FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is entered into as of October 9, 1997, by and
among KOMAG, INCORPORATED, a Delaware corporation ("Borrower"), the
banks from time to time party thereto, together with their respective
successors and assigns (each a "Bank" and collectively the "Banks"), and
BANKBOSTON, N.A., a national banking association ("BankBoston"), as agent
for the Banks (in such capacity, the "Agent"), with reference to the
following facts:
A. The Borrower, the Banks, and the Agent are parties to that
certain Amended and Restated Credit Agreement dated as of June 20, 1997,
by and among the Borrower, the Banks, and the Agent (the "Credit
Agreement"). The Credit Agreement and all related and supporting
documents collectively are referred to in this Amendment as the "Loan
Documents."
B. The parties desire to amend certain provisions contained in
the Credit Agreement as set forth below.
NOW, THEREFORE, in consideration of the promises and the
agreements, provisions and covenants herein contained, the parties hereto
agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined
herein shall have the same meanings as set forth in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) The following defined term shall be added to
Section 1.1 in its proper alphabetical order:
"'Net Profit Margin': Net income for any fiscal month of
Borrower, divided by net sales for such fiscal month, excluding equity in
net income or loss of Asahi Komag Co., Ltd."
(b) Section 2.1(c) is hereby amended to read as follows
from and after the effective date of this Amendment:
"Facility Fee. Borrower agrees to pay to the Agent, for
the pro rata benefit of the Banks in accordance with their respective
Commitment Percentages, a facility fee based on the Aggregate Commitment
at the following rates, each of which shall be calculated on the basis of
a 360-day year for the actual days elapsed beginning on the Closing Date,
payable in arrears at the end of each calendar quarter following the
Closing Date. Said rates shall be calculated quarterly based on
Borrower's performance for the immediately preceding quarter for which
Borrower has provided information to the Agent regarding the calculation
of the rate and shall be effective five (5) Business Days following the
Agent's receipt of such financial statements and the officer's certificate
required to be delivered in connection therewith pursuant to Section
6.1(a); provided that if Borrower shall not have timely delivered its
financial statements in accordance with Section 6.1(a) (after giving
effect to any grace period set forth in Section 7.1(c)), then commencing
on the date upon which such financial statements should have been delivered
and continuing until such financial statements are actually delivered, it
shall be assumed for purposes of determining said rates that Borrower's
Consolidated Funded Debt to Consolidated Capital is equal to or greater
than .25 to 1.0.
If Borrower's Consolidated Funded Debt to Consolidated
Capital is less than .15 to 1.0: the facility fee shall be 20 basis
points per annum;
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .15 to 1.0 but less than .25 to 1.0:
the facility fee shall be 25 basis points per annum; and
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .25 to 1.0: the facility fee shall be
30 basis points per annum;
provided, that upon Borrower's achievement of a cumulative average
Net Profit Margin for any fiscal six (6) month period commencing on or
after August 25, 1997 of at least five percent (5%), as demonstrated by
Borrower's consolidated balance sheet for itself and its Consolidated
Subsidiaries as at the end of such fiscal six (6) month period and the
related consolidated statements of income, stockholders' equity and
statement of cash flows for such fiscal six (6) month period, which
statements are certified by a duly authorized officer of Borrower as being
fairly stated in all material respects subject to year end adjustments,
the facility fee shall be reduced to the following rates:
If Borrower's Consolidated Funded Debt to Consolidated
Capital is less than .15 to 1.0: the facility fee shall be 17.5 basis
points per annum;
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .15 to 1.0 but less than .25 to 1.0:
the facility fee shall be 22.5 basis points per annum; and
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .25 to 1.0: the facility fee shall be
27.5 basis points per annum;
provided, further, that upon Borrower's achievement of a cumulative
average Net Profit Margin for any fiscal six (6) month period commencing
on or after August 25, 1997 of at least ten percent (10%), as demonstrated
by Borrower's consolidated balance sheet for itself and its Consolidated
Subsidiaries as at the end of such fiscal six (6) month period and the
related consolidated statements of income, stockholders' equity and
statement of cash flows for such fiscal six (6) month period, which
statements are certified by a duly authorized officer of Borrower as being
fairly stated in all material respects subject to year end adjustments,
the facility fee shall be further reduced to the following rates:
If Borrower's Consolidated Funded Debt to Consolidated
Capital is less than .15 to 1.0: the facility fee shall be 15 basis
points per annum;
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .15 to 1.0 but less than .25 to 1.0:
the facility fee shall be 20 basis points per annum; and
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .25 to 1.0: the facility fee shall be
25 basis points per annum.
