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EXHIBIT 10.12
THE INDEBTEDNESS EVIDENCED BY
THIS SENIOR SUBORDINATED PROMISSORY NOTE
IS, OR WILL BE, SUBORDINATED TO THE PAYMENT OF
CERTAIN OTHER INDEBTEDNESS OF THE MAKER HEREOF
ON THE TERMS AND CONDITIONS SET FORTH IN
A SUBORDINATION AGREEMENT DESCRIBED BELOW
SENIOR SUBORDINATED PROMISSORY NOTE
(HONG KONG)
U.S.$16,300,000 June 10, 1996
MAXTOR (HONG KONG) LIMITED, a corporation organized under the laws of
Hong Kong ("Company"), for value received, hereby promises to pay to the order
of MAXTOR CORPORATION, a Delaware corporation ("Maxtor" which term shall include
any successor or permitted assign thereof), at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other address of Maxtor in the United States of America
as Maxtor may specify from time to time, the principal sum of Sixteen Million
Three Hundred Thousand United States Dollars (U.S.$16,300,000) on the date or
dates set forth below, and together with interest thereon calculated from the
date hereof at the rate or rates set forth below.
1. PAYMENT OF INTEREST. Interest on the unpaid principal amount of this
Note shall be payable at the rate of seven and forty-three one hundredths
percent (7.43%) per annum from the date hereof; provided that on the first
anniversary of the date of this Note, the applicable interest rate shall
thereafter be adjusted to the fixed interest rate equal to the Bank Facility
Interest Rate in effect on such first anniversary date. In no event shall the
interest rate determined in accordance with the forgoing exceed the rate per
annum equal to the Bank Facility Interest Rate in effect on the closing date of
the 1996 Credit Agreement plus 1.00%. Interest shall be computed on the basis of
a 360 day year. In no event shall the interest charged exceed the maximum rate
permitted under applicable law. Interest shall be payable quarterly in arrears,
on the last day of each June, September, December and March commencing June 30,
1996, and on the date the outstanding principal amount of this Note is paid in
full (whether at maturity or otherwise.)
2. PAYMENT OF PRINCIPAL.
(a) SCHEDULED PAYMENTS FROM EXCESS CASH FLOW. The principal
amount of this Note shall be payable in three substantially equal installments
of $5,433,333.33 on each of June 10, 1999, June 10, 2000 and June 10, 2001(each,
an "Amortization Date"), but solely to the extent that the making of such
payments would not result in an event of default under the Bank Credit Facility,
or an event which with notice or lapse of time or both, would be an event of
default under the Bank Credit
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Facility. If any scheduled amortization payment or portion thereof cannot be
made because an event of default under the Bank Credit Facility (or an event
which, with notice or lapse of time or both, would be an event of default under
the Bank Credit Facility) would result therefrom, then such payment or portion
thereof shall instead be due on the next scheduled Amortization Date. In any
event, the outstanding principal balance of this Note plus accrued and unpaid
interest in respect thereof shall be due and payable in full on June 13, 2001.
(b) MANDATORY PREPAYMENT FOLLOWING INITIAL PUBLIC OFFERING.
Within five (5) days after the receipt by International Manufacturing Services,
Inc., a Delaware corporation ("IMS") of the Available Offering Proceeds in
connection with the underwritten initial public offering of common stock of IMS
(the "IPO"), Company shall prepay the outstanding principal balance of this Note
plus all accrued and unpaid interest in respect thereof, subject to the
following conditions: (i) the managing underwriters of IMS in connection with
the IPO shall have approved of such prepayment (which approval shall be
evidenced by the use of proceeds presentation in the prospectus for the IPO);
(ii) concurrently with the prepayment of this Note, the outstanding principal
and accrued and unpaid interest in respect of the Related Senior Subordinated
Notes shall be prepaid (with such prepayment allocated among this Note and the
Related Senior Subordinated Notes as IMS shall specify); and (iii) the amount of
the prepayment under this Note, when added to the amount of the prepayment under
the Related Senior Subordinated Notes, shall in no event exceed that portion of
the Available IPO Proceeds determined by reference to Schedule A to this Note.
The Available IPO Proceeds shall be applied to scheduled payments of principal
under this Note in order of their maturity.
(c) MANDATORY PREPAYMENT FOLLOWING SECONDARY OFFERING. Within
five (5) days after the receipt by IMS of the Available Offering Proceeds in
connection with the underwritten secondary offering of common stock of IMS (the
"Secondary Offering"), Company shall prepay all of the outstanding principal
balance of this Note plus all accrued and unpaid interest in respect thereof,
subject to the following conditions: (i) the managing underwriters of IMS in
connection with the Secondary Offering shall have approved of such prepayment
(which approval shall be evidenced by the use of proceeds presentation in the
prospectus for the Secondary Offering); (ii) concurrently with the prepayment of
this Note, outstanding principal and accrued and unpaid interest in respect of
the Related Senior Subordinated Notes shall be prepaid (with such prepayment
allocated among this Note and the Related Senior Subordinated Notes as IMS shall
specify); and (iii) the amount of the prepayment under this Note, when added to
the amount of the prepayment under the Related Senior Subordinated Notes, shall
in no event exceed fifty percent (50%) of the Available Offering Proceeds. The
Available Offering Proceeds shall be applied to scheduled payments of principal
under this Note in order of their maturity.
(d) MANDATORY PREPAYMENT UPON CHANGE IN OWNERSHIP OR SALE OF
ASSETS.
(1) If a Fundamental Change or Change in Ownership has
occurred with respect to IMS, then the outstanding principal amount of this Note
and the Related Senior Subordinated Notes, plus accrued and unpaid interest
thereunder, shall be prepaid in full unless such prepayment would result in an
event of default or an event that with the passage of time or the giving of
notice would become an event of default under the Bank Credit Facility.
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(2) If a Fundamental Change or Change in Ownership has
occurred with respect to Company or any subsidiary of IMS of which Company is a
direct or indirect subsidiary, then the Company Net Cash Proceeds received from
such sale or transfer shall, to the extent not required to be used to repay the
Bank Credit Facility pursuant to the terms thereof, be applied to prepay
scheduled principal amortization payments under this Note and the Related Senior
Subordinated Notes (with such prepayment allocated among this Note and the
Related Senior Subordinated Notes as IMS shall specify), in order of their
maturity unless such prepayment would result in an event of default or an event
that with the passage of time or the giving of notice would become an event of
default under the Bank Credit Facility.
(3) If a Fundamental Change or Change in Ownership has
occurred with respect to IMS International Manufacturing Services (Thailand),
Limited ("IMS Thailand") or any subsidiary of IMS of which IMS Thailand is a
direct or indirect subsidiary, then (a) IMS or one of its subsidiaries shall
commit in writing, within three months after the date of consummation of such
change, to reinvest the Thailand Net Cash Proceeds in businesses comparable,
related or incidental to the business of IMS and its subsidiaries, or (b) if IMS
or any of its subsidiaries shall fail to make such commitment within such three
month period, then, to the extent the Thailand Net Cash Proceeds are not
required to be used to repay the Bank Credit Facility pursuant to the terms
thereof, the Thailand Net Cash Proceeds shall be applied to prepay scheduled
principal amortization payments under this Note and the Related Senior
Subordinated Notes (with such prepayment allocated among this Note and the
Related Senior Subordinated Notes as IMS shall specify), in order of their
maturity unless such prepayment would result in an event of default or an event
that with the passage of time or the giving of notice would become an event of
default under the Bank Credit Facility.
(e) OPTIONAL PREPAYMENTS. Company may prepay all or any
portion of this Note at any time, without penalty or premium, and without prior
notice to Maxtor, unless to do so would violate the provisions of the Bank
Credit Facility.
(f) PAYMENTS IN GENERAL. Payments of principal and interest
shall be made in lawful money of the United States of America. If any payment of
principal or interest on this Note shall become due on a Saturday, Sunday or
legal holiday under the laws of the State of California, such payment shall be
made on the next succeeding business day, and such extension of time shall be
included in computing interest in connection with such payment. Withholding
taxes required by any applicable taxing authorities to be paid in respect of
payments made under this Note shall be paid to such taxing authorities by
Company, without offset against amounts payable to Maxtor, and at Maxtor's
request, Company shall provide Maxtor with copies of official receipts, if any,
issued by such taxing authorities or such other evidence as is reasonably
available to establish that such taxes have been paid. Notwithstanding the
foregoing, Maxtor shall assist Company and take such actions as are reasonably
necessary in order to secure available reductions or eliminations of such
withholding taxes.
