EXECUTION VERSION
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
June 26, 1998, is entered into by and among:
(1) QUANTUM CORPORATION, a Delaware corporation ("Borrower");
(2) Each of the financial institutions listed in Schedule I to
the Credit Agreement referred to in Recital A below (collectively, the
"Banks") that execute this Amendment; and
(3) CANADIAN IMPERIAL BANK OF COMMERCE, as administrative
agent for the Banks (in such capacity, the "Administrative Agent").
RECITALS
A. Each of (i) Borrower, (ii) the Banks, (iii) the Administrative
Agent, (iv) ABN AMRO Bank, N.V., San Francisco International Branch ("ABN") and
CIBC Inc., as co-arrangers for the Banks, (v) Bank of America National Trust and
Savings Association, as documentation agent for the Banks, (vi) ABN, as
syndication agent for the Banks and (vii) BankBoston, N.A., The Bank of Nova
Scotia, Fleet National Bank and The Industrial Bank of Japan, Limited, as
co-agents for the Banks, are parties to a Credit Agreement dated as of June 6,
1997 (the "Credit Agreement").
B. Borrower has requested the Banks and Administrative Agent to amend
the Credit Agreement in certain respects.
C. The Banks executing this Amendment and Administrative Agent are
willing so to amend the Credit Agreement upon the terms and subject to the
conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Banks executing this Amendment and Administrative
Agent hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.
2. Amendments to Credit Agreement. Subject to the satisfaction of the
conditions set forth in Paragraph 4 below, the Credit Agreement is hereby
amended as follows:
(a) Paragraph 1.01 is amended by adding thereto, in the
appropriate alphabetical order, the definitions of the terms "ATL" and
"ATL Acquisition", "ATL In-Process R&D Charge", and "Year 2000 Problem"
to read in their entirety as follows:
"ATL" shall mean ATL Products, Inc., a Delaware
corporation.
"ATL Acquisition" shall mean the proposed acquisition
by Borrower of ATL during Borrower's fiscal year 1999 which,
if consummated, will be paid in Equity Securities of Borrower
at an exchange price of $29.00 per share.
"ATL In-Process R&D Charge" shall mean the
non-recurring charge, not to exceed $150,000,000 (pre-tax) in
the aggregate, taken by Borrower in Borrower's fiscal year
1999 as a result of write-offs of in process research and
development expenses and charges incurred in connection with
the consummation of the ATL Acquisition.
"ATL Non-Recurring Integration Charges" shall mean
the non-recurring integration expenses and charges not to
exceed $10,000,000 (pre-tax) in the aggregate, taken by
Borrower in Borrower's fiscal year 1999 as a result of
write-offs of business combination expenses and charges
incurred in connection with the consummation of the ATL
Acquisition.
"Year 2000 Problem" shall mean the risk that computer
applications used by Borrower and its Subsidiaries may be
unable to properly recognize and perform date-sensitive
functions involving certain dates on or after December 31,
1999.
(b) Paragraph 4.01 is amended by adding a new subparagraph
4.01(u) immediately after subparagraph 4.01(t) to read in its entirety
as follows:
(u) Year 2000 Compliance. Borrower and its
Subsidiaries have reviewed or are reviewing the areas within
their business and operations which reasonably could be
expected to be adversely affected by, and have developed or
are developing a program to address on a timely and adequate
basis, the Year 2000 Problem and intend to make appropriate
inquiry of material suppliers and vendors. Upon the completion
of such ongoing review and development of such a program,
Borrower and its Subsidiaries believe that they will be able
to timely and adequately address the Year 2000 Problem such
that it could not reasonably be expected to have a Material
Adverse Effect.
(c) Clause (iii) of Subparagraph 5.01(a) is hereby amended to
read in its entirety as follows:
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(iii) Contemporaneously with the quarterly and
year-end Financial Statements required by the foregoing
clauses (i) and (ii), (A) a certificate of an Executive
Officer of Borrower in the form of Exhibit E, appropriately
completed, together with (1) such financial computations as
Agents may reasonably request to determine compliance with the
terms of this Agreement (a "Compliance Certificate") and (2) a
statement by such Executive Officer of Borrower that the
remediation efforts of Borrower and its Subsidiaries with
respect to the Year 2000 Problem are proceeding as scheduled
and that neither Borrower nor its Subsidiaries has received a
management letter or other communication from an auditor,
regulator or third party consultant indicating that Borrower
or its Subsidiaries is failing to address the Year 2000
Problem; and (B) management's discussion of Borrower's
operations for the period covered by such Financial Statements
in the form supplied to Borrower's stockholders, including a
comparison with Borrower's operations for the corresponding
quarter in the immediately preceding fiscal year or with the
immediately preceding fiscal year, as the case may be, as set
forth in Borrower's 10-K and 10-Q reports filed by Borrower or
any of its Subsidiaries with the Securities and Exchange
Commission;
(d) Subparagraph 5.02(e) is amended by (i) deleting the "and"
appearing at the end of clause (xviii), (ii) renumbering clause (xix)
as clause (xx), and (iii) adding a new clause (xix) immediately after
clause (xviii) to read in its entirety as follows:
(xix) Investments by Borrower in ATL in connection
with the consummation of the ATL Acquisition; and
(e) Clause (iv) of Subparagraph 5.02(f) is amended to read in
its entirety as follows:
(iv) Borrower may purchase Equity Securities pursuant
to stock repurchase programs, provided that the aggregate
payments under such programs do not exceed (A) during fiscal
year 1999, twenty-three percent (23%) of Tangible Net Worth as
determined as of the fiscal quarter ending March 31, 1998 and
(B) during all other fiscal years, ten percent (10%) of
Tangible Net Worth as determined as of the fiscal quarter
immediately preceding the date of determination.
(f) Clause (ii) of Subparagraph 5.02(l) is hereby amended to
read in its entirety as follows:
(ii) Borrower shall not permit its Tangible Net Worth
on any date of determination (such date to be referred to
herein as a "determination date") which occurs after March 31,
1997 (such date to be referred to herein as the "base date")
to be less than the sum on such determination date of the
following:
(A) $760,000,000;
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plus
(B) Seventy-five percent (75%) of the sum of
Borrower's consolidated quarterly net income
(ignoring any quarterly losses) for each quarter
after the base date through and including the quarter
ending immediately prior to the determination date;
plus
(C) Ninety percent (90%) of the Net Proceeds
derived from the conversion of the Convertible
Subordinated Debentures;
plus
(D) Seventy-five percent (75%) of the Net
Proceeds of all Equity Securities issued by Borrower
and its Subsidiaries (excluding any issuance where
the total proceeds are less than $10,000,000) during
the period commencing on the base date and ending on
the determination date; provided, however, that (1)
the Net Proceeds of all Equity Securities issued by
Borrower in connection with the consummation of the
ATL Acquisition and (2) the Net Proceeds of all
Equity Securities issued by Borrower as a result of
the failed consummation of the ATL Acquisition shall
not be included;
plus
(E) If the ATL Acquisition is consummated,
for the period ending December 31, 1998, seventy-five
percent of the sum of (1) the aggregate amount of all
Equity Securities issued by Borrower in connection
with the ATL Acquisition less (2) the aggregate
amount paid by Borrower for all Equity Securities
purchased in connection with the ATL Acquisition;
provided, however, that if the ATL Acquisition is not
consummated, for the period ending March 31, 1999,
seventy-five percent (75%) of the sum of (x) all
amounts paid by Borrower to purchase its Equity
Securities in connection with the ATL Acquisition
less (y) the Net Proceeds of all Equity Securities
issued by Borrower as a result of the failed
consummation of the ATL Acquisition;
minus
(F) the lesser of (1) the aggregate amount
paid by Borrower to repurchase its capital stock and
(2) $50,000,000; provided, however, that with respect
to the period in which the ATL Acquisition is
consummated, amounts to be deducted hereunder shall
not be included;
minus
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(G) an amount equal to the after-tax sum of
any ATL In-Process R&D Charge.
(g) Clause (iii) of Subparagraph 5.02(l) is hereby amended to
read in its entirety as follows:
(iii) In any consecutive four-quarter period,
Borrower shall not permit (A) more than two quarterly net
losses aggregating to more than five percent (5%) of its
Tangible Net Worth as determined as of the fiscal quarter
immediately preceding the date of determination or (B) its
cumulative net income for any consecutive four-quarter period
to be less than one Dollar; provided, however, that for
purposes of calculating Borrower's net income for any period
which includes the quarters ending on June 30, 1998, September
30, 1998 and December 31, 1998, such calculation shall exclude
the ATL In-Process R&D Charge and the ATL Non-Recurring
Integration Charges.
3. Representations and Warranties. Borrower hereby represents and
warrants to Administrative Agent and the Banks that the following are true and
correct on the date of this Amendment and that, after giving effect to the
amendments set forth in Paragraph 2 above, the following will be true and
correct on the Effective Date (as defined below):
(a) The representations and warranties of Borrower and its
Subsidiaries set forth in Paragraph 4.01 and in the other Credit
Documents are true and correct in all material respects as if made on
such date (except for representations and warranties expressly made as
of a specified date, which shall be true and correct in all material
respects as of such date);
(b) No Default or Event of Default has occurred and is
continuing; and
(c) Each of the Credit Documents is in full force and effect.
(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
4. Effective Date. The amendments effected by Paragraph 2 above shall
become effective on June 26, 1998 (the "Effective Date"), subject to receipt by
Administrative Agent and the Banks on or prior to the Effective Date of the
following, each in form and substance satisfactory to Administrative Agent, the
Banks executing this Amendment and their respective counsel:
(a) This Amendment duly executed by Borrower, the Majority
Banks and Administrative Agent;
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(b) A Certificate of the Secretary or an Assistant Secretary
of Borrower, dated the Effective Date, certifying that (i) the
Certificate of Incorporation and Bylaws of Borrower, in the form
delivered to Administrative Agent on the Closing Date, are in full
force and effect and have not been amended, supplemented, revoked or
repealed since such date, (ii) that the resolution of the Borrower, in
the form delivered to Administrative Agent on the Closing Date, is in
full force and effect and has not been amended, supplemented, revoked
or repealed since such date, and (iii) the incumbency, signatures and
authority of the officers of Borrower authorized to execute, deliver
and perform the Credit Agreement, this Amendment, the other Credit
Documents and all other documents, instruments or agreements relating
thereto executed or to be executed by Borrower and indicating each such
officer which is an Executive Officer or Authorized Financial Officer;
(c) A nonrefundable amendment fee equal to one-twentieth of
one percent (0.05%) of the Total Commitment to be shared among the
Banks that execute this Amendment on or before June 30, 1998 pro rata
in accordance with such Banks' respective Proportionate Share; and
(d) Such other evidence as Administrative Agent or any Bank
executing this Amendment may reasonably request to establish the
accuracy and completeness of the representations and warranties and the
compliance with the terms and conditions contained in this Amendment
and the other Credit Documents.
5. Effect of this Amendment. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Banks or Administrative Agent, nor constitute a
waiver of any provision of the Credit Agreement or any other Credit Document.
6. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
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IN WITNESS WHEREOF, Borrower, Administrative Agent and the Banks
executing this Amendment have caused this Amendment to be executed as of the day
and year first above written.
QUANTUM CORPORATION
By: /s/ Xxxxxxx X. Xxxxx, Xx.
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice President, Finance & Treasurer
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Executive Director
ABN AMRO BANK N.V., San Francisco
International Branch, as a Bank
By: /s/ Xxxxx X. Xxx
Name: Xxxxx X. Xxx
Title: Group Vice President
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Group Vice President
CIBC INC., as a Bank
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Executive Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: /s/ Xxxxx XxXxxxx
Name: Xxxxx XxXxxxx
Title: Managing Director
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BANKBOSTON, N.A., as a Bank
By: /s/ Xxxxxxxxx Xxxxxxx
Name: Xxxxxxxxx Xxxxxxx
Title: Director
THE BANK OF NOVA SCOTIA, as a Bank
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Relationship Manager
FLEET NATIONAL BANK, as a Bank
By: /s/ Xxxxxx X. Xxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxx
Title: VP
THE INDUSTRIAL BANK OF JAPAN, LIMITED, as a Bank
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Deputy General Manager
BANQUE NATIONALE DE PARIS, as a Bank
By: /s/Xxxxxxx X. XxXxxxxxxxx/Xxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. XxXxxxxxxxx/Xxxxxx X. Xxxxxxxx
Title: Vice President/Vice President
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THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY, as a Bank
By: /s/ Yasushi Satomi
Name: Yasushi Satomi
Title: Senior Vice President
UNION BANK OF CALIFORNIA, N.A., as a Bank
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Assistant Vice President
THE FUJI BANK, LIMITED, as a Bank
By: /s/ Keiichi Ozawa
Name: Keiichi Ozawa
Title: Joint General Manager
ROYAL BANK OF CANADA, as a Bank
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Manager
DEUTSCHE BANK A.G., NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES, as a Bank
By: /s/ Andre Heitbaum
Name: Andre Heitbaum
Title: Asst. Vice President
By: /s/ Xxxxxxx X. XxXxxxx
Name: Xxxxxxx X. XxXxxxx
Title: Director
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KEYBANK NATIONAL ASSOCIATION, as a Bank
By: /s/ Xxxxx X. XxXxxxx
Name: Xxxxx X. XxXxxxx
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., as a Bank
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Deputy General Manager
MELLON BANK, as a Bank
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: First Vice President
SANWA BANK LIMITED, SAN XXXXXXXXX XXXXXX, as a Bank
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: General Manager
THE SUMITOMO TRUST AND BANKING CO., LTD., as a Bank
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President & Manager
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PARIBAS, as a Bank
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Managing Director
PARIBAS, as a Bank
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Vice President
THE SUMITOMO BANK, LIMITED, as a Bank
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: General Manager
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