
manifest error. Notwithstanding the foregoing, no additional compensation will
be required from the Borrower under this Section 5.7 if the reason for said
additional compensation was based solely on said Restructure Lender's failure to
comply with any existing or new law, treaty, rule or regulation or requirement.
In addition, said Restructure Lender shall promptly notify the Borrower of any
proposed request for compensation under this Section 5.7 and shall provide the
Borrower with reasonable support therefor. Any request by said Restructure
Lender for additional compensation shall be structured to allocate such
additional costs over the term of the credit affected thereby. The Borrower may,
at its option, replace any Restructure Lender assessing additional charges under
this Section 5.7 with a new Restructure Lender with the prior consent of the
Restructure Agent, which consent shall not be unreasonably withheld or delayed;
provided, however, the Borrower may not require, and this sentence shall not be
deemed to be the agreement of, any Restructure Lender to replace any other
Restructure Lender.
SECTION 5.8 IBJ BANK GROUP II SWAP TRANSACTIONS. The Borrower
acknowledges that in connection with the IBJ Facility II, the IBJ Bank Group II
entered into certain interest rate swap transactions (the "IBJ Bank Group II
Swap Transactions"), to which the Borrower is not a party. As a further
inducement to the Restructure lenders in the IBJ Bank Group II to enter into the
Restructure Agreement, the Borrower agrees as follows:
(a) Interest Rate Swap Deferral Fee. Borrower shall pay a fee
(the "Interest Rate Swap Deferral Fee") to IBJ, as payment agent for the
Restructure Lenders in the IBJ Bank Group II, payable in arrears on the 6th day
of March, June, September and December of each year (each, a "Payment Date"),
equal to the product of (i) the amount, if any, by which (i) 6.7085% exceeds
(ii) the Three Month USD-LIBOR-BBA at TELERATE 3750 for the three month period
ending on such Payment Date, calculated on the basis of actual days elapsed and
a 360-day year, and (ii) the aggregate notional amount of the IBJ Bank Group II
Swap Transactions as of such Payment Date (as such notional amount may have been
or maybe deemed to have been reduced, terminated or canceled as a result of
amounts attributable to a Borrower's Election (as defined below) or payments or
prepayments made by the Borrower on or prior to such Payment Date in respect of
the Restructure Loans attributable to the Existing Loans under the IBJ Facility
II). Such LIBOR rate shall be reset for the following three month period two
Business Days prior to
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each Payment Date, using London and New York Holidays and the Modified Following
Day Convention.
(b) Borrower's Election. The Borrower may elect at any time on
or prior to the Restructure Maturity Date to cause all of the Restructure
Lenders in the IBJ Bank Group II to cancel and/or terminate their interests in
the IBJ Bank Group II Swap Transactions, in whole or part, upon three Business
Days' notice to IBJ, as payment agent for the IBJ Bank Group II (a "Borrower's
Election"). In the event of a Borrower's Election that does not terminate the
IBJ Bank Group II Swap Transactions in full, the Borrower shall be obligated to
continue to pay the Interest Rate Swap Deferral Fee from time to time with
respect to the aggregate notional amount of the IBJ Bank Group II Swap
Transactions not otherwise reduced, canceled or terminated.
(c) Breakage Costs. On the Closing Date, the Borrower shall
irrevocably authorize each Restructure Lender that is an Existing Lender under
the IBJ Facility II to terminate their interest rate swap transactions with IBJ,
and the Borrower shall indemnify each Restructure Lender that is an Existing
Lender under IBJ Facility II for any documented breakage costs, fees, damages or
claims resulting from such termination; provided, however, that each such
Restructure Lender shall use its best efforts to minimize the amount of such
breakage costs, fees, damages and claims, and in addition if such termination
results in payments to be due to any Restructure Lender that is an Existing
Lender under IBJ Facility II, each such Restructure Lender shall ensure that
said payments are received by Borrower.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT. The
effectiveness of this Agreement is subject to the conditions precedent set forth
in this Section 6.1 and the Borrower hereby agrees that the obligation of
Restructure Lenders to consummate the transactions contemplated herein is
subject to the accuracy of the representations and warranties described herein
and the fulfillment, to Restructure Agent's and Restructure Lenders'
satisfaction, on or before the Closing Date, of each of the following conditions
precedent (which are for the sole benefit of Restructure Lenders), unless waived
by Restructure Agent and Restructure Lenders in their sole discretion:
(a) Restructure Agent (which shall promptly distribute such
information to each of the Restructure Lenders) shall have received, for and on
behalf of the Restructure Lenders and on or before the date of this Agreement,
the following, each dated such day and in form and substance satisfactory to
Restructure Agent and the agents under the Existing Facilities:
(1) The Restructured Notes executed by the Borrower to
the order of the respective Restructure Lenders;
(2) A copy of the Certificate of Incorporation of the
Borrower certified as of a recent date by the Secretary of the State of
Delaware;
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(3) A copy of the bylaws of the Borrower certified by
the Secretary or Assistant Secretary of the Borrower;
(4) Copies of resolutions of the Board of Directors or
other authorizing documents of the Borrower approving the Restructure Loan
Documents;
(5) the Borrower's certificate that the copy of the
incumbency certificate, executed by the Secretary or an Assistant Secretary of
the Borrower or equivalent document, certifying the names and signatures of the
officers of the Borrower or other Persons authorized to sign the Restructure
Loan Documents and the other documents to be delivered hereunder, heretofore
provided to Restructure Agent is in full force and effect and has not been
amended and/or supplemented;
(6) Executed copies of all Restructure Loan Documents by
the Borrower, each Restructure Lender and Restructure Agent; and
(7) Executed copies of the Warrant Agreement by the
Borrower, each Restructure Lender and Restructure Agent.
(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 Restructure
Agent, Restructure Lenders and their counsel, and Restructure Agent or
Restructure Lenders and such counsel shall have received any and all further
information and documents which Restructure Agent, Restructure Lenders or their
respective counsel may reasonably have requested in connection therewith, such
documents where appropriate to be certified by proper corporate or governmental
authorities;
(c) The Borrower shall have paid the Catch-Up Interest and
Restructure Fee to Restructure Agent for the benefit of the applicable
Restructure Lenders;
(d) The Borrower shall have paid Crossroads, LLC ("Crossroads")
a retainer of $10,000.00; and
(e) The Borrower shall have paid all reasonable costs, fees
(inclusive of attorneys' fees and consultants' fees) and expenses incurred by
Restructure Agent and the agents of the Existing Facilities for which the
Borrower has received copies of invoices as of the Closing Date in connection
with (i) the administration, default and collection of the Existing Loans, and
(ii) the preparation, negotiation, administration and execution of this
Agreement, and the other Restructure Loan Documents.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 REPRESENTATIONS AND WARRANTIES. In order to induce each
Restructure Lender to enter into this Agreement, the Borrower represents and
warrants as follows:
(a) Organization. The Borrower is duly organized, validly
existing and in good standing under the laws of the state of its formation. The
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 the Borrower and the percentage of
the Borrower's ownership interest therein as of the date of this Agreement are
identified on Schedule 2.
(b) Authorization. The execution, delivery and performance by
the Borrower of the Restructure Loan Documents are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action
and do not contravene (i) the Borrower's certificate of incorporation, bylaws or
other organizational documents or (ii) any law or regulation (including
Regulations T, U and X) or any contractual restriction binding on or affecting
the 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 the Borrower),
which reports will be made in the ordinary course of business) is required for
the due execution, delivery and performance by the Borrower of the Restructure
Loan Documents.
(d) Validity. The Restructure Loan Documents are the binding
obligations of the 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 the Borrower and
its Consolidated Subsidiaries as at the fiscal year ended January 2, 2000, and
the related statements of income, cash flows and stockholders' equity of the
Borrower and its Consolidated Subsidiaries to that date for the fiscal year then
ended, copies of which have been furnished to Restructure Agent and to the
Restructure Lenders, fairly present the financial condition of the Borrower and
its Consolidated Subsidiaries as of such date and the results of the operations
of the Borrower and its Consolidated Subsidiaries for the respective period
ended on such date, all in accordance with GAAP, consistently applied.
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(f) Litigation. Except as set forth in the financial statements
delivered on or prior to the date hereof or described on Schedule 4 to this
Agreement, to the best of the Borrower's knowledge after due inquiry there is no
pending or threatened action or proceeding affecting the 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 the Borrower or which could
reasonably be expected to have a material adverse effect on the Borrower's
ability to perform its obligations under the Restructure Loan Documents, having
regard for its other financial obligations (a "Material Adverse Effect").
(g) Employee Benefit Plans. The 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 the Borrower
contained in this Agreement or any other document, certificate or written
statement furnished to Restructure Agent and the Restructure Lenders by or on
behalf of the 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 the 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 the Borrower's knowledge, there is no
fact known to the Borrower (other than matters of a general economic nature)
which materially adversely affects the business, operations, property, assets or
condition (financial or otherwise) of the 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 Restructure Agent and
the Restructure Lenders 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 the Borrower and its
Consolidated Subsidiaries is less than twenty-five percent of the aggregate
value of the 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 the Borrower nor any
Consolidated 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 the 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 the 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 the Borrower or any Consolidated Subsidiary in an
amount for all such unresolved violations that could
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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 the 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 the 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 the 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 the 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 the 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 the Borrower's knowledge after due inquiry,
threatened involving the 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 after due inquiry, 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.
(m) Year 2000 Compliance. The Borrower has completed a review
and assessment of the applicable areas of its and each of its Consolidated
Subsidiaries' businesses and operations that could be materially adversely
affected by the "Year 2000" problem (that is, the risk that computer
applications used by the Borrower or any of its Consolidated Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999). Based upon the
foregoing, the Borrower developed a plan and timetable to take at the
appropriate time all steps the Borrower considers reasonably necessary to ensure
that all computer applications that are necessary to its or any of its
Consolidated Subsidiaries' businesses and operations are able to perform
properly date-sensitive functions for all dates before and after January 1,
2000, except to the extent that any such Year 2000 non-compliance would not
reasonably be expected to have a Material Adverse Effect. In connection
therewith, the Borrower believes it has committed adequate resources to support
its Year 2000 plan for itself and its Consolidated Subsidiaries.
ARTICLE 8
COVENANTS
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SECTION 8.1 AFFIRMATIVE COVENANTS. So long as any Restructured Loan
shall remain unpaid, the Borrower will, unless the Majority Restructure Lenders
shall otherwise consent in writing:
(a) Financial Information. Furnish to Restructure Agent and each
of the Restructure Lenders in each case as soon as available, but in any event
no later than:
(1) Annual Reporting: (A) One hundred twenty (120) days
after the end of each fiscal year of the Borrower, a copy of the 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 fiscal year, setting
forth in each case in comparative form the figures for the previous year,
accompanied by a report and opinion thereon of Ernst & Young LLP or other
independent certified public accountants of recognized national standing;
(2) Quarterly Reporting: Thirty (30) days after the end
of each fiscal quarter of the Borrower (A) a variance report showing the
Borrower's actual performance to its January projected performance as set forth
in the Borrower's Business Plan for the applicable fiscal year as attached as
Exhibit E to this Agreement, including but not limited to, the Borrower's
revenue with a breakdown of sales and changes in sales on a quarter to quarter
basis, cash receipts and disbursements, an analysis of the Borrower's yield
improvement process, material and running costs and average selling prices, an
analysis of capital expenditures, general and administration expense and
research and development expenses for such quarter, and a progress report on
Borrower's "Qualification Process"; (B) on a quarterly basis, but in any event
within forty-five (45) days after the end of the applicable fiscal quarter for
the first three quarters of each fiscal year and within sixty (60) days
following the Borrower's fiscal year end, a compliance certificate, in form and
substance satisfactory to Restructure Agent, setting forth in such detail as
Restructure Agent may request the calculation of the ratios and amounts
necessary to determine the Borrower's compliance with Sections 8.2(a), (b), (c),
and (d) hereof for the accounting period covered by such financial statements,
certified by the Borrower's chief executive officer or chief financial officer;
and (C) together with each delivery of financial statements of the Borrower and
its Consolidated Subsidiaries pursuant to subdivisions (1) and (2) above, an
officer's certificate stating that the signers have reviewed the terms of the
Restructure Loan Documents and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
the 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 a Restructure
Event of Default or Potential Restructure Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrower has taken, is taking and proposes
to take with respect thereto;
(3) Monthly Reporting: Thirty (30) days after the end of
each calendar month, the Borrower's (A) unaudited consolidated balance sheet of
itself and its Consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated statements of
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income and stockholders' equity; and (B) the Borrower's unaudited statements of
cash flows for itself and its Consolidated Subsidiaries 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 the Borrower as being fairly stated in all material
respects subject to year end adjustments and the absence of footnotes; all such
financial statements and other reports to be complete and correct in all
material respects and to be prepared in reasonable detail acceptable to the
Majority Restructure Lenders and, to the extent applicable, in accordance with
GAAP applied consistently throughout the periods reflected therein (except as
approved by such accountants and disclosed therein);
(4) concurrently with the closing of the Company's books
for the preceding fiscal month, a certificate signed by the Chief Financial
Officer of the Company and in form and substance reasonably satisfactory to
Restructure Agent certifying the Borrower's cash balance measured at the end of
such preceding fiscal month;
(5) as soon as available, notice of filing or delivery
of all reports which the Borrower sends to its security holders generally, and
copies of all reports and registration statements which the Borrower or any
Subsidiary files with the SEC 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, together with information sufficient to enable each
recipient of such notice to access such reports electronically; and
(6) as soon as available, copies of the Borrower's
annual audit management letter.
(b) Notices and Information. Deliver to Restructure Agent and
each of the Restructure Lenders subject to the last sentence of Section 8.1(f):
(1) promptly upon any officer of the Borrower obtaining
knowledge (A) of any condition or event which constitutes a Restructure Event of
Default or existing Potential Restructure Event of Default, (B) that any Person
has given any notice to the 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 9.1(e), (C) of the institution of any litigation
involving an alleged liability (including possible forfeiture of property) of
the Borrower or any of its Consolidated Subsidiaries equal to or greater than
$4,000,000.00 or any adverse determination in any litigation involving a
potential liability of the Borrower or any of its Consolidated Subsidiaries
equal to or greater than $4,000,000.00, or (D) of a material adverse change in
the business, operations, properties, assets or condition (financial or
otherwise) of the 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, Restructure Event of
Default, Potential Restructure Event of Default, event or condition, and what
action the Borrower has taken, is taking and proposes to take with respect
thereto;
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(2) 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 the 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
("PBGC") with respect thereto;
(3) with reasonable promptness copies of (A) all notices
received by the Borrower or any of its ERISA Affiliates of the PBGC'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 the 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 the 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;
(4) 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 the
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 the 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
Section 9507 of the Internal Revenue Code; and
(5) promptly, and in any event within fifteen (15) days
after request, such other information and data with respect to the business
affairs and financial condition of the Borrower or any of its Consolidated
Subsidiaries as from time to time may be reasonably requested by Restructure
Agent or any Restructure Lender; provided, however, that such fifteen (15) day
period may be extended for a reasonable period at the request of the Borrower
and with the consent of the Restructure Agent (which consent shall not be
unreasonably withheld) if the Borrower determines that such information and data
cannot reasonably be provided within such fifteen (15) day period.
(6) promptly, and in any event within two business days
after such event, written notice on each occasion that the Borrower's cash
balance is less than the required minimum amount for such period as set forth in
Section 8.2(b) for five consecutive business days from the date that the
Borrower first has knowledge that its cash balance is less than such required
minimum cash balance.
(c) Corporate Existence, Etc. At all times preserve and keep in
full force and effect the Borrower's and its Consolidated Subsidiaries'
corporate existence and rights and
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franchises material to the 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 the Borrower and is not materially disadvantageous to any
Restructure Lender.
(d) Payment of Taxes and Claims. Pay, and cause each of its
Consolidated Subsidiaries 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; however, 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 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 the Borrower and its Consolidated
Subsidiaries and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof. The 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 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 Crossroads or any successor designated by
the Restructure Agent (at the request of Majority Restructure Lenders), to visit
and inspect any of the properties of the Borrower or any of its Consolidated
Subsidiaries, 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
the Borrower's supervision and as often as may be reasonably requested. Any such
information received hereunder that is reasonably deemed to be confidential by
the Borrower shall be held in confidence by Crossroads and may not be used for
any purpose other than to monitor the credit worthiness of the Borrower and its
Consolidated Subsidiaries and shall (i) only be disclosed or disseminated in
summary form to the Restructure Agent and Restructure Lenders and (ii) not be
disclosed or disseminated to any other Person for any reason without the prior
written consent of the Borrower.
(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.
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(h) Proceeds of Assets and Capital Raising Events. The Borrower
shall deposit and maintain all proceeds from any capital raising event or asset
sale described in Section 4.2(d) and 4.2(e), respectively, in a segregated
account that complies with Section 8.2(h)(1).
(i) Notification of Debt Instrument Default. The Borrower shall
promptly give written notification to Restructure Agent of any event of any
default under any Debt Instrument and specify the nature of such default
thereunder.
SECTION 8.2 NEGATIVE COVENANTS. So long as any Restructured Note shall
remain unpaid, the Borrower will not, without the prior written consent of the
Majority Restructure Lenders:
(a) Adjusted Tangible Net Worth. Permit the Borrower's Adjusted
Tangible Net Worth on a quarterly basis to be less than the following at all
times during the applicable quarter:
Q100 $169,000,000.00
Q200 $161,000,000.00
Q300 $153,000,000.00
Q400 $145,000,000.00
Q101 $142,000,000.00
Q201 $139,000,000.00
(b) Minimum Cash Balance. Permit the Borrower's Cash balance, on
a consolidated basis, to be less than the following at all times during the
applicable quarter:
Q100 $ 35,000,000.00
Q200 $ 30,000,000.00
Q300 $ 30,000,000.00
Q400 $ 30,000,000.00
Q101 $ 30,000,000.00
Q201 $ 30,000,000.00
(c) Minimum Net Working Capital. Permit the Borrower's Net
Working Capital on a quarterly basis to be less than $27,000,000.00.
(d) Capital Expenditures. Permit the Borrower's Capital
Expenditures to exceed $30,000,000.00 in any fiscal year.
(e) Liens, Etc. Create or suffer to exist, or permit any of its
Consolidated Subsidiaries 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 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 Restructure Lenders, (ii) existing Liens reflected on the
financial statements referred to in Section 7.1(e), and (iii) Permitted Liens.
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(f) 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 to purchase or otherwise acquire for value any
stock of the Borrower.
(g) Consolidation, Merger or Acquisition. Regarding the Borrower
and its Consolidated Subsidiaries, liquidate or dissolve or enter into any
consolidation, merger, acquisition, material partnership, material joint
venture, syndication or other combination, except that the 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 the Borrower;
provided, however, that the 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 a Restructure Event of Default or a Potential
Restructure Event of Default. Notwithstanding anything to the contrary in this
Agreement, the Borrower shall not enter into any consolidation, merger,
acquisition, material partnership, material joint venture, syndication or other
combination with HMT Technology Corp., a Delaware corporation, without the prior
written consent of Majority Restructure Lenders.
(h) Loans, Debt, Investments, Secondary Liabilities. Make or
permit to remain outstanding, or permit any Consolidated Subsidiary to make or
permit to remain outstanding, any loan or advance to, or incur, assume, become
or be liable in any manner in respect of, suffer to exist, guarantee, induce or
otherwise become contingently liable, directly or indirectly, in connection with
any Debt other than as permitted by this Agreement, or 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
Person, except that the Borrower and its Consolidated Subsidiaries may:
(1) own, purchase or acquire certificates of deposit,
time deposits and bankers' acceptances issued by (A) any financial institution
organized and existing under the laws of the United States of America or any
State thereof, or (B) with respect to any Consolidated Subsidiary domiciled
outside the United States of America, any financial institution located in the
same jurisdiction of such Consolidated Subsidiary in an amount consistent with
past practices but in no event shall such deposits in all such overseas
financial institutions in the aggregate exceed 20% of the Borrower's Cash, in
each case having a combined capital and surplus of at least $100,000,000.00,
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, or (C) any Restructure Lender and any funds investing in any of the
foregoing;
(2) acquire and own stock, obligations or securities
received in connection with debts created in the ordinary course of business
owing to the Borrower or a Subsidiary;
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(3) continue to own the existing capital stock of the
Borrower's Subsidiaries;
(4) endorse negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(5) 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 the Borrower's
Subsidiaries or any joint venture to which it is a party to make or permit to
remain outstanding advances from the Borrower's Subsidiaries or such joint
venture to the Borrower;
(6) make or permit to remain outstanding loans or
advances to the 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 the Borrower's Subsidiaries or such joint ventures;
(7) make or permit to remain outstanding (A) loans
and/or advances to the Borrower's officers, stockholders and/or employees,
which, in the aggregate, would not exceed $3,000,000.00 during the term of this
Agreement, (B) loans to the Borrower's vendors, in the ordinary course of the
Borrower's business, which, in the aggregate, do not exceed $5,000,000.00, (C)
progress payments to the Borrower's vendors made in the ordinary course of the
Borrower's business, and (D) (i) loans and/or advances for the purpose of
purchasing the 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 the 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;
(8) make investments under the Borrower's deferred
compensation plans for the benefit of the employees of the Borrower and its
Subsidiaries;
(9) consummate the WD Asset Acquisition and assume
Capital Leases in connection therewith on terms and conditions set forth in the
WD Asset Acquisition Documents; provided, however, the Borrower shall not make
any payments of principal, interest, fees or expenses with respect to the
Subordinated Promissory Note or distribute any assets on account thereof (except
for the non-cash adjustments of the Subordinated Promissory Note pursuant to
Sections 2(b) and 2(c) thereof) unless and until the Restructured Loan of each
Restructure Lender together with any other fees, costs, expenses or amounts due
to Restructure Agent and each Restructure Lender pursuant to the Restructure
Loan Documents have been paid indefeasibly in full; and further provided,
however, the Borrower shall not, and shall not permit its Consolidated
Subsidiaries to, obtain letters of credit for the benefit of any lessor of any
operating leases or Capital Leases assumed by the Borrower in the WD Asset
Acquisition without the prior written consent of Majority Restructure Lenders.
For the avoidance of doubt,
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the transactions described in this clause (9) are subject to all other
applicable terms and conditions of this Agreement.
(10) Asahi Komag Co., Ltd. may make an initial public
offering of its common stock;
(11) subject to Section 4.2(d) issue or execute debt
securities, promissory notes or similar types of instruments related to
financing (collectively "Debt Instruments"), if and only if such Debt
Instruments are subordinated to the Restructured Loans on terms and conditions
acceptable to the Majority Restructure Lenders, which consent shall not
unreasonably be withheld, or amend, restate, supplement, replace or otherwise
modify in any manner that would be detrimental to the Restructure Lenders any
such Debt Instruments without the prior written consent of Majority Restructure
Lenders.
(12) incur Debt on account of a Permitted Lien.
(i) Asset Sales. Convey, sell, lease, transfer or otherwise
dispose of or permit any Consolidated Subsidiary to Transfer, in one transaction
or a series of transactions, all or any part of its or its Consolidated
Subsidiary's business, property or fixed assets outside the ordinary course of
business (any such transaction a "Transfer"), whether now owned or hereafter
acquired, except that subject to the provisions of Section 4.2(e) (i) the
Borrower and its Consolidated Subsidiaries 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 ten percent of Net
Tangible Assets in any fiscal year of the Borrower without the prior written
consent of the Majority Restructure Lenders, and (ii) the Borrower may Transfer
Dastek (M) or DHC. The Borrower shall provide Restructure Agent and Restructure
Lenders with a written summary of any Transfer that triggers a prepayment to
Restructure Lenders pursuant to Section 4.2(e) no later than five business days
before such Transfer. The Borrower shall further provide Restructure Agent and
Restructure Lenders with a written summary of all Transfers in the applicable
fiscal quarter of the Borrower no later than thirty (30) days after the end of
such fiscal quarter. The Borrower shall further provide Restructure Agent and
Restructure Lenders with any other information reasonably requested by
Restructure Agent concerning any Transfer as soon as such information is
available to the Borrower.
ARTICLE 9
RESTRUCTURE EVENTS OF DEFAULT
SECTION 9.1 RESTRUCTURE EVENTS OF DEFAULT. If any of the following
events (each, a "Restructure Event of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of the
principal of any Restructured Note outstanding hereunder when due or any
installment of interest on any Restructured Note or other amount payable
hereunder; or
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(b) Any representation or warranty made by the Borrower herein
or by the Borrower (or any of its officers) in connection with the other
Restructure Loan Documents shall prove to have been incorrect in any material
respect when made; or
(c) The 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 the Borrower to perform or observe Sections 8.1(c) and (f) and/or
8.2(a), (b), (c), (d), (e), (f), (g), (h) and (i) shall constitute a Restructure
Event of Default without regard to any lapse of time or cure period; or
(d) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in this Agreement other than those referred to
in Subsections 9.1(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 the
Borrower knows of such failure; or
(e) The Borrower or any of its Consolidated Subsidiaries shall
fail to pay when due any obligation (except those specifically arising under the
Restructure Loan Documents) in excess of $1,000,000.00 in aggregate amount, or
fail to observe or perform any material term, covenant or agreement contained in
any agreement for such obligation or 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) The Borrower or any of its Consolidated Subsidiaries
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 the
Borrower or any of its Consolidated Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Consolidated Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (X) results in the
entry of an order for relief or any such adjudication or appointment or (Y)
remains undismissed, undischarged or unbonded for a period of thirty (30) days;
or (iii) there shall be commenced against the Borrower or any of its
Consolidated Subsidiaries 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)
the Borrower or any of its Consolidated Subsidiaries 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) the
Borrower or any of its Consolidated Subsidiaries shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
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(g) One judgment or decree shall be entered against the Borrower
or any of its Consolidated Subsidiaries involving a liability (not paid or at
least seventy-five percent covered by insurance or the third party indemnity of
a solvent indemnitor) equal to or greater than $5,000,000.00 or one or more
judgments or decrees shall be entered against the Borrower or any of its
Consolidated Subsidiaries involving in the aggregate a liability (not paid or at
least seventy-five percent covered by insurance or the third party indemnity of
a solvent indemnitor) equal to or greater than $10,000,000.00 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) (1) The 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, the Borrower or
any of its ERISA Affiliates is required to pay as contributions thereto;
(2) Any material accumulated funding deficiency occurs
or exists, whether or not waived, with respect to any Pension Plan;
(3) 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 of Consolidated Tangible Net Worth;
(4) The 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;
(5) (A) Any material Pension Plan maintained by the
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
PBGC (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) the 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) through (C) of this paragraph or any subsequent date,
either the Borrower or its ERISA Affiliates has any material liability (such
liability to include, without limitation, any material liability to the PBGC, 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) through (C) of this paragraph;
(6) As used in this subsection 9.1(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
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(i) There shall be instituted against the Borrower, or any of
its Consolidated Subsidiaries, any proceeding for which forfeiture (not paid or
seventy-five percent covered by insurance or the third party indemnity of a
solvent indemnitor) of any property equal to or greater than $5,000,000.00 is a
potential penalty and such proceeding shall not have been vacated or discharged
within thirty (30) days of its institution; or
(j) The Borrower shall fail to observe any term, covenant,
representation, warranty or other provision contained in the Subordinated
Promissory Note or any Debt Instrument permitted pursuant to Section 8.2(h)(11)
or Article 11 of this Agreement.
Then (i) upon the occurrence of any Restructure Event of Default described in
clause (f) above, the Restructured Loans, and each of them, with accrued
interest thereon, and all other amounts owing under this Agreement, the
Restructured Notes and the other Restructure Loan Documents shall automatically
become due and payable, and (ii) upon the occurrence and continuance of any
other Restructure Event of Default, Restructure Agent, at the instruction of the
Majority Restructure Lenders, shall, by notice to the Borrower, declare the
Restructured Loans hereunder, with accrued interest thereon, and all other
amounts owing under this Agreement, the Restructured Notes, and the other
Restructure Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Notwithstanding the foregoing, clause
(ii) rather than clause (i) in this paragraph shall apply in the case of a
proceeding described in clause (f)(ii) or (iii) above against a Consolidated
Subsidiary domiciled outside the United States of America, excluding however,
Komag Malaysia from the application of this sentence (in which case, for
avoidance of doubt, clause (i) shall apply), provided the laws or regulations of
the applicable jurisdiction do not prohibit the Restructure Agent or the
Restructure Lenders from giving to the Borrower or Consolidated Subsidiary an
acceleration notice of the type described in clause (ii) of this paragraph.
Except as expressly provided above in this Section 9.1, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
Notwithstanding any other provision of this Agreement, including Section 12.2,
notices to the Borrower pursuant to this Section 9.1 may be communicated orally
(including by telephone with a written notice to the Borrower to be subsequently
provided by Restructure Agent) or in writing (including telex or facsimile
transmission). Notwithstanding any other provision of this Agreement, each
Restructure Lender hereby agrees with each other Restructure Lender that no
Restructure Lender shall take any action to protect or enforce its rights
arising out of or relating to this Agreement, any of the Restructured Notes, or
any of the other Restructure Loan Documents (including exercising any rights of
offset) without first obtaining the prior written consent of Majority
Restructure Lenders, it being the agreement of Restructure Agent and Restructure
Lenders that any such action to protect or enforce rights under this Agreement,
any of the Restructured Notes, or any of the other Restructure Loan Documents
shall be taken in concert and at the direction or with the consent of the
Majority Restructure Lenders, and not independently by a single Restructure
Lender.
ARTICLE 10
RESTRUCTURE AGENT
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SECTION 10.1 RESTRUCTURE AGENT. Fleet is hereby appointed as Restructure
Agent by each of the Restructure Lenders to perform such duties on behalf of
itself and the other Restructure Lenders, 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, Restructure Agent shall act solely as
agent of the Restructure Lenders 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 the Borrower. The duties of Restructure Agent shall be mechanical
and administrative in nature; Restructure Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Restructure Lender, and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon Restructure Agent any obligations in respect of this
Agreement, the Restructured Loans, the Restructure Loan Documents or the other
instruments and agreements referred to herein except as expressly set forth
herein or therein.
SECTION 10.2 DELEGATION OF DUTIES, ETC. Restructure 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 other professional selected by it. Restructure Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 10.3 INDEMNIFICATION. The Restructure Lenders agree to indemnify
Restructure Agent in its capacity as such, to the extent not reimbursed promptly
by the Borrower, pro rata according to their respective Restructured Loans
Percentage, 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 Restructure Agent in any way relating to or arising out
of this Agreement or the Restructured Notes or any action taken or omitted to be
taken or suffered in good faith by Restructure Agent hereunder or thereunder;
provided, however, that no Restructure Lender shall be liable for any portion of
any of the foregoing items resulting from the gross negligence or willful
misconduct of Restructure Agent. Without limitation of the foregoing, each
Restructure Lender agrees to reimburse Restructure Agent promptly upon demand
for its pro rata share according to their respective Restructured Loans
Percentage of any out-of-pocket expenses (including reasonable counsel fees and
disbursements) incurred by Restructure 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, the Restructured Notes, or the other Restructure Loan
Documents, to the extent that Restructure Agent is not promptly reimbursed for
such expenses by the Borrower.
SECTION 10.4 EXCULPATORY PROVISIONS.
(a) Neither Restructure Agent nor any of its predecessors,
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 Restructure Agent shall be liable for its own
gross negligence or willful misconduct. Restructure Agent and its predecessors
shall not be liable in any manner for the effectiveness, enforceability,
collectibility, genuineness, perfection, validity, sufficiency or the due
execution of this Agreement, the other
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Restructure Loan Documents or the Restructured 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. Restructure Agent and
its predecessors shall be under no duty or responsibility to the Restructure
Lenders to ascertain or to inquire into the performance or observance by the
Borrower of any of the provisions hereof or of any document executed and
delivered in connection herewith. Each Restructure Lender 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 the Borrower and each
Restructure Lender 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 the Borrower and that, in entering
into this Agreement, and in making its Restructured Loans, it has not relied and
will not rely upon any information or representations furnished or given by
Restructure Agent, its predecessors or any other Restructure Lender. For the
purposes of this Section 10, "predecessors" shall include, without limitation,
each of the agents under the Existing Facilities.
(b) Each Restructure Lender expressly acknowledges that
Restructure Agent and its predecessors have not made any representations or
warranties to it and that no act taken by Restructure Agent or its predecessors
shall be deemed to constitute any representation or warranty by Restructure
Agent or its predecessors to the Restructure Lenders.
(c) If Restructure Agent shall request instruction from
Restructure Lenders with respect to any act or action (including the failure to
take an action) in connection with the Restructured Loans under this Agreement,
Restructure Agent shall be entitled to refrain from such act or taking such
action unless and until Restructure Agent shall have received instructions from
all of the Restructure Lenders or the Majority Restructure Lenders, as the case
may be and as required herein. Without prejudice to the generality of the
foregoing, (i) Restructure 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 Restructure Lender shall have
any right of action whatsoever against Restructure Agent or its predecessors as
a result of Restructure Agent acting or (where so instructed) refraining from
acting under this Agreement with respect to the Restructured Loans in accordance
with the instructions of all of the Restructure Lenders or the Majority
Restructure Lenders, as the case may be.
SECTION 10.5 KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that Restructure Agent shall be entitled to assume that no Restructure Event of
Default has occurred and is continuing, unless the officers of Restructure Agent
immediately responsible for matters concerning this Agreement shall have actual
knowledge of such occurrence or shall have been notified in writing by any
Restructure Lender that such Restructure Lender considers that a Restructure
Event of Default has occurred and is continuing and specifying the nature
thereof. In
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the event that Restructure Agent shall have acquired actual knowledge of any
Restructure Event of Default, it shall promptly give notice thereof to the
Restructure Lenders.
SECTION 10.6 RESTRUCTURE AGENT IN ITS INDIVIDUAL CAPACITY. With respect
to this Agreement, and all Restructured Loans made by it and any renewals,
extensions or deferrals of the payment thereof and any Restructured Note issued
to or held by it, the Restructure Agent shall have the same rights and powers
hereunder as any Restructure Lender, and may exercise the same as though it were
not Restructure Agent, and the term "Restructure Lender" or "Restructure
Lenders" shall, unless the context otherwise requires, include Restructure Agent
in its individual capacity. Restructure Agent and each of its Restructure Lender
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with the 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 the
Borrower for services in connection with this Agreement and otherwise without
having to account for the same to the Restructure Lenders.
SECTION 10.7 PAYEE OF RESTRUCTURED NOTES TREATED AS OWNER. Restructure
Agent may deem and treat the payee of any Restructured Note as the owner thereof
for all purposes hereof unless and until an Assignment Agreement shall have been
lodged with Restructure Agent as provided in Section 12.6. 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
Restructured Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Restructured Note or of any Restructured Note or
Restructured Notes issued in exchange therefor.
SECTION 10.8 RESIGNATION OF RESTRUCTURE AGENT. If at any time
Restructure Agent deems it advisable, in its sole discretion, it may submit to
each of the Restructure Lenders and the Borrower a written notification of its
resignation as Restructure Agent under this Agreement, such resignation (subject
to the further provisions of this Section 10.8) to be effective on the thirtieth
day after the date of such notice. Upon any such resignation, the Majority
Restructure Lenders, subject to the prior written consent of the Borrower if no
Restructure Event of Default shall have occurred and be continuing (which
consent shall not be unreasonably withheld), shall have the right to appoint a
successor Restructure Agent. If no successor Restructure Agent shall have been
so appointed by the Majority Restructure Lenders and accepted such appointment
within thirty (30) days after the retiring Restructure Agent's giving of notice
of resignation, then the retiring Restructure Agent may, on behalf of the
Restructure Lenders, appoint a successor Restructure Agent, which successor
Restructure Agent shall be either a Restructure Lender or if none of the
Restructure Lenders is willing to serve as successor Restructure Agent, a bank
having combined capital and surplus of at least $100,000,000.00. Any such
appointment of a successor Restructure Agent shall be subject to the prior
written approval of the Borrower if no Restructure Event of Default shall have
occurred and be continuing (which approval shall not be unreasonably withheld).
Upon the acceptance of any appointment as Restructure Agent hereunder by a
successor Restructure Agent, such successor Restructure Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Restructure Agent, and the retiring Restructure Agent shall be
discharged from its duties and obligations under this
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Agreement. The Borrower and the Restructure Lenders shall execute such documents
as shall be necessary to effect such appointment. After any retiring Restructure
Agent's resignation hereunder as Restructure Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Restructure Agent under this Agreement and the
Restructured Notes. Notwithstanding the foregoing provisions of this Section
10.8, if at any time there shall not be a duly appointed and acting Restructure
Agent, the Borrower agrees to make each payment due hereunder and under the
Restructured Loans directly to the Restructure Lenders entitled thereto during
such time.
ARTICLE 11
CONVERSION LENDER OPTION
SECTION 11.1 ELECTION. Notwithstanding anything to the contrary
in this Agreement or in any other Restructure Loan Document, any Restructure
Lender may convert its Restructured Loan (including, for purposes of this
Article 11 and for the avoidance of doubt, Existing Loan) into a convertible
Debt Instrument subject to the following terms and conditions: (i) for each
Restructured Loan owned by such Restructure Lender on the Closing Date, by
irrevocable written notice delivered by the Restructure Lender to the
Restructure Agent that it shall convert such Restructured Loan to a convertible
Debt Instrument on terms and conditions set forth in the Securities Purchase
Agreement, the Convertible Note and the Registration Rights Agreement
(collectively, the "Conversion Documents") annexed as Exhibit D to this
Agreement, which notice shall be delivered concurrently with such Restructure
Lender's execution of this Agreement (each, a "Closing Date Conversion Notice");
and (ii) for each Restructured Loan that was not the subject of a Closing Date
Conversion Notice, by irrevocable written notice delivered by the Restructure
Lender to the Restructure Agent that it shall convert, subject to the Borrower's
consent, such Restructured Loan to a convertible Debt Instrument on terms and
conditions that are similar in all material respects to those set forth in
Exhibit D (collectively, the "Post-Closing Conversion Documents"), which notice
shall be delivered concurrently with such Restructure Lender's notice to
Borrower of its election to purchase such convertible Debt Instruments (each, a
"Post-Closing Conversion Notice").
SECTION 11.2 CONVERSION LENDER. Each Restructure Lender, solely
with respect to its Restructured Loan for which irrevocable notice has been
delivered to Restructure Agent as provided above, shall be deemed a "Conversion
Lender" for purposes of this Article 11.
SECTION 11.3 CONVERSION DATE RIGHTS. With respect to each
Closing Date Conversion Notice or Post-Closing Date Conversion Notice, such
Conversion Lender shall, from and after the effective closing date specified in
the Conversion Documents or the Post-Closing Conversion Documents, as applicable
(the "Conversion Date"): (i) relinquish all rights and benefits under this
Agreement and any other Restructure Loan Document arising or accruing from and
after the applicable Conversion Date, and (ii) such Conversion Lender shall be
deemed released from all obligations under this Agreement and the other
Restructure Loan Documents arising or accruing from and after the applicable
Conversion Date, including, without limitation, any such obligations under
Sections 4.2(i), 9.l and 10.3 hereof.
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In addition, Restructure Agent consent will not be necessary for the assignment
by any Restructure Lender of its Restructured Loan subsequent to the Closing
Date provided all of the other terms and conditions of Section 12.6 hereof have
been satisfied and further provided that the assignee of the Restructure Lender
irrevocably agrees at the time of such assignment to become a Conversion Lender
with respect to the Restructured Loan it has acquired.
For the avoidance of doubt, the rights and benefits relinquished by any
Conversion Lender in subsection (i) of this Section 11.3 shall include any
payments of principal, interest, fees, or expenses and any voting rights under
this Agreement or any other Restructure Loan Document, to the extent the same
arise or accrue after the applicable Conversion Date; provided, however, the
Restructure Fee payable under Section 4.1(b) hereof, the $15,000,000.00
mandatory repayment of the principal amount of the Restructured Loan as set
forth in the first sentence of Section 4.2(a) hereof, and all rights under the
Warrant Agreement, shall be deemed to arise on the Closing Date for the ratable
benefit of the Restructure Lenders as of the Closing Date.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 AMENDMENTS, ETC.
(a) No amendment or waiver of any provision of the Restructure
Loan Documents, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Majority Restructure Lenders, 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 Restructure
Lenders, no amendment, waiver or consent shall do any of the following:
(b) extend the Restructure Maturity Date, or subject the
Restructure Lenders to any additional obligations;
(c) reduce the principal of, or interest on, the Restructured
Loans or any fee or other amount payable to the Restructure Lenders hereunder;
(d) postpone any date fixed for any payment in respect of
principal of, or interest on, the Restructured Loans or any fee or other amount
payable to the Restructure Lenders hereunder;
(e) change the definition of "Majority Restructure Lenders" or
any definition or provision of this Agreement requiring the approval of Majority
Restructure Lenders or some other specified amount of Restructure Lenders;
(f) amend the provisions of Section 4.2(i); or
(g) amend the provisions of this Section 12.1; and
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provided, further, however, that no amendment, waiver or consent shall, unless
in writing and signed by Restructure Agent in addition to the Restructure
Lenders required hereinabove to take such action, affect the rights, obligations
or duties of Restructure Agent under this Agreement or any other Restructure
Loan Document.
SECTION 12.2 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 the Borrower,
at the Borrower's address set forth on the signature page hereof; and if to
Restructure Agent and/or the Restructure Lenders, 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 Restructure
Agent and the Restructure Lenders pursuant to Articles 4, 8 or 9 shall not be
effective until received by Restructure Agent and the Restructure Lenders.
SECTION 12.3 RIGHT OF SETOFF. Upon and after the occurrence of any
Restructure Event of Default, the Restructure Lenders are hereby authorized by
the Borrower, at any time, after having first obtained the written consent of
Restructure 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 the Borrower under the Restructure Loan Documents (whether
matured or unmatured, fixed or contingent or liquidated or unliquidated) any and
all amounts owing by the Restructure Lenders to the 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 Restructure Lenders in their sole discretion may elect.
The Restructure Lenders agree promptly to notify the Borrower after any such
setoff and application made by the Restructure Lenders. Upon and during the
continuance of any Restructure Event of Default and after having first obtained
the written consent of Restructure Agent (which consent shall not unreasonably
be withheld), the Restructure Lenders are authorized to debit any account
maintained with them by the Borrower for any amount of principal, interest or
fees which are then due and owing to the Restructure Lenders by the Borrower.
SECTION 12.4 NO WAIVER; REMEDIES. The Restructure Lenders' waiver of the
Existing Defaults or of any of the terms and/or conditions of the Restructure
Loan Documents shall not be deemed a waiver of any such other or future default.
No failure on the part of Restructure Agent, on behalf of itself or the
Restructure Lenders, or the Restructure Lenders to exercise, and no delay in
exercising, any right under any of the Restructure Loan Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any right under
any of the Restructure 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.
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SECTION 12.5 COSTS AND EXPENSES. The Borrower shall, no later than
thirty (30) days after written notice thereof, reimburse Restructure Agent and
the agents of the Existing Facilities for all reasonable fees, costs and
expenses, including the fees, costs and expenses of counsel or other advisors
(including environmental and management consultants and appraisers) for advice,
assistance, or other representation in connection with:
(a) any amendment, modification or waiver of, or consent
with respect to, any of the Restructure Loan Documents
or advice in connection with the administration of the
Restructure Loans made pursuant hereto or its rights
hereunder or thereunder;
(b) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by either the Restructure
Agent, any Restructure Lender, the Borrower or any other
Person) in any way relating to any of the Restructure
Loan Documents or any other agreement to be executed or
delivered in connection therewith or herewith, whether
as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or
action, and any appeal or review thereof, in connection
with a case commenced by or against the Borrower or any
other Person that may be obligated to either the
Restructure Agent or any Restructure Lender by virtue of
the Restructure Loan Documents, including any such
litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring
of the Restructured Loans during the pendency of one or
more Restructure Events of Default;
(c) any attempt to enforce any remedies of either the
Restructure Agent or any Restructure Lender against the
Borrower or any other Person that may be obligated to
either the Restructure Agent or any Restructure Lender
by virtue of any of the Restructure Loan Documents,
including any such attempt to enforce any such remedies
in the course of any work-out or restructuring of the
Restructured Loans during the pendency of one or more
Restructure Events of Default;
(d) any work-out or restructuring of the Restructured Loans
during the pendency of one or more Restructure Events of
Default; and
(e) efforts to (i) monitor the Restructured Loans, (ii)
evaluate, observe or assess the Borrower or its affairs,
and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any
property of the Borrower, including, as to each of
clauses (a) through (d) of this Section 12.5, all
attorneys' and other professional and service providers'
fees arising from such services, including those in
connection with any appellate proceedings; and all
expenses, costs, charges and other fees incurred by such
counsel and others in any way or respect arising in
connection with or relating to any of the events or
actions described in this
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Section 12.5 shall be payable, on demand, by the
Borrower to the Restructure Agent and Restructure
Lenders.
Without limiting the generality of the foregoing Section 12.5, such
expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services. After the Closing Date, the Restructure Agent and the agents of the
Existing Facilities will use their best efforts to retain professional advisors
jointly rather than retaining separate counsel, consultants and other
professional advisors. Notwithstanding the foregoing Section 12.5, on the
Closing Date, and thereafter on a quarterly basis, Crossroads shall provide the
Borrower, Restructure Agent and Restructure Lenders with a written budget on a
quarterly basis. So long as (a) no Restructure Event of Default shall have
occurred and (b) the Restructure Agent, in the exercise of its reasonable
discretion, does not believe that there is a reasonable likelihood that a
Restructure Event of Default will occur, the Borrower shall not be obligated to
reimburse Crossroads for its fees and expenses for any quarter that exceed the
budgeted amounts set forth in the applicable budget by more than ten percent
unless Crossroads shall have received the written consent of the Restructure
Agent and the Borrower (which consent shall not be unreasonably withheld). In
the event the Borrower does not pay timely any expenses, fees, charges or costs
due pursuant to this Section 12.5, interest shall accrue on such unpaid amount
at the rate of ten percent per annum until paid in full.
SECTION 12.6 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Restructure Lender may assign with the consent of the
Restructure Agent (which shall not unreasonably be withheld or delayed) all or
any portion of its Restructured Loan and Restructured Note to any Person except
a Person primarily employed or engaged in any aspect of the computer hardware or
peripheral business (a "Prohibited Assignee"). If the assignee of any
Restructured Loan or Restructured Note is a broker or other intermediary, the
Restructure Lender making the assignment shall be required to obtain, prior to
such assignment, a representation from such Person that the Restructured Loan
and Restructured Note will not be beneficially owned by any Prohibited Assignee.
For purposes of this Agreement, beneficial ownership shall not include an
investment in a fund which is independently managed and formed with a primary
purpose of purchasing or holding loans. The Restructure Agent and each
Restructure Lender, including the Restructure Lender making the assignment,
shall be entitled to rely upon such representation without any further
investigation or diligence. The minimum amount of any Restructured Loan which
may be assigned is the lesser of $5,000,000.00 or the Restructure Lenders'
entire Restructured Loan. Upon execution and delivery of an assignment agreement
substantially in the form of Exhibit B ("Assignment Agreement"), 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 Restructure Lender hereunder and
(Y) the Restructure Lender assignor thereunder shall, to
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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 Restructure Lender's rights and
obligations under this Agreement, such Restructure Lender shall cease to be a
party hereto. Each Restructure Lender's Restructure Loans Percentage hereunder
shall be modified to reflect the Restructured Loan 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 Restructured Loan is
outstanding, new Restructured Notes shall, if requested by the assignor
Restructure Lender or such assignee, upon the surrender of the assigning
Restructure Lender's Restructured Notes, be issued to such assignee and to the
assigning Restructure Lender as necessary to reflect the new Restructured Loans
Percentage of the assigning Restructure Lender and of its assignee. Any
assigning Restructure Lender shall pay a $2,500.00 fee in connection with the
effectiveness of any assignment it makes to the Restructure Agent. The
Restructure Agent shall give the Borrower written notice of any assignment
disclosed to it within two business days after such disclosure.
For the avoidance of doubt, any Restructure Lender may assign, but is not
required to assign, its rights with respect to the Warrant Agreement to any
assignee of the Restructured Loan of such Restructure Lender.
(b) Each Restructure Lender may sell, negotiate or grant
participations to any Person in all or part of the obligations of the Borrower
outstanding under the Restructure Loan Documents, without notice to or the
approval of Restructure Agent, Restructure Lenders, or the Borrower; provided,
however, that any such sale, negotiation or participation shall be in compliance
with the applicable federal and state securities laws. No Restructure Lender
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 Restructure Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent as
described in the first proviso to Section 12.1. No participant shall constitute
a "Restructure Lender" under any Restructure Loan Document, and the Borrower
shall continue to deal solely and directly with Restructure Agent and the
Restructure Lenders. The Restructure Agent shall give the Borrower written
notice of any participation disclosed to it in writing within two (2) business
days after receipt of such disclosure.
(c) Each Restructure Lender may disclose to any proposed
approved assignee or participant which is not a Prohibited Assignee any
information relating to the Borrower or any of its Consolidated Subsidiaries;
provided, however, that prior to such disclosure such proposed assignee or
participant shall have executed a Nondisclosure Agreement substantially in the
form of Exhibit C. The applicable Restructure Lender shall provide the Borrower
with a copy of the Nondisclosure Agreement executed by any proposed assignee or
participant within two business days after such agreement has been executed;
provided, however, the failure to so provide such Nondisclosure Agreement shall
not constitute a default under, or breach of, this Agreement.
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(d) Notwithstanding the foregoing provisions of this Section
12.6, any Restructure Lender may at any time pledge or assign all or any portion
of such Restructure Lender's rights under this Agreement or any Restructure Loan
Document to a Federal Reserve bank; provided, however, that no such pledge or
assignment shall release such Restructure Lender from its obligations hereunder
or pursuant to any Restructure Loan Document.
SECTION 12.7 EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW. This
Agreement is being executed on the date hereof by the Borrower, the Restructure
Lenders and Fleet (in its capacities as Restructure Agent and Restructure
Lender) 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 the Borrower, Restructure Agent and the Restructure Lenders and thereafter
shall be binding upon and inure to the benefit of the Borrower, Restructure
Agent and the Restructure Lenders and their respective permitted successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of
Restructure Agent and the Restructure Lenders. THIS AGREEMENT, THE RESTRUCTURED
NOTES AND THE OTHER RESTRUCTURE LOAN DOCUMENTS 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 12.8 CONSENT TO JURISDICTION; VENUE; AGENT FOR SERVICE OF
PROCESS. All judicial proceedings brought against the Borrower with respect to
this Agreement and the Restructure 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, the
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. The 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 12.8. The Borrower
designates and appoints the 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 the 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 being hereby acknowledged by the 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 the 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 the Borrower refuses to accept service, the
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 Restructure Agent, on behalf
of itself and the Restructure Lenders, to bring proceedings against the Borrower
in courts of any jurisdiction.
SECTION 12.9 ENTIRE AGREEMENT. This Agreement with Exhibits and
Schedules and the other Restructure Loan Documents embody the entire agreement
and understanding
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between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
SECTION 12.10 SEVERABILITY 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 12.11 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 12.12 SURVIVAL OF CERTAIN AGREEMENTS. Notwithstanding anything
in this Agreement or implied by law to the contrary, the agreement of the
Borrower set forth in Section 5.6 and the agreements of the Restructure Lenders
set forth in Sections 10.2, 10.3, and 10.4 (as well as any obligations under any
Nondisclosure Agreements) shall survive the payment of the Restructure Loans and
the Restructured Notes and the termination of this Agreement. Notwithstanding
anything in this Agreement to the contrary, the agreement of the Borrower set
forth in Sections 5.5, and 5.7 of this Agreement shall survive for one hundred
and eighty (180) days from the date of the payment of the Restructured Loans and
Restructured Notes.
SECTION 12.13 REVIVAL CLAUSE. If the incurring of any debt, the payment
of money or transfer of property under the Existing Facilities or the
Restructure Loan Documents made to Restructure Agent or any Restructure Lender
by or on behalf of the Borrower should for any reason, in whole or in part,
subsequently be declared to be "fraudulent" or preferential or otherwise be
recoverable (collectively, "Voidable Transfers") within the meaning of any state
or federal law governing creditors' rights including the Bankruptcy Code, and
Restructure Agent or any Restructure Lender is required to repay or restore any
such Voidable Transfers or portion thereof or, upon the advice of its counsel is
advised to do so, then, as to any such Voidable Transfer or the amount repaid or
restored (including all reasonable costs, expenses and attorneys' fees of
Restructure Agent and Restructure Lender related thereto), the liability of the
Borrower under the applicable facility shall automatically be revived,
reinstated and restored as though such Voidable Transfer had never been made.
SECTION 12.14 RELEASE OF ALL CLAIMS.
(a) The Borrower on behalf of itself and each of its successors
and assigns hereby forever and irrevocably releases Restructure Agent, each
Restructure Lender and each of their respective officers, representatives,
agents, attorneys, employees, financial consultants, predecessors, successors
and assigns, from the Claims, whether such Claims are known or unknown,
contingent or absolute and howsoever arising.
(b) The Borrower has been advised by counsel with respect to the
release contained herein. Upon advice of such counsel, the Borrower hereby
waives and relinquishes all
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of the rights and benefits which it has, or may have, with respect to the Claims
released under Section 1542 of the California Civil Code or any other similar
statute.
(c) The Borrower is familiar with and waives the provisions of
Section 1542 of the California Civil Code which provide as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
SECTION 12.15 ADDITIONAL ASSURANCES. The Borrower agrees that it will
execute such other documents and instruments and perform such other acts as may
reasonably be required by Restructure Agent and Restructure Lenders to carry out
and effectuate the purpose and intent of this Agreement.
SECTION 12.16 CONFIDENTIALITY. Notwithstanding any other provision of
this Agreement, each of the Borrower, the Restructure Agent, the Restructure
Lenders and Crossroads shall be bound by the provisions of the Nondisclosure
Agreement attached hereto as Exhibit C.
[Signature pages follow]
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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:
---------------------------------
Title:
------------------------------
Address:
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
FLEET NATIONAL BANK f/k/a BANKBOSTON, N.A.,
as Restructure Agent and as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxxxx Xxxxxx, Xxxx Xxxx 00-00-00
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
BANK OF MONTREAL, as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 X. XxXxxxx Xxxxxx, 00 Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx
S-1
55
BEAR, XXXXXXX & CO. INC.,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention:
--------------------------
COMERICA BANK - CALIFORNIA,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
00 Xxxxxxx Xxxxxxxxx
Mail Code: 4041
Xxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
OLYMPUS SECURITIES, LTD.,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
c/o Citadel Investment Group, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
S-2
56
XXXXXX PARTNERS LTD.,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
c/o Citadel Investment Group, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
THE BANK OF NOVA SCOTIA,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
UNION BANK OF CALIFORNIA, N.A.,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxx Xxxxxxxxx
S-3
57
LOEB PARTNERS CORPORATION,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxx
THE DAI-ICHI KANGYO BANK, LIMITED,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
Corporate Finance Department I
Xxx Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
SAN FRANCISCO AGENCY,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
S-4
58
THE MITSUBISHI TRUST AND BANKING CORPORATION,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
SANWA BANK CALIFORNIA,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
THE FIRST NATIONAL BANK OF CHICAGO,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
The First National Bank of Chicago
x/x Xxxx Xxx
Xxxxxxx Xxxxxx Managed Assets
AZ1-1283
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
S-5
59
THE FUJI BANK, LIMITED,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention:
--------------------------
THE SUMITOMO BANK, LIMITED,
as a Restructure Lender
By:
---------------------------------
Title:
------------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
S-6
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EXHIBIT A
FORM OF RESTRUCTURED PROMISSORY NOTE
$ May 25, 2000
--------------------
FOR VALUE RECEIVED, KOMAG, INCORPORATED (the "Borrower"),
promises to pay to the order of (the "Restructure Lender"), the principal amount
of ____________________________ Dollars ($ ______________________), or, if less,
the aggregate amount of the Restructured Loan (as defined in the Restructure
Agreement referred to below), outstanding on the Restructure Maturity Date (as
defined in the Restructure Agreement referred to below). All unpaid amounts of
principal and interest shall be due and payable in full on the Restructure
Maturity Date as defined in the Restructure 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
Restructure Agreement referred to below.
All payments and prepayments of principal and all payments of interest, fees and
other amounts payable in respect of this Restructured Note shall be made by the
Borrower to Fleet National Bank f/k/a BankBoston, N.A., as "Restructure Agent"
(as that term is defined in the Restructure Agreement referred to below), on
behalf of the Restructure Lender, at the head office of the Restructure Agent
located at 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx Xxxxxxx, OR
SUCH OTHER PLACE AS IT SHALL DESIGNATE IN WRITING FOR SUCH PURPOSE IN ACCORDANCE
WITH THE TERMS OF THE RESTRUCTURE AGREEMENT REFERRED TO BELOW in immediately
available UNITED STATES DOLLARS, on or before 12:00 p.m. (Eastern time) on the
due date thereof, WITHOUT COUNTERCLAIM OR SETOFF AND FREE AND CLEAR OF, AND
WITHOUT ANY DEDUCTION OR WITHHOLDING FOR, ANY TAXES OR OTHER PAYMENTS. Until
notified of the transfer of this Restructured Note, the Borrower shall be
entitled to deem the Restructure Lender or such person who has been so
identified by the transferor in writing to the Borrower as the holder of this
Restructured Note, as the owner and holder of this Restructured Note. Each of
the Restructure Lender and any subsequent holder of this Restructured Note
agrees that before disposing of this Restructured 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 Restructured Note shall not limit or otherwise affect the
obligation of the Borrower hereunder with respect to payments of principal or
interest on this Restructured Note.
This Restructured Note is referred to in, and is entitled to the
benefits of, the Loan Restructure Agreement dated as of May 25, 2000 (as
amended, the "Restructure Agreement") among the Borrower, the Restructure Agent,
the Restructure Lender and the other Restructure Lenders described therein. The
Restructure Agreement is hereby incorporated by reference. The Restructure
Agreement, among other things, (i) provides for the restructuring of outstanding
indebtedness (the "Restructured Loan") owed by the Borrower to the Restructure
Lender 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 such Restructured Loan being evidenced by this Restructured 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 Restructured Note are subject to amendment
only in the manner provided in the Restructure Agreement.
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No reference herein to the Restructure Agreement and no
provision of this Restructured Note or the Restructure Agreement shall alter or
impair the obligation of the Borrower, which is absolute and unconditional, to
pay the principal of and interest on this Restructured 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 and costs, incurred in the collection and enforcement
of this Restructured 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 Restructured Note amends, restates and supersedes in its
entirety any promissory notes delivered pursuant to the Existing Facilities (as
defined in the Restructure Agreement) in favor of the Restructure Lender.
IN WITNESS WHEREOF, the Borrower has caused this Restructured
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:
---------------------------------
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EXHIBIT B
FORM OF ASSIGNMENT AGREEMENT
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EXHIBIT C
FORM OF NONDISCLOSURE AGREEMENT
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EXHIBIT D
CONVERSION DOCUMENTS
Securities Purchase Agreement
Convertible Note
Registration Rights Agreement
Attached hereto as an addendum.
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EXHIBIT E
JANUARY PROJECTED PERFORMANCE
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SCHEDULE 1
SCHEDULE OF COMMITMENTS
Name of Existing Restructured Restructured
Restructure Lender Loan Loan Loans Percentage
------------------------------------------ --------------------- --------------------- -----------------
Fleet National Bank f/k/a $33,714,286 $33,714,286 12.96703 %
BankBoston, N.A.
Bank of Montreal $8,571,429 $8,571,429 3.29670 %
Bear, Xxxxxxx & Co. Inc. $3,500,000 $3,500,000 1.34615 %
Comerica Bank - California $14,285,714 $14,285,714 5.49451 %
Olympus Securities, Ltd. $8,500,000 $8,500,000 3.26923 %
Xxxxxx Partners Ltd. $5,571,429 $5,571,429 2.00000 %
The Bank of Nova Scotia $11,428,571 $11,428,571 4.39560 %
Loeb Partners Corporation $3,000,000 $3,000,000 1.15385%
Union Bank of California, N.A. $11,428,571 $11,428,571 4.39560 %
The Dai-Ichi Kangyo Bank, Limited $35,000,000 $35,000,000 13.46154 %
The Industrial Bank of Japan, Limited, IBJ Facility I: $15,000,000 5.76923 %
San Francisco Agency $50,000,000
The Mitsubishi Trust and Banking Participant's share $10,000,000 3.84615 %
Corporation equals:
$10,000,000
Sanwa Bank California Participant's share $10,000,000 3.84615 %
equals:
$10,000,000
The First National Bank of Chicago Participant's share $15,000,000 5.76923 %
equals:
$15,000,000
The Industrial Bank of Japan, Limited, IBJ Facility II: $25,000,000 9.61539%
San Francisco Agency Existing Loan
Amount:
$75,000,000
The Mitsubishi Trust and Banking Participant's share $20,000,000 7.69231 %
Corporation equals:
$20,000,000
The Fuji Bank, Limited Existing Loan $15,000,000 5.76923%
Amount:
$15,000,000
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Name of Existing Restructured Restructured
Restructure Lender Loan Loan Loans Percentage
------------------------------------------ --------------------- --------------------- -----------------
The Sumitomo Bank, Limited, Existing Loan $15,000,000 5.76923 %
Amount:
$15,000,000
TOTAL: $260,000,000
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SCHEDULE 2
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 USA (Malaysia) Sdn 0%**
6. Dastek Holding Company 60%
7. Dastek (M) SDN BHD 0%***
8. Asahi Komag (Thailand) Co., Ltd 0%****
9. Komag FSC (Barbados) Ltd. 100%
10. Komag Distribution Company 100%
11. Komag Netherlands Antilles N.V. 0%*****
12. Komag Technology (N) B.V. 0%******
13. Komag Asia-Pacific, Inc. 100%
----------
* Borrower is a 50% partner of Komag Technology Partners, which owns 100%
of Asahi Komag Co., Ltd.
** Komag Bermuda Ltd. owns 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.
***** Komag (Bermuda) Ltd. owns 100% of Komag (Netherlands Antilles) N.V.
****** Komag (Netherlands Antilles) N.V. owns 100% of Komag Technology (N) B.V.
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SCHEDULE 3
EXISTING LIENS AND SECURITY INTERESTS
1. Purchase money security interests in equipment; and
2. UCC filings evidencing leased equipment.
3. UCC filings granted by WDC against assets that were
acquired by the Borrower in the WD Asset Acquisition
(other than those evidencing leased equipment). The
Borrower covenants and agrees that these UCC filings
shall be irrevocably released and terminated by no later
than May 31, 2000.
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SCHEDULE 4
LITIGATION
The company has received a letter on behalf of Magnetic Memory Development, LLC
("MMD") referencing a number of patents issued on alleged inventions by Xxxxxx
Xxxxxxxx (U.S. Patent Nos. 4,735,840, 4,894,133, 5,020,747, 5,316,864, and
5,636,970). MMD is the purported owner of these patents. MMD has offered to
grant a license to the Company under the patents listed, and the Company and MMD
are currently in discussions regarding a license. However, the Company can give
no assurance regarding whether the terms of the license will be agreed upon,
whether this matter will lead to litigation, the probable outcome of any
litigation, if litigation is commenced, or the amount of damages awarded against
the Company should such litigation occur and be determined unfavorably to the
Company.
Asahi Glass Company, Ltd. ("Asahi"), has asserted that it has an
exclusive right to Komag's intellectual property relating to glass substrates
under a technical cooperation agreement between Komag and Asahi. Komag disagrees
with Asahi's position. Komag and Asahi are currently in discussions regarding
this issue.