3. SUSPENSION OF INTEREST PAYMENTS. Notwithstanding anything herein, in
the event that prior to June 30, 1997, Maxtor shall have breached its "Purchase
Commitment" under and as defined in that certain Manufacturing Services
Agreement dated as of May 16, 1996 between IMS and Maxtor, as amended or
modified from time to time, then Company shall not be obligated to make any
payments
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of interest in respect of this Note which otherwise would have been due on or
before June 30, 1997, so long as such breach remains uncured. Following cure of
any such breach, then scheduled payments of interest shall immediately resume,
provided that the aggregate amount of interest payments that were so suspended
shall be paid by Company to Maxtor in thirteen (13) substantially equal monthly
payments, on the last day of each calendar month, commencing on the first such
date to follow the date of such cure.
4. SUBORDINATION. THE OBLIGATIONS EVIDENCED BY THIS NOTE ARE TO BE, AND
WILL BE, SUBORDINATED TO ALL PRESENT AND FUTURE SENIOR INDEBTEDNESS OF COMPANY
AND CERTAIN OF ITS AFFILIATES, INCLUDING, WITHOUT LIMITATION, THE SENIOR
INDEBTEDNESS UNDER THE BANK CREDIT FACILITY, ON THE TERMS AND CONDITIONS SET
FORTH IN THE SUBORDINATION AGREEMENT, TO BE ENTERED INTO AND AMONG COMPANY, IMS,
IMS THAILAND, IMS BORROWER, INC., A DELAWARE CORPORATION ("IMS DELAWARE"), IMS
HOLDCO, INC., A DELAWARE CORPORATION ("IMS HOLDCO"), IMS INTERNATIONAL
MANUFACTURING SERVICES, LIMITED, A CAYMAN ISLANDS CORPORATION ("IMS CAYMEN"),
DONGGUAN IMS ELECTRONICS COMPANY, LIMITED, A PEOPLE'S REPUBLIC OF CHINA
CORPORATION ("IMS PRC"), MAXTOR AND THE BANK CREDIT FACILITY AGENT (AS AMENDED,
MODIFIED OR REPLACED FROM TIME TO TIME, THE "SUBORDINATION AGREEMENT"), WHICH
SUBORDINATION AGREEMENT IS TO BE MADE FOR THE BENEFIT OF ALL PRESENT AND FUTURE
HOLDERS OF SENIOR INDEBTEDNESS. REFERENCE IS MADE TO THE SUBORDINATION AGREEMENT
FOR THE COMPLETE TERMS AND CONDITIONS OF SUCH SUBORDINATION. MAXTOR AND EACH
HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES TO THE TERMS AND
CONDITIONS SET FORTH IN THE SUBORDINATION AGREEMENT.
5. GUARANTY. The obligations of Company under this Note are guarantied
by the Guarantors pursuant to the Guaranties, of even date herewith (the
"Guaranties").
6. COVENANTS. So long as any amount remains outstanding under this
Note:
(a) Company shall not grant any security interest in or lien
upon any of its property to secure Indebtedness, other than security interests
and liens (i) existing on the date hereof, and (ii) to secure Senior
Indebtedness.
(b) Within 45 days after the end of each of the first three
fiscal quarters of Company, Company shall deliver to Maxtor a copy of its
Company-prepared balance sheet, income statement and statement of changes in
shareholders equity for such quarter, prepared in accordance with generally
accepted accounting principles consistently applied, subject to year-end
adjustments and the absence of footnotes.
(c) Within 90 days after the end of each fiscal year of
Company, Company shall deliver to Maxtor a copy of its balance sheet, income
statement and statement of changes in shareholders equity for such year,
prepared in accordance with generally accepted accounting principles
consistently applied, certified by independent public accountants selected by
Company.
(d) Upon at least five business days notice to Company, Maxtor
may, during reasonable business hours, inspect the properties of Company.
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(e) Company shall not engage in any business other than the
businesses conducted by IMS or any of its subsidiaries as of the date of this
Note, or other businesses related or incidental thereto.
7. DEFAULT; REMEDIES. Each of the following events shall constitute an
"Event of Default" hereunder:
(a) Company shall fail to make any payment of principal or
interest due hereunder (other than as a result of the provisions of Section 3 or
4 above) and such failure shall have continued uncured for a period of at least
thirty (30) days; or
(b) Company shall fail to perform any covenant or agreement
provided for in this Note, and such failure shall continue uncured for a period
of at least thirty (30) days following written notice from Maxtor; or
(c) Any Reorganization Proceeding (i) shall be commenced by
Company, IMS or any Guarantor or (ii) shall be commenced against Company, IMS or
any Guarantor and the same shall not have been rescinded or stayed within ninety
(90) days; or
(d) Any default shall occur under (i) any agreement or
instrument evidencing the Indebtedness under the Bank Credit Facility, if such
default shall continue after any applicable grace period and if the effect of
such default is to accelerate, or permit the holders of the Indebtedness under
the Bank Credit Facility to accelerate, the maturity of such Indebtedness; or
(ii) any agreement or instrument evidencing Senior Indebtedness other than the
Bank Credit Facility, if (x) such default results from the failure to make a
payment when due, (y) such default shall continue after any applicable grace
period and (z) the effect of such event is to accelerate, or permit the holders
of such Senior Indebtedness to accelerate, the maturity of such Indebtedness; or
(iii) any one or more instruments or agreements evidencing Senior Indebtedness
in an aggregate principal amount of at least $5,000,000, if (x) such default
results from a default other than the failure to make a payment when due, (y)
such default shall continue after any applicable grace period and (z) the effect
of such default is to accelerate, or permit the holders of such Senior
Indebtedness to accelerate, the maturity of such Senior Indebtedness; provided
that upon the waiver or cure any such default, then the Event of Default under
this Note resulting therefrom shall automatically be deemed waived or cured; or
(e) Any default shall occur under the Subordinated Notes, if
such default shall continue after any applicable grace period and if the effect
of such default is to accelerate, or permit the holders of the Indebtedness
under the Subordinated Notes to accelerate, the maturity of such Indebtedness;
provided that upon the waiver or cure any such default in respect of the
Subordinated Notes, then the Event of Default under this Note resulting
therefrom shall automatically be deemed waived or cured; or
(f) Any default shall occur under the Guaranties, if such
default shall continue after any applicable grace period.
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Upon the occurrence and during the continuance of any Event of
Default, then (i) Maxtor shall have the right to declare immediately due and
payable all or any portion of the outstanding principal balance of this Note, in
which case such principal balance and accrued and unpaid interest thereon shall
immediately be due and payable, and (ii) at Maxtor's option upon notice to
Company, the interest rate otherwise applicable to this Note shall be increased
by two percent (2%). Maxtor shall also have such other rights as may be
available to Maxtor under applicable law. Notwithstanding the foregoing, so long
as any Senior Indebtedness has not been paid in full in cash, Maxtor shall have
no right to accelerate amounts due hereunder.
8. COSTS OF ENFORCEMENT. In the event any action is taken to enforce
the rights of Maxtor under this Note, the party prevailing in that action shall
be entitled, in addition to such other relief as may be granted, to all
reasonable costs and expenses, including reasonable attorneys' fees, incurred in
such action.
9. ASSIGNMENT. By accepting this Note Maxtor agrees that Maxtor may not
assign any interest in this Note to any person other than Hyundai Electronics
America ("Hyundai") or any of its Affiliates (which Affiliate shall be an
Affiliate with respect to which Hyundai owns at least 51% of the economic
interests and at least 51% of the voting interests, and which shall not have
been created in anticipation of such assignment (a "Permitted Affiliate"));
provided, that in connection with any assignment of this Note, (a) Maxtor must
concurrently assign its interest in each of the Guaranties, the Related Senior
Subordinated Notes, and the guaranties by the Garantors of the Related Senior
Subordinated Notes (the "Related Documents"), (b) such Permitted Affiliate shall
deliver to Company and the Bank Credit Facility Agent a written acknowledgment
of its agreement to be bound by the terms of the Subordination Agreement, and
(c) the documents pursuant to which such assignment is made must provide that if
the assignee ceases to be a Permitted Affiliate of Hyundai, then either such
assignment shall automatically be rescinded, or this Note and the Related
Documents shall be assigned to another Affiliate of Hyundai prior to or
concurrently with the effectiveness of the transactions pursuant to which the
assignee ceases to be a Permitted Affiliate of Hyundai. Notwithstanding anything
herein to the contrary, in no event shall any person other than Maxtor, Hyundai
or a Permitted Affiliate of Hyundai hold any right or interest in this Note. Any
purported assignment in contravention of the provisions of this Section 9 shall
be null and void.
10. MISCELLANEOUS. The rights and obligations under this Note shall be
binding upon and inure to the benefit of Company and Maxtor and their respective
successors and permitted assigns. Company hereby waives presentment, demand,
protest or notice of any kind in connection with this Note. This Note is issued
in connection with that certain Redemption Agreement dated as of May 16, 1996
among IMS, Maxtor and certain other parties thereto (the "Redemption
Agreement"). This Note shall be construed in accordance with and governed by the
laws of the State of California (without regard to its conflict of laws
principles). Company hereby submits to the jurisdiction of any State or Federal
court sitting in the State of California.
11. OFFSETS. Company may, without prior notice to Maxtor (but only
with the prior written consent of the Bank Credit Facility Agent), offset
amounts the due under this Note against amounts then due from Maxtor to Company,
any Borrower or any other Guarantor in respect of Maxtor's
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indemnification obligations under that certain Recapitalization Agreement dated
May 16, 1996 (the "Recapitalization Agreement"), the Redemption Agreement, the
agreements entered into in connection with the Recapitalization Agreement and
Redemption Agreement, and any other agreement to which Maxtor and Company, any
Borrower or any other Guarantor are parties. In addition, Company may, without
prior notice to Maxtor but only with the prior written consent of the Bank
Credit Facility Agent, offset amounts due under this Note against amounts then
due from Maxtor to Prudential Equity Investors, Inc. and Oak Investment Partners
("Investors") in respect of Maxtor's indemnification obligations under the
Redemption Agreement and Recapitalization Agreement, but only to the extent such
indemnification rights have been assigned by Investors to Company. For purposes
of this Section 11, amounts shall not be deemed to be "due" from Maxtor in
respect of its indemnification obligations until such time as any applicable
dispute resolution procedures set forth in the relevant agreement have been
fully satisfied.
12. CERTAIN DEFINITIONS. As used in this Note:
"Affiliate" means any person which, directly or indirect,
controls, is controlled by or is under common control with another
person; provided that for purposes of this Note, "control," "controlled
by" and "common control" shall mean the possession, directly or
indirectly, of the power to vote 51% or more of the securities having
ordinary voting power of the election of directors of such person.
"Available IPO Proceeds" means the net cash proceeds to IMS of
the IPO, after deducting (x) underwriting discounts, commissions and
other expenses, and (y) an amount equal to $10,000,000 or such greater
or lesser amount as is applied to reduce the outstanding Indebtedness
under the Bank Credit Facility in accordance with the terms thereof
(provided that if such amount is in excess $10,000,000, then such
excess shall have been made as a result of IMS's negotiations with the
holders of the Indebtedness under the Bank Credit Facility following a
potential or actual default under the Bank Credit Facility, or shall
have been necessary, in the reasonable opinion of IMS, to allow IMS or
any of its subsidiaries to continue the availability of or to obtain
financing under the Bank Credit Facility).
"Available Offering Proceeds" means the net cash proceeds to
IMS of the Secondary Offering , after deducting (x) underwriting
discounts, commissions and other expenses, (y) such amounts are
necessary, in the reasonable opinion of IMS, to satisfy the capital
needs of IMS and its subsidiaries, and (z) such amount, if any, as is
applied to reduce the outstanding Indebtedness under the Bank Credit
Facility in accordance with the terms thereof.
"Bank Credit Facility" means the 1996 Credit Agreement, and
all amendments, modifications, renewals, extensions and increases
thereof, and all refundings, refinancings and replacements thereof, in
whole or in part.
"Bank Credit Facility Agent" means Chemical Bank or such other
person as shall be designated as "Administrative Agent" or "Collateral
Agent" in respect of the Bank Credit Facility
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from time to time, or if no Agent shall have been so designated, then
the holder or holders of the Indebtedness represented by the Bank
Credit Facility.
"Bank Facility Interest Rate" means, as of any date of
determination, the rate of interest, including the applicable spread,
that would be applicable to six month "Eurodollar Loan" (as defined in
the 1996 Credit Agreement) under the 1996 Credit Agreement made on such
date (or, in the event the 1996 Credit Agreement is not in effect on
such date, on the last day that the 1996 Credit Agreement was in
effect, as determined by Company in good faith ) plus forty-three one
hundredths percent (0.43%).
"Borrower" means Company and any other person designated as a
"Borrower" under Senior Indebtedness.
"Change in Ownership" means, with respect to any person, any
sale, transfer or issuance or series of sales, transfers and/or
issuances of voting capital stock of such person which results in any
other person or any group of persons (as the term "group" is used under
the Securities Exchange Act of 1934), other than other holders of the
capital stock of such person as of the date hereof, owning more than
fifty percent (50%) of the voting capital stock outstanding at the time
of such sales, transfers or issuances.
"Company Net Cash Proceeds" means, with respect to a
Fundamental Change or Change in Ownership with respect to Company or
any subsidiary of IMS of which Company is a direct or indirect
subsidiary, the net cash proceeds therefrom received by Company, or if
such net cash proceeds were received by a subsidiary of IMS of which
Company is a direct or indirect subsidiary, then the net cash proceeds
attributable to the assets or capital stock of Company, as the case may
be (measured either by book value determined in accordance with
generally accepted accounting principles consistently applied or by
fair market value determined in the reasonable good faith of the board
of directors of such person).
"Fundamental Change" means, with respect to any person, (a)
any sale or transfer of all or substantially all of the assets of such
person and its subsidiaries on a consolidated basis in any transaction
or series of transactions (other than sales in the ordinary course of
business) and (b) any merger or consolidation to which such person is a
party, except for a merger in which such person is the surviving
corporation (provided that a merger or other transaction conducted for
the sole purpose of changing a person's domicile shall not be
considered a Fundamental Change).
"Guarantors" means each of IMS, IMS Delaware, IMS Holdco, IMS
Cayman, and IMS Hong Kong and any other person that guarantees the
obligations of any Borrower in respect of the Senior Indebtedness
except that IMS PRC shall be a "Guarantor" only to the extent permitted
under the law of the Peoples Republic of China (or any province or
other local government body located in the Peoples Republic of China or
any political subdivision thereof) after giving effect to any guarantee
by, or other obligations of, IMS PRC in respect of the Senior
Indebtedness.
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"Indebtedness" means, with respect to any person, and without
duplication, (i) all indebtedness and other obligations (contingent or
otherwise) of such person for borrowed money (other than trade payables
incurred in the ordinary course of business (whether or not the same
are past due)); (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisitions of property, assets or
businesses; (iii) reimbursement obligations and other liabilities
(contingent or otherwise) of such person with respect to letters of
credit or bankers acceptances; (iv) all obligations or liabilities
(continent or otherwise) in respect of leases of such person that are
required, in conformity with generally accepted accounting principles,
to be accounted for as capital leases; (v) all obligations of such
person (contingent or otherwise) with respect to foreign exchange
contracts, currency exchange agreements, interest rate swaps, collars,
caps or other protection agreements; (vi) all direct or indirect
guaranties or similar agreements by such person in respect of
obligations of another person that would constitute "Indebtedness"
hereunder; (vii) indebted-ness of the types described in clauses (i)
through (vi) secured by a mortgage, pledge, lien or other encumbrance
existing on property that is owned or held by such person, regardless
of whether the indebtedness or other obligation secured thereby shall
have been assumed by such person, and (viii) all amendments,
modifications, renewals, extensions, increases, refundings,
refinancings and replacements of any of the foregoing.
"Related Senior Subordinated Notes" means, collectively, the
Senior Subordinated Evidence of Indebtedness, dated of even date
herewith, in the original principal amount of $2,000,000 made by IMS
Thailand, and the Senior Subordinated Promissory Note, dated of even
date herewith, in the original principal amount of $1,700,000 made by
IMS, each made payable to the order of Maxtor.
"Reorganization Proceedings" means any voluntary or
involuntary liquidation or dissolution of, or any bankruptcy,
reorganization, insolvency, receivership, assignment for the benefit of
creditors or similar proceeding relating to, Company, any other
Borrower or any Guarantor.
"Senior Indebtedness" means, without duplication, the
principal of, premium, if any, and interest (including all interest
accruing subsequent to the commencement of any Reorganization
Proceedings, whether or not a claim for post-petition interest is
allowable as a claim in any such Reorganization Proceeding) and fees,
costs, expenses and other amounts accrued or due in connection with (i)
all Indebtedness of Company, any other Borrower and any Guarantor in
respect of the Bank Credit Facility or Interest Rate Protection
Agreements referred to therein; (ii) all other Indebtedness of Company,
any other Borrower or any Guarantor with respect to which the
instrument creating or evidencing the same or the assumption or
guarantee thereof (or related documents to which Company, any other
Borrower or any Guarantor is a party) expressly provides that the same
is "Senior Indebtedness" for purposes of this Note; and (iii) all
amendments, renewals, extensions, increases, refundings and
refinancings of the Indebtedness described in clauses (i) and (ii);
provided that (w) the aggregate Indebtedness referred to in clause (i)
shall not exceed $50,000,000; (x) the aggregate Indebtedness and
contingent obligations referred to in clause (ii) shall not constitute
Senior Indebtedness to the extent
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including the same would cause the aggregate principal amount plus
commitments outstanding under Senior Indebtedness, including the Bank
Credit Facility, to exceed $50,000,000; (y) the instrument creating or
evidencing Senior Indebtedness other than the Bank Credit Facility may
not contain any limitations on the payment of the Indebtedness under
this Note or the Related Senior Subordinated Notes that are more
restrictive than those provided for in the Bank Credit Facility, and
(z) the instrument creating or evidencing Senior Indebtedness other
than the Bank Credit Facility may contain limitations on the ability of
the holders of such other Senior Indebtedness to exercise any of the
rights otherwise given to holders of Senior Indebtedness under the
Subordination Agreement. Notwithstanding anything to the contrary
herein, Senior Indebtedness shall not include (a) any Indebtedness of
Company, any other Borrower or any Guarantor to any of its Affiliates,
or (b) any Indebtedness in respect of those certain $12,500,000 Junior
Subordinated Promissory Notes to be made by IMS in the aggregate
original principal amount of $12,500,000 (the "Subordinated Notes").
"Thailand Net Cash Proceeds" means, with respect to a
Fundamental Change or Change in Ownership with respect to IMS Thailand
or any subsidiary of IMS of which IMS Thailand is a direct or indirect
subsidiary, the net cash proceeds therefrom received by IMS Thailand,
or if such net cash proceeds were received by a subsidiary of IMS of
which IMS Thailand is a direct or indirect subsidiary, then the net
cash proceeds attributable to the assets or capital stock of IMS
Thailand, as the case may be (measured either by book value determined
in accordance with generally accepted accounting principles
consistently applied or by fair market value determined in the
reasonable good faith of the board of directors of such person).
"1996 Credit Agreement" means that certain Credit Agreement to
be entered into by and among IMS, IMS Delaware, IMS Holdco, Company,
IMS Thailand, IMS PRC, the lenders parties thereto and Chemical Bank as
administrative agent and collateral agent for such lenders, as amended
or modified from time to time.
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IN WITNESS WHEREOF, this Note has been executed by a duly authorized
officer of Company as of the date first above written.
MAXTOR (HONG KONG) LIMITED
By_______________________________
Title_____________________________
Address:
The Common Seal of Maxtor (Hong Kong) Limited was hereunto affixed in the
presence of SHL Services Limited as Company Secretary.
for and on behalf of
SHL SERVICES LIMITED
By:
--------------------------------
Director
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SCHEDULE A
TO SENIOR SECURED PROMISSORY NOTE
ALLOCATION OF
AVAILABLE IPO PROCEEDS
AVAILABLE IPO
PROCEEDS (PRIOR
TO PAYMENT OF
BANK CREDIT PAYABLE TO BANK
FACILITY)* CREDIT FACILITY** PAYABLE TO MAXTOR PAYABLE TO IMS
--------------- ---------------- ----------------- --------------
$30,000,000 10 12 8
35,000,000 10 15 10
40,000,000 10 19 11
45,000,000 10 20 15
50,000,000 10 20 20
* In the event the Available Offering Proceeds from the IPO (prior to
payment of the Bank Credit Facility) are (i) less than $30,000,000,
then the Available IPO Proceeds payable to Maxtor and IMS shall be
reduced on a pro rata basis; (ii) greater than $50,000,000, then the
Available IPO Proceeds payable to IMS shall be increased by such excess
amount; (iii) in between two of the amounts set forth above, then the
Available IPO Proceeds payable to Maxtor and IMS shall be interpolated
accordingly (until Maxtor is paid in full).
** In the event the Available IPO Proceeds payable to the Bank Credit
Facility are greater than or less than $10,000,000, then the Available
IPO Proceeds payable to Maxtor and IMS shall be decreased or increased,
as applicable, on a pro rata basis (until Maxtor is paid in full).
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