For purposes of this Section 2.1(c), Borrower shall be required to
furnish its fiscal six (6) month financial statements only for those
periods as are necessary to demonstrate achievement of the Net Profit
Margin tests specified in this Section."
(c) Section 2.3(c) is amended to read as follows from
and after the effective date of this Amendment:
"LIBOR Rate Loans. Revolving Loans which are LIBOR
Rate Loans shall bear interest for each Interest Period with respect
thereto on the unpaid principal amount thereof at a rate per annum equal
to the LIBOR Rate determined for such Interest Period plus an amount (the
"Applicable Margin") determined in accordance with following schedule.
Said rates shall be calculated quarterly based on Borrower's performance
for the immediately preceding fiscal quarter for which Borrower has
provided information to the Agent regarding the calculation of the rate
and shall be effective five (5) Business Days following the Agent's
receipt of such financial statements and the officer's certificate
required to be delivered in connection therewith pursuant to Section
6.1(a); provided that if Borrower shall not have timely delivered its
financial statements in accordance with Section 6.1(a) (after giving
effect to any grace period set forth in Section 7.1(c)), then commencing
on the date upon which such financial statements should have been delivered
and continuing until such financial statements are actually delivered, it
shall be assumed for purposes of determining said rates that Borrower's
Consolidated Funded Debt to Consolidated Capital is equal to or greater
than .25 to 1.0 (said calculations shall apply to existing as well as new
LIBOR Rate Loans).
If Borrower's Consolidated Funded Debt to Consolidated
Capital is less than .15 to 1.0: the Applicable Margin shall be 85 basis
points;
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .15 to 1.0 but less than .25 to 1.0:
the Applicable Margin shall be 92.5 basis points; and
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .25 to 1.0: the Applicable Margin
shall be 100 basis points;
provided, that upon Borrower's achievement of a cumulative average
Net Profit Margin for any fiscal six (6) month period commencing on or
after August 25, 1997 of at least five percent (5%), as demonstrated by
Borrower's consolidated balance sheet for itself and its Consolidated
Subsidiaries as at the end of such fiscal six (6) month period and the
related consolidated statements of income, stockholders' equity and
statement of cash flows for such fiscal six (6) month period, which
statements are certified by a duly authorized officer of Borrower as being
fairly stated in all material respects subject to year end adjustments,
the Applicable Margin shall be as follows:
If Borrower's Consolidated Funded Debt to Consolidated
Capital is less than .15 to 1.0: the Applicable Margin shall be 60 basis
points;
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .15 to 1.0 but less than .25 to 1.0:
the Applicable Margin shall be 67.5 basis points; and
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .25 to 1.0: the Applicable Margin
shall be 75 basis points;
provided, further, that upon Borrower's achievement of a cumulative
average Net Profit Margin for any fiscal six (6) month period commencing
on or after August 25, 1997 of at least ten percent (10%), as demonstrated
by Borrower's consolidated balance sheet for itself and its Consolidated
Subsidiaries as at the end of such fiscal six (6) month period and the
related consolidated statements of income, stockholders' equity and
statement of cash flows for such fiscal six (6) month period, which
statements are certified by a duly authorized officer of Borrower as being
fairly stated in all material respects subject to year end adjustments,
the Applicable Margin shall be as follows:
If Borrower's Consolidated Funded Debt to Consolidated
Capital is less than .15 to 1.0: the Applicable Margin shall be 35 basis
points;
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .15 to 1.0 but less than .25 to 1.0:
the Applicable Margin shall be 42.5 basis points; and
If Borrower's Consolidated Funded Debt to Consolidated
Capital is equal to or greater than .25 to 1.0: the Applicable Margin
shall be 50 basis points.
For purposes of this Section 2.3(c), Borrower shall be required to
furnish its fiscal six (6) month period financial statements only for
those periods as are necessary to demonstrate achievement of the Net
Profit Margin tests specified in this Section."
