EXHIBIT 10.27
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
AGREEMENT. SUCH OMITTED CONFIDENTIAL INFORMATION HAS BEEN DESIGNATED BY AN
ASTERISK AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND THE COMMISSION'S RULES AND REGULATIONS PROMULGATED UNDER THE
FREEDOM OF INFORMATION ACT, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.***
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 19, 2003
among
WESTERN DIGITAL TECHNOLOGIES, INC.,
as Borrower,
WESTERN DIGITAL (FREMONT), INC.,
WESTERN DIGITAL (UK), LIMITED, and
WESTERN DIGITAL (I.S.) LIMITED,
as Credit Parties,
THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent,
GECC CAPITAL MARKETS GROUP, INC.,
as Lead Arranger, and
BANK OF AMERICA, N.A.,
as Documentation Agent
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT.............................................................................. 2
1.1 Credit Facilities.............................................................................. 2
1.2 Letters of Credit.............................................................................. 6
1.3 Prepayments.................................................................................... 6
1.4 Use of Proceeds................................................................................ 8
1.5 Interest and Applicable Margins................................................................ 8
1.6 Eligible Accounts.............................................................................. 10
1.7 [intentionally omitted]........................................................................ 12
1.8 Cash Management System......................................................................... 12
1.9 Fees........................................................................................... 12
1.10 Receipt of Payments............................................................................ 13
1.11 Application and Allocation of Payments......................................................... 13
1.12 Loan Account and Accounting.................................................................... 14
1.13 Indemnity...................................................................................... 15
1.14 Access......................................................................................... 16
1.15 Taxes.......................................................................................... 16
1.16 Capital Adequacy; Increased Costs; Illegality.................................................. 17
1.17 Single Loan.................................................................................... 18
1.18 WD UK and WD IS................................................................................ 19
1.19 Bank Products.................................................................................. 19
1.20 Consents....................................................................................... 19
2. CONDITIONS PRECEDENT.................................................................................... 19
2.1 Conditions to the Initial Loans................................................................ 19
2.2 Further Conditions to Each Loan................................................................ 20
3. REPRESENTATIONS AND WARRANTIES.......................................................................... 21
3.1 Corporate Existence; Compliance with Law....................................................... 21
3.2 Executive Offices; Collateral Locations; FEIN.................................................. 22
3.3 Corporate Power, Authorization, Enforceable Obligations........................................ 22
3.4 Financial Statements and Projections........................................................... 23
3.5 Material Adverse Effect........................................................................ 23
3.6 Ownership of Property; Liens................................................................... 24
3.7 Labor Matters.................................................................................. 24
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness...................... 25
3.9 Government Regulation.......................................................................... 25
3.10 Margin Regulations............................................................................. 25
3.11 Taxes.......................................................................................... 25
3.12 ERISA.......................................................................................... 26
3.13 No Litigation.................................................................................. 27
3.14 Brokers........................................................................................ 27
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3.15 Intellectual Property.......................................................................... 27
3.16 Full Disclosure................................................................................ 27
3.17 Environmental Matters.......................................................................... 28
3.18 Insurance...................................................................................... 28
3.19 Deposit and Disbursement Accounts.............................................................. 29
3.20 Government Contracts........................................................................... 29
3.21 Customer and Trade Relations................................................................... 29
3.22 Agreements and Other Documents................................................................. 29
3.23 Solvency....................................................................................... 29
3.24 Subordinated Debt.............................................................................. 29
4. FINANCIAL STATEMENTS AND INFORMATION.................................................................... 30
4.1 Reports and Notices............................................................................ 30
4.2 Communication with Accountants................................................................. 30
5. AFFIRMATIVE COVENANTS................................................................................... 30
5.1 Maintenance of Existence and Conduct of Business............................................... 30
5.2 Payment of Obligations......................................................................... 31
5.3 Books and Records.............................................................................. 31
5.4 Insurance; Damage to or Destruction of Collateral; Condemnation................................ 31
5.5 Compliance with Laws........................................................................... 33
5.6 Supplemental Disclosure........................................................................ 34
5.7 Intellectual Property.......................................................................... 34
5.8 Environmental Matters.......................................................................... 34
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters................................. 35
5.10 Further Assurances............................................................................. 35
6. NEGATIVE COVENANTS...................................................................................... 35
6.1 Mergers, Subsidiaries, Etc..................................................................... 35
6.2 Investments; Loans and Advances................................................................ 38
6.3 Indebtedness................................................................................... 39
6.4 Employee Loans and Affiliate Transactions...................................................... 39
6.5 Capital Structure and Business................................................................. 40
6.6 Guaranteed Indebtedness........................................................................ 40
6.7 Liens.......................................................................................... 40
6.8 Sale of Stock and Assets....................................................................... 40
6.9 ERISA.......................................................................................... 41
6.10 Financial Covenants............................................................................ 41
6.11 Hazardous Materials............................................................................ 41
6.12 Sale-Leasebacks................................................................................ 41
6.13 Cancellation of Indebtedness................................................................... 41
6.14 Restricted Payments............................................................................ 42
6.15 Change of Corporate Name or Location; Change of Fiscal Year.................................... 42
6.16 No Impairment of Intercompany Transfers........................................................ 42
6.17 No Speculative Transactions.................................................................... 42
6.18 Leases......................................................................................... 43
6.19 Changes Relating to Subordinated Debt.......................................................... 43
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6.20 Subsidiaries................................................................................... 43
7. TERM.................................................................................................... 43
7.1 Termination.................................................................................... 43
7.2 Survival of Obligations Upon Termination of Financing Arrangements............................. 43
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................................................................. 44
8.1 Events of Default.............................................................................. 44
8.2 Remedies....................................................................................... 46
8.3 Waivers by Credit Parties...................................................................... 47
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF CO-AGENTS................................................. 47
9.1 Assignment and Participations.................................................................. 47
9.2 Appointment of Co-Agents....................................................................... 49
9.3 Agent's Reliance............................................................................... 50
9.4 GE Capital, Bank of America and their Affiliates............................................... 50
9.5 Lender Credit Decision......................................................................... 50
9.6 Indemnification................................................................................ 51
9.7 Successor Co-Agents............................................................................ 51
9.8 Setoff and Sharing of Payments................................................................. 52
9.9 Advances; Non-Funding Lenders; Information; Actions in Concert................................. 52
9.10 Relationship Between Co-Agents................................................................. 55
10. SUCCESSORS AND ASSIGNS.................................................................................. 55
11. MISCELLANEOUS........................................................................................... 55
11.1 Complete Agreement; Modification of Agreement.................................................. 55
11.2 Amendments and Waivers......................................................................... 55
11.3 Fees and Expenses.............................................................................. 57
11.4 No Waiver...................................................................................... 59
11.5 Remedies....................................................................................... 59
11.6 Severability................................................................................... 59
11.7 Conflict of Terms.............................................................................. 60
11.8 Confidentiality................................................................................ 60
11.9 GOVERNING LