1
EXHIBIT 10.1
[Execution Copy]
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
------------------------------
Dated as of May 29, 1998
among
STORMEDIA INTERNATIONAL, LTD.
AND
STRATES PTE. LTD.,
As Borrowers
and
STORMEDIA INCORPORATED,
as Parent Guarantor
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Banks
and
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY,
as Agent
and
BANQUE NATIONALE DE PARIS, SAN ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
as Co-Agent
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................... 2
SECTION 1.01. DEFINED TERMS.................................................... 2
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS................................... 21
ARTICLE II THE TERM LOAN................................................... 22
SECTION 2.01. THE TERM LOAN................................................... 22
(a) The Term Loan................................................... 22
(b) Notations Regarding Term Loan................................... 22
SECTION 2.02. FEES............................................................ 22
SECTION 2.03. REPAYMENT AND PREPAYMENT........................................ 22
(a) Scheduled Principal Installments................................ 22
(b) Optional Prepayment............................................. 23
(c) Mandatory Prepayment............................................ 23
SECTION 2.04. INTEREST RATE AND PAYMENT DATES................................. 24
(a) Payment of Interest............................................. 24
(b) Base Rate Loans................................................. 24
(c) LIBO Rate Loans................................................. 24
(d) Interest After an Event of Default.............................. 24
SECTION 2.05. CONTINUATION AND CONVERSION OPTIONS............................. 24
SECTION 2.06. COMPUTATION OF INTEREST AND FEES................................ 25
(a) Calculations.................................................... 25
(b) Determination by Agent.......................................... 26
ARTICLE III GENERAL PROVISIONS CONCERNING
THE TERM LOAN................................................... 26
SECTION 3.01. USE OF PROCEEDS................................................. 26
SECTION 3.02. PAYMENTS........................................................ 26
SECTION 3.03. PAYMENT ON NON-BUSINESS DAYS.................................... 26
SECTION 3.04. REDUCED RETURN.................................................. 26
SECTION 3.05. INDEMNITIES..................................................... 27
(a) General Indemnity............................................... 27
(b) Funding Losses.................................................. 28
SECTION 3.06. FUNDING SOURCES................................................. 28
SECTION 3.07. INABILITY TO DETERMINE INTEREST RATE............................ 28
SECTION 3.08. REQUIREMENTS OF LAW............................................. 29
SECTION 3.09. ILLEGALITY...................................................... 30
SECTION 3.10. RIGHT TO REPLACE BANK........................................... 30
SECTION 3.11. TAXES........................................................... 30
(a) Payments........................................................ 30
(b) Other Taxes..................................................... 31
(c) Indemnity....................................................... 31
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(d) Evidence of Payment............................................. 32
(e) Forms........................................................... 32
(f) Change of Booking Office........................................ 32
(g) Indemnities..................................................... 32
SECTION 3.12. SHARING OF PAYMENTS, ETC........................................ 33
ARTICLE IV CONDITIONS TO EFFECTIVENESS..................................... 33
SECTION 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT......... 33
(a) Documents....................................................... 33
(b) Restructuring Transactions...................................... 34
(c) Perfection and Priority of Liens in Personal and Real Property.. 35
(d) Evidence of Insurance........................................... 36
(e) Financial Statements............................................ 36
(f) Cash Management................................................. 36
(g) No Material Adverse Change...................................... 36
(h) Fees and Expenses............................................... 36
(j) No Legal Impediments............................................ 37
(k) Agent Fees...................................................... 37
(l) Further Documentation........................................... 37
ARTICLE V REPRESENTATIONS AND WARRANTIES.................................. 37
SECTION 5.01. REPRESENTATIONS AND WARRANTIES.................................. 37
(a) Organization; Subsidiaries...................................... 37
(b) Due Authorization; No Conflict.................................. 38
(c) Validity........................................................ 39
(d) Capitalization.................................................. 39
(e) Valid Issuance of Warrants...................................... 40
(f) Financial Condition/Material Adverse Change..................... 40
(g) Litigation...................................................... 40
(h) Employee Benefit Plans.......................................... 41
(i) Disclosure...................................................... 41
(j) Margin Stock.................................................... 41
(k) Environmental Matters........................................... 41
(l) Employee Matters................................................ 42
(m) Insurance....................................................... 42
(n) Year-2000 Compliance............................................ 42
(o) Solvency........................................................ 42
(p) Intellectual Property........................................... 42
(q) No Encumbrances................................................. 43
ARTICLE VI COVENANTS....................................................... 43
SECTION 6.01. AFFIRMATIVE COVENANTS........................................... 43
(a) Accounting System............................................... 43
(b) Financial Information........................................... 43
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(c) Notices and Information......................................... 45
(d) Corporate Existence, Etc........................................ 46
(e) Tax Returns..................................................... 47
(f) Payment of Taxes................................................ 47
(g) Maintenance of Properties; Insurance............................ 47
(h) Inspection...................................................... 48
(i) Compliance with Laws, Etc....................................... 48
(j) Appraisals...................................................... 49
(k) Outside Consultant.............................................. 49
(l) Year 2000....................................................... 49
(m) No Setoffs or Counterclaims..................................... 49
(n) Employee Benefits............................................... 49
(o) Leases.......................................................... 50
(p) Fiscal Year..................................................... 50
(q) Compliance with Material Contracts.............................. 50
(r) Real Property; Collateral Access Agreements..................... 50
(s) Delivery of Documents After Effective Date...................... 51
(t) Further Assurances.............................................. 51
SECTION 6.02. NEGATIVE COVENANTS.............................................. 51
(a) Indebtedness.................................................... 51
(b) Liens........................................................... 52
(c) Restrictions on Fundamental Changes............................. 52
(d) Disposition of Assets........................................... 52
(e) Change Name..................................................... 52
(f) [Intentionally omitted.]........................................ 52
(g) Acquisitions.................................................... 53
(h) New Subsidiaries................................................ 53
(i) Guarantee....................................................... 53
(j) Nature of Business.............................................. 53
(k) Prepayments and Amendments...................................... 53
(l) Change of Control............................................... 54
(m) Consignments.................................................... 54
(n) Distributions................................................... 54
(o) Accounting Methods.............................................. 54
(p) Investments..................................................... 54
(q) Transactions with Affiliates.................................... 55
(r) Suspension...................................................... 55
(s) Compensation.................................................... 55
(t) Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees............................ 55
(u) No Prohibited Transactions Under ERISA.......................... 55
(v) Financial Covenant.............................................. 56
(w) Capital Expenditures............................................ 56
(x) Securities Accounts............................................. 56
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(y) Inactive Subsidiary............................................. 57
(z) Sales and Lease-Backs........................................... 57
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.................................. 57
SECTION 7.01. EVENTS OF DEFAULT............................................... 57
(a) Failure to Pay.................................................. 57
(b) [Intentionally Omitted]......................................... 57
(c) Breach of Certain Representations, Covenants,
Terms and Conditions............................................ 57
(d) Material Adverse Change......................................... 58
(e) Cross Default................................................... 58
(f) Loan Party Insolvency Event..................................... 58
(g) Subsidiary Insolvency Event..................................... 58
(h) Injunction...................................................... 59
(i) Writs and Levies................................................ 59
(j) Government Levy................................................. 59
(k) Judgments and Encumbrances...................................... 59
(l) Material Contracts.............................................. 59
(m) Subordinated Indebtedness....................................... 60
(n) ERISA Violation................................................. 60
(o) Loan Documents.................................................. 60
(p) Dissolution..................................................... 60
(q) Guarantors...................................................... 61
(r) Foothill Overadvances........................................... 61
(s) Failure of Enforceability of Credit Documents; Security......... 61
SECTION 7.02. ACCELERATION.................................................... 61
ARTICLE VIII THE AGENT....................................................... 61
SECTION 8.01. AUTHORIZATION AND ACTION........................................ 61
SECTION 8.02. AGENT'S RELIANCE, ETC........................................... 62
SECTION 8.03. CIBC [ASIA] LTD., CANADIAN IMPERIAL
BANK OF COMMERCE, NEW YORK AGENCY AND AFFILIATES................ 62
SECTION 8.04. BANK CREDIT DECISION............................................ 62
SECTION 8.05. INDEMNIFICATION................................................. 63
SECTION 8.06. SUCCESSOR AGENT................................................. 63
SECTION 8.07. AGENT AUTHORIZATION............................................. 63
ARTICLE IX MISCELLANEOUS................................................... 64
SECTION 9.01. AMENDMENTS, ETC................................................. 64
SECTION 9.02. NOTICES, ETC.................................................... 64
SECTION 9.03. RIGHT OF SETOFF................................................. 64
SECTION 9.04. NO WAIVER; REMEDIES............................................. 65
SECTION 9.05. COSTS AND EXPENSES.............................................. 65
SECTION 9.06. ADDITIONAL BANKS; ASSIGNMENTS; PARTICIPATIONS................... 65
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SECTION 9.07. JOINT AND SEVERAL OBLIGATIONS................................... 67
SECTION 9.08. CO-BORROWER PROVISIONS.......................................... 67
(a) Consents........................................................ 67
(b) Waivers......................................................... 68
(c) Additional Waivers.............................................. 70
(d) Subrogation Waiver.............................................. 71
(e) Subordination of Claims......................................... 71
(f) Primary Obligations............................................. 71
SECTION 9.09. EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW.................... 71
SECTION 9.10. SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS................... 71
SECTION 9.11. WAIVER OF JURY TRIAL............................................ 72
SECTION 9.12. CONSENT TO JURISDICTION; VENUE.................................. 72
SECTION 9.13. ENTIRE AGREEMENT................................................ 72
SECTION 9.14. SEPARABILITY OF PROVISIONS...................................... 73
SECTION 9.15. OBLIGATIONS SEVERAL............................................. 73
SECTION 9.16. EXECUTION IN COUNTERPARTS....................................... 73
SECTION 9.17. 1654 INTERPRETATION............................................. 73
SECTION 9.18. CONFIDENTIALITY................................................. 73
SECTION 9.19. NO NOVATION..................................................... 73
SECTION 9.20. MAXIMUM PERMISSIBLE RATE........................................ 74
ARTICLE X GUARANTY........................................................ 74
SECTION 10.01. GUARANTY OF THE GUARANTIED OBLIGATIONS.......................... 74
SECTION 10.02. LIABILITY OF GUARANTOR ABSOLUTE................................. 75
SECTION 10.03. WAIVERS BY GUARANTOR............................................ 77
SECTION 10.04. CONTINUING GUARANTY: TERMINATION OF GUARANTY.................... 78
SECTION 10.05. BANKRUPTCY; POST-PETITION INTEREST;
REINSTATEMENT OF GUARANTY....................................... 78
SECTION 10.06. SUBORDINATION OF CLAIMS......................................... 78
SECTION 10.07. ADDITIONAL WAIVERS.............................................. 79
ANNEXES
Annex I Financial Institutions and Pro Rata Shares
Annex II Lending Offices
EXHIBITS
Exhibit A Form of Notice of Conversion/Continuance
Exhibit B Assignment Agreement
Exhibit C Form of Collateral Access Agreement
Exhibit D Form of Compliance Certificate
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SCHEDULES
I Items to be Delivered After the Effective Date
II Closing Document List
III Evidence of Insurance
IV List of Subsidiaries
V Common Stock
VI Litigation
VII Employee Benefit Plans
VIII Disclosure
IX Permitted Indebtedness
X Permitted Liens
XI Pro Forma Consolidated Balance Sheet
XII Projections
XIII Environmental Disclosures
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 29, 1998
(the "Agreement"), is entered into among STORMEDIA INTERNATIONAL, LTD., a Cayman
Islands corporation ("SIL"), STRATES PTE. LTD., a Singapore corporation
("Strates" and together with SIL, the "Borrowers," each a "Borrower"), STORMEDIA
INCORPORATED, a Delaware corporation (the "Parent Guarantor", and collectively
with the Subsidiary Guarantors, as defined below, and the Borrowers, the "Loan
Parties," each a "Loan Party"), the financial institutions named on Annex I
hereof or who become parties hereto pursuant to Section 9.06(a) or otherwise, as
Banks (each a "Bank" and collectively the "Banks"), CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY, as agent for the Banks, (the "Agent"), and BANQUE
NATIONALE DE PARIS, SAN ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as co-agent for the Banks (the
"Co-Agent").
RECITALS:
A. The Borrowers, the Parent Guarantor, the Banks, the Agent, the
Co-Agent, and Canadian Imperial Bank of Commerce, Singapore Branch, as the
Designated Issuer ("Designated Issuer") have entered into that certain Credit
Agreement dated as of August 23, 1996 (as amended, supplemented or otherwise
modified through the date hereof, the "Existing Credit Agreement").
B. On December 31, 1997, StorMedia Foreign Sales Corporation, a U.S.
Virgin Islands corporation and wholly-owned Subsidiary of Parent Guarantor
("FSC"), acquired all of the outstanding capital stock of Akashic Memories
Corporation, a California corporation ("Akashic") through the merger of
StorMedia Acquisition Corporation, a California corporation and wholly-owned
Subsidiary of FSC with and into Akashic. In connection with such acquisition,
certain of the other Loan Parties purchased the patents and applications pending
in Akashic's parent corporation, Kubota Corporation.
C. Pursuant to a series of consents and limited waivers, the Agent, the
Co-Agent, the Banks and the Designated Issuer deferred certain principal
payments in respect of the Term Loan and waived certain Events of Default
arising out of the Loan Parties' failure to comply with certain provisions of
the Existing Credit Agreement.
D. The Parent Guarantor, the Borrowers and the other Loan Parties
propose to enter into a financial restructuring (the "Restructuring"), pursuant
to which, among other things, one or more of the Loan Parties will consummate
(i) the financing transactions contemplated by the Foothill Group Financing
Documents, (ii) the Equity Investment and (iii) the issuance of the Seagate
Subordinated Debt;
F. In connection with the Restructuring, the Loan Parties, the Banks,
the Agent and the Co-Agent desire to amend and restate the Existing Credit
Agreement in its entirety (the
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Existing Credit Agreement, as so amended and restated, and the Second Amended
and Restated Credit Agreement, as amended, restated, supplemented or otherwise
modified from time to time, collectively, this "Agreement"), it being understood
and agreed that (i) with respect to any date or time period occurring and ending
prior to the Effective Date, the rights and obligations of the parties thereto
shall be governed by the Existing Credit Agreement (including without limitation
the Exhibits and Schedules thereto) and other Loan Documents (as defined
therein), (ii) the aggregate principal amount of the Term Loan outstanding on
the Effective Date (after giving effect to the application of the principal
payment required pursuant to Section 4.01 of this Agreement on the Effective
Date) shall continue to constitute the Term Loan under (and shall be subject to
the terms and provisions of) this Agreement and, together with all other
Obligations, shall continue to be secured by the Collateral and (iii) with
respect to any date or time period occurring or ending on or after the Effective
Date, the rights and obligations of the parties hereto shall be governed by this
Agreement (including without limitation the Exhibits and Schedules hereto) and
the other Loan Documents (as defined herein); provided, however, that, as of the
Effective Date, the rights and obligations of the parties hereto shall be
governed by this Agreement and no Event of Default or Potential Event of Default
under the Existing Credit Agreement shall constitute an Event of Default or
Potential Event of Default under this Agreement.
NOW THEREFORE, in consideration of the promises and the agreements,
provisions and comments herein contained, the Loan Parties, Banks, Co-Agent and
Agent agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Accounts": All rights of a Person to payment for goods sold or leased
or for services rendered, no matter how evidenced, including accounts
receivable, contract rights, notes, drafts, chattel paper, acceptances and other
forms of obligations and receivables so long as the right to such payment has
been earned (entitlement to recognize revenue under GAAP) but regardless of
whether an invoice for such amount has been rendered so long as the failure to
render such invoice is in accordance with the payment schedule set forth in the
underlying contract.
"Adjusted Net Worth": As of any date of determination, the sum of (i)
the consolidated net worth (determined in accordance with GAAP) of Parent
Guarantor and its Subsidiaries, on a consolidated basis, and (ii) the
outstanding principal balance of Subordinated Indebtedness; and (iii) without
duplication, the outstanding liquidation preference (excluding rights with
respect to dividends) of any preferred stock of Parent Guarantor that is
recharacterized as a liability and not equity under GAAP.
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"Affiliate": As applied to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, that Person. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Agent": As set forth in the introductory paragraph of this Agreement.
"Agreement": As set forth in the recitals of this Agreement.
"Akashic": As set forth in the recitals of this Agreement.
"Akashic Collateral Assignment": The Collateral Assignment, Patent
Mortgage and Security Agreement dated as of the date hereof between Akashic and
Agent.
"Akashic Security Agreement": The Subsidiary Guarantor Security
Agreement dated as of the date hereof between Akashic and Agent.
"AKT": Strates Sdn. Bhd., a Malaysian corporation formerly known as
Akashic Kubota Technologies Sdn. Bhd. and wholly-owned Subsidiary of Akashic.
"AKT Collateral Assignment": The Collateral Assignment, Patent Mortgage
and Security Agreement dated as of the date hereof between AKT and Agent.
"AKT Debenture": The Debenture dated as of the date hereof between AKT
and Agent.
"AKT Security Agreement": The Subsidiary Guarantor Security Agreement
dated as of the date hereof between AKT and Agent.
"AKT Share Charge": The Memorandum of Deposit/Share Charge dated as of
the date hereof between Akashic and Agent regarding the pledge by Akashic of all
of the issued and outstanding shares of AKT.
"Assignment Agreement": An Assignment Agreement in substantially the
form of Exhibit B.
"Bank" or "Banks": As set forth in the introductory paragraph of this
Agreement.
"Base Rate": The higher of (i) the rate of interest announced from time
to time by Canadian Imperial Bank of Commerce in New York, New York as its Prime
Commercial Lending Rate and (ii) the sum of one-half of one percent (.5%) plus
the Federal Funds Rate on the day prior to the date on which the Base Rate is to
be determined. The Prime Commercial Lending Rate is a reference rate; the Agent
may make loans at, above or below the Prime
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Commercial Lending Rate. In any event, the Base Rate shall not exceed the
maximum interest rate permitted under applicable law.
"Base Rate Loans": Loans hereunder at such time as they accrue interest
at a rate based upon the Base Rate.
"Benefit Plan": A "defined benefit plan" (as defined in Section 3(35) of
ERISA) for which any of the Loan Parties or any ERISA Affiliate has been an
"employer" (as defined in Section 3(5) of ERISA) within the past six years.
"Borrowers": As set forth in the introductory paragraph of this
Agreement.
"Borrower Security Agreement": The Amended and Restated Borrower
Security Agreement dated as of the date hereof among Borrowers and the Agent.
"Borrowing Base": As defined in Section 2.1 of the Foothill Group
Agreement.
"Business Day": A day other than a Saturday, Sunday or a day on which
commercial banks in Singapore, New York, New York, Boston, Massachusetts, San
Francisco, California or London, England are authorized or required by law to
close.
"Capital Lease": As applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.
"Certificate of Designation": The Certificate of Designations of Series
A 9% Convertible Preferred Stock in connection with the Equity Investment.
"Change of Control": Shall be deemed to have occurred at such time as:
(a) a "Change of Control" (as such term is defined in the Foothill Group
Agreement) occurs; (b) a "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Act), directly or indirectly, of more
than 10% of the total voting power of all classes of Stock then outstanding of
Parent Guarantor entitled to vote in the election of directors; (c) a majority
of members of the board of directors of Parent Guarantor shall not be Continuing
Directors; or (d) unless disposed of in accordance with the Intercreditor
Agreement, Parent Guarantor shall cease to own and control, directly or
indirectly and of record, 100% of the issued and outstanding capital Stock of
each of the Borrowers and Subsidiary Guarantors. The foregoing notwithstanding,
there shall not be a Change of Control as the result of any increase in Stock
ownership by any shareholder of Parent Guarantor that is a shareholder of Parent
Guarantor on the Effective Date, or as the result of the exercise of any
warrants to acquire Stock of Parent Guarantor outstanding on the Effective Date.
"CIBCAL": As defined in Section 8.03 of this Agreement.
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"CIBC NYA": As defined in Section 8.03 of this Agreement.
"Class A Common Stock": Class A Common Stock, par value $0.013 per
share, of the Parent Guarantor.
"Closing Document List": As defined in Section 4.01(a)(vi), and attached
hereto as Schedule II.
"Co-Agent": As set forth in the introductory paragraph of this
Agreement.
"Collateral": With respect to (i) any Borrower, "Collateral" as defined
in the Borrower Security Agreement, (ii) the Parent Guarantor, "Collateral" as
defined in the Parent Guarantor Security Agreement and (iii) any Subsidiary
Guarantor, "Collateral" as defined in the Subsidiary Guarantor Security
Agreement to which such Subsidiary Guarantor is a party.
"Collateral Access Agreement": Any landlord waiver substantially in the
form of Exhibit C (with such modifications as the Agent may approve in its
discretion), and any mortgagee waiver, bailee letter or any similar
acknowledgment agreement of any warehouseman or processor in possession of any
Inventory or Equipment in each case in form and substance reasonably
satisfactory to the Agent.
"Collateral Assignments": The Strates Collateral Assignment, the SIL
Collateral Assignment, the Parent Guarantor Collateral Assignment, the FSC
Collateral Assignment, the AKT Collateral Assignment and the Akashic Collateral
Assignment.
"Collections": All cash, checks, notes, instruments and other forms of
payment (including, insurance proceeds, proceeds of cash sales, rental proceeds
and tax refunds).
"Compliance Certificate": A certificate substantially in the form of
Exhibit D and delivered by the chief accounting officer of each Borrower to the
Agent.
"Consolidated Capital Expenditures": For any period, the Dollar amount
of gross expenditures (including that portion of any Capital Lease which is
capitalized on the consolidated balance sheet of the Parent Guarantor and its
Subsidiaries) incurred by the Parent Guarantor and its Subsidiaries during such
period for Fixed Assets, and renewals, improvements and replacements thereto
required to be included in "capital expenditures," "additions to property, plant
or equipment" or comparable items in the consolidated statement of operations of
the Parent Guarantor and its Subsidiaries in conformity with GAAP, excluding,
however, expenditures of insurance proceeds received as the result of damage or
destruction of the property being replaced.
"Consolidated Net Income": For any period, on a consolidated basis in
conformity with GAAP, the net income (or loss) after income taxes of the Parent
Guarantor and its Subsidiaries for such period.
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"Continuing Directors": As of any date of determination, a member of the
board of directors of Parent Guarantor who (a) was a member of the board of
directors of Parent Guarantor on the Effective Date, or (b) was nominated to be
a member of the board of directors of Parent Guarantor by a majority of the
Continuing Directors then in office to fill a vacancy left by the death,
expiration of term, permanent disability, or resignation of a Continuing
Director.
"Contractual Obligations": With respect to any Person, any provision of
any securities issued by such Person or of any lease, contract, franchise,
agreement, guaranty, instrument or undertaking to which such Person is a party
or by which such Person is a party or by which such Person or any of its
properties is bound.
"Control Agreement": An agreement, in form and substance reasonably
satisfactory to the Agent, between the applicable Loan Party, the Agent, and the
applicable securities intermediary with respect to the applicable Securities
Account and related Investment Property.
"Convertible Securities": As defined in Section 5.01(d)(ii).
"Debenture A": The Debenture dated August 23, 1996 executed by SIL in
favor of the Agent.
"Debenture B": The Debenture dated August 23, 1996 executed by Strates
in favor of the Agent.
"Debenture C": The Debenture dated January 24, 1997 executed by SIL in
favor of the Agent.
"Debenture D: The Debenture dated January 22, 1997 executed by Strates
in favor of the Agent.
"Debenture E": The Debenture dated as of the date hereof executed by SIL
in favor of the Agent.
"Debenture F": The Debenture dated as of the date hereof executed by
Strates in favor of the Agent.
"Debenture G": The Debenture dated as of the date hereof executed by SIL
in favor of the Agent.
"Debenture H": The Debenture dated as of the date hereof executed by
Strates in favor of the Agent.
"Designated Issuer": As defined in the recitals to this Agreement.
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"Dilution": With respect to any Person and in each case based upon the
experience of the immediately prior three (3) months, the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising, returns,
promotions, credits, or other dilutive items with respect to the Accounts, by
(b) such Person's Collections (excluding extraordinary items) plus the Dollar
amount of clause (a).
"Dollars and $": Dollars in lawful currency of the United States of
America.
"Effective Date": As defined in Section 4.01 hereof.
"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 Loan Parties or any ERISA
Affiliate of any Loan Party.
"Equipment": With respect to (i) any Borrower, "Equipment" as defined in
the Borrower Security Agreement, (ii) the Parent Guarantor, "Equipment" as
defined in the Parent Guarantor Security Agreement and (iii) any Subsidiary
Guarantor, "Equipment" as defined in the Subsidiary Guarantor Security Agreement
to which such Subsidiary Guarantor is a party.
"Equity Investment": Investment in the Parent Guarantor pursuant to
which Prudential Private Equity Investors, III, L.P. will purchase $5,000,000 of
convertible preferred stock (8% coupon) and warrants for a number of shares of
Class A Common Stock equal to 2,500,000 divided by the market price of Class A
Common Stock and Capital Ventures International will purchase $3,000,000 of
convertible preferred stock (8% coupon) and warrants for a number of shares of
Class A Common Stock equal to 1,500,000 divided by the market price of Class A
Common Stock, documentation of which shall be in form and substance satisfactory
to the Banks.
"Equity Issuance": As applied to any Person, the sale or issuance by
such Person of (i) any capital stock of such Person, (ii) any options, warrants
or other similar rights exercisable in respect of such capital stock, (iii) any
other security or instrument representing an equity interest (or the right to
obtain an equity interest) in such Person or (iv) any subordinated debt if such
Indebtedness is treated by GAAP as equity.
"ERISA": The Employee Retirement Income Security Act of 1974, 29 U.S.C.
Sections 1000 et seq., amendments thereto, successor statutes, and regulations
or guidance promulgated thereunder.
"ERISA Affiliate": (a) Any corporation subject to ERISA whose employees
are treated as employed by the same employer as the employees of the Loan
Parties under Internal Revenue Code Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of the Loan Parties under Internal Revenue Code Section 414(c),
(c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which
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any Loan Party is a member under Internal Revenue Code Section 414(m), or (d)
solely for purposes of Section 302 of ERISA and Section 412 of the Internal
Revenue Code, any party subject to ERISA that is a party to an arrangement with
any Loan Party and whose employees are aggregated with the employees of any Loan
Party under Internal Revenue Code Section 414(o).
"ERISA Event": (a) A Reportable Event with respect to any Benefit Plan
or Multiemployer Plan, (b) the withdrawal of any Loan Party or any ERISA
Affiliate from a Benefit Plan during a plan year in which it was a "substantial
employer" (as defined in Section 4001(a)(2) of ERISA), (c) the providing of
notice of intent to terminate a Benefit Plan in a distress termination (as
described in Section 4041(c) of ERISA), (d) the institution by the Pension
Benefit Guaranty Corporation of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of any Loan Party or any ERISA
Affiliate from a Multiemployer Plan, or (g) providing any security to any Plan
under Section 401(a)(29) of the Internal Revenue Code by any Loan Party or any
ERISA Affiliate.
"Event of Default": As defined in Section 7.01.
"Excess Cash Flow": With respect to any Fiscal Year of the Parent
Guarantor and its Subsidiaries, the excess, if any, of:
(a) the sum, without duplication, of (i) Consolidated Net Income
for such Fiscal Year, (ii) an amount equal to the amount of all non-cash
charges deducted in arriving at such Consolidated Net Income, (iii)
decreases in Working Capital for such Fiscal Year, (iv) extraordinary
gains which are cash items not included in the calculation of
Consolidated Net Income and (v) the aggregate non-cash loss on the
disposition of property by the Parent Guarantor and its Subsidiaries
during such Fiscal Year (other than sales of inventory in the ordinary
course of business), to the extent deducted in arriving at such
Consolidated Net Income; over
(b) the sum, without duplication, of (i) an amount equal to the
amount of all non-cash credits included in arriving at such Consolidated
Net Income, (ii) the aggregate amount actually paid by the Parent
Guarantor and its Subsidiaries in cash during such Fiscal Year on
account of Consolidated Capital Expenditures (excluding (A) the
principal amount of Indebtedness incurred in connection with such
expenditures, (B) any such expenditures financed with the proceeds from
sales of fixed assets, and (C) any Consolidated Capital Expenditures in
such Fiscal Year to the extent in excess of the amount permitted to be
made in such Fiscal Year under this Agreement), (iii) the aggregate
amount of all payments of revolving loans under the Foothill Group
Agreement and accompanying permanent optional reductions of the
revolving credit commitment of the Foothill Group and all optional
prepayments of the Term Loan during such Fiscal
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Year, (iv) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation, the Term Loan)
of the Parent Guarantor and its Subsidiaries (other than in respect of
any revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder), (v) increases in Working
Capital for such Fiscal Year, (vi) extraordinary losses which are cash
items not included in the calculation of Consolidated Net Income and
(vii) an amount equal to the aggregate non-cash gain on the disposition
of property by the Parent Guarantor and its Subsidiaries during such
Fiscal Year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net
Income.
"Existing Credit Agreement": As set forth in the recitals to this
Agreement.
"Federal Funds Rate": On any day, a fluctuating interest 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 which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.
"Fee Letter": That certain letter agreement dated as of May 29, 1998
pursuant to which the Loan Parties agree to pay to the Agent and the Banks
non-refundable fees in an amount separately agreed to between such parties.
"Financial Institution": Any (i) bank, savings bank, savings and loan
association or insurance company, (ii) pension plan or portfolio or investment
fund managed or administered by any bank, savings bank, savings and loan
association or insurance company, (iii) investment company owned by any bank,
savings bank, savings and loan association or insurance company, or (iv)
investment banking company or other investment fund.
"Fiscal Year": The fiscal year of the Loan Parties for accounting and
tax purposes, which shall be the twelve-month period ending on December 31 of
each calendar year.
"Fixed Assets": All real property, plant and Equipment of the Loan
Parties.
"Foothill Bridge Term Loan": As defined in Section 2.2 of the Foothill
Group Agreement.
"Foothill Group": Foothill Capital Corporation in its individual
capacity and as the Foothill Group Agent, ▇▇▇▇▇▇▇▇▇, L.L.C., and any other
person holding any Foothill Group Claim, and each of them, collectively and
individually.
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"Foothill Group Agent": Foothill Capital Corporation, a California
corporation, acting as agent for the members of the Foothill Group pursuant to
the Foothill Group Financing Documents, and any successor agent thereunder.
"Foothill Group Agreement": That certain Loan and Security Agreement,
dated as of May 29, 1998, between Parent Guarantor and Akashic, on the one hand
and, on the other hand, the Foothill Group, as the same may from time to time be
amended, modified, renewed, extended or restated.
"Foothill Group Claims": All present and future claims of the Foothill
Group against the Loan Parties for the payment of money arising under or related
to the Foothill Group Financing Documents.
"Foothill Group Financing Documents": The Foothill Group Agreement and
all present and future notes, guaranties, reimbursement agreements, security
documents or other documents or agreements in any way related to, evidencing, or
documenting the Foothill Group Claims, as the same may from time to time be
amended, restated, supplemented, modified, renewed, extended, replaced, or
refinanced.
"FSC": As set forth in the recitals to this Agreement.
"FSC Collateral Assignment": The Collateral Assignment, Patent Mortgage
and Security Agreement to be executed by FSC and Agent after the date hereof if
required pursuant to the terms of the FSC Security Agreement.
"FSC Security Agreement": The Amended and Restated Subsidiary Guarantor
Security Agreement dated as of the date hereof between FSC and Agent.
"Funded Debt": With respect to any Person, all Indebtedness for borrowed
money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Capital Leases, 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 Loan Parties, the Obligations
and all other obligations under the Loan Documents.
"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.
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"General Intangibles": All of each Loan Party's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.
"Governing Documents": The certificate or articles of incorporation,
by-laws, or other organizational or governing documents of any Person.
"Governmental Authority": Any nation or government, any state or other
political subdivision thereof and any entity exercising executive legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantied Obligations": As defined in Section 10.01 of this Agreement.
"Guarantors": The Parent Guarantor and the Subsidiary Guarantors.
"Hazardous Materials": (a) Substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Highest Lawful Rate" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Term Loan or on other Obligations, as the
case may be, under the laws of any jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Agreement.
"Indebtedness": As applied to any Person, (a) all obligations of such
Person for borrowed money, (b) all obligations of any Person evidenced by bonds,
debentures, notes, or other similar instruments (except for and excluding notes
given to trade creditors with respect to trade payables of any Loan Party as to
which such Loan Party has been granted extended payment terms) and all
reimbursement or other obligations of any Person in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations of any
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Person under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any property or asset of any Person, irrespective of
whether such obligation or liability is assumed, (e) any obligation of any
Person guaranteeing or intended to guarantee (whether guaranteed, endorsed,
co-made, discounted, or sold with recourse to such Person) any indebtedness,
lease, dividend, letter of credit, or other obligation of any other Person, (f)
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money; and (g) any obligation owed for
all or part of the deferred purchase price of property or services which
purchase price is (i) due more than twelve months from the date of incurrence of
the obligation in respect thereof, or (ii) evidenced by a note or similar
written instrument.
"Indemnified Liabilities": As defined in Section 3.05(a) of this
Agreement.
"Indemnified Person": As defined in Section 3.05(a) of this Agreement.
"Insolvency Event": As defined in Section 7.01(f) of this Agreement.
"Intellectual Property": As defined in Section 5.01(p) of this
Agreement.
"Interbank Agreement": That certain Amended and Restated Interbank
Agreement dated as the date hereof by and among the Agent, the Co-Agent, the
Banks and CIBC [Asia] Ltd., and acknowledged and agreed to by each of the Loan
Parties.
"Intercreditor Agreement": That certain Intercreditor Agreement, dated
as of May 29, 1998, between the Foothill Group Agent for and on behalf of the
Foothill Group and the Agent for and on behalf of the Banks, in form and
substance satisfactory to the Agent and the Banks.
"Interest Payment Date": As to any Base Rate Loan until paid in full,
the Maturity Date and, the last day of each calendar month, commencing on the
first of such days to occur after such Loan is made, converted or continued as a
Base Rate Loan. As to any LIBO Rate Loan, until payment in full, the last day of
such Interest Period and the Maturity Date.
"Interest Period": With respect to any LIBO Rate Loan:
(i) initially, the period commencing on the
borrowing or conversion date with respect to such LIBO Rate Loan and ending one
month thereafter as selected by Borrowers in their notice of borrowing or
conversion as provided in Section 2.05, respectively; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such LIBO Rate Loan and
ending one month thereafter as selected by Borrowers in their notice of
continuation as provided in Section 2.05;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
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(a) if any Interest Period for a LIBO Rate Loan would otherwise
end on a day that is not a LIBO Business Day, that Interest Period shall be
extended to the next succeeding LIBO Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding LIBO
Business Day;
(b) Borrowers may not select an Interest Period with respect to
any portion of principal of a LIBO Rate Loan which extends beyond the Maturity
Date; and
(c) there shall be no more than five (5) Interest Periods with
respect to LIBO Rate Loans outstanding at any time.
"Internal Revenue Code" or "IRC": The Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Inventory": With respect to (i) any Borrower, "Inventory", as defined
in the Borrower Security Agreement, (ii) the Parent Guarantor, "Inventory" as
defined in the Parent Guarantor Security Agreement and (iii) any Subsidiary
Guarantor, "Inventory", as defined in the Subsidiary Guarantor Security
Agreement to which such Subsidiary Guarantor is a party.
"Investment": As defined in Section 6.02(p).
"Investment Property": "Investment property" as that term is defined in
Section 9115 of the California Commercial Code.
"Lending Office": For each Bank, the office specified opposite such
Bank's name on Annex II hereto with respect to Base Rate Loans, and LIBO Rate
Loans, respectively.
"Letter of Credit Agreements": Three separate Letter of Credit
Agreements in substantially the form attached to the Interbank Agreement, among
the Agent, the Guarantor and each of Fleet National Bank, Sanwa Bank California,
and Union Bank of California, N.A., respectively.
"LIBO Business Day": A day which is a Business Day and a day on which
dealings in Dollar deposits may be carried out in the London interbank market.
"LIBO Rate": For each Interest Period for which the LIBO Rate is
selected, (i) the rate of interest determined by the Agent that is equal to the
London Interbank Offered Rate for U.S. Dollar deposits for the relevant Interest
Period and in the approximate amount of the relevant LIBO Rate Loan that appears
on the display appearing on page 3750 (under USD) of the Telerate Services
Incorporated Screen (or such other display as may replace such page on the
Telerate Screen) at 11:00 a.m. (London time) on the day that is two (2) LIBO
Business Days prior to the first day of such Interest Period, divided by (ii) a
number equal to 1.00 minus the aggregate (but without duplication) of the rates,
if any (expressed as a decimal) of reserve requirements in effect
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on the day that is two (2) LIBO Business Days prior to the beginning of such
Interest Period (including basic, supplemental, marginal and emergency reserves
under any regulations of the Board of Governors of the Federal Reserve System or
other governmental authority having jurisdiction with respect thereto, as in
effect at the time the Agent quotes the rate to Borrowers) for Eurocurrency
funding of domestic assets (currently referred to as "Eurocurrency liabilities"
in Regulation D of such Board) which are required to be maintained by a member
bank of such System (such rate to be adjusted to the next higher 1/16 of 1%).
"LIBO Rate Loans": Loans hereunder at such time as they accrue interest
at a rate based upon the LIBO Rate.
"Lien": Any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease having the same economic effect as any of the
foregoing, and any agreement to give any security interest).
"Loan": The Term Loan.
"Loan Documents": This Agreement, the Fee Letter, the Security
Agreements, the Collateral Assignments, Debenture A, Debenture B, Debenture C,
Debenture D, Debenture E, Debenture F, Debenture G and Debenture H, the Strates
Legal Assignments, the AKT Debenture, the SIL Share Mortgage, the AKT Share
Charge, the Subsidiary Guaranty, the Interbank Agreement, the Side Letter, the
Letter of Credit Agreements and the letters of credit issued pursuant thereto,
the Intercreditor Agreement, the Seagate Subordination Agreement, the Warrants,
the Warrant Purchase Agreement, the Warrant Agreement Side Letter, the Release
Agreement and each other certificate or document delivered by any of the Loan
Parties to the Agent or any Bank prior to the date hereof or pursuant to Article
IV, any amendment to this Agreement or any other Loan Document, any waiver to
this Agreement or any other Loan Document, and any other agreement entered into
now, or in the future, certificate or document delivered by any Loan Party to
the Agent or any Bank which by its terms states that it is a Loan Document under
this Agreement.
"Loan Party" or "Loan Parties": As set forth in the introductory
paragraph of this Agreement.
"Majority Banks": As of any date of determination, Banks which are
collectively owed at least 51.0% of the then aggregate unpaid principal amount
of the Term Loan. For purposes of this definition, CIBC [Asia] Ltd. shall be
deemed to have fully drawn each letter of credit issued by the Banks party to
the Letter of Credit Agreements.
"Material Adverse Change": (a) A material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of any Loan Party, (b) the material
impairment of any Loan Party's ability to perform its obligations under the Loan
Documents to which it is a party or of the Agent or Banks to enforce the
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Obligations or realize upon the Collateral, (c) a material adverse effect on the
value of the Collateral or the amount that the Banks would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of the Collateral, or (d) a material impairment of the priority
of the Liens with respect to the Collateral.
"Material Contract": Any contractual obligation to which a Loan Party is
a party (other than the Loan Documents) for which breach, nonperformance,
cancellation or failure to renew is reasonably likely to create a Material
Adverse Change.
"Maturity Date": May 29, 2000.
"Multiemployer Plan": A "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is maintained for employees of Loan Parties or any
ERISA Affiliate of Loan Parties.
"Negotiable Collateral": All of a Person's present and future letters of
credit, notes, drafts, instruments, Investment Property, documents, personal
property leases (wherein such Person is the lessor), chattel paper, and Books
relating to any of the foregoing.
"Net Sale Consideration": As defined in the Intercreditor Agreement.
"Obligations": The principal balance of the Term Loan, together with all
interest (including any interest that, but for the provisions of the United
States Bankruptcy Code, would have accrued), liabilities, obligations, fees,
charges, costs or expenses (including any fees or expenses that, but for the
provisions of the United States Bankruptcy Code, would have accrued),
guaranties, covenants, and duties owing by Loan Parties to the Banks of any kind
and description arising under, in connection with, related to, or incidental to
or evidenced by the Loan Documents and irrespective of whether for the payment
of money, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and further including all interest not
paid when due and all of the expenses of the Banks pursuant to Section 9.05
hereof that Loan Parties are required to pay or reimburse the Banks by the Loan
Documents, by law or otherwise, as any of the same may from time to time be
amended, modified, extended, renewed, restated, or increased by agreement.
"Option Rights": As defined in Section 5.01(d)(ii).
"Other Taxes": As defined in Section 3.11(b).
"Parent Guarantor": As set forth in the introductory paragraph of this
Agreement.
"Parent Guarantor Collateral Assignment": The Amended and Restated
Collateral Assignment, Patent Mortgage and Security Agreement dated as of the
date hereof between Parent Guarantor and Agent.
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"Parent Guarantor Security Agreement": The Amended and Restated Parent
Guarantor Security Agreement dated as of the date hereof between the Parent
Guarantor and the Agent.
"Pension Plan": Any employee plan which is subject to Section 412 of the
Internal Revenue Code and which is maintained for employees of Guarantor or any
ERISA Affiliate of Guarantor other than a Multiemployer Plan.
"Permitted Investments": (a) Direct obligations of the United States of
America, or any agency thereof if backed by the full faith and credit of the
United States of America, or obligations fully guaranteed by the United States
of America, or any agency thereof if backed by the full faith and credit of the
United States of America, in each case denominated in Dollars and maturing
within one (1) year from the date of creation thereof, (b) commercial paper,
denominated in Dollars, issued by a corporation (other than Loan Parties or any
Affiliate of any Loan Party) organized under the laws of any State of the United
States of America or the District of Columbia maturing within one (1) year from
the date of creation thereof rated in the highest grade by a nationally
recognized credit rating agency, (c) time deposits denominated in Dollars and
maturing within one (1) year from the date of creation thereof with, including
certificates of deposit issued by, any office located in the United States of
America of any bank or trust company which is organized under the laws of the
United States of America or any state thereof and has capital, surplus, and
undivided profits aggregating at least $500,000,000, or (d) shares of any money
market mutual fund holding only obligations denominated in Dollars rated at
least AAA or the equivalent thereof by Standard & Poor's Corporation or at least
AAA or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc.; provided that,
to the extent any such investment is made with Collateral, such investment shall
not be a Permitted Investment unless the security interest of the Agent therein
is perfected.
"Permitted Liens": (a) Liens held by the Agent for the benefit of the
Banks, (b) Liens for unpaid taxes that either (i) are not yet due and payable or
(ii) are the subject of Permitted Protests, (c) Liens set forth on Schedule X,
(d) (i) the interests of lessors under operating leases, and (ii) purchase money
Liens and the interests of lessors under Capital Leases to the extent that the
acquisition or lease of the underlying asset is permitted under Section 6.02(w)
and so long as the Lien only attaches to the asset purchased or acquired and
proceeds thereof and only secures the purchase price of the asset, (e) Liens
arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business of the Loan Parties and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet due and payable, or (ii)
are the subject of Permitted Protests, (f) Liens arising from deposits made in
connection with the procurement of utilities, the securing in ordinary course of
business of guaranties of repatriation of workers expatriated from the Peoples
Republic of China to Singapore or Malaysia, or the obtaining of Worker's
Compensation or other unemployment insurance, (g) Liens or deposits to secure
performance of bids, tenders, or leases (to the extent permitted under this
Agreement), incurred in the ordinary course of business of the Loan Parties and
not in connection with the borrowing of money, (h) Liens arising by reason of
security for surety or appeal bonds in the ordinary course of business of the
Loan Parties, (i) Liens of or resulting from any judgment or award that
reasonably could
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not be expected to result in a Material Adverse Change and as to which the time
for appeal or petition for rehearing of which has not yet expired, or in respect
of which the applicable Loan Party is in good faith prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending such
appeal or proceeding for review has been secured, (j) easements, rights of way,
zoning and similar covenants and restrictions, and similar encumbrances that
customarily exist on real property of Persons engaged in similar activities and
similarly situated and that in any event do not materially interfere with or
impair the use or operation of the Collateral by the applicable Loan Party or
the value of any of the Agent's Liens thereon or therein, for the benefit of the
Banks, or materially interfere with the ordinary conduct of the business of the
Loan Parties, (k) subject to the terms and conditions of the Intercreditor
Agreement, Liens on the properties and assets of the Loan Parties in favor of
the Foothill Group Agent for the benefit of the Foothill Group, and (l) subject
to the terms and conditions of the Subordination Agreement with respect to the
Seagate Subordinated Debt, the Lien of Seagate on the Accounts of Parent
Guarantor owed to Parent Guarantor by Seagate.
"Permitted Protest": The right of the Loan Parties to protest any Lien
other than any such Lien that secures the Obligations, tax (other than payroll
taxes or taxes that are the subject of a foreign or United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the books of the applicable Loan Party in an amount
that is reasonably satisfactory to the Agent, (b) any such protest is instituted
and diligently prosecuted by the applicable Loan Party in good faith, and (c)
the Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent's
Liens in and to the Collateral.
"Person": An individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Plan": means any employee benefit plan, program, or arrangement,
maintained or contributed to by any Loan Party or with respect to which it may
incur liability.
"Potential Event of Default": A condition or event which, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"Pro Forma": The unaudited pro forma consolidated balance sheet of the
Loan Parties, dated as of May 29, 1998 after giving effect to the transactions
contemplated by this Agreement and the Restructuring, attached hereto as
Schedule XI.
"Projections": The forecasted; (i) consolidated balance sheet of the
Loan Parties; (ii) consolidated income statements of the Loan Parties; (iii)
consolidated cash flow statements of the Loan Parties; (iv) consolidated
capitalization statements of the Loan Parties and (v) compliance with the
financial covenants set forth herein, all prepared by management of the Loan
Parties on a basis consistent with the Loan Parties' historical financial
statements for the period
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commencing on the Effective Date and ending in 2000, together with appropriate
supporting details and a statement of underlying assumptions, attached hereto as
Schedule XII.
"Real Property" With respect to any Person, all of such Person's present
and future right, title and interest (including, without limitation any
leasehold estate) in any plots, pieces or parcels of land, and any improvements,
buildings, structure and fixtures now or hereafter located or erected thereon or
attached thereto of every nature whatsoever.
"Regulations 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.
"Release Agreement": The Release and Assurance of Future Nonimpairment
dated as of the date hereof among the Loan Parties on the one hand, and the
Agent, the Co-Agent, the Designated Issuer and the Banks on the other hand.
"Reportable Event": Any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of thirty (30) days notice to the Pension Benefit Guaranty
Corporation is waived under applicable regulations.
"Requirement": As defined in Section 3.04 of this Agreement.
"Responsible Officer": Any of the President, Chief Financial Officer,
Controller, Assistant Controller or Treasurer of any Loan Party.
"Restructuring": As defined in the recitals to this Agreement.
"Retiree Health Plan": An "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Sale": As defined in the Intercreditor Agreement.
"Seagate": Seagate Technology, Inc., a Delaware corporation.
"Seagate Settlement Documents": The written documentation entered into
or to be entered into between the Parent Guarantor and Seagate relating to the
termination of the existing supply agreement between the parties, the exchange
of releases, and the incurrence of the Seagate Subordinated Debt, the form of
substance of which shall be acceptable to the Agent and the Banks.
"Seagate Subordinated Debt": Investment in the Parent Guarantor pursuant
to which Seagate will purchase from the Parent Guarantor (i) subordinated debt
in the principal amount of not less than $3,000,000 secured by a third priority
security interest in Accounts owing from
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Seagate to the Parent Guarantor and (ii) unsecured subordinated debt convertible
into Class A Common Stock in the principal amount of $5,000,000 in the form of
notes, the form and substance of which shall be acceptable to the Agent and the
Banks.
"Seagate Subordination Agreement": The Subordination Agreement dated as
of May 29, 1998 among the Agent, the Foothill Group Agent and Seagate, in form
and substance satisfactory to the Agent and the Banks.
"S.E.C.": The United States Securities and Exchange Commission and any
successor institution or body which performs the functions or substantially all
of the functions thereof.
"Securities Account": A "securities account" as that term is defined in
Section 8501 of the California Uniform Commercial Code.
"Securities Act": Securities and Exchange Act of 1934.
"Security Agreements": The Borrower Security Agreement, the Parent
Guarantor Security Agreement and the Subsidiary Guarantor Security Agreements.
"Side Letter": The amended and restated side letter agreement dated as
of the date hereof among the Agent, the Co-Agent, the Banks and the Loan
Parties.
"SIL": As set forth in the introductory paragraph of this Agreement.
"SIL Collateral Assignment": The Amended and Restated Collateral
Assignment, Patent Mortgage and Security Agreement dated as of the date hereof
between SIL and Agent.
"SIL Share Mortgage": The Amended and Restated Mortgage dated the date
hereof between the Parent Guarantor and Agent regarding the pledge of all of the
issued and outstanding capital stock of SIL.
"Solvent": With respect to any Person on a particular date, that on such
date (a) at fair valuations, all of the properties and assets of such Person are
greater than the sum of the debts, including contingent liabilities, of such
Person, (b) the present fair salable value of the properties and assets of such
Person (sold location by location to Persons intending to use those facilities
for the purpose for which they were designed and constructed) is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts beyond such Person's ability
to pay as such debts mature, and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which such Person is engaged. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will
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be computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that reasonably can be expected to
become an actual or matured liability.
"Stock": All shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a corporation or
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 S.E.C. under the
Securities Act, as amended).
"Strates": As set forth in the introductory paragraph of this Agreement.
"Strates Collateral Assignment": The Amended and Restated Collateral
Assignment, Patent Mortgage and Security Agreement dated as of the date hereof
between Strates and Agent.
"Strates Legal Assignments": The Legal Assignments between Strates and
Agent regarding the pledging of certain leasehold real property interests of
Strates.
"Subordinated Indebtedness: Indebtedness of a Loan Party that is the
subject of a Subordination Agreement.
"Subordination Agreement": A written subordination of indebtedness
agreement in form and substance satisfactory to the Agent whereby indebtedness
to a third Person is subordinated in right of payment to the Obligations.
"Subsidiary": With respect to any Person, any corporation, partnership,
limited liability company, joint venture, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate, is at the time directly or indirectly owned or controlled
by such Person, but such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries. Unless the context requires
otherwise, any reference to a Subsidiary herein or in any of the Loan Documents
shall be deemed to be a reference to a Subsidiary of a Loan Party.
"Subsidiary Guarantors": Akashic, AKT and FSC, in their capacity as
guarantors pursuant to the Subsidiary Guaranty.
"Subsidiary Guarantor Security Agreements": The FSC Security Agreement,
the AKT Security Agreement and the FSC Security Agreement.
"Subsidiary Guaranty": The Subsidiary Guaranty dated as of the date
hereof executed by Akashic, AKT and FSC in favor of the Agent, the Co-Agent and
the Banks.
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"Taxes": As defined in Section 3.11(a).
"Term Loan": The Loans made in Dollars pursuant to the Existing Credit
Agreement, the outstanding principal amount of which, after giving effect to the
$10,000,000 principal payment to be made on the Effective Date, is
$38,333,333.00.
"Termination Event": (i) a "Reportable Event" described in Section 4043
of ERISA and the regulations issued thereunder (other than a "Reportable Event"
not subject to the provision for 30-day notice to the Pension Benefit Guaranty
Corporation under such regulations), or (ii) the withdrawal of any Loan Party 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(l) (2) or 4068(f) of
ERISA, or (iii) 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 (iv) the institution of proceedings to terminate a Pension Plan by the
Pension Benefit Guaranty Corporation, or (v) any other event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan, or (vi) the imposition of a Lien
pursuant to Section 412(n) of the Internal Revenue Code.
"Warrant Agreement Side Letter": The Agreement re Exercise of Warrants
by and among the Banks, dated as of the date hereof.
"Warrant Purchase Agreement": The Warrant Purchase Agreement between the
Parent Guarantor on the one hand, and each Bank on the other hand, dated as of
the date hereof.
"Warrants": The Stock Purchase Warrants with respect to the Class A
Common Stock of the Parent Guarantor executed by the Parent Guarantor on the one
hand, and each Bank on the other hand, dated the date hereof.
"Wholly-Owned Subsidiary": A Subsidiary, all of the stock of every class
which, except (a) directors' qualifying shares and (b) any shares issued to
comply with local ownership legal requirements, is owned, directly or
indirectly, by a Loan Party.
"Working Capital": With respect to the Parent Guarantor and its
Subsidiaries on a consolidated basis, (i) all current assets of the Parent
Guarantor and its Subsidiaries as of any date of determination calculated in
accordance with GAAP, but excluding cash, cash equivalents and debts due from
Affiliates, minus (ii) all liabilities which should, in accordance with GAAP, be
classified as current liabilities, and in any event shall include all
Indebtedness 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, and the current portion of long-term debt required to
be paid within one year.
"Year 2000 Compliant": With regard to any Person, that all software in
goods produced or sold by, or utilized by and material to the business
operations or financial condition of, such
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Person are able to interpret and manipulate data on and involving all calendared
dates correctly and without causing any abnormal ending scenario, including in
relation to dates in and after the year 2000.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any Loan Document or any certificate or other document
made or delivered pursuant hereto, unless otherwise defined therein.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto, accounting
terms not defined in Section 1.01, and accounting terms partly defined in
Section 1.01 to the extent not defined, shall have the respective meanings given
to them under GAAP, unless otherwise defined herein or therein, as the case may
be. In the event that GAAP changes during the term of this Agreement such that
the financial covenants contained in any affected subsection of Section 6.02
would then be calculated in a different manner or with different components, (i)
Loan Parties and the Banks agree to negotiate to amend this Agreement in such
respects as are necessary to conform those covenants as criteria for evaluating
Loan Parties' financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (ii) Loan Parties shall be deemed to
be in compliance with the financial covenants contained in such Sections,
pending reaching agreement on such amendment, following any such change in GAAP
if and to the extent that Loan Parties would have been in compliance therewith
under GAAP as in effect immediately prior to such change.
(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. All article,
section, subsection, schedule and exhibit references are to this Agreement
unless otherwise specified.
(d) So long as Loan Parties do not have any Subsidiaries,
references to a Subsidiary or Subsidiaries in this Agreement shall be deemed to
be deleted.
(e) The terms defined in this Section 1.01 include the plural as
well as the singular. Pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms. The terms "includes" and "including" shall
not be construed to imply any limitation.
(f) Unless the context otherwise requires, each reference herein
to any agreement, document or instrument (including the Loan Documents) shall be
deemed to be a reference to such agreement, document or instrument as amended,
restated, supplemented or otherwise modified from time to time.
ARTICLE II
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THE TERM LOAN
SECTION 2.01. THE TERM LOAN.
(a) The Term Loan. The Term Loan was advanced to the Borrowers
pursuant to the Existing Credit Agreement and the outstanding principal balance
thereof, as of the Effective Date, shall continue as the Term Loan under this
Agreement. Each of the Loan Parties agree, ratify and confirm to the Agent, the
Co-Agent and the Banks that the Term Loan, together with all accrued and unpaid
interest thereon, is due and owing to the Banks and is not subject to any
offset, counterclaim or defenses.
(b) Notations Regarding Term Loan. Each Bank is hereby authorized
to record in its books and records the amount of the Term Loan and, in the case
of LIBO Rate Loans, the Interest Period and interest rate with respect thereto
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded; provided that failure by any Bank to effect such
recordation shall not affect Borrowers' obligations hereunder.
SECTION 2.02. FEES. From time to time, Borrowers shall pay to the Agent
and the Banks non-refundable fees in the amount agreed to separately between
such parties pursuant to the Fee Letter between Agent and the Loan Parties.
SECTION 2.03. REPAYMENT AND PREPAYMENT.
(a) Scheduled Principal Installments. Subject to subsections (b)
and (c) of this Section 2.03, the Borrowers shall repay the Term Loan in
installments in the following amounts on the following dates:
Installment Due Date Installment Amount
-------------------- ------------------
October 30, 1998 $5,000,000
May 31, 1999 $5,000,000
August 31, 1999 $5,000,000
November 30, 1999 $5,000,000
February 28, 1999 $5,000,000
The outstanding principal balance of the Term Loan, together with all accrued
and unpaid interest, fees and other Obligations, shall be paid in full on or
before the Maturity Date. To the extent that any proceeds of Sales are paid to
the Agent on behalf of the Banks in accordance with Section 2.03(c)(1) of this
Agreement and the Intercreditor Agreement prior to the scheduled October 30,
1998 installment, then such payment shall be applied to reduce,
dollar-for-dollar, the amount of such installment amount due and owing on
October 30, 1998.
(b) Optional Prepayment. Borrowers may at their option prepay the
Term Loan, in whole or in part, at any time and from time to time, provided that
the Agent shall
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have received from Borrowers notice of any such payment at least one Business
Day prior to the date of the proposed payment if such date is not the last day
of the then current Interest Period for the Term Loan being paid, in each case
specifying the date and the amount of payment. Partial prepayments hereunder
shall be in an aggregate principal amount of the lesser of (i) One Million
Dollars ($1,000,000) or any integral multiple thereof and (ii) the outstanding
balance of the Loan being paid. Optional prepayments on the Term Loan shall be
applied to reduce scheduled principal installment payments in the inverse order
of maturity.
(c) Mandatory Prepayment. Borrowers shall make the following
mandatory prepayments on the Term Loan:
(i) Immediately upon receipt thereof, the Borrowers shall make a
mandatory prepayment on the Term Loan in an amount equal to that portion
of the Net Sale Consideration with respect to any Sale or the net
proceeds with respect to any other disposition of assets, in each case,
which is required to be paid to the Agent or the Banks pursuant to the
Intercreditor Agreement. To the extent that a Purchaser Note (as defined
in Section 17(a) of the Intercreditor Agreement) is pledged to or
received by the Agent pursuant to the Intercreditor Agreement, such
Purchaser Note shall not constitute a payment in respect of the Term
Loan or any other Obligation unless, and to the extent, cash payments
are actually received by Agent thereunder.
(ii) To the extent permitted to be made pursuant to Section
7.8(a) of the Foothill Group Agreement (as in effect on the Effective
Date) on the earlier of (A) ninety (90) days after the end of each
Fiscal Year of the Parent Guarantor and (B) the date the annual audited
financial statements of the Parent Guarantor are delivered to the Banks
pursuant to Section 6.01(b), the Borrowers shall make a mandatory
prepayment on the Term Loan in an amount equal to 50% of any Excess Cash
Flow for such Fiscal Year.
(iii) To the extent permitted to be made pursuant to Section
7.8(a) of the Foothill Group Agreement (as in effect on the Effective
Date) immediately upon receipt thereof, the Borrowers shall make a
mandatory prepayment on the Term Loan in an amount equal to fifty
percent (50%) of the net proceeds of an Equity Issuance not including
proceeds of exercise of Warrants or Option Rights issued on or prior to
the Effective Date which closes after the Effective Date, provided, that
the prepayment under this Section 2.03(c)(iii) shall be required only in
respect of and to the extent that the aggregate net proceeds from all
Equity Issuances of the Loan Parties exceeds $10,000,000.
All mandatory prepayments of the Term Loan shall be applied to reduce scheduled
principal installment payments in the inverse order of maturity.
SECTION 2.04. INTEREST RATE AND PAYMENT DATES.
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(a) Payment of Interest. Interest with respect to each Loan shall
be payable in arrears on each Interest Payment Date for such Loan.
(b) Base Rate Loans. Loans that are Base Rate Loans at any time
shall bear interest on the unpaid principal amount thereof at a rate per annum
equal to the Base Rate in effect at such time plus two percent (2.00%).
(c) LIBO Rate Loans. Loans that are LIBO 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 lesser of (i) the LIBO Rate
determined for such Interest Period in accordance with the terms hereof plus
three percent (3.00%) and (ii) the maximum interest rate per annum permitted
under applicable law.
(d) Interest After an Event of Default. Effective upon notice
from the Agent or the Majority Banks at any time after an Event of Default has
occurred and until the earlier of (i) the date all Obligations have been paid in
full in cash and (ii) the date as to which such Event of Default is waived or
cured, the Term Loan shall bear interest calculated at a rate per annum equal to
the Base Rate plus four percent (4.00%), payable upon demand or, in the case of
LIBO Rate Loans, all such outstanding LIBO Rate Loans shall bear interest
calculated at a rate per annum equal to the LIBO Rate for the Interest Period,
in each case, in effect for such LIBO Rate Loan plus five percent (5.00%),
payable at the end of such Interest Period. Upon the expiration of the Interest
Period in effect, such LIBO Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate per annum equal
to the rate set forth in subparagraph (i) above.
SECTION 2.05. CONTINUATION AND CONVERSION OPTIONS. Borrowers may elect
from time to time to convert all or a portion of the outstanding Term Loan
bearing interest at a rate determined by reference to one basis to a Term Loan
bearing interest at a rate determined by reference to an alternative basis by
giving the Agent irrevocable notice in the form of Exhibit A not later than
11:00 a.m., New York time, (i) at least one (1) Business Day prior to an
election to convert LIBO Rate Loans to Base Rate Loans and (ii) at least five
(5) LIBO Business Days' prior to an election to convert Base Rate Loans to LIBO
Rate Loans; provided that any conversion of LIBO Rate Loans shall only be made
on the last day of an Interest Period with respect thereto; provided, further
that no Base Rate Loan may be converted to a LIBO Rate Loan so long as an Event
of Default or Potential Event of Default has occurred and is continuing.
Borrowers may elect from time to time to continue their outstanding LIBO Rate
Loans upon the expiration of the Interest Period(s) applicable thereto by giving
to the Agent irrevocable notice in the form of Exhibit A not later than 11:00
a.m., New York time, at least five (5) LIBO Business Days' prior to continuation
of a LIBO Rate Loan, and the succeeding Interest Period(s) of such continued
LIBO Rate Loan will commence on the last day of the Interest Period of the LIBO
Rate Loan to be continued, provided that no LIBO Rate Loan may be continued as a
LIBO Rate Loan so long as an Event of Default or Potential Event of Default has
occurred and is continuing. Each notice electing to convert or continue all or a
portion of the Term Loan shall specify: (i) the proposed conversion/continuation
date; (ii) the amount of the Term Loan to be converted/continued;
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(iii) the nature of the proposed continuation/conversion; and (iv) in the case
of a conversion to, or continuation of a LIBO Rate Loan, the requested Interest
Period, and shall certify that no Event of Default or Potential Event of Default
has occurred and is continuing. Promptly following receipt of such notice, the
Agent shall notify each Bank of the contents of such notice, and of the
effective interest rate. On the date on which such conversion or continuation is
being made the applicable Lending Office(s) of each Bank shall take such action
as is necessary to effect such conversion or continuation. In the event that no
notice of continuation or conversion is received by the Agent with respect to
outstanding LIBO Rate Loans, upon expiration of the Interest Period(s)
applicable thereto, such LIBO Rate Loans shall convert to Base Rate Loans.
Subject to the limitations set forth in this Section and in the definition of
Interest Period, all or any part of the outstanding Term Loan may be converted
or continued as provided herein, provided that partial conversions or
continuations of any Base Rate Loan to a LIBO Rate Loan shall be in an aggregate
minimum amount of Five Million Dollars ($5,000,000) or an integral multiple of
One Million Dollars ($1,000,000) in excess thereof and any conversion of a LIBO
Rate Loan to a Base Rate Loan shall be in an aggregate minimum amount of One
Million Dollars ($1,000,000) or an integral multiple of Five Hundred Thousand
Dollars ($500,000) in excess thereof. The notice of conversion/continuation may
be given orally (including telephonically), and shall be promptly confirmed by a
notice of conversion/continuation in writing, or in writing (including facsimile
transmission) and any conflict regarding a notice or between an oral notice and
a written notice applicable to a particular Base Rate Loan or LIBO Rate Loan
shall be conclusively determined in the absence of manifest error by the Agent's
books and records. The Agent's failure to receive any written notice of
conversion and continuation of a particular Base Rate Loan or LIBO Rate Loan
shall not relieve Borrowers of their obligations to repay the Term Loan and to
pay interest thereon. The Agent shall not incur any liability to Borrowers in
acting upon any notice of conversion and continuation of a particular Base Rate
Loan or LIBO Rate Loan which the Agent believes in good faith to have been given
by a Person duly authorized to borrow on behalf of Borrowers.
SECTION 2.06. COMPUTATION OF INTEREST AND FEES.
(a) Calculations. Interest in respect of the Base Rate Loans
shall be calculated on the basis of a 365/366 day year for the actual days
elapsed. Any change in the interest rate on a Base Rate Loan resulting from a
change in the Base Rate shall become effective as of the opening of business on
the day on which such change in the Base Rate shall become effective. Interest
in respect of the LIBO Rate Loans and all fees hereunder shall be calculated on
the basis of a 360 day year for the actual days elapsed.
(b) Determination by Agent. Each determination of an interest
rate or fee by the Agent pursuant to any provision of this Agreement shall be
conclusive and binding on Borrowers in the absence of manifest error.
ARTICLE III
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GENERAL PROVISIONS CONCERNING THE TERM LOAN
SECTION 3.01. USE OF PROCEEDS. The proceeds of the Term Loan shall be
used by Borrowers for general corporate purposes, including capital expenditures
and working capital. On, or as soon as practicable after the Effective Date the
Agent and Loan Parties shall jointly provide Bank of America with a written
notification that any and all restrictions on Account #12331-62058 are removed
and the Loan Parties shall be able to use any and all such funds deposited in
such account for any lawful corporate purpose.
SECTION 3.02. PAYMENTS. Borrowers shall make each payment of principal,
interest and fees hereunder, without setoff or counterclaim, not later than
11:00 a.m., New York time, on the day when due in lawful money of the United
States of America to the account of the Agent designated on the signature pages
hereof (or such other account as may be designated by the Agent) in immediately
available funds. The Agent shall promptly pay to the applicable Lending Office
of each Bank its pro rata share of each payment of principal, interest, and fees
received by the Agent.
SECTION 3.03. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day (except as provided
in the definition of Interest Payment Date), and with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.
SECTION 3.04. REDUCED RETURN. If any Bank shall have determined that any
applicable law, regulation, rule or regulatory requirement ("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 such Bank with any 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 or announced
after the date hereof, has or would have the effect of reducing the rate of
return on that Bank's capital as a consequence of the making and holding of the
Term Loan or the issuance of any letter of credit pursuant to the Letter of
Credit Agreements (taking into consideration that Bank's policies with respect
to capital adequacy) by an amount deemed by that Bank to be material (which
amount shall be determined by that Bank's reasonable allocation of the aggregate
of such reductions resulting from such events), then from time to time, within
five (5) Business Days after demand by such Bank, Borrowers jointly and
severally agree to pay to that Bank such additional amount or amounts as will
compensate that Bank for such reduction; provided, however, that Borrowers shall
not be obligated to pay any Bank for any such additional amount incurred more
than one hundred and eighty (180) days prior to the date of demand for payment
by such Bank, provided, further, however, that Borrowers shall not be obligated
to pay any Bank for any additional amount otherwise payable pursuant to this
Section 3.04 to the extent such amount is reflected in adjustments to the
interest rates applicable to the Term Loan. Each Bank making a claim for
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payment under this Section 3.04 shall submit an invoice to the Agent and the
Agent shall promptly transmit such invoice to Borrowers for the amount claimed
to be owed by Borrowers, showing in reasonable detail the calculations necessary
to determine the amount. Such statement shall be conclusive in the absence of
manifest error; provided, further, that this Section shall not apply to any
increased cost or reduced amount receivable as the result of Taxes or Other
Taxes.
SECTION 3.05. INDEMNITIES.
(a) General Indemnity. Whether or not the transactions
contemplated hereby shall be consummated, each Loan Party jointly and severally
agrees to indemnify, pay and hold the Agent, the Co-Agent and each Bank, and the
shareholders, officers, directors, Affiliates, employees and agents of the
Agent, the Co-Agent and each Bank (each, an "Indemnified Person"), harmless from
and against any and all claims, liabilities, losses, damages, costs and
expenses, including reasonable attorneys' fees and costs (including the
reasonable estimate of the allocated cost of in-house legal counsel and staff)
and including costs of investigation, document production, attendance at
deposition or other discovery, that may be incurred by or asserted against any
Indemnified Person, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with the transactions contemplated by this Agreement, any Loan
Document, the Restructuring or any contemplated use of the proceeds of the Term
Loan, or the issuance of any letter of credit pursuant to any Letter of Credit
Agreement, whether or not an Indemnified Person is a party thereto
(collectively, the "Indemnified Liabilities"), except to the extent that such
Indemnified Liabilities result from the gross negligence or wilful misconduct of
the Agent, the Co-Agent or any Bank. If any claim is made, or any action, suit
or proceeding is brought, against any Indemnified Person described in this
Section, the Indemnified Person shall notify Loan Parties of such claim or of
the commencement of such action, suit or proceeding, and Loan Parties shall have
the option to, and at the request of the Indemnified Person shall, jointly
direct and control the defense of such action, suit or proceeding, employing
counsel selected by Loan Parties and reasonably satisfactory to the Indemnified
Person, and pay the fees and expenses of such counsel; provided, however, that
any Indemnified Person may at its own expense retain separate counsel to
participate in such defense. Notwithstanding the foregoing, such Indemnified
Person shall have the right to employ separate counsel at the expense of the
Loan Parties, jointly and severally, and to control and direct its own defense
of such action, suit or proceeding if, in the reasonable opinion of counsel to
such Indemnified Person, (i) there are or may be legal defenses available to
such Indemnified Person or to other Indemnified Persons that are different from
or additional to those available to any Loan Party that such Loan Party cannot
assert, or (ii) a conflict or potential conflict exists between any Loan Party
and such Indemnified Person that would make such separate representation
advisable. Each Loan Party agrees that it will not, without the prior written
consent of the Agent, the Co-Agent and each other Indemnified Person settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding with respect to which the indemnification
provided for in this Section is available (whether or not any Indemnified Person
is a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Agent, the Co-Agent and each
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other Indemnified Person from all liability arising or that may arise out of
such claim, action, suit or proceeding. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section 3.05 may be
unenforceable because it is violative of any law or public policy, each Loan
Party shall contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by any Indemnified Person.
(b) Funding Losses. The Loan Parties jointly and severally agree
to indemnify each Bank and to hold each Bank harmless from any loss or expense
(excluding loss of anticipated profits), including any such loss or expense
arising from interest or fees payable by such Bank to lenders of funds obtained
by it in order to maintain its LIBO Rate Loans hereunder, which such Bank may
sustain or incur as a consequence of (i) default by Borrowers in payment of the
principal amount of or interest on the LIBO Rate Loans, (ii) default by
Borrowers in making a conversion or continuation after Borrowers have given a
notice thereof, (other than pursuant to Section 3.07 or 3.09), (iii) default by
any Loan Party in making any payment after the Loan Party has given a notice of
payment, (iv) Borrowers making any payment of a LIBO Rate Loan, or converting a
LIBO Rate Loan, on a day other than the last day of the Interest Period for such
Loan, or (v) default by the Guarantors in payment of any and all sums due and
payable under Article X or the applicable Subsidiary Guaranty. For purposes of
this Section and Section 3.09, it shall be assumed that the affected Bank had
funded or would have funded 100%, as the case may be, of a LIBO Rate Loan in the
London interbank market for a corresponding amount and term. Each Bank making a
claim for payment under this Section shall submit to the Agent, who shall
promptly transmit it to Loan Parties, an invoice for the amount claimed to be
owed by the Loan Parties, showing in reasonable detail the calculations
necessary to determine the amount. The determination of such amount by such Bank
shall be presumed correct in the absence of manifest error.
SECTION 3.06. FUNDING SOURCES. Except to the extent provided in Sections
3.08, 3.09 and 3.11(f), nothing in this Agreement shall be deemed to obligate
any Bank to obtain funds for any Loan in any particular place or manner or to
constitute a representation by any Bank that it has obtained or will obtain the
funds for all or any portion of the Term Loan in any particular place or manner.
SECTION 3.07. INABILITY TO DETERMINE INTEREST RATE. In the event that
any Bank shall have determined (which determination shall be conclusive and
binding upon Borrowers) that by reason of circumstances affecting the London
interbank market, the LIBO Rate applicable pursuant to Section 2.04 for any
Interest Period with respect to a LIBO Rate Loan does not adequately cover the
cost of funding such Loan, such Bank shall forthwith give notice of such
determination to Borrowers and the Agent not later than 9:00 a.m., New York
time, on the requested funding date, conversion date or the last day of an
Interest Period of a Loan which was to have been continued as a LIBO Rate Loan.
If such notice is given and has not been withdrawn (i) any Loan that was to have
been made as a LIBO Rate Loan, shall be made as a Base Rate Loan, (ii) any Base
Rate Loan that was to have been converted to a LIBO Rate Loan shall be
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continued as a Base Rate Loan and (iii) any outstanding LIBO Rate Loan shall be
converted, on the last day of the then current Interest Period with respect
thereto, to a Base Rate Loan. Until such notice has been withdrawn by such Bank,
Borrowers shall not have the right to convert a Base Rate Loan to a LIBO Rate
Loan. The affected Bank will review the circumstances affecting the London
interbank market from time to time and such Bank will withdraw such notice at
such time as it shall determine that the circumstances giving rise to said
notice no longer exist.
SECTION 3.08. REQUIREMENTS OF LAW. Without duplication of any amounts
payable under Section 3.04 or 3.11, in the event that (i) the enactment or
issuance of or any change in any law, regulation or directive or in the
interpretation or application thereof or (ii) compliance by any Bank with any
request or directive (whether or not having the force of law) from any central
bank or other governmental authority, agency or instrumentality, in any such
case, effective or announced after the date hereof:
(a) does or shall impose, modify or hold applicable any reserve,
assessment rate, special deposit, compulsory loan or other requirement 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 such Bank which are not otherwise included in the
determination of any LIBO Rate Loan or the conversion or continuation date of
the Term Loan;
(b) does or shall impose on any Bank any other condition; and the
result of any of the foregoing is to increase the cost to any Bank of
maintaining the LIBO Rate Loans, then, in any such case, Borrowers shall pay to
such Bank within three (3) Business Days of its demand, any additional amounts
necessary to compensate such Bank for such additional cost or reduced amount
receivable as determined by such Bank with respect to this Agreement; provided,
however, that Borrowers shall not be obligated to pay any Bank for any such
additional cost or reduced amount incurred more than one hundred and eighty
(180) days prior to the date of demand for payment by such Bank provided,
further, that before making such demand, each Bank agrees to use its reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different lending office if the making of such a
designation would avoid, or reduce the amount of, such additional cost or
reduced amount, and would not, in the reasonable judgment of such Bank, be
otherwise disadvantageous to the Bank; provided, further, that Borrowers shall
not be obligated to pay any Bank for any additional amount otherwise payable
pursuant to this Section 3.08 to the extent such amount is reflected in
adjustments to the interest rates applicable to the Term Loan. Each Bank making
a claim for payment under this Section 3.08 shall submit an invoice to the Agent
and the Agent shall promptly transmit such invoice to Borrowers, for the amount
claimed to be owed by Borrowers, showing in reasonable detail the calculations
necessary to determine the amount. Such statement shall be conclusive in the
absence of manifest error; provided, further, that this Section shall not apply
to any increased cost or reduced amount receivable as the result of Taxes or
Other Taxes.
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SECTION 3.09. ILLEGALITY. Notwithstanding any other provisions herein,
if the introduction of or any change in or in the interpretation or application
of any law, regulation, treaty or directive, in any such case, effective or
announced after the date hereof, shall make it unlawful, or any central bank or
other governmental authority shall assert after the date hereof that it is
unlawful, for any Bank to maintain LIBO Rate Loans as contemplated by this
Agreement, (a) the agreement of such Bank hereunder to make LIBO Rate Loans or
convert Base Rate Loans to LIBO Rate Loans shall forthwith be canceled and (b)
such Bank's Loans then outstanding as LIBO Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the next succeeding Interest
Payment Date or within such earlier period as allowed by law; provided, further,
that before such cancellation and conversion, such Bank agrees to use its
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different lending office if the making of such a
designation would avoid the need for such cancellation and conversion and would
not, in the reasonable judgment of such Bank, be otherwise disadvantageous to
the Bank. Borrowers jointly and severally agree to pay any Bank, within three
(3) Business Days of its demand, any additional amounts necessary to compensate
such Bank for any costs (excluding loss of anticipated profits) incurred by such
Bank in making any conversion in accordance with this Section, including any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its LIBO Rate Loans hereunder (such Bank's notice of
such costs, as certified to Borrowers and the Agent shall be conclusive absent
manifest error).
SECTION 3.10. RIGHT TO REPLACE BANK. If Borrowers shall, as a result of
the requirements of Sections 3.04, 3.05(b), 3.07, 3.08, 3.09, or 3.11 be
required to pay any Bank the additional costs referred to in such Sections or if
any Bank fails to make available its ratable portion of any Loan, Borrowers
shall have the right to substitute another Financial Institution satisfactory to
Agent (whose approval will not be unreasonably withheld or delayed) for such
Bank which has submitted an invoice for such additional costs or has failed to
make available, its ratable portion of the Term Loan. Any such substitution
shall be on terms and conditions satisfactory to the Agent. Until such time as
such substitution shall be consummated, Borrowers shall continue to pay any
additional costs invoiced by such Bank and shall continue to pay all other
amounts payable to such Bank hereunder. The substituting Financial Institution
and the Bank that is being replaced shall execute and deliver an Assignment
Agreement substantially in the form of Exhibit B, and the terms of the second
sentence of Section 9.06(a) shall apply to such substitution. Upon any such
substitution, Borrowers jointly and severally agree to pay or cause to be paid
to the Bank that is being replaced, all principal, interest (to the date of such
substitution) and other amounts owing hereunder to such Bank.
SECTION 3.11. TAXES
(a) Payments. Subject to the following sentence, all payments by
any Loan Party hereunder or under any Loan Document shall be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Bank, the Co- Agent and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the
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jurisdiction under the laws of which such Bank (or the applicable Lending Office
of such Bank), the Co-Agent or the Agent (as the case may be) is organized or
any political subdivision thereof and, in the case of each Bank, the Co-Agent or
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction of the office or branch in which such Bank, the Co-Agent or the
Agent books the Term Loan or any political subdivision thereof (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Loan Party shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Loan Document to any Bank, the Co-Agent or the Agent, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.11) such Bank, the Co-Agent or the Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Party shall make such deductions and (iii)
such Loan Party shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided that
any Loan Party shall not be required pursuant to clause (i) above to increase
the sum payable to any Bank, the Co-Agent or the Agent organized under the laws
of a jurisdiction outside of the United States if such Bank, the Co-Agent or the
Agent, as the case may be, shall have failed to provide either the forms or
documents referred to in Section 3.11(e) indicating exemption from (or reduction
via applicable tax treaty of) Singapore withholding tax.
(b) Other Taxes. In addition, Loan Parties jointly and severally
agree to pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies (other than those taxes,
levies, imposts, deductions, charges, withholdings and liabilities excluded
pursuant to Section 3.11(a) above) which arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with respect to
the Loan Documents (hereinafter referred to as "Other Taxes").
(c) Indemnity. Loan Parties jointly and severally indemnify each
Bank, the Co-Agent and the Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.11) paid by such Bank, the
Co-Agent or the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted;
provided, in the case of Taxes or Other Taxes imposed by jurisdictions outside
of the United States of America, Loan Parties shall not be required to indemnify
any Bank, the Co-Agent or the Agent for any liability resulting from the failure
of such Bank, the Co-Agent or the Agent to notify Loan Parties on a timely basis
of the assertion of such Taxes or Other Taxes. This indemnification shall be
made within thirty (30) days from the date such Bank, the Co-Agent or the Agent
(as the case may be) makes written demand therefor. Each Bank, the Co-Agent and
the Agent agree to reimburse Loan Parties for amounts paid by Loan Parties
pursuant to this Section 3.11 to the extent that such Bank, the Co-Agent or the
Agent actually recovers all or any portion of such amounts from the applicable
taxing authority which recovery is specifically designated by such taxing
authority as being applicable to such amounts.
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(d) Evidence of Payment. Within sixty (60) days after the date of
any payment of Taxes, Loan Parties will furnish to the Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing payment thereof or other evidence of the payment thereof satisfactory
to the Agent.
(e) Forms. Prior to the date hereof in the case of the Agent and
each Bank listed on the signature pages hereof, and on the date of the
Assignment Agreement (or any other agreement) pursuant to which it became a Bank
in the case of each other Bank (and, in each case, from time to time thereafter
if requested by Loan Parties or the Agent), the Agent, each Bank (or the
applicable Lending Office of such Bank) if organized under the laws of Singapore
shall provide the Agent and the Loan Parties with the forms prescribed by the
Inland Revenue Authority of Singapore certifying as to such Bank's, or the
Agent's status for purposes of determining exemptions from Singapore withholding
taxes with respect to all payments to be made to such Bank, or the Agent
hereunder or other documents satisfactory to Loan Parties and the Agent
indicating that all payments to be made to such Bank or the Agent, as the case
may be, hereunder are subject to such taxes at a rate reduced by an applicable
tax treaty. Unless Loan Parties and the Agent have received forms or other
documents satisfactory to them indicating that payments hereunder are not
subject to Singapore withholding tax, Loan Parties or the Agent shall withhold
taxes from such payments at the applicable statutory rate or such lower rate as
provided in an applicable tax treaty (if such Bank or the Agent, if applicable,
has provided the required forms entitling it to such reduced withholding rate)
in the case of payments to or for any Bank, or the Agent if organized under the
laws of Singapore.
(f) Change of Booking Office. Any Bank or Agent claiming any
additional amounts payable pursuant to this Section 3.11 shall use its
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of the office or branch in which it
books the Term Loan if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Bank or Agent, be otherwise
disadvantageous to such Bank or Agent.
(g) Indemnities. Without limiting the generality of Section 3.11
and for the avoidance of doubt, the Loan Parties jointly and severally agree to
indemnify each Bank, the Co-Agent and the Agent against all penalties, fines,
costs or other expenses howsoever suffered or incurred by any Bank, the Co-Agent
or the Agent arising out of or in connection with any Loan Documents or
amendments from time to time made to this Agreement (including any
non-compliance by such Bank, the Co-Agent or the Agent with any taxation or
other laws or regulations of the State of California or any other jurisdiction)
except for any penalties, fines, costs or other expenses suffered or incurred on
account of (i) any gross negligence or wilful misconduct of such Bank, the
Co-Agent or the Agent, or (ii) failure by any Bank, the Co-Agent or the Agent
organized under the laws of a jurisdiction outside of the United States to
provide either the forms or documents referred to in Section 3.11(e) indicating
exemption from (or reduction via applicable tax treaty of) Singapore withholding
tax.
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SECTION 3.12. SHARING OF PAYMENTS, ETC. Except with respect to the
reduction of the Term Loan of any Bank in lieu of making a cash payment upon
exercise of the Warrants in accordance with the terms thereof and the Warrant
Agreement Side Letter, if any Bank shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of the obligations of the Loan Parties under the Loan Documents, in
excess of its ratable share of payments on account of all obligations of the
Loan Parties under the Loan Documents obtained by all the Banks, then such Bank
shall forthwith purchase from the other Banks such participations in the Term
Loan owing to them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such recovery
together with an amount equal to the Bank's ratable share (according to the
proportion of (i) the amount of such Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. Borrowers agree that any Bank so purchasing a participation from
another Bank pursuant to this Section 3.12 or Section 9.06 of this Agreement
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right to set-off) with respect to such participation as
fully as if such Bank were the direct creditor of the Loan Parties in the amount
of such participation.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall become effective on the date on or before May 29, 1998 (the
"Effective Date") on which all of the following conditions shall have been
satisfied or waived:
(a) Documents. The Agent shall have received on or before the
date hereof the following, each dated the date hereof (except for the document
referred to in clause (iii)), in form and substance satisfactory to the Agent
and in sufficient copies for each Bank:
(i) Copies of the Certificate of Incorporation or
equivalent document of each Loan Party, certified by the appropriate agency of
the jurisdiction in which it is incorporated or organized (or, if such agency
does not provide such certification, then by the Secretary, Assistant Secretary
or a director of such Loan Party) as being true, correct and complete copies and
in full force and effect as of the date hereof;
(ii) Copies of the Bylaws or the Memorandum and Articles
of Association or equivalent document of each Loan Party, certified by the
Secretary, Assistant Secretary or a director of such Loan Party as being true,
correct and complete copies and in full force and effect as of the date hereof;
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(iii) Copies of resolutions of each Loan Party's
board of directors or other authorizing documents of such Loan Party, approving
the Loan Documents and the Term Loan and ratifying all actions taken by the Loan
Parties with respect to the Existing Credit Agreement and the Loan Documents (as
defined herein) prior to the date hereof, dated prior to the date hereof,
certified by the Secretary, Assistant Secretary or a director of such Loan Party
as being true, correct and complete copies and in full force and effect as of
the date hereof;
(iv) A certificate of each Loan Party, executed by
the Secretary, Assistant Secretary or a director of such Loan Party, certifying
the names and signatures of the officers of such Loan Party or other Persons
authorized to sign the Loan Documents and the other documents to be delivered
hereunder;
(v) A certificate of the chief executive officer of
each Loan Party executed and delivered on behalf of such Loan Party certifying
that all conditions precedent set forth in this Article IV have been satisfied
and that, after giving effect to the transactions contemplated under this
Agreement and the Loan Documents, all representations and warranties in this
Agreement and the Loan Documents are true and correct, no Event of Default has
occurred and is continuing and no change, occurrence, event or development or
event involving prospective change that is reasonable likely to have a Material
Adverse Change has occurred and is continuing;
(vi) An originally executed copy of this Agreement
and all other Loan Documents, agreements, documents, instruments, certificates,
perfection notices and documents and opinions (other than those designated on
Schedule I as items to be delivered after the Effective Date) described in the
Closing Document List attached hereto as Schedule II (the "Closing Document
List"), each duly executed where appropriate; each of the Borrowers and
Guarantors, on behalf of all of the Loan Parties, hereby directs their
respective counsel to prepare and deliver to the Agent and the Banks the
respective opinions described in the Closing Document List;
(vii) Written appraisals of the Fixed Assets based
on "orderly liquidation value"; and
(viii) The Loan Parties shall have engaged KPMG Peat
Marwick for purposes of administering the reporting obligations of the Loan
Parties under this Agreement and the Loan Documents upon terms reasonably
satisfactory to the Agent and the Banks.
(b) Restructuring Transactions. The Agent shall be satisfied in
all material respects that the terms, conditions, form and substance of the
restructuring transactions contemplated by this Agreement have been or
contemporaneously with the effectiveness of this Agreement will be satisfied and
are effective, including without limitation the following:
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(i) The agent shall have received the $10,000,000
principal payment (which payment is to be paid from the proceeds of the Equity
Investment and the Seagate Subordinated Debt) and the Agent shall have received
the Warrants;
(ii) The Agent shall have determined to its
satisfaction that, immediately after giving effect to the financing pursuant to
the Foothill Group Financing Documents, and after having paid all closing costs,
fees, and expenses incurred in connection with the transactions contemplated
hereby (including any costs, fees, and expenses in connection with the related
Equity Investment or issuances of Subordinated Indebtedness, and in connection
with the Foothill Group Financing Documents), the sum of Loan Parties'
Availability (as defined in the Foothill Group Financing Documents) plus
unrestricted cash and cash equivalents (after reserving for any increase in the
trade payables of Loan Parties since the date of completion of the most recent
field survey of Loan Parties completed by Foothill Group Agent but not taking
into account the Foothill Bridge Term Loan) is not less than $7,000,000;
(iii) The Foothill Bridge Term Loan shall have been
fully funded in the amount of not less than $8,000,000;
(iv) The Parent Guarantor shall have received the
proceeds of the Equity Investment in the aggregate amount of not less than
$8,000,000;
(v) The Seagate Subordinated Debt in the aggregate
amount of not less than $8,000,000 shall have been issued and the transactions
contemplated by the Seagate Settlement Documents consummated;
(c) Perfection and Priority of Liens in Personal and Real
Property. Each Loan Party shall have taken or caused to be taken (and the Agent
shall have received satisfactory evidence thereof) such actions (other than the
filing or recording of items (i) through (v) below in such a manner so that the
Agent, for the benefit of the Banks, has a valid and perfected first priority
Lien as of such date in all of the Collateral (subject only to the Intercreditor
Agreement and Permitted Liens). Such actions shall include, without limitation,
(i) except with respect to the shares of FSC and Akashic (which shall be
delivered to the Foothill Group Agent), delivery to the Agent or its designee of
certificates (which certificates shall be properly endorsed in blank for
transfer or accompanied by irrevocable undated stock powers duly endorsed in
blank for transfer, all in form and substance satisfactory to the Agent)
representing the capital stock pledged pursuant to the applicable Security
Agreement and delivery to the Agent or its designee of all other instruments
(duly endorsed where appropriate) evidencing the Collateral; (ii) delivery to
the Agent of Uniform Commercial Code Lien searches in the jurisdictions set
forth in the Closing Document List (other than those searches designated on the
Closing Document List as searches to be delivered after the Effective Date)
which shall disclose no Liens on any Collateral other than Permitted Liens and
Liens with respect to which fully executed release agreements, Uniform
Commercial Code termination statements or payoff letters, in each case in form
and substance satisfactory to the Agent, shall have been delivered to the Agent;
(iii) delivery to the Agent of Uniform Commercial Code financing statements as
to the Collateral for all jurisdictions
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designated by the Agent as necessary or desirable to perfect the Liens granted
to the Agent, for the benefit of the Banks, in the Collateral; (iv) delivery to
the Agent of the Collateral Assignments, together with the cover sheet required
for filing with the United States Patent and Trademark Office; (v) delivery to
the Agent of a Control Agreement; and (vi) delivery to the Agent of such other
documents and instruments that the Agent notifies the Loan Parties are necessary
or advisable to establish, preserve and perfect the first priority Liens granted
to the Agent, for the benefit of the Banks, under the Loan Documents.
(d) Evidence of Insurance. Schedule III shall set forth as of the
Effective Date all insurance policies and programs in effect with respect to the
respective assets and business of the Loan Parties, specifying for each such
policy and program, (i) the amount thereof, (ii) the risks insured against
thereby, (iii) the name of the insurer and each insured party thereunder, (iv)
the policy or other identification number thereof, (v) the expiration date
thereof and (vi) the annual premium with respect thereto. All such policies and
programs shall be in amount and scope and maintained with such carriers as is
customarily carried or maintained under similar circumstance by corporations of
established reputation engaged in similar businesses and similarly situated, all
of which shall be reasonably satisfactory to the Agent. The Agent shall have
received insurance certificates (or other satisfactory evidence of coverage and
endorsements) in form and substance reasonably satisfactory to the Agent
evidencing that such insurance policies and programs are in full force and
effect, and, subject to the Intercreditor Agreement, contain endorsements naming
the Agent, for the benefit of the Banks, as loss payee with respect to all
casualty coverages, and as an additional insured with respect to all general
liability coverages and otherwise comply with the requirements of Section
6.01(g).
(e) Financial Statements. Complete and accurate copies of the Pro
Forma and the Projections shall have been delivered to the Agent. After review
of the foregoing, the Agent shall be satisfied, in its sole discretion, that (i)
the financial condition of the Loan Parties does not differ in any material
adverse respect from the condition evidenced by the financial information
provided to the Agent prior to March 9, 1998 and (ii) the Loan Parties will be
able to comply with the financial covenants set forth herein and in the Foothill
Group Financing Documents.
(f) Cash Management. The Loan Parties shall have in place a cash
management system reasonably satisfactory to the Agent and the Banks consistent
with the terms of the Intercreditor Agreement and the Foothill Group Financing
Documents.
(g) No Material Adverse Change. There shall have been no Material
Adverse Change in the condition (financial or otherwise), business, properties,
assets or prospects of any of the Loan Parties since March 9, 1998 except as has
been previously disclosed to the Agent or as reflected in the Pro Forma or the
Projections;
(h) Fees and Expenses. All fees and expenses payable to the Agent
and the Banks pursuant to Section 9.05 hereof shall have been paid in full.
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(i) Interest Payment. Any interest payment due and owing pursuant
to Section 2.05 of the Existing Credit Agreement shall have been paid in full.
(j) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Agent shall not have
received any notice that litigation is pending or threatened which is likely to
enjoin, prohibit or restrain the consummation of the transactions evidenced by
the Loan Documents, or related transactions, except for such laws, regulations,
orders or decrees or pending or threatened litigation that in the aggregate
could not reasonably be expected to result in a Material Adverse Change.
(k) Agent Fees. The Agent shall have received the fees pursuant
to the Fee Letter referred to in Section 2.02.
(l) Further Documentation. All corporate and legal proceedings
and all instruments and documents in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in content, form
and substance to the Agent and its counsel; and each Bank, the Agent and Agent's
counsel shall have received any and all further information and documents which
any Bank, the Agent or such counsel may reasonably have requested in connection
therewith, such documents where appropriate to be certified by proper corporate
or governmental authorities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. REPRESENTATIONS AND WARRANTIES. Each Loan Party represents
and warrants that, as of the Effective Date, the following are true, correct and
complete. Such representations and warranties, and all other representations and
warranties made by any Loan Party in any other Loan Document, shall survive the
execution and delivery of the Loan Documents.
(a) Organization; Subsidiaries.
(i) Each Loan Party is duly organized and existing
and in good standing under the laws of the jurisdiction of its incorporation and
qualified and licensed to do business in, and in good standing in, any state or
other jurisdiction where the failure to be so licensed or qualified reasonably
could be expected to constitute a Material Adverse Change.
(ii) Set forth on Schedule IV is a complete and
accurate list of the Parent Guarantor's direct and indirect Subsidiaries,
showing: (i) the jurisdiction of their incorporation; (ii) the number of shares
of each class of common and preferred Stock authorized for each of such
Subsidiaries; and (iii) the number and the percentage of the outstanding shares
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of each such class owned directly or indirectly by Parent Guarantor. All of the
outstanding Stock of each such Subsidiary has been validly issued and is fully
paid and non-assessable.
(iii) Except as set forth on Schedule IV, no Stock
(or any securities, instruments, warrants, options, purchase rights, conversion
or exchange rights, calls, commitments or claims of any character convertible
into or exercisable for Stock) of any direct or indirect Subsidiary of Parent
Guarantor is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.
(iv) FSC is merely an inactive holding company for
certain Subsidiaries of Parent Guarantor and has no operations of its own nor
any significant assets except for cash of not more than $500,000 and the Stock
of certain Subsidiaries of Parent Guarantor.
(b) Due Authorization; No Conflict.
(i) The execution, delivery, and performance by
each Loan Party of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary corporate action.
(ii) The execution, delivery, and performance by
each Loan Party of this Agreement and the Loan Documents to which it is a party
do not and will not (i) violate any provision of federal, state, foreign or
local law or regulation (including Regulations T, U, and X of the Federal
Reserve Board) applicable to such Loan Party, the Governing Documents of each
Loan Party, or any order, judgment, or decree of any court or other Governmental
Authority binding on such Loan Party, (ii) conflict with, result in a breach of,
or constitute (with due notice or lapse of time or both) a default under any
material contractual obligation or material lease of such Loan Party, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Loan Party, other than
Permitted Liens, or (iv) require any approval of stockholders or any approval or
consent of any Person under any material contractual obligation of such Loan
Party, except for ones that have been obtained.
(iii) Other than the filing of appropriate financing
statements and the filing of certain Loan Documents with the appropriate foreign
Governmental Authorities, the execution, delivery, and performance by each Loan
Party of this Agreement and the Loan Documents to which such Loan Party is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any federal, state, foreign, or
other Governmental Authority or other Person.
(iv) The Agent's Liens granted by the Loan Parties
to the Agent, for the benefit of the Banks, in and to their properties and
assets and the other Loan Documents are validly created, perfected, and (subject
to the Intercreditor Agreement) first priority Liens, subject only to Permitted
Liens. To the extent that any Liens were granted to the Agent for the
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benefit of the Banks prior to the date hereof, all such Liens are hereby
ratified and confirmed as being in full force and effect; provided, however,
that the priority of all such Liens shall be governed by the Intercreditor
Agreement.
(c) Validity. The Loan Documents and all other documents
contemplated thereby are the legally binding obligations of each Loan Party,
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 and equitable principles relating
to or affecting creditors' rights.
(d) Capitalization.
(i) As of May 27, 1998, the Parent Guarantor's
authorized capital stock consisted of: (A) 50,000,000 shares of Class A Common
Stock, of which 16,317,932 shares were issued and outstanding, (B) 5,000,000
shares of Class B Common Stock, of which 4,362,000 shares were issued and
outstanding (all of which have been tendered for conversion into Class A Common
Stock effective as of the date of this Agreement), and (C) 1,000,000 shares of
preferred stock, par value $0.013 per share, of which 500,000 shares had been
designated as Series A Preferred Stock, none of which shares were issued and
outstanding. All of the outstanding shares of capital stock of the Parent
Guarantor (x) have been duly authorized and validly issued, are fully paid and
nonassessable, and free of preemptive rights, and (y) have been offered and
issued without violation of the Securities Act or any applicable state
securities or blue sky law or any preemptive rights of any person. Schedule V
hereto accurately sets forth, as of the date hereof, the number of issued and
outstanding shares of Common Stock held by each person known by the Parent
Guarantor to own beneficially or of record ten percent (10%) of more of the
outstanding shares of any class of the Parent Guarantor's capital stock.
(ii) Except as disclosed on Schedule V hereto: (A)
there are no issued or outstanding securities that are convertible into or
exchangeable for shares of the Parent Guarantor's capital stock ("Convertible
Securities"); (B) there are no issued or outstanding subscriptions, options,
warrants or other rights to purchase or acquire any shares of the capital stock
of the Parent Guarantor or any Convertible Securities ("Option Rights") other
than the Warrants; (C) the Parent Guarantor is not a party to any agreement or
understanding pursuant to which the Parent Guarantor is obligated to purchase,
redeem or otherwise reacquire or cancel any shares of the Parent Guarantor's
capital stock or any Convertible Securities or Option Rights, and the Parent
Guarantor is not otherwise under any obligation to repurchase, redeem or
otherwise acquire any shares of the Parent Guarantor's capital stock or any
Convertible Securities or Option Rights; (D) the Parent Guarantor is not a party
to any agreement or understanding pursuant to which the Parent Guarantor is
obligated to register any shares of its capital stock or other securities under
the Securities Act or any state securities laws; and (E) to the best knowledge
of the Parent Guarantor, no securities holder of the Parent Guarantor is a party
to any voting agree ment, voting trust, irrevocable proxy or other agreement
affecting the voting rights of any shares of the Parent Guarantor's capital
stock or any agreement providing for any call or put option, right of first
refusal or offer or other right to acquire or dispose of any shares of the
Parent
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Guarantor's capital stock or any Convertible Securities or Option Rights.
Other than the shares of Class A Common Stock reserved for issuance upon
exercise of the Warrants, except as disclosed on Schedule V hereto no shares of
Common Stock are issuable upon the exercise of any outstanding Convertible
Securities or Option Rights and no additional shares of Common Stock will become
issuable upon exercise of such Convertible Securities or Option Rights on
account of the issuance of the Warrants.
(e) Valid Issuance of Warrants.
(i) The Warrants have been duly executed and
delivered by the Parent Guarantor, have been duly authorized and validly issued
free and clear of all liens, encumbrances, equities and claims, are fully paid
and non-assessable, and constitute the legal, valid and binding obligations of
the Parent Guarantor, enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and subject to general
principles of equity.
(ii) The shares of Class A Common Stock issuable
upon exercise of the Warrants have been duly authorized and reserved for
issuance and, when issued in accordance with the terms of the Warrants, will be
validly issued, fully paid and non-assessable, free and clear of all liens,
encumbrances, equities and claims and without violation of any preemptive
rights.
(f) Financial Condition/Material Adverse Change. The Parent
Guarantor's audited consolidated balance sheet for the fiscal year ended
December 31, 1997 and the related consolidated statements of operations and cash
flows for the fiscal year then ended, and the consolidated balance sheet as of
the last day of the fiscal quarter ended March 31, 1998 and the related
consolidated statements of operations and cash flows for the fiscal quarter then
ended, copies of which have been furnished to each Bank, fairly present in all
material respects the consolidated financial condition of the Parent Guarantor
as at such dates and the consolidated results of the operations of the Loan
Parties for the respective periods ended on such dates, all in accordance with
GAAP, consistently applied, subject, in the case of the quarterly financial
statements, to year-end adjustments and the absence of footnotes. Except as has
been previously disclosed to the Agent or as reflected in the Pro Forma or the
Projections, since March 9, 1998, there has been no Material Adverse Change in
the business, operations, prospects, properties, assets or condition (financial
or otherwise) of (i) any Loan Party or (ii) any Loan Party and its Subsidiaries,
taken as a whole. The Pro Forma fairly presents on a pro forma basis the
financial condition of the Loan Parties and their Subsidiaries as of May 29,
1998 after giving effect to the consummation of the transactions contemplated by
this Agreement and the Loan Documents, and reflects on a pro forma basis those
liabilities reflected in the notes thereto and resulting from consummation of
the transactions described therein and the transactions contemplated by the Loan
Documents. The Projections and the assumptions expressed in the Pro Forma are
reasonable based on the information available to the Loan Parties at the time so
furnished.
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(g) Litigation. There are no actions or proceedings pending by or
against any Loan Party before any court or administrative agency and no Loan
Party has any knowledge or belief of any pending, threatened, or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving any Loan Party, except for: (a) ongoing collection
matters in which a Loan Party is the plaintiff; (b) matters disclosed on
Schedule VI; and (c) matters arising after the date hereof that, if decided
adversely to any Loan Party, reasonably could not be expected to result in a
Material Adverse Change.
(h) Employee Benefit Plans. None of the Loan Parties, nor any of
its ERISA Affiliates maintains or contributes to any Benefit Plan, other than
those listed on Schedule VII. Each Loan Party and each ERISA Affiliate have
satisfied the minimum funding standards of ERISA and the Internal Revenue Code
with respect to each Benefit Plan to which it is obligated to contribute. No
ERISA Event has occurred nor has any other event occurred that may result in an
ERISA Event that reasonably could be expected to result in a Material Adverse
Change. None of the Loan Parties, any ERISA Affiliate, or any fiduciary of any
Plan is subject to any direct or indirect liability with respect to any Plan
under any applicable law, treaty, rule, regulation, or agreement. None of the
Loan Parties or any ERISA Affiliate is required to provide security to any Plan
under Section 401(a)(29) of the Internal Revenue Code.
(i) Disclosure. The documents, certificates and written
statements (including the Loan Documents) furnished to the Agent or any Bank
prior to or on the date hereof by any Loan Party for use in connection with the
transactions contemplated by this Agreement, taken as a whole, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading (it being recognized by the Agent and the Banks that projections and
forecasts provided by any Loan Party are not to be viewed as facts and that
actual results during the period or periods covered by any such projections and
forecasts may differ from the projected or forecasted results). Except as set
forth in Schedule VIII hereto, as of the date hereof, there is no fact known to
any Loan Party (other than matters of a general economic nature) which
materially adversely affects the (i) business, operations, prospects, property,
assets or condition (financial or otherwise) of (x) any Loan Party or (y) any
Loan Party and its Subsidiaries, taken as a whole, or (ii) on the ability of any
Loan Party to perform, or of the Agent or any of the Banks to enforce, the
obligations of any Loan Party under the Loan Documents, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Agent and each Bank for use in connection with the transactions
contemplated hereby.
(j) Margin Stock. The aggregate value of all margin stock (as
defined in Regulation U) directly or indirectly owned by each Loan Party and its
Subsidiaries is less than twenty five percent (25%) of the aggregate market
value of each Loan Party's net assets.
(k) Environmental Matters. Except as disclosed in Schedule XIII,
none of the Loan Parties' properties or assets has ever been used by Loan
Parties or, to the best of Loan Parties' knowledge, by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials. Except as disclosed in
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Schedule XIII, none of Loan Parties' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental protection statute. No Lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned or operated by Loan Parties. Except as disclosed in
Schedule XIII, Loan Parties have not received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other foreign, federal
or state governmental agency or tribunal concerning any action or omission by
Loan Parties resulting in the releasing or disposing of Hazardous Materials into
the environment.
(l) Employee Matters. There is no strike or work stoppage in
existence or, to the best of the Loan Parties' knowledge, threatened litigation
(except as disclosed in Schedule VI) involving any Loan Party or its
Subsidiaries that could reasonably be expected to have a material adverse effect
(i) on the business, operations, prospects, properties, assets or condition
(financial or otherwise) of (x) any Loan Party or (y) any Loan Party and its
Subsidiaries, taken as a whole, or (ii) on the ability of any Loan Party to
perform, or of any of the Banks to enforce, the obligations of such Loan Party
under the Loan Documents.
(m) Insurance. Each Loan Party maintains with financially sound
and reputable insurers, insurance with respect to its properties and business
and the properties and business of its 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. Such insurance is in full force and effect and all
required premiums required to be paid prior to the date hereof have been paid.
(n) Year-2000 Compliance.
(i) On the basis of a comprehensive inventory,
review and assessment currently being undertaken by Loan Parties of Loan
Parties' computer applications utilized by Loan Parties or contained in products
produced or sold by Loan Parties, and upon inquiry made of Loan Parties'
material suppliers and vendors, Loan Parties' management is of the considered
view that Loan Parties, their products, and all such suppliers and vendors will
be Year 2000 Compliant before October 1, 1999.
(ii) Each Loan Party (i) has undertaken a detailed
inventory, review and assessment of all areas within its business and operations
that could be adversely affected by the failure of Loan Parties or their
products to be Year 2000 Compliant on a timely basis, (ii) are developing a
detailed plan and timeline for becoming Year 2000 Compliant on a timely basis,
and (iii) to date, are implementing that plan in accordance with that timetable
in all material respects. Loan Parties reasonably anticipate that they will be
Year 2000 Compliant on a timely basis.
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(o) Solvency. Each Loan Party is Solvent. No transfer of property
is being made by Loan Parties and no obligation is being incurred by Loan
Parties in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of Loan Parties.
(p) Intellectual Property. Each Loan Party owns or possesses
adequate licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇ applications,
trade names, copyrights, source code, mask-works, trade secrets and know-how
(collectively, the "Intellectual Property") that are necessary for the operation
of such Loan Party's business as currently conducted. Except as disclosed in
Schedule VI, no claim is pending or threatened in writing to the effect that a
Loan Party infringes upon, or conflicts with, the asserted rights of any other
Person under any Intellectual Property, and there is no basis for any such claim
(whether pending or threatened, and which, if determined adversely to an Loan
Party, reasonably could be expected to result in a Material Adverse Change). No
claim is pending or threatened in writing to the effect that any such
Intellectual Property owned or licensed by any Loan Party or in which any Loan
Party otherwise has the right to use is invalid or unenforceable by such Loan
Party, and there is no basis for any such claim (whether or not pending or
threatened, and which, if determined adversely to any Loan Party, reasonably
could be expected to result in a Material Adverse Change). No Loan Party has any
registered copyrights. No Loan Party owns any works of authorship that are
registrable as copyrights, except for works of insignificant value that are not
necessary to their business.
(q) No Encumbrances. Each Loan Party has good and indefeasible
title to the Collateral, free and clear of Liens except for Permitted Liens.
ARTICLE VI
COVENANTS
SECTION 6.01. AFFIRMATIVE COVENANTS. So long as any portion of the Term
Loan shall remain outstanding, each Loan Party and its Subsidiaries shall,
unless the Majority Banks otherwise consent in writing:
(a) Accounting System. The Loan Parties and their Subsidiaries
shall maintain a standard and modern system of accounting that enables Loan
Parties and their subsidiaries to produce financial statements in accordance
with GAAP, and maintain records pertaining to the Collateral that contain
information as from time to time may be requested by the Agent. Loan Parties and
their Subsidiaries shall keep a modern inventory reporting system that shows all
additions, sales, claims, returns, and allowances with respect to the Inventory.
(b) Financial Information. Furnish to each Bank and the Agent:
(i) Collateral Reporting. (A) On a monthly basis
and, in any event, by no later than the 10th Business Day of each month during
the term of this Agreement, (i) a
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detailed calculation of the Borrowing Base, and (ii) a detailed aging, by total,
of the Accounts, together with a reconciliation to the detailed calculation of
the Borrowing Base, (B) on a monthly basis and, in any event, by no later than
the 10th Business Day during the term of this Agreement, a summary aging, by
vendor, of each Loan Party and any Subsidiary's accounts payable and any book
overdraft, (C) upon request, copies of invoices in connection with the Accounts,
customer statements, credit memos, remittance advices and reports, deposit
slips, shipping and delivery documents in connection with the Accounts and for
Inventory and Equipment acquired by Loan Parties, purchase orders and invoices,
(D) on a quarterly basis, a detailed list of the customers of the Loan Parties
and their Subsidiaries, (E) on a monthly basis, a calculation of the Dilution
for the prior month; and (F) such other reports as to the Collateral or the
financial condition of the Loan Parties as the Agent may request from time to
time.
(ii) Financial Statements, Reports, Certificates.
(A) Deliver to the Agent, with copies to each
Bank: (i) as soon as available, but in any event within thirty (30) days after
the end of each month during each Fiscal Year, a company prepared balance sheet,
income statement, and statement of cash flow covering each Loan Party and its
Subsidiaries' operations during such period; and (ii) as soon as available, but
in any event within 90 days after the end of each Fiscal Year, financial
statements of each Loan Party and its Subsidiaries for each such Fiscal Year,
audited by independent certified public accountants reasonably acceptable to the
Agent and certified, without any qualifications, by such accountants to have
been prepared in accordance with GAAP, together with a certificate of such
accountants addressed to the Agent stating that such accountants do not have
knowledge of the existence of any Potential Event of Default or Event of
Default. Such audited financial statements shall include a balance sheet, profit
and loss statement, and statement of cash flow and, if prepared, such
accountants' letter to management. Inasmuch as a Loan Party is a parent company
of one or more Subsidiaries, or Affiliates, or is a Subsidiary or Affiliate of
another company, then, in addition to the financial statements referred to
above, each Loan Party agrees to deliver financial statements prepared on a
consolidating basis so as to present such Loan Party and each such related
entity separately, and on a consolidated basis.
(B) Together with the above, Loan Parties also
shall deliver to the Agent, with copies to each Bank, each Loan Party's Form
10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K Current Reports,
and any other filings made by Loan Parties or their Subsidiaries with the
S.E.C., if any, as soon as the same are filed, or any other information that is
provided by Loan Party to its shareholders, and any other report reasonably
requested by the Agent or any Bank relating to the financial condition of the
Loan Parties and their Subsidiaries.
(C) Each month, together with the financial
statements provided pursuant to Section 6.01(b)(ii)(A), the Parent Guarantor and
its Subsidiaries shall deliver to the Agent, with copies to each Bank, a
certificate signed by its chief financial officer to the effect that: (i) all
financial statements delivered or caused to be delivered to any one or more of
the Banks and the Agent hereunder have been prepared in accordance with GAAP
(except, in the
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case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and fairly present the financial
condition of the Parent Guarantor and any of its Subsidiaries, (ii) the
representations and warranties of the Parent Guarantor and its Subsidiaries
contained in this Agreement and the other Loan Documents are true and correct in
all material respects on and as of the date of such certificate, as though made
on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date), (iii) for each month that also is
the date on which a financial covenant in Section 6.02(v) is to be tested, a
Compliance Certificate demonstrating in reasonable detail compliance at the end
of such period with the applicable financial covenants contained in Section
6.02(v), and (iv) on the date of delivery of such certificate to the Agent there
does not exist any condition or event that constitutes a Potential Event of
Default or Event of Default (or, in the case of clauses (i), (ii), or (iii), to
the extent of any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action the Parent Guarantor and its
Subsidiaries have taken, is taking, or proposes to take with respect thereto).
(D) On a monthly basis, (i) a cash receipts and
disbursements report substantially in the form delivered to the Agent and the
Banks on a weekly basis prior to the Effective Date; (ii) a month-end daily
production report, including the "weekly build summary" for each plant,
substantially in the form delivered to the Agent and the Banks prior to the
Effective Date; and (iii) a comparison in reasonable detail of the Projections
to the Loan Parties' actual results of operation for the prior month.
(E) Loan Parties shall issue written instructions
to their independent certified public accountants authorizing them to
communicate with the Agent and to release to the Agent whatever financial
information concerning the Loan Parties that the Agent may request. Each Loan
Party and its Subsidiaries hereby irrevocably authorizes and directs all
auditors, accountants, or other third parties to deliver to the Agent, at Loan
Parties' expense, copies of the Loan Parties and Subsidiaries' financial
statements, papers related thereto, and other accounting records of any nature
in their possession, and to disclose to the Agent any information they may have
regarding the Loan Parties and Subsidiaries' business affairs and financial
conditions.
(c) Notices and Information. Deliver to the Agent and each Bank:
(i) Promptly upon any Responsible Officer of any
Loan Party obtaining knowledge (A) of any condition or event which constitutes
an Event of Default which is continuing or Potential Event of Default; (B) that
any Person has given any notice to any Loan Party or any Subsidiary of any Loan
Party or taken any other action with respect to (1) a claimed default or event
or condition of the type referred to in Section 7.01; (2) the institution of any
litigation of the type described in Section 5.01(g) or (h); or (3) any condition
or event with respect to any Loan Party or any of its Subsidiaries which
constitutes a Material Adverse Change (a) in the business, operations,
prospects, properties, assets or condition (financial or otherwise) of such Loan
Party and Subsidiaries, taken as a whole, or (b) in the ability of such Loan
Party to perform, or of the Agent or any of the Banks to enforce, the
obligations of such Loan Party and
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Subsidiaries under the Loan Documents: an officers' certificate specifying the
nature and period of existence of any such condition, event, or litigation or
specifying the notice given or action taken by such holder or Person and the
nature of such claimed default, Event of Default, Potential Event of Default,
condition, event, or litigation, and what action Loan Parties and their
Subsidiaries have taken, are taking and propose to take with respect thereto;
(ii) Where applicable, within ten (10) Business Days
after any Responsible Officer of any Loan Party or any of its Subsidiaries
becomes aware of the occurrence of or forthcoming occurrence of any (a)
Termination Event, (b) any "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 in excess of One
Hundred Thousand Dollars ($100,000), or (c) any ERISA Event that reasonably
could be expected to result in a Material Adverse Change, a written notice
specifying the nature thereof, what action such Loan Party or any of its
Subsidiaries has taken, is taking or proposes to take with respect thereto, and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor, or the Pension Benefit Guaranty Corporation with respect
thereto; provided, however, that this clause (ii) shall not apply to any
prohibited transaction for which an exemption has been granted pursuant to
Section 4975(c)(ii) of the Internal Revenue Code or Section 408 of ERISA;
(iii) Where applicable, within three (3) Business
Days, copies of (a) all notices received by any Loan Party or its Subsidiaries
or any of its ERISA Affiliates of the Pension Benefit Guaranty Corporation's
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; and (b) all notices received by any Loan Party or
Subsidiary or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA;
(iv) Promptly, and in any event within thirty (30)
days after receipt thereof, a copy of any notice, summons, citation, directive,
letter or other form of communication from any Governmental Authority or court
in any way concerning any action or omission on the part of any Loan Party or
any of its Subsidiaries in connection with any Hazardous Materials, or
concerning the filing of a Lien upon, against or in connection with any Loan
Party, its 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, where applicable, which could reasonably be expected to cause a Material
Adverse Change to the business, operations, prospects, properties, assets and
condition (financial or otherwise) of any Loan Party and its Subsidiaries, taken
as a whole, or on the ability of each Loan Party to perform, or of any of the
Banks to enforce, the obligations of such Loan Party and its Subsidiaries under
the Loan Documents, excepting therefrom, however, any such notices, summons,
citations, directives, letters or other communications received in connection
with those matters listed in Schedule XIII.
(v) Promptly, and in any event within ten (10)
Business Days after any Material Contract of any Loan Party or any Subsidiary is
terminated or any new Material
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Contract is entered into, a written statement describing such event and
explaining any action being taken with respect thereto (and, if requested by
Agent, copies of such amendments or new contracts); and
(vi) Promptly, and in any event within ten (10) days
after request, such other information and data with respect to any Loan Party or
any of its Subsidiaries as from time to time may be reasonably requested by any
Bank or the Agent.
(d) Corporate Existence, Etc. Except as permitted in the
Intercreditor Agreement, at all times preserve and keep in full force and effect
its and its Subsidiaries' corporate existence and rights and franchises material
to its business and those of such Subsidiaries.
(e) Tax Returns. Deliver to the Agent copies of each Loan Party
and its Subsidiary's future federal income tax returns, and any amendments
thereto, within thirty (30) days of the filing thereof with the Internal Revenue
Service.
(f) Payment of Taxes. Loan Parties shall: (i) cause all
assessments and taxes, whether real, personal, or otherwise, due or payable by,
or imposed, levied, or assessed against any Loan Party and any Subsidiary or any
of its property to be paid in full, before delinquency or before the expiration
of any extension period, except to the extent that the validity of such
assessment or tax shall be the subject of a Permitted Protest; (ii) make due and
timely payment or deposit of all such federal, state, foreign, and local taxes,
assessments, or contributions required of it by law, except to the extent that
the validity of such assessment or tax shall be the subject of a Permitted
Protest, and will execute and deliver to the Agent, on demand, appropriate
certificates attesting to the payment thereof or deposit with respect thereto;
and (iii) make timely payment or deposit of all tax payments and withholding
taxes required of it by those laws concerning F.I.C.A. (or its foreign
equivalent) and F.U.T.A. (or its foreign equivalent), state disability (or its
foreign equivalent), and, upon request, furnish the Agent with proof
satisfactory to Agent indicating that such Loan Party and any Subsidiary have
made such payments or deposits.
(g) Maintenance of Properties; Insurance.
(i) Maintain or cause to be maintained in good
repair, working order and condition (ordinary wear and tear excepted) all
properties material to the continued conduct of the business of each Loan Party
and its Subsidiaries. Each Loan Party shall, at its own expense, maintain
insurance with respect to the Equipment and Inventory in which it has an
interest in such amounts, against such risks, in such form and with such
insurers as is customary for similarly situated businesses. Such insurance shall
include, without limitation, property damage insurance and liability insurance.
Each policy for property damage insurance shall provide for all losses to be
paid directly to Agent in accordance with the Intercreditor Agreement. Each
policy shall in addition name the applicable Loan Party and Agent as insured
parties thereunder (without any representation or warranty by or obligation upon
Agent) as their
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interests may appear and have attached thereto a loss payable clause acceptable
to Agent that shall (A) contain an agreement by the insurer that any loss
thereunder shall be payable to Agent in accordance with the Intercreditor
Agreement notwithstanding any action, inaction or breach of representation or
warranty by any Loan Party and its Subsidiary, (B) provide that there shall be
no recourse against Agent for payment of premiums or other amounts with respect
thereto, and (C) provide that at least thirty (30) days' prior written notice of
cancellation, material amendment, reduction in scope or limits of coverage or of
lapse shall be given to Agent by the insurer. Each Loan Party and its Subsidiary
shall, if so requested by Agent, deliver to Agent original or duplicate policies
of such insurance and, as often as Agent may reasonably request (but no more
frequently than once per year, unless there is a change in the policy or the
insurer), a report of a reputable insurance broker with respect to such
insurance. Further, subject to the Intercreditor Agreement, each Loan Party and
its Subsidiary shall, at the request of Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 8 of the Security Agreements and cause the respective
insurers to acknowledge notice of such assignment.
(ii) Payments for claims issued by any liability
insurance maintained by any Loan Party pursuant to this Section 6.01(g) may be
paid directly to the Person who shall have incurred liability covered by such
insurance. In case of any loss involving damage to Equipment or Inventory when
subsection (i) of this Section 6.01(g) is not applicable, each Loan Party and
its Subsidiary shall make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by such Loan Party and any Subsidiary pursuant to this Section
6.01(g) shall be paid to such Loan Party and any Subsidiary as reimbursement for
the costs of such repairs or replacements.
(iii) Upon (A) the occurrence and during the
continuation of any Event of Default or (B) the actual or constructive loss (in
excess of $100,000 per occurrence) of any Equipment or Inventory, all insurance
payments in respect of such Equipment or Inventory shall be paid to and applied
by Agent as specified in Section 18 of the Security Agreements.
(h) Inspection. Permit any authorized representatives designated
by the Agent or any Bank in writing, upon reasonable notice to such Loan Party
and its Subsidiary, to visit and inspect, test, check, or appraise any of the
properties of such Loan Party or any of its Subsidiaries, including its and
their financial and accounting books and records, 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, provided that (i) physical visits
and inspections of any Loan Party's properties shall occur no more frequently
than once a year, unless an Event of Default has occurred and is continuing, in
which case visits and inspections may be conducted as frequently as Agent or any
Bank elects, and (ii) inspection of any Loan Party or Subsidiary's books and
records shall be conducted as often as reasonably requested; provided, further,
that inspections by any Bank shall be at that Bank's expense and inspections by
Agent shall be at the expense of the Loan Parties and Subsidiaries.
Notwithstanding any provision of this Agreement to the contrary, no Loan Party
or Subsidiary will be required to disclose, permit the inspection, examination,
copying or
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making extracts of, or discussion of, any document, information or other matter
that (i) constitutes non-financial trade secrets or non-financial proprietary
information (except to the extent necessary to perfect or protect Agent's
security interest in such assets), or (ii) in respect of which disclosure to
Agent or such Bank (or designated representative) is then prohibited by (a) law,
or (b) an agreement binding on such Loan Party that was not entered into by such
Loan Party for the primary purpose of concealing information from Agent or the
Banks. Permit Agent and its authorized representatives to conduct (at such Loan
Party's expense) an audit of such Loan Party's Accounts, provided that such
audits shall not be conducted more frequently than annually unless an Event of
Default is continuing, in which case audits may be conducted as frequently as
Agent elects.
(i) Compliance with Laws, Etc. Exercise reasonable due diligence
in order to comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, including all
environmental laws, rules, regulations and orders, noncompliance with which
could reasonably be expected to cause a Material Adverse Change to the business,
operations, prospects, properties, assets or condition (financial or otherwise)
of such Loan Party and any Subsidiary, taken as a whole, or on the ability of
such Loan Party and its Subsidiary to perform, or of the Agent or any of the
Banks to enforce, the obligations of such Loan Party and such Subsidiary under
the Loan Documents.
(j) Appraisals. When requested by the Agent, and in any event at
least semi-annually after the Effective Date, an appraisal report by an
appraiser reasonably satisfactory to the Agent and consented to by the Loan
Parties (which consent shall not be unreasonably withheld), which shall describe
the Collateral and report the original cost, net book value, fair market value,
auction value and orderly liquidation value thereof. The Fixed Assets shall be
appraised pursuant to this Section 6.01(j) by no later than December 31, 1998.
(k) Outside Consultant. Continue to engage KPMG Peat Marwick, on
terms and conditions acceptable to the Agent, for purposes of administering the
reporting obligations of the Loan Parties under this Agreement and the Loan
Documents and, in particular, monitoring and assisting in the production of the
financial reports required thereby.
(l) Year 2000. Loan Parties and their Subsidiaries will be Year
2000 Compliant by October 1, 1999.
(m) No Setoffs or Counterclaims. Loan Parties and their
Subsidiaries agree that the Loan Parties shall make payments hereunder and under
the other Loan Documents by or on behalf of the Loan Parties and their
Subsidiaries without setoff or counterclaim and free and clear of, and without
deduction or withholding for or on account of, any federal, state, local, or
foreign taxes.
(n) Employee Benefits. Cause to be delivered to the Agent, upon
request, each of the following:
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(i) a copy of each Benefit Plan (or, where any such
plan is not in writing, complete description thereof) (and if applicable,
related trust agreements or other funding instruments) and all amendments
thereto, all written interpretations thereof and written descriptions thereof
that have been distributed to employees or former employees of each Loan Party
or its Subsidiaries;
(ii) the most recent determination letter issued by
the Internal Revenue Service with respect to each Benefit Plan;
(iii) for the three most recent plan years, annual
reports on Form 5500 Series required to be filed with any governmental agency
for each Benefit Plan;
(iv) all actuarial reports prepared for the last
three plan years for each Benefit Plan;
(v) a listing of all Multiemployer Plans, with the
aggregate amount of the most recent annual contributions required to be made by
each Loan Party, its Subsidiary or any ERISA Affiliate to each such plan and
copies of the collective bargaining agreements requiring such contributions;
(vi) any information that has been provided to any
Loan Party, its Subsidiary or any ERISA Affiliate regarding withdrawal liability
under any Multiemployer Plan; and
(vii) the aggregate amount of the most recent annual
payments made to former employees of any Loan Parties or Subsidiaries under any
Retiree Health Plan.
Each Loan Party and its Subsidiary, as applicable, shall be deemed to know all
facts known by the administrator of any Benefit Plan of which it is the plan
sponsor.
(o) Leases. Loan Parties and their Subsidiaries agree that Loan
Parties and their Subsidiaries shall pay when due all rents and other amounts
payable under any leases to which any Loan Party or any of its Subsidiaries is a
party or by which any Loan Party or any of its Subsidiaries' properties and
assets are bound, unless such payments are the subject of a Permitted Protest
and except for rents and other amounts payable under leases of closed facilities
at which Collateral having an OLV (as defined in the Intercreditor Agreement)
less than $1,250,000 is located.
(p) Fiscal Year. Each Loan Party and its Subsidiaries agree to
maintain its Fiscal Year as a year ending December 31.
(q) Compliance with Material Contracts. Each Loan Party shall
perform and observe all material terms and provisions of the Material Contracts
to be performed or observed by it, maintain, and cause each of its Subsidiaries
to maintain the Material Contracts to
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which it is a party in full force and effect during their respective stated
terms, enforce, and cause each of its Subsidiaries to enforce, and cause each of
its Subsidiaries to enforce, the Material Contracts to which it is a party in
accordance with their terms, and take and cause each of its Subsidiaries to
take, all such action to such ends as may from time to time be reasonably
requested by the Agent other than any such failure which would create no
Material Adverse Change; excepting therefrom, (x) Loan Parties' dispute with
Nextar regarding thickness sorters, (y) any failure to make timely payment in
respect of the approximately $2,700,000 unsecured trade note payable to ▇▇▇▇▇,
and (z) defaults under leases of closed facilities of the Loan Parties where no
Collateral is located.
(r) Real Property; Collateral Access Agreements. Within thirty
(30) days after the Effective Date, (i) the Loan Parties shall prepare and
deliver to the Agent a list of all leasehold interests of the Loan Parties in
any Real Property as of the Effective Date, and (ii) each Loan Party having a
leasehold interest in Real Property shall use its best efforts to deliver, or
cause to be delivered, to the Agent, Collateral Access Agreements from the
landlords on all Real Property leasehold interests of such Loan Party.
(s) Delivery of Documents After Effective Date. Each Loan Party
and its Subsidiary shall execute and deliver, or shall cause the execution and
delivery of, the agreements, documents, instruments, certificates and opinions
designated on the Closing Document List as items to be delivered after the
Effective Date, as applicable, within the time periods with respect to such
items, as set forth on the Closing Document List.
(t) Further Assurances. Each Loan Party shall take, and shall
cause each of its Subsidiaries to take, all such further actions and execute all
such further documents and instruments as the Agent may at any time reasonably
determine in its sole discretion to be necessary or desirable to further carry
out and consummate the transactions contemplated by the Loan Documents, to cause
the execution, delivery and performance of the Loan Documents to be duly
authorized and to perfect or protect the Liens (and maintain the priority status
thereof) of the Agent, for the benefit of the Banks, on the Collateral.
SECTION 6.02. NEGATIVE COVENANTS. So long as any portion of the Term
Loan shall remain outstanding, none of the Loan Parties nor any of their
Subsidiaries shall, without the written consent of the Majority Banks (except
where all Banks must provide prior written consent in accordance with Section
9.01):
(a) Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(i) Indebtedness evidenced by this Agreement;
(ii) Indebtedness set forth in Schedule IX;
(iii) Indebtedness under the Foothill Group Agreement;
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(iv) Subordinated Indebtedness approved by the Banks;
(v) Indebtedness secured by Permitted Liens; and
(vi) Refinancings, renewals, or extensions of
Indebtedness permitted under clauses (ii), (iii), (iv), and (v) of this Section
6.02(a) (and continuance or renewal of any Permitted Liens associated therewith)
so long as: (i) the terms and conditions of such refinancings, renewals, or
extensions do not materially impair the prospects of repayment of the
Obligations by Loan Parties (ii) the net cash proceeds of such refinancings,
renewals, or extensions do not result in an increase in the aggregate principal
amount of the Indebtedness so refinanced, renewed, or extended, (iii) such
refinancings, renewals, refundings, or extensions do not result in a shortening
of the average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, (iv) to the extent that Indebtedness that is refinanced was
subordinated in right of payment to the Obligations, then the subordination
terms and conditions of the refinancing Indebtedness must be at least as
favorable to the Banks as those applicable to the refinanced Indebtedness, and
(v) such refinancings, renewals or extensions of Indebtedness would not violate
Section 6.02(k)(ii) hereof.
(b) Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
Section 6.02(a)(vi) and so long as the replacement Liens only encumber those
assets or property that secured the original Indebtedness).
(c) Restrictions on Fundamental Changes. Except as permitted by
Section 6.02(d)(ii) or as permitted by the Intercreditor Agreement, enter into
any merger, consolidation, reorganization, or recapitalization, or reclassify
its Stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its property or assets; provided that nothing herein prohibits Parent
Guarantor from permitting the conversion of all or part of its preferred stock
to Class A Common Stock.
(d) Disposition of Assets.
(i) Unauthorized Dispositions of Collateral. Except as
to authorized dispositions of Collateral set forth in Section 6.02(d)(ii) below,
the use by Loan Parties of Collateral constituting cash or cash equivalents in
compliance with the Loan Documents, the making of Permitted Investments or the
licensing of General Intangibles in the ordinary course of business to
licensees, sell, lease, assign, transfer, or otherwise dispose of any of their
properties or assets other than sales of Inventory to buyers in the ordinary
course of the Loan Parties' businesses as currently conducted.
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(ii) Authorized Dispositions of Collateral. So
long as no Event of Default has occurred and is continuing or would result from
giving effect to such Sale, the Loan Parties shall be entitled to dispose of
assets composing the Collateral subject to the terms and conditions set forth in
the Intercreditor Agreement; provided, however, that in the event of any such
Sale, the Company shall: (A) provide immediate notice of the Sale to the Agent
and the Banks; (B) direct the purchaser(s) of assets subject to the Sale to pay
the proceeds of such Sale (to the extent required and calculated in accordance
with the Intercreditor Agreement) directly to the Agent on behalf of the Banks;
provided, further, in the event of any such Sale, the Agent shall, to the extent
of any disposition of Collateral governed by and made in compliance with the
Intercreditor Agreement and, so long as any payments required to be received by
the Agent for the benefit of the Banks under the Loan Documents shall have been
received in connection therewith, release its security interest in the
Collateral being sold concurrent with the sale thereof.
(e) Change Name. Change its name (or any foreign equivalent),
corporate structure (within the meaning of Section 9402(7) of the California
Commercial Code), or identity, or add any new fictitious name.
(f) [Intentionally omitted.]
(g) Acquisitions. Acquire or permit any Subsidiary to acquire any
assets or a going business, whether through purchase of assets, merger or
otherwise, outside of the ordinary course of business.
(h) New Subsidiaries. Create or acquire any new Subsidiaries.
(i) Guarantee. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person (other than the obligations
of another Loan Party upon prior or concurrent written notice to the Agent)
except by endorsement of instruments or items of payment for deposit to the
account of Loan Parties or which are transmitted or turned over to the Agent.
(j) Nature of Business. Engage, or permit any of its Subsidiaries
to engage, in any business other than (i) the businesses engaged in by such Loan
Party and its Subsidiaries on the date of this Agreement and similar or related
businesses, and (ii) such other lines of business as may be consented to by the
Majority Banks.
(k) Prepayments and Amendments.
(i) Except in connection with a refinancing
permitted by Section 6.02(a)(vi), prepay, redeem, retire, defease, purchase, or
otherwise acquire any Indebtedness owing to any third Person, other than in
respect of (A) the Obligations in accordance with this Agreement, (B) any
payment under the revolver facility pursuant to the Foothill Group Agreement,
(C) interest, fees, expenses and mandatory prepayments of the Foothill Bridge
Term
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Loan under Section 2.2 of the Foothill Group Agreement, as in effect on the
Effective Date and (D) prepayment of the Seagate Subordinated Debt solely upon
the conversion of up to $5,000,000 in principal amount thereof into Class A
Common Stock in accordance with the terms thereof, and
(ii) Directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 6.02(a)(ii), (iii), (iv), (v), or (vi), except that (A)
the Loan Parties may enter into amendments that would be permitted if effected
by a refinancing permitted under Section 6.02(a)(vi), and (B) the Loan Parties
may enter into amendments under the Foothill Group Financing Documents unless
the effect of any such amendment or amendments is to (1) increase the interest
rate or fees payable with respect to the Indebtedness thereunder; (2) change the
dates upon which payments of principal or interest are due on such Indebtedness
other than to extend such dates; (3) change any events constituting a "Default"
or an "Event of Default" (as defined in the Foothill Group Agreement) other than
to delete or make less restrictive any default provision therein, or add or make
more restrictive any covenant with respect to such Indebtedness; (4) change the
redemption or prepayment provisions of such Indebtedness other than to extend
the dates therefor or to reduce the premiums payable in connection therewith;
(5) increase the commitments under the Foothill Group Financing Documents or the
principal amount of the Foothill Group Bridge Term Loan; (6) make more
restrictive the definition of "Revolving Advance Cap" or "Total Obligations Cap"
(as defined in the Foothill Group Agreement as in effect on the Effective Date)
or add any other definitions which would have the effect of decreasing the
amount available for borrowing under the revolving credit provisions of the
Foothill Group Financing Documents to an amount less than the amount calculated
pursuant to Section 2.1 of the Foothill Group Agreement as in effect on the
Effective Date; (7) amend the definition of "Borrowing Base" (as that definition
is in effect on the Effective Date) or any of the components thereof (including,
without limitation, those relating to eligible collateral, advance rates,
dilution and concentration percentages); (8) change or amend any other term if
such change or amendment would materially increase the obligations of the Loan
Parties or confer additional material rights to the Foothill Group in a manner
adverse to the Loan Parties, the Agent, the Co-Agent or any Bank; (9) add any
collateral or security for the obligations of the Loan Parties thereunder; or
(10) enter into any amendment, modification or waiver of Section 1D, the second
paragraph of Section 2, Section 4C or the second paragraph of Section 7 of the
Certificate of Designation.
(l) Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
(m) Consignments. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms of
sale.
(n) Distributions. Make any distribution or declare or pay any
dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any Stock, of any class, whether now or hereafter
outstanding, provided, however, that
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conversion of the Equity Investment from preferred stock to Class A Common Stock
shall not constitute a purchase, acquisition, redemption, or retirement of any
Stock and provided, further, that any Loan Party may make dividends,
distributions or other payments to any Borrower, and any Loan Party other than a
Borrower may make dividends, distributions and other payments to the Parent
Guarantor, so long as such dividends, distributions and other payments are not
otherwise prohibited by this Agreement.
(o) Accounting Methods. Modify or change its method of accounting
or enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of the Loan Parties' accounting records
without said accounting firm or service bureau agreeing to provide the Agent
information regarding the Collateral or the Loan Parties' financial condition.
Loan Parties hereby waive in favor of the Agent for the benefit of the Banks,
the right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by the Agent pursuant to or in accordance with this Agreement, and agrees that
the Agent may contact directly any such accounting firm or service bureau in
order to obtain such information.
(p) Investments. Except for Permitted Investments, directly or
indirectly make, acquire, or incur any liabilities (including contingent
obligations) for or in connection with (i) the acquisition of the securities
(whether debt or equity) of, or other interests in, a Person, (ii) loans,
advances, capital contributions, or transfers of property to a Person, or (iii)
the acquisition of all or substantially all of the properties or assets of a
Person.
(q) Transactions with Affiliates. Directly or indirectly, enter
into or permit to exist any material transaction with any Affiliate of any Loan
Party except for transactions that are in the ordinary course of such Loan
Party's business, upon fair and reasonable terms, that are fully disclosed to
the Agent, and that are no less favorable to such Loan Party than would be
obtained in an arm's length transaction with a non-Affiliate.
(r) Suspension. In the aggregate suspend or go out of a
substantial portion of their business.
(s) Compensation. Other than Parent Guarantor, increase the
annual fee or per-meeting fees paid to directors during any year by more than
15% over the prior year; and, no Loan Parties or any of their Subsidiaries shall
pay or accrue total cash compensation, during any year, to officers and senior
management employees in an aggregate amount in excess of 125% of that paid or
accrued in the prior year.
(t) Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its chief executive office to a new location
without providing thirty (30) days prior written notification thereof to the
Agent and so long as, at the time of such written notification, the relevant
Loan Party provides any financing statements or fixture filings (or foreign
equivalents) necessary to perfect and continue perfected the Agent's Liens and
also
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provides to the Agent a Collateral Access Agreement with respect to such new
location. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without the Agent's prior
written consent. The Agent and the Banks hereby consent to the transfer of up to
$1,000,000 in book value of Inventory and up to $1,000,000 of OLV (as defined in
the Intercreditor Agreement) of Equipment to a warehouse selected by Loan
Parties located in California, Singapore or Malaysia; provided, however, that
the Loan Parties shall provide twenty (20) days prior written notification
thereof to the Agent and, at such time, provide financing statements or fixture
filings (or foreign equivalents) necessary to perfect the Agent's Liens.
(u) No Prohibited Transactions Under ERISA. Directly or
indirectly:
(i) Engage, or permit any Subsidiary of Loan
Parties to engage, in any prohibited transaction which is reasonably likely to
result in a civil penalty or excise tax described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from the
United States Department of Labor;
(ii) Permit to exist with respect to any Benefit
Plan any accumulated funding deficiency (as defined in Sections 302 of ERISA and
412 of the Internal Revenue Code), whether or not waived;
(iii) Fail, or permit any Subsidiary of Loan Parties
to fail, to pay timely required contributions or annual installments due with
respect to any waived funding deficiency to any Benefit Plan;
(iv) Terminate, or permit any Subsidiary of Loan
Parties to terminate, any Benefit Plan where such event would result in any
liability of Loan Parties, any of its Subsidiaries or any ERISA Affiliate under
Title IV of ERISA;
(v) Fail, or permit any Subsidiary of Loan Parties
to fail, to make any required contribution or payment to any Multiemployer Plan;
(vi) Fail, or permit any Subsidiary of Loan Parties
to fail, to pay any required installment or any other payment required under
Section 412 of the Internal Revenue Code on or before the due date for such
installment or other payment;
(vii) Amend, or permit any Subsidiary of Loan
Parties to amend, a Plan resulting in an increase in current liability for the
plan year such that any Loan Party or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Internal Revenue Code; or
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(viii) Withdraw, or permit any Subsidiary of Loan
Parties to withdraw, from any Multiemployer Plan where such withdrawal is
reasonably likely to result in any liability of any such entity under Title IV
of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of any Loan Party or any
ERISA Affiliate in excess of $100,000.
(v) Financial Covenant. Fail to maintain Adjusted Net Worth of at
least the amounts specified below for the relevant periods, measured on a fiscal
quarter-end basis: (A) for the fiscal quarters of Loan Parties ending on June
30, 1998, (A) $32,000,000 and September 30, 1996, (B) $26,000,000; and (C) for
each fiscal quarter of Loan Parties ending thereafter, $32,000,000.
(w) Capital Expenditures. Make Consolidated Capital Expenditures
in any fiscal year in excess of $20,000,000.
(x) Securities Accounts.
(i) Establish or maintain any Securities Account
unless the Agent shall have received a Control Agreement, duly executed and in
full force and effect, in respect of such Securities Account;
(ii) Transfer assets out of any Securities Accounts;
provided, however, that, so long as no Event of Default has occurred and is
continuing or and no Event of Default or Potential Event of Default would result
therefrom, the relevant Loan Parties may use such assets to the extent not
prohibited by this Agreement or the other Loan Documents.
(y) Inactive Subsidiary. Permit FSC to become an active operating
company. Loan Parties shall cause FSC to continue to be an inactive holding
company whose only significant assets are cash of not more than $500,000 and the
Stock of various Subsidiaries.
(z) Sales and Lease-Backs. Become or remain liable, or permit any
of its Subsidiaries to become or remain liable, directly or indirectly, with
respect to any Capital Lease of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which such Loan Party or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person or (ii) which such Loan Party or any of its Subsidiaries intends to use
for substantially the same purpose as any other property which has been or is to
be sold or transferred by such Loan Party or any of its Subsidiaries to any
Person in connection with such lease; provided that any Loan Party and its
Subsidiaries may become and remain liable as lessee, guarantor or other surety
with respect to any such lease if and to the extent that any such Loan Party or
any of its Subsidiaries would be permitted to enter into, and remain liable
under, such lease under Sections 6.02(a) and 6.02(f).
ARTICLE VII
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EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT. Any one or more of the following events
shall constitute an event of default (each an "Event of Default") under this
Agreement:
(a) Failure to Pay. If any Loan Party shall fail to pay any
installment of the principal when due hereunder or under any Loan Document, or
shall fail to pay any installment of interest within three (3) Business Days of
the date when due hereunder or under any Loan Document, or shall fail to pay any
other amount payable within five (5) Business Days of the date when due
hereunder or under any Loan Document.
(b) Failure to Make Principal and Interest Payments as a
Condition to the Effective Date. If the Loan Parties shall fail to pay the
$10,000,000 principal payment required to be paid pursuant to Section 4.01(b)(i)
on or before June 1, 1998 and the interest payment required to be made pursuant
to Section 4.01(i).
(c) Breach of Certain Representations, Covenants, Terms and
Conditions. If any Loan Party fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.01(a),
6.01(b)(i) (but only up to three times during any 12-month period, and only in
relation to Events of Default caused by the failure of third Persons to provide
required information or reporting, and not in relation to Events of Default
caused by a Loan Party), 6.01(b)(ii), 6.01(e), 6.01(g), 6.01(i), 6.01(n), and
6.01(o) of this Agreement and in Sections 4(b), 5(a), 7(a), 7(b), 7(d), and 10
of the Security Agreements or comparable provisions of the other Loan Documents,
within ten (10) days of the date when required, or within five (5) days of the
date when required in the case of Section 6.01(b)(i) or Section 6.01(b)(ii), or
if any Loan Party otherwise fails to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement, in any
of the other Loan Documents, or in any other present or future agreement between
any Loan Party and the Banks or Agent;
(d) Material Adverse Change. If there is a Material Adverse
Change;
(e) Cross Default. If any Loan Party or any of their Subsidiaries
shall (i) fail to pay any principal of, or premium or interest on, any
Indebtedness, the aggregate outstanding principal amount of which is at least
Two Million Dollars ($2,000,000) (excluding the Term Loan) when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, or (ii)
fail to perform or observe any term, covenant or condition on its part required
to be performed or observed under any agreement or instrument relating to any
Indebtedness, the aggregate outstanding principal of which is at least Two
Million Dollars ($2,000,000) (excluding the Term Loan), and the effect of such
failure is to accelerate or permit the acceleration of the maturity of such
Indebtedness or (iii) fail to perform or observe any term, covenant or condition
on its part to be performed or observed under any agreement or instrument
relating to any Indebtedness, the aggregate outstanding principal amount of
which is at least One Million
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Dollars ($1,000,000) (excluding the Term Loan), and the effect of such failure
is to accelerate the maturity of such Indebtedness; or
(f) Loan Party Insolvency Event. (i) If any Loan Party 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 a 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 any
Loan Party shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against any Loan Party any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of forty-five (45)
consecutive days; or (iii) there shall be commenced against any Loan Party 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 forty-five (45) consecutive days from the entry thereof; or (iv) any Loan
Party 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) any Loan Party shall admit in writing its inability to
pay its debts as they become due (any of the foregoing described in clauses (i)
through (v) of this Section defined hereinafter as an "Insolvency Event");
(g) Subsidiary Insolvency Event. (i) If any Subsidiary of a Loan
Party 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 a 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 any
such Subsidiary shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against any such Subsidiary any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a period
of forty-five (45) consecutive days; or (iii) there shall be commenced against
any such Subsidiary 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 forty-five (45) consecutive days from the entry
thereof; or (iv) any such Subsidiary 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)
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and (iii) above; or (v) any such Subsidiary shall admit in writing its inability
to pay its debts as they become due;
(h) Injunction. If any Loan Party is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;
(i) Writs and Levies. If any material portion of the properties
or assets of any Loan Party is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any third Person;
(j) Government Levy. If notices of Lien, levy, or assessment
aggregating more than $100,000 are filed of record with respect to any of the
properties or assets of any Loan Party by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or by any foreign governmental authority, or
if any taxes or debts aggregating more than $100,000 owing at any time hereafter
to any one or more of such entities become a Lien, whether ▇▇▇▇▇▇ or otherwise,
upon any of the properties or assets of any Loan Party and the same is not paid
(or reserved against) on the payment date thereof;
(k) Judgments and Encumbrances. If a judgment or other claim in
excess of $100,000 becomes a Lien or encumbrance upon any material portion of
any Loan Party's properties or assets and is not fully satisfied, bonded, or
stayed within twenty (20) days;
(l) Material Contracts. If there is a default in any Material
Contract to which any Loan Party is a party with one or more third Persons and
such default (a) occurs at the final maturity of the obligations thereunder, or
(b) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of such Loan Party's obligations
thereunder; the foregoing notwithstanding, (x) Loan Parties' dispute with Nextar
regarding thickness sorters, (y) defaults by Loan Parties under the
approximately $2,700,000 unsecured trade note payable to ▇▇▇▇▇, and (z) defaults
under leases of closed facilities of the Loan Parties where no Collateral is
located, shall not constitute an Event of Default under this Section 7.01(l).
(m) Subordinated Indebtedness. If any Loan Party makes any
payment on account of Indebtedness of any Loan Party that has been contractually
subordinated in right of payment to the payment of the Obligations, except to
the extent such payment is permitted by the terms of the subordination
provisions applicable to such Indebtedness;
(n) ERISA Violation.
(i) If any Loan Party or any of its ERISA
Affiliates fails to make full payment when due of all amounts which, under the
provisions of any Pension Plan or Section 412 of the Internal Revenue Code, such
Loan Party or such ERISA Affiliate is required to pay as contributions thereto;
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(ii) If any accumulated funding deficiency occurs or
exists, whether or not waived, with respect to any Pension Plan;
(iii) If the excess of the actuarial present value
of all benefit liabilities under all 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 Two Million Dollars ($2,000,000);
(iv) If any Loan Party or any of its ERISA
Affiliates enters into any transaction which has as its principal purpose the
evasion of liability under Subtitle D of Title IV of ERISA;
(v) If any Pension Plan maintained by any Loan Party
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 Pension Plan, or (C) the Pension Benefit
Guaranty Corporation (or any successor thereto) shall institute proceedings to
terminate any Pension Plan or to appoint a trustee to administer any Pension
Plan, or (D) any Loan Party or any of its ERISA Affiliates shall withdraw (under
Section 4063 of ERISA) from a Pension Plan, if as of the date of the event
listed in subclauses (A)-(D) above or any subsequent date, either any Loan Party
or its ERISA Affiliates have any liability (such liability to include, without
limitation, any liability to the Pension Benefit Guaranty Corporation, or any
successor thereto, or to any other party under Sections 4062, 4063 or 4064 of
ERISA or any other provision of law) resulting from or otherwise associated with
the events listed in subclauses (A)-(D) above; (As used in this subsection
7.01(n) 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);
(o) Loan Documents. If an event of default shall occur and be
continuing under any other Loan Document.
(p) Dissolution. If any Loan Party shall dissolve, wind up or
otherwise cease its business unless permitted hereunder.
(q) Guarantors. If the obligation of any Guarantor under or other
third Person under any Loan Document to which it is a party is limited or
terminated by operation of law or by the guarantor or other third Person
thereunder, or any such Guarantor or other third Person becomes the subject of
an Insolvency Event.
(r) Foothill Overadvances. If the aggregate amount of advances
under the Foothill Group Agreement (including, without limitation, overadvances
and protective advances but excluding the Foothill Group Bridge Term Loan),
whether or not requested by any Loan Party, shall (i) remain outstanding for
more than any 120 days within any 365-day period or (ii) at any one time, exceed
availability under the Borrowing Base (as defined in the Foothill
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Group Agreement) by $2 million; provided, further, that the total amount of the
Foothill Group Claim (as defined in the Foothill Group Agreement and including
the Foothill Group Bridge Term Loan) shall not exceed $30,000,000 minus the
aggregate amount of principal repayments made with respect to the Foothill Group
Bridge Term Loan.
(s) Failure of Enforceability of Credit Documents; Security. If
any covenant, agreement or obligation of any Loan Party contained in or
evidenced by any of the Loan Documents shall cease to be enforceable, or shall
be determined to be unenforceable, in accordance with its terms; any Loan Party
shall deny or disaffirm its obligations under any of the Loan Documents or any
Liens granted in connection therewith; or, any Liens granted to the Agent, for
the benefit of the Banks, in any of the Collateral shall be determined to be
void, voidable, invalid or unperfected, are subordinated or not given the
priority contemplated by this Agreement.
SECTION 7.02. ACCELERATION. (i) Upon the occurrence of any Event of
Default described in Subsections (f) and (g) above (Insolvency Event), the Term
Loan, together with accrued interest thereon, and all other amounts owing under
this Agreement, and the other Loan Documents shall automatically become due and
payable, and (ii) upon the occurrence of any other Event of Default, the Agent
shall at the request, or may with the consent of the Majority Banks, by notice
to Loan Parties, declare the Term Loan, together with accrued interest thereon,
and all other amounts owing under this Agreement, and the other Loan Documents
to be due and payable forthwith, whereupon the same shall immediately become due
and payable. Except as expressly provided above in this Section or elsewhere in
this Agreement, each Loan Party expressly waives presentment, demand, protest
and all other notices of any kind.
ARTICLE VIII
THE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Loan Documents, the Agent shall not be required to
exercise any discretion or take any action, but, subject to Section 9.01, shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Banks,
and such instructions shall be binding upon all Banks; provided, however, that
the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or any of the other
Loan Documents or applicable law. The Agent agrees to give to each Bank prompt
notice of each notice given to it by any Loan Party pursuant to the terms of
this Agreement and the other Loan Documents.
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SECTION 8.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement and
the other Loan Documents, except for its or their own gross negligence or wilful
misconduct. Without limiting the generality of the foregoing, the Agent: (i) may
consult with legal counsel (including counsel for any Loan Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Loan Documents on the
part of any Loan Party or to inspect the property (including the books and
records) of any Loan Party; (iv) shall not be responsible to any Bank for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (v) shall incur no liability
under or in respect of this Agreement and the other Loan Documents by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 8.03. CIBC [ASIA] LTD., CANADIAN IMPERIAL BANK OF COMMERCE, NEW
YORK AGENCY AND AFFILIATES. With respect to the Term Loan made by it, CIBC
[Asia] Ltd. ("CIBCAL") shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Bank and may exercise the
same as though CIBCAL was not an Affiliate of the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include CIBCAL in its
individual capacities. CIBCAL, Canadian Imperial Bank of Commerce, New York
Agency ("CIBC NYA") and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with any of the Loan Parties, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
subsidiary, all as if CIBCAL and CIBC NYA were not a Bank or Agent and without
any duty to account therefor to the Banks.
SECTION 8.04. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 5.01(b) and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Bank
also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.
SECTION 8.05. INDEMNIFICATION. The Banks agree to indemnify Agent and
Co- Agent (to the extent not reimbursed by Loan Parties) ratably according to
the respective principal amounts outstanding under the Term Loan (for purposes
of this Section 8.05, CIBC [Asia] Ltd.
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shall be deemed to have fully drawn each letter of credit issued by the Banks
party to the Letter of Credit Agreements), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent or Co-Agent in any way
relating to or arising out of this Agreement and the other Loan Documents or any
action taken or omitted by the Agent or Co-Agent under this Agreement and the
other Loan Documents, provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's or Co-Agent's
gross negligence or wilful misconduct. Without limiting the foregoing, each Bank
agrees to reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent
or Co-Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Loan Documents,
to the extent that the Agent or Co-Agent is not reimbursed for such expenses by
Loan Parties.
SECTION 8.06. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and Loan Parties and may be removed
at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Agent with the Loan Parties' consent (so long as no Event of Default
or Potential Event of Default is then continuing) which consent shall not be
unreasonably withheld or delayed. If no successor Agent shall have been so
appointed by the Majority Banks, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent from among
the Banks. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VIII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
SECTION 8.07. AGENT AUTHORIZATION. Each Bank authorizes and directs the
Agent to enter into the Loan Documents concerning the Collateral for the benefit
of the Banks. Each Bank authorizes and directs the Agent to enter into the
Intercreditor Agreement and the Seagate Subordination Agreement. Each Bank
agrees that any action taken by the Agent which is required to be taken in
accordance with the provisions of such documents or is otherwise approved by
this Agreement or the Majority Lenders, together with such other actions as are
reasonably incidental thereto, shall be authorized and binding upon the Agent,
the Co-Agent and each of the Banks.
ARTICLE IX
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MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of the Loan Documents nor consent to any departure by the Loan Parties
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) waive any of
the conditions specified in Article IV, (b) subject the Banks to any additional
obligations, (c) reduce the principal of, or interest on, the Term Loan or any
fees or other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal of, or interest on, the Term Loan or any fees or other
amounts payable hereunder, (e) change the percentage of the aggregate unpaid
principal amount of the Term Loan, or the number of Banks, which shall be
required for the Banks or any of them to take any action hereunder, (f) amend
any of the provisions in Sections 3.04 through 3.12, (g) amend the definition of
Majority Banks or this Section 9.01, (h) release Parent Guarantor, Subsidiary
Guarantors or any other guarantor, (i) release any material portion of the
Collateral or (j) amend any of the provisions of the Interbank Agreement and the
Side Letter; and provided, further, that no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Banks required
above to take such action, affect the rights or duties of the Agent under this
Agreement or any other Loan Document; and provided, further that no waiver or
consent shall, unless in writing and signed by the affected Bank, waive the
rights of that Bank to receive any payment or compensation under any of Sections
3.04 through 3.12. No amendment to Section 17(a) or 17(c) of the Intercreditor
Agreement shall be made without the consent of the Borrowers.
SECTION 9.02. NOTICES, ETC. Except as otherwise set forth in this
Agreement, all notices and other communications provided for hereunder shall be
in writing (including facsimile communication) and mailed or sent by facsimile
or delivered, if to Loan Parties, at their respective addresses set forth on the
signature page hereof; and if to any Bank or the Agent, at its address 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 communi cations shall (i) when telecopied be effective when
telecopied, (ii) when mailed first class postage prepaid, be effective on the
third Business Day after the date deposited in the mail, and (iii) when
delivered, be effective upon receipt, except that notices and communications to
the Agent pursuant to Article II or VII shall not be effective until received by
the Agent.
SECTION 9.03. RIGHT OF SETOFF. Subject to the Intercreditor Agreement,
upon the occurrence of both (i) any Event of Default and (ii) the making of the
request or the granting of the consent specified by the last paragraph of
Article VII to authorize the Agent to declare the Term Loan and other amounts
due and payable pursuant to the provisions of the last paragraph of Article VII,
each Bank is hereby authorized by each Loan Party, at any time and from time to
time, without notice, (a) to set off against, and to appropriate and apply to
the payment of, the obligations and liabilities of any Loan Party under the Loan
Documents (whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts owing by such
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Bank or any of its Affiliates to any Loan Party (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 any
monies, credits or other property belonging to any Loan Party at any time held
by or coming into the possession of such Bank, the Agent or any of their
respective Affiliates, 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 such Bank in its sole discretion may
elect. The rights of each Bank under this Section are in addition to other
rights and remedies (including other rights of set-off) which such Bank may
have.
SECTION 9.04. NO WAIVER; REMEDIES. No failure on the part of the Agent
or any Bank to exercise, and no delay in exercising, any right under any of the
Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any of the Loan Documents preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 9.05. COSTS AND EXPENSES. Without duplication of any amounts
payable pursuant to Article III, each of the Loan Parties jointly and severally
agree to pay upon receipt of invoice all costs and expenses of the Agent
(including reasonable attorney's fees and the allocated cost of in-house counsel
and staff) in connection with the preparation, amendment, modification,
enforcement, including in appellate, bankruptcy, (including without limitation
in connection with issues concerning cash collateral, relief from the automatic
stay and plan confirmation), insolvency, liquidation, reorganization, moratorium
or other similar proceedings or restructuring of the Loan Documents. In
addition, without duplication of any amounts payable pursuant to Article III,
the Loan Parties agree jointly and severally to pay on demand all costs and
expenses of each Bank (including reasonable attorney's fees and the reasonable
estimate of the allocated cost of in-house counsel and staff) in connection with
the preparation, amendment, modification, enforcement, bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings of any Loan
Party or restructuring of the Loan Documents.
SECTION 9.06. ADDITIONAL BANKS; ASSIGNMENTS; PARTICIPATIONS.
(a) Any Bank may assign, from time to time, all or any portion of
its pro rata share of the Term Loan to an Affiliate of that Bank or to a Federal
Reserve Bank or, (so long as no Event of Default shall have occurred and be
continuing) with the prior written approval of Loan Parties (which approval will
not be unreasonably withheld or delayed), to any other Financial Institution
acceptable to the Agent; provided that the parties to each such assignment shall
execute and deliver to the Agent and Loan Parties an Assignment Agreement
substantially in the form of Exhibit B. Upon such execution and delivery and
payment of a fee equal to $2,500 to the Agent to cover administrative costs,
from and after the effective date specified in such Assignment Agreement (y) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, have the rights and obligations of a Bank hereunder and (z) the Bank
assignor
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thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, relinquish its rights and
be released from its obligations under this Agreement (other than pursuant to
Section 9.06(e)), and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto, subject to its continuing
obligations under Section 9.06(e).
(b) Each Bank may sell, negotiate or grant participations to
other Financial Institutions in all or part of the obligations of Loan Parties
outstanding under the Loan Documents, without notice to or the approval of the
Agent or Loan Parties; provided that any such sale, negotiation or participation
shall be in compliance with the applicable federal, state, and foreign
securities laws and the other requirements of this Section 9.06. No participant
shall constitute a "Bank" under any Loan Document, and Loan Parties shall
continue to deal solely and directly with the Agent and the Banks.
(c) Each Bank may disclose to any proposed assignee or
participant which is a Financial Institution any information relating to Loan
Parties or any of their Subsidiaries; provided, that prior to such disclosure
such proposed assignee or participant shall have agreed in writing to keep any
such information confidential substantially on the terms of Section 9.06(e).
(d) The grant of a participation interest shall be on such terms
as the granting Bank determines are appropriate, provided only that (1) the
holder of such a participation interest shall not have any of the rights of a
Bank under this Agreement except, if the participation agreement so provides,
rights to demand the payment of costs of the type described in Article III, and
(2) the consent of the holder of such a participation interest shall not be
required for amendments or waivers of provisions of the Loan Documents other
than those that (i) extend the term of the Term Loan, (ii) decrease the rate of
interest or the amount of any fee or any other amount payable to the Banks under
the Loan Documents, (iii) reduce the principal amount payable under the Loan
Documents, or (iv) extend the date fixed for the payment of principal or
interest or any other amount payable under the Loan Documents.
(e) Each Bank understands that some of the information and
documents furnished to it pursuant to the Loan Documents may be confidential and
each Bank agrees that it will keep all non-public information, documents and
agreements so furnished to it confidential and will make no disclosure to other
Persons of such information or agreements until it shall have become public,
except (i) to the extent required in connection with matters involving
operations under or enforcement or amendment of the Loan Documents; (ii) in
accordance with such Bank's obligations under law or regulations or pursuant to
subpoenas or other process to make information available to governmental
agencies and examiners or to others; (iii) to any corporate parent of any Bank
so long as such parent agrees to accept such information or agreement subject to
the restrictions provided in this Section 9.06(e); (iv) to any participant bank
or trust company of any Bank so long as such participant shares the corporate
parent with such Bank and agrees to keep such information, documents or
agreement confidential in accordance
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with the restrictions provided in this Section 9.06(e); (v) to the Agent or to
any other Bank and their respective counsel and other professional advisors and
to its own counsel and professional advisors so long as such Persons are
instructed to keep such information confidential in accordance with the
provisions of this Section 9.06(e); (vi) to proposed assignees and participants
that are Financial Institutions in accordance with Section 9.06(c); and (vii)
with the prior written consent of Loan Parties.
SECTION 9.07. JOINT AND SEVERAL OBLIGATIONS. The Obligations are joint
and several obligations of each Borrower. The rights of the Borrower hereunder
are joint and not several, and must be exercised collectively.
SECTION 9.08. CO-BORROWER PROVISIONS.
(a) Consents. Subject to the Intercreditor Agreement, each
Borrower, as the guarantor of the Obligations directly incurred by the other
Borrower authorizes Agent, without giving notice to such Borrower or obtaining
such Borrower's consent and without affecting the liability of such Borrower for
the Obligations directly incurred by the other Borrower, from time to time to:
(i) compromise, settle, renew, extend the time for
payment, change the manner or terms of payment, discharge the performance of,
decline to enforce, or release all or any of the Obligations; grant other
indulgences to the other Borrower in respect thereof; or modify in any manner
any documents relating to the Obligations;
(ii) declare all Obligations due and payable upon
the occurrence and during the continuance of an Event of Default;
(iii) take and hold security for the performance of
the Obligations of the other Borrower and exchange, enforce, waive and release
any such security;
(iv) apply and reapply such security and direct the
order or manner of sale thereof as Agent, in its sole discretion, may determine;
(v) release, surrender or exchange any deposits or
other property securing the Obligations or on which Agent at any time may have a
Lien; release, substitute or add any one or more endorsers or guarantors of the
Obligations of the other Borrower or such Borrower; or compromise, settle,
renew, extend the time for payment, discharge the performance of, decline to
enforce, or release all or any obligations of any such endorser or guarantor or
other Person who is now or may hereafter be liable on any Obligations or
release, surrender or exchange any deposits or other property of any such
Person;
(vi) apply payments received by Agent from either
Borrower to any Obligations, in such order as Agent shall determine, in its sole
discretion; and
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(vii) assign this Agreement in whole or in part.
(b) Waivers. Each Borrower, as the guarantor of the Obligations
directly incurred by the other Borrower, but without affecting its liability as
a primary obligor for that portion of the Obligations for which it is the
Borrower, waives:
(i) any defense based upon any legal disability or
other defense of the other Borrower, or by reason of the cessation or limitation
of the liability of the other Borrower from any cause (other than full payment
of all Obligations), including, but not limited to, failure of consideration,
breach of warranty, statute of frauds, statute of limitations, accord and
satisfaction, and usury;
(ii) any defense based upon any legal disability or
other defense of any guarantor or other Person;
(iii) any defense based upon any lack of authority
of the officers, directors, partners or agents acting or purporting to act on
behalf of any other Borrower or any principal of the other Borrower or any
defect in the formation of the other Borrower or any principal of any other
Borrower;
(iv) any defense based upon the application by any
other Borrower of the proceeds of the Term Loan for purposes other than the
purposes represented by any other Borrower to Agent or intended or understood by
Agent or such Borrower;
(v) any defense based on such Borrower's rights,
under statute or otherwise, to require Agent to ▇▇▇ the other Borrower or
otherwise to exhaust its rights and remedies against the other Borrower or any
other Person or against any collateral before seeking to enforce its right to
require such Borrower to satisfy the Obligations of the other Borrower;
(vi) any defense based on Agent's failure at any
time to require strict performance by either Borrower of any provision of the
Loan Documents. Such Borrower agrees that no such failure shall waive, alter or
diminish any right of Agent thereafter to demand strict compliance and
performance therewith. Nothing contained herein shall prevent Agent from
foreclosing on the Lien of any security agreement, or exercising any rights
available to Agent thereunder, and the exercise of any such rights shall not
constitute a legal or equitable discharge of such Borrower;
(vii) any defense arising from any act or omission
of Agent which changes the scope of such Borrower's risks hereunder;
(viii) any defense based upon Agent's election of
any remedy against such Borrower or the other Borrower or both; any defense
based on the order in which Agent enforces its remedies;
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(ix) any defense based on (A) Agent's surrender,
release, exchange, substitution, dealing with or taking any additional
collateral, (B) Agent's abstaining from taking advantage of or realizing upon
any Lien or other guaranty, and (C) any impairment of collateral securing the
Obligations, including, but not limited to, Agent's failure to perfect or
maintain a Lien in such collateral;
(x) any defense based upon Agent's failure to
disclose to such Borrower any information concerning the other Borrower's
financial condition or any other circumstances bearing on the other Borrower's
ability to pay the Obligations;
(xi) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in any other respects more burdensome than that of a principal;
(xii) any defense based upon Agent's election, in
any proceeding instituted under the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code or any successor statute;
(xiii) any defense based upon any borrowing or any
grant of a security interest under Section 364 of the Bankruptcy Code;
(xiv) any defense based on Agent's failure to be
diligent or to satisfy any other standard imposed on a secured party in
exercising rights with respect to collateral securing the Obligations;
(xv) notice of acceptance hereof; notice of the
existence, creation or acquisition of any Obligation; except as provided herein,
notice of any Event of Default; notice of the amount of the Obligations
outstanding from time to time; notice of any other fact which might increase
such Borrower's risk; diligence; presentment; demand of payment; protest; filing
of claims with a court in the event of the other Borrower's receivership or
bankruptcy and all other notices and demands to which such Borrower might
otherwise be entitled (and agrees the same shall not have to be made on the
other Borrower as a condition precedent to such Borrower's obligations
hereunder);
(xvi) any defense based on errors and omissions by
Agent in connection with its administration of the Term Loan, other than those
caused by the Agent's gross negligence or willful misconduct;
(xvii) any defense based on application of
fraudulent conveyance or transfer law or shareholder distribution law to any of
the Obligations or the security therefor;
(xviii) any defense based on Agent's failure to seek
relief from stay or adequate protection in another Borrower's bankruptcy
proceeding or any other act or omission by Agent which impairs such Borrower's
prospective subrogation rights;
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(xix) any defense based on legal prohibition of
Agent's acceleration of the maturity of the Obligations during the occurrence of
an Event of Default or any other legal prohibition on enforcement of any other
right or remedy of Agent with respect to the Obligations and the security
therefor; and
(xx) the benefit of any statute of limitations
affecting the liability of such Borrower hereunder or the enforcement hereof.
(c) Additional Waivers. Each Borrower authorizes Agent to
exercise, in its sole discretion, any right, remedy or combination thereof which
may then be available to Agent, since it is such Borrower's intent that the
Obligations be absolute, independent and unconditional obligations of such
Borrower under all circumstances. Without limiting the generality of the
foregoing or any other provision hereof, each Borrower hereby waives, to the
fullest extent permitted by applicable law in accordance with Section 2856 of
the California Civil Code, all rights and benefits under California Civil Code
Sections 2787 to 2855, inclusive (or any similar laws in other jurisdictions)
and all rights and benefits of California Civil Code Sections 2899 and 3433 (or
any similar laws in any other jurisdiction). In addition, without limiting the
generality of the foregoing or any other provision hereof, each Borrower hereby
waives, in accordance with Section 2856 of the California Civil Code, all rights
and defenses (including, without limitation, all rights and defenses arising out
of an election of remedies by the Agent or any Bank) that such Borrower may have
because the Obligations are or may in the future be secured by real property.
This means, among other things:
(i) the Agent, the Co-Agent or any Bank may collect
from such Borrower without first foreclosing on any real or personal property
collateral pledged to or for the benefit of the Agent or any Bank; and
(ii) if the Agent, the Co-Agent or any Bank
forecloses on any real property collateral pledged by the other Borrower:
(A) the amount of the debt may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price; and
(B) the Agent, the Co-Agent or any Bank may collect
from such Borrower even if the Agent, the Co-Agent or any Lender, by foreclosing
on the real property collateral, has destroyed any right such Borrower may have
to collect from the other Borrower.
This is an unconditional and irrevocable waiver of any rights and defenses the
Borrowers may have because the Obligations are or may in the future be secured
by real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure (or any similar laws in any other jurisdiction).
Notwithstanding any foreclosure of any Lien with respect to any or all of any
property securing the Obligations, whether by the exercise of the power of sale
contained therein,
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by an action for judicial foreclosure or by an acceptance of a deed in lieu of
foreclosure, each Borrower shall remain bound under such Borrower's guaranty of
the Obligations directly incurred by the other Borrower.
(d) Subrogation Waiver. Notwithstanding anything to the contrary
contained herein, each Borrower hereby irrevocably waives, and shall not seek to
exercise, until after indefeasible payment in full in cash of the Obligations,
all of the following rights that it may have against the other Borrower, any
guarantor, or any collateral provided by any other Borrower or any other
guarantor, for any amounts paid by such Borrower, or any acts performed by such
Borrower hereunder, in each case, arising under or in respect of the Loan
Documents: (i) subrogation (including all rights arising under Bankruptcy Code
Section 509 and California Civil Code Sections 2848 and 2849, as now and
hereafter in effect), (ii) reimbursement (including all rights arising under
Bankruptcy Code Section 502(e) and California Civil Code Section 2847, as now
and hereafter in effect), (iii) performance (including all rights arising under
California Civil Code Section 2846, as now and hereafter in effect), (iv)
indemnification or contribution (including all rights to indemnification or
contribution arising under Bankruptcy Code Section 502(e), as now and hereafter
in effect), (v) participation in a claim, and (vi) all similar rights arising
under a contract, in equity, common law, statutes or otherwise.
(e) Subordination of Claims. All present and future debts and
other obligations of the Borrowers to each other are hereby postponed in favor,
and subordinated to the full indefeasible payment in cash, of the Obligations.
If an Event of Default has occurred and is continuing, no payments in respect of
any such intra-Borrower indebtedness may be made until all Obligations are
indefeasibly paid in full in cash.
(f) Primary Obligations. This Agreement is a primary and original
obligation of each Borrower and each Borrower shall be liable for all existing
and future Obligations of the other Borrower as fully as if such Obligations
were directly incurred by such Borrower.
SECTION 9.09. EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW. This
Agreement shall become effective when it shall have been executed by Loan
Parties, the Agent, the Co-Agent and each Bank and each of the conditions
precedent set forth in Section 4.01 shall have been satisfied. This Agreement
shall be binding upon and inure to the benefit of Loan Parties, the Agent, the
Co-Agent, each Bank and their respective successors and assigns, except that
Loan Parties shall not have the right to assign their rights hereunder or any
interest herein without the prior written consent of the Agent and all the
Banks. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS TO BE PERFORMED
WITHIN SUCH STATE.
SECTION 9.10. SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. Subject to
the remainder of this Section 9.10, this Agreement shall terminate upon the
indefeasible repayment in full of the Term Loan and all other amounts owing
under this Agreement. All agreements,
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representations and warranties made herein and in any Loan Document shall
survive the execution and delivery of this Agreement and the making of the Term
Loan hereunder. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements contained in Sections 3.04, 3.05, 3.08, 3.11 and
9.05 shall survive the payment of the Term Loan and the termination of this
Agreement; provided, however, that such Sections (other than Section 9.05) shall
terminate on the fifth anniversary of the termination of this Agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF THE LOAN PARTIES, THE AGENT
AND EACH BANK HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS LOAN TRANSACTION AND THE DEBTOR/CREDITOR RELATIONSHIP THAT IS
BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. The Agent,
each Bank and each of the Loan Parties acknowledge that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this Agreement, and that each
will continue to rely on the waiver in their related future dealings. The Agent,
each Bank and each of the Loan Parties further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREE MENT, THE OTHER LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
SECTION 9.12. CONSENT TO JURISDICTION; VENUE. All judicial proceedings
brought against any Loan Party with respect to this Agreement and the other 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, each Loan Party 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. Each Loan Party
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. Nothing herein shall affect the right of the Agent
or any Bank to bring proceedings against any Loan Party in courts of any
jurisdiction.
SECTION 9.13. ENTIRE AGREEMENT. This Agreement with Exhibits and
Schedules and the other Loan Documents embody the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
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SECTION 9.14. SEPARABILITY OF PROVISIONS. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION 9.15. OBLIGATIONS SEVERAL. The obligation of each Bank hereunder
is several, and no Bank shall be responsible for the obligation or commitment of
any other Bank hereunder. Nothing contained in this Agreement and no action
taken by the Banks pursuant hereto shall be deemed to constitute the Banks to be
a partnership, an association, a joint venture or any other kind of entity.
SECTION 9.16. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability and binding effect of this Agreement.
SECTION 9.17. 1654 INTERPRETATION. This Agreement has been negotiated at
arm's length and between persons sophisticated and knowledgeable in the matters
dealt with in this Agreement. Each party has been represented by experienced and
knowledgeable legal counsel. Accordingly, any rule of law (including California
Civil Code Section 1654) or legal decision that would require interpretation of
any ambiguities in this Agreement against the party that has drafted it is not
applicable and is waived. The provisions of this Agreement shall be interpreted
in a reasonable manner to effect the purpose of the parties and this Agreement.
SECTION 9.18. CONFIDENTIALITY. Any information provided in connection
herewith to the Agent, Co-Agent or any Bank shall be subject to the
confidentiality provisions of Section 9.06(e) of the Agreement.
SECTION 9.19. NO NOVATION. This Agreement is an amendment and
restatement of the Existing Credit Agreement. The Obligations under this
Agreement are incurred in renewal of and rearrangement and substitution, but not
in payment, for the obligations of the Parent Guarantors and the Borrowers under
the Existing Credit Agreement, it being acknowledged and agreed that the
Indebtedness evidenced by the Existing Credit Agreement and the "Loan Documents"
(as defined therein) constitutes the same Indebtedness evidenced by this
Agreement and the Loan Documents, and this Agreement and the Loan Documents are
in no way intended to constitute a novation of the Existing Credit Agreement or
the outstanding principal amount of the Term Loan; provided, however, that, as
of the Effective Date, the rights and obligations of the parties to this
Agreement shall be governed by this Agreement and not by the Existing Credit
Agreement and no Event of Default or Potential Event of Default under the
Existing Credit
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Agreement shall constitute an Event of Default or Potential Event of Default
under this Agreement.
SECTION 9.20. MAXIMUM PERMISSIBLE RATE. Each provision in this Agreement
and each other Loan Document is expressly limited so that in no event whatsoever
shall the amount paid, or otherwise agreed to be paid, to the Agent, the
Co-Agent or any Bank for the use, forbearance or detention of the money to be
loaned under this Agreement or any Loan Document or otherwise (including any
sums paid as required by any covenant or obligation contained herein or in any
other Loan Document which is for the use, forbearance or detention of such
money), exceed that amount of money which would cause the effective rate of
interest to exceed the Highest Lawful Rate, and all amounts owed under this
Agreement and each other Loan Document shall be held to be subject to reduction
to the effect that such amounts so paid or agreed to be paid which are for the
use, forbearance or detention of money under this Agreement or such Loan
Document shall in no event exceed that amount of money which would cause the
effective rate of interest to exceed the Highest Lawful Rate. Anything in this
Agreement or any other Loan Document to the contrary notwithstanding, Borrowers
shall never be required to pay interest on the Obligations at a rate in excess
of the Highest Lawful Rate, and if the effective rate of interest which would
otherwise be payable with respect to the Obligations would exceed the Highest
Lawful Rate, or if the holder of such Obligations shall receive monies that are
deemed to constitute interest which would increase the effective rate of
interest payable by any Borrower with respect to the Obligations to a rate in
excess of the Highest Lawful Rate, then the amount of interest which would
otherwise be payable by such Borrower with respect to such Obligations shall be
reduced to the Highest Lawful Rate and (ii) any unearned interest paid by such
Borrower or any interest paid by such Borrower in excess of the Highest Lawful
Rate shall be in the first instance credited on the principal of such
Obligations with the excess thereof, if any, refunded to such Borrower.
ARTICLE X
GUARANTY
SECTION 10.01. GUARANTY OF THE GUARANTIED OBLIGATIONS. Parent Guarantor
hereby irrevocably and unconditionally guaranties, as primary obligor and not
merely as surety, the due and punctual payment in full of all Guarantied
Obligations when the same shall become due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)). The term
"Guarantied Obligations" is used herein in its most comprehensive sense and
includes any and all obligations of Borrowers or any Borrower in respect of
advances, borrowings, loans, debts, letters of credit, bankers' acceptances,
interest, fees, costs, expenses (including, without limitation, legal fees and
expenses of counsel and allocated costs of internal counsel), indemnities and
liabilities of whatsoever nature now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, whether due or not
due, and however arising under or in connection
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with this Agreement and the other Loan Documents, including those arising under
successive borrowing transactions under this Agreement which shall either
continue such obligations of Borrowers or from time to time renew them after
they have been satisfied.
SECTION 10.02. LIABILITY OF GUARANTOR ABSOLUTE. Parent Guarantor agrees
that its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than indefeasible
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Agent may enforce this Guaranty upon the occurrence of an
Event of Default notwithstanding the existence of any dispute between Banks and
Borrowers with respect to the existence of such Event of Default.
(c) The obligations of Parent Guarantor hereunder are independent
of the obligations of Borrowers under the Loan Documents and the obligations of
any other guarantor of the obligations of Borrowers under the Loan Documents,
and a separate action or actions may be brought and prosecuted against Parent
Guarantor whether or not any action is brought against Borrowers or any of such
other guarantors and whether or not Borrowers are joined in any such action or
actions.
(d) Parent Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge Parent
Guarantor's liability for any portion of the Guarantied Obligations which has
not been paid. Without limiting the generality of the foregoing, if Agent is
awarded a judgment in any suit brought to enforce Parent Guarantor's covenant to
pay a portion of the Guarantied Obligations, such judgment shall not be deemed
to release Parent Guarantor from its covenant to pay the portion of the
Guarantied Obligations that is not the subject of such suit.
(e) Agent or any Bank, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability of
this Parent Guarantor's guaranty hereunder or giving rise to any reduction,
limitation, impairment, discharge or termination of Parent Guarantor's liability
hereunder, as long as any Guarantied Obligations are outstanding and until
indefeasible payment in cash in full of all Guarantied Obligations and
termination of the Credit Agreement from time to time may (i) renew, extend,
accelerate, increase the rate of interest on, or otherwise change the time,
place, manner or terms of payment of the Guarantied Obligations; (ii) settle,
compromise, release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Guarantied Obligations or any
agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other guaranties of
the Guarantied Obligations and take and hold security for the payment of Parent
Guarantor's guaranty hereunder or the Guarantied
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Obligations; (iv) release, surrender, exchange, substitute, compromise, settle,
rescind, waive, alter, subordinate or modify, with or without consideration, any
security for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations; (v) enforce and apply any security now or hereafter
held by or for the benefit of Agent or any Bank in respect of Parent Guarantor's
guaranty hereunder or the Guarantied Obligations and direct the order or manner
of sale thereof, or exercise any other right or remedy that Agent or, Banks, or
any of them, may have against any such security, as Agent in its discretion may
determine consistent with this Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of Parent
Guarantor against Borrowers or any security for the Guarantied Obligations; and
(vi) exercise any other rights available to it under the Loan Documents.
(f) Parent Guarantor's guaranty of the Guarantied Obligations and
the obligations of Parent Guarantor hereunder shall be valid and enforceable and
shall not be subject to any reduction, limitation, impairment, discharge or
termination for any reason (other than indefeasible payment in full of the
Guarantied Obligations), including, without limitation, the occurrence of any of
the following, whether or not Parent Guarantor shall have had notice or
knowledge of any of them: (i) any failure or omission to assert or enforce or
agreement or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or enforcement
of, any claim or demand or any right, power or remedy (whether arising under the
Loan Documents, at law, in equity or otherwise) with respect to the Guarantied
Obligations or any agreement relating thereto, or with respect to any other
guaranty of or security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including, without limitation, provisions
relating to Events of Default) of this Agreement, any of the other Loan
Documents or any agreement or instrument executed pursuant thereto, or of any
other guaranty or security for the Guarantied Obligations, in each case whether
or not in accordance with the terms of this Agreement or such Loan Document or
any agreement relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to be
illegal, invalid or unenforceable in any respect; (iv) the application of
payments received from any source (other than payments received pursuant to the
other Loan Documents or from the proceeds of any security for the Guarantied
Obligations, except to the extent such security also serves as collateral for
indebtedness other than the Guarantied Obligations) to the payment of
indebtedness other than the Guarantied Obligations, even though Agent or Banks,
or any of them, might have elected to apply such payment to any part or all of
the Guarantied Obligations; (v) any Bank's or Agent's consent to the change,
reorganization or termination of the corporate structure or existence of any
Borrower or any of its Subsidiaries and to any corresponding restructuring of
the Guarantied Obligations; (vi) any failure to perfect or continue perfection
of a security interest in any collateral which secures any of the Guarantied
Obligations; (vii) any defenses, set-offs or counterclaims which Borrowers may
allege or assert against Agent or any Bank in respect of the Guarantied
Obligations,
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including, but not limited to, failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do any other
act or thing, which may or might in any manner or to any extent vary the risk of
Parent Guarantor as an obligor in respect of the Guarantied Obligations.
SECTION 10.03. WAIVERS BY GUARANTOR. Parent Guarantor hereby waives, for
the benefit of Banks and Agent:
(a) any right to require Agent or Banks, as a condition of
payment or performance by Parent Guarantor, to (i) proceed against either
Borrower, any other guarantor of the Guarantied Obligations or any other Person,
(ii) proceed against or exhaust any security held from any Borrower, any other
guarantor of the Guarantied Obligations or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit on the
books of Agent or any Bank in favor of either Borrower or any other Person, or
(iv) pursue any other remedy in the power of Agent or any Bank whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of either Borrower including,
without limitation, any defense based on or arising out of the lack of validity
or the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
either Borrower from any cause other than indefeasible payment in full of the
Guarantied Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or
omissions in the administration of the Guarantied Obligations other than such
errors or omission arising from Agent's or any such Bank's gross negligence or
willful misconduct;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of Parent
Guarantor's guaranty of the Guarantied Obligations and any legal or equitable
discharge of Parent Guarantor's obligations hereunder, (ii) the benefit of any
statute of limitations affecting Parent Guarantor's liability hereunder or the
enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that Agent or any Bank
protect, secure, perfect or insure any security interest or lien or any property
subject thereto; and
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of Parent Guarantor's guaranty of the Guarantied Obligations hereunder, notices
of default under this Agreement or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the Guarantied Obligations
or any agreement related thereto, notices of any extension of credit to
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either Borrower and notices of any of the matters referred to in Section 10.2
and any right to consent to any thereof.
SECTION 10.04. CONTINUING GUARANTY: TERMINATION OF GUARANTY. Parent
Guarantor's guaranty of the Guarantied Obligations is a continuing guaranty and
shall remain in effect until all of the Guarantied Obligations shall have been
indefeasibly paid in full. Anything contained in this Article X to the contrary
notwithstanding, this Guaranty shall not apply to Guarantied Obligations created
after actual receipt by Agent of written notice from Parent Guarantor of its
revocation as to future transactions; provided, however, that any such
revocation shall not affect Parent Guarantor's liability for any Guarantied
Obligations outstanding at the time of receipt of such notice or any extension
or renewal of such Guarantied Obligations.
SECTION 10.05. BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF
GUARANTY.
(a) So long as any Guarantied Obligations remain outstanding,
Parent Guarantor shall not, without the prior written consent of Agent in
accordance with the terms of this Agreement, commence or join with any other
Person in commencing any bankruptcy, reorganization or insolvency proceedings of
or against either Borrower. The obligations of Parent Guarantor hereunder shall
not be reduced, limited, impaired, discharged, deferred, suspended or terminated
by any proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement of either
Borrower or by any defense which either Borrower may have by reason of the
order, decree or decision of any court or administrative body resulting from any
such proceeding.
(b) Parent Guarantor acknowledges and agrees that any interest on
any portion of the Guarantied Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guarantied Obligations if said proceedings had
not been commenced) shall be included in the Guarantied Obligations because it
is the intention of Parent Guarantor and Agent that the Guarantied Obligations
which are guarantied by Parent Guarantor pursuant to this Article X should be
determined without regard to any rule of law or order which may relieve
Borrowers of any portion of such Guarantied Obligations. Parent Guarantor will
permit any trustee in bankruptcy, receiver, debtor in possession, assignee for
the benefit of creditors or similar person to pay Agent, or allow the claim of
Agent in respect of, any such interest accruing after the date on which such
proceeding is commenced.
(c) In the event that all or any portion of the Guarantied
Obligations are paid by Borrowers, the obligations of Parent Guarantor hereunder
shall continue and remain in full force and effect or be reinstated, as the case
may be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from Agent or any Bank as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under this
Article X.
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SECTION 10.06. SUBORDINATION OF CLAIMS. All present and future debts and
other obligation of any Borrower to the Parent Guarantor are hereby postponed in
favor, and subordinated to the full indefeasible payment in cash, of the
Obligations. If an Event of Default has occurred and is continuing no payments
in respect of any such indebtedness may be made until all Obligations are
indefeasibly paid in full in cash.
SECTION 10.07. ADDITIONAL WAIVERS. The Parent Guarantor authorizes Agent
to exercise, in its sole discretion, any right, remedy or combination thereof
which may then be available to Agent, since it is the Parent Guarantor's intent
that the Guarantied Obligations be absolute, independent and unconditional
obligations of the Parent Guarantor under all circumstances. Without limiting
the generality of the foregoing or any other provision hereof, the Parent
Guarantor hereby waives, to the fullest extent permitted by applicable law in
accordance with Section 2856 of the California Civil Code, all rights and
benefits under California Civil Code Sections 2787 to 2855, inclusive (or any
similar laws in other jurisdictions) and all rights and benefits of California
Civil Code Sections 2899 and 3433 (or any similar laws in any other
jurisdiction). In addition, without limiting the generality of the foregoing or
any other provision hereof, the Parent Guarantor hereby waives, in accordance
with Section 2856 of the California Civil Code, all rights and defenses
(including, without limitation, all rights and defenses arising out of an
election of remedies by the Agent or any Bank) that the Parent Guarantor may
have because the Obligations are or may in the future be secured by real
property. This means, among other things:
(a) The Agent, the Co-Agent or any Bank may collect from the
Parent Guarantor without first foreclosing on any real or personal property
collateral pledged to or for the benefit of the Agent or any Bank; and
(b) If the Agent, the Co-Agent or any Bank forecloses on any real
property collateral pledged by any Borrower:
(i) the amount of the debt may be reduced only by
the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth
more than the sale price; and
(ii) the Agent, the Co-Agent or any Bank may
collect from the Parent Guarantor even if the Agent,
the Co-Agent or any Lender, by foreclosing on the
real property collateral, has destroyed any right
the Parent Guarantor may have to collect from any
Borrower.
This is an unconditional and irrevocable waiver of any rights and defenses the
Borrowers may have because the Obligations are or may in the future be secured
by real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure (or any similar laws in any other jurisdiction).
Notwithstanding any foreclosure of any Lien with respect to any or all of any
property securing the Obligations, whether by the exercise of the power of sale
contained therein,
81
89
by an action for judicial foreclosure or by an acceptance of a deed in lieu of
foreclosure, the Parent Guarantor shall remain bound under the Parent
Guarantor's guaranty of the Obligations directly incurred by any Borrower.
82
90
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.
STORMEDIA INTERNATIONAL, LTD.,
as Borrower
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇-▇▇▇-▇▇▇▇
Attention: Chief Financial
Officer
STRATES PTE. LTD., as Borrower
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇-▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
S-1
91
STORMEDIA INCORPORATED, as
Parent Guarantor
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
S-2
92
CANADIAN IMPERIAL BANK OF
COMMERCE, New York Agency, as Agent
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Payment Address:
Chase Manhattan Bank, New York
Chips ID 126193
Account No.: ▇▇▇-▇-▇▇▇▇▇
Account Name: Canadian Imperial Bank of
Commerce, Singapore
Reference: StorMedia
S-3
93
BANQUE NATIONALE DE PARIS,
San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
as Co-Agent
By: /s/
------------------------------------
Title:
---------------------------------
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
S-4
94
BANKS:
CIBC [Asia] LTD.
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ Foo ▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇
S-5
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ Branch
By: /s/
------------------------------------
Title:
---------------------------------
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
Tung Centre
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇
S-6
96
FLEET NATIONAL BANK
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Mail
Stop RI OP TO5A ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇-▇
▇▇
▇▇▇▇▇ ▇▇▇▇ CALIFORNIA
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
S-8
▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
S-9
99
ACKNOWLEDGMENT
Each of the undersigned (i) acknowledges receipt of a copy of the
foregoing Amended and Restated Credit Agreement, (ii) understands that it is a
"Loan Party" as defined therein, (iii) agrees to comply with the agreements,
covenants and restrictions applicable to Loan Parties thereunder and (iv)
represents and warrants to the Agent, the Co-Agent and the Banks that the
representations and warranties therein regarding the undersigned are true,
complete and correct.
AKASHIC MEMORIES CORPORATION,
as Subsidiary Guarantor
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
STRATES SDN. BHD., formerly known as,
AKASHIC KUBOTA TECHNOLOGIES, as
Subsidiary Guarantor
By: /s/
------------------------------------
Title:
---------------------------------
Notice Address:
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
S-10
100
STORMEDIA FOREIGN SALES
CORPORATION, as Subsidiary Guarantor
By: /s/
----------------------------------
Title:
-------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
P.O. Box 1858
St. ▇▇▇▇▇▇, U.S. Virgin Islands
S-11
101
ANNEX I-1