(d) Section 6.2(a) is amended to read as follows:
"Profitability. Permit, on a consolidated
after-tax basis, (i) an aggregate net loss for the period beginning
September 29, 1997 and ending March 31, 1998 of more than Twenty Million
Dollars ($20,000,000); or (ii) a net loss in any two consecutive fiscal
quarter periods commencing after December 28, 1997."
3. Conditions to Effectiveness.
This Amendment shall become effective as of October 9, 1997
(the "Closing Date"), only upon:
(i) receipt by the Agent from the Borrower of a fee equal
to One Hundred Thousand Dollars ($100,000), to be distributed to the Banks
on a pro rata basis in accordance with the respective Commitment
Percentage of each Bank;
(ii) receipt by the Agent of the following (each of
which shall be in form and substance satisfactory to the Agent and its
counsel, with sufficient copies for each of the Banks): counterparts of
this Amendment duly executed on behalf of the Borrower, the Agent, and the
Majority Banks.
4. Representations and Warranties. In order to induce the
Banks to enter into this Amendment, the Borrower represents and warrants
to the Agent and each Bank that the following statements are true, correct
and complete as of the effective date of this Amendment:
(a) Corporate Power and Authority. The Borrower has
all requisite corporate power and authority to enter into this Amendment
and to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement as amended by this Amendment (the
"Amended Agreement"). The Certificate of Incorporation and Bylaws of the
Borrower have not been amended since the copies previously delivered to
the Agent or Banks.
(b) Authorization of Agreements. The execution and
delivery of this Amendment and the performance by the Borrower of the
Amended Agreement have been duly authorized by all necessary corporate
action on the part of the Borrower.
(c) No Conflict. The execution and delivery by the
Borrower of this Amendment do not and will not contravene (i) any law or
any governmental rule or regulation applicable to the Borrower, (ii) the
Certificate of Incorporation or Bylaws of the Borrower, (iii) any order,
judgment or decree of any court or other agency of government binding on
the Borrower, or (iv) any material agreement or instrument binding on the
Borrower.
(d) Governmental Consents. The execution and delivery
by the Borrower of this Amendment and the performance by the Borrower of
the Amended Agreement do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
(e) Binding Obligation. This Amendment and the Amended
Agreement have been duly executed and delivered by the Borrower and are the
binding obligations of the Borrower, enforceable against the Borrower 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 and equitable principles
relating to or affecting creditors' rights.
(f) Incorporation of Representations and Warranties
From Credit Agreement. The representations and warranties contained in
Section 5.1 of the Credit Agreement are correct on and as of the effective
date of this Amendment as though made on and as of such date (except to
the extent such representations and warranties expressly refer to an
earlier date, in which case they were true and correct as of such earlier
date and except that Section 5.1(e) shall be deemed instead to refer to the
last day of the most recent fiscal year and fiscal quarter for which
financial statements have then been delivered).
(g) Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default
or a Potential Event of Default.
5. Miscellaneous.
(a) Reference to and Effect on the Credit Agreement and
the Other Loan Documents.
(i) On and after the Closing Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement," "thereunder", "thereof" or words of like import referring to
the Credit Agreement, shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this
Amendment, the Credit Agreement and the other Loan Documents shall remain
in full force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein, constitute
a waiver of any provision of, or operate as a waiver of any right, power
or remedy of the Agent or any Bank under the Credit Agreement or any of
the other Loan Documents.
(b) Fees and Expenses. All reasonable and documented
costs and expenses of the Agent, including, but not limited to, reasonable
and documented attorneys' fees, incurred by the Agent in the preparation
and implementation of this Amendment constitute costs and expenses in
connection with the amendment and restructuring of the Loan Documents, and
as such are payable by the Borrower in accordance with Section 9.5 of the
Credit Agreement.
(c) Headings. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose or be given
any substantive effect.
(d) Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
(e) Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.
KOMAG, INCORPORATED
By:
Title:
BANKBOSTON, N.A.,
as the Agent and as a Bank
By:
Title:
COMERICA BANK - CALIFORNIA,
as a Bank
By:
Title:
STANDARD CHARTERED BANK,
as a Bank
By:
Title:
By:
Title:
BANQUE NATIONALE DE PARIS,
as a Bank
By:
Title:
By:
Title:
FLEET NATIONAL BANK,
as a Bank
By:
Title:
BANK OF MONTREAL, as a Bank
By:
Title:
THE BANK OF NOVA SCOTIA,
as a Bank
By:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as a Bank
By:
Title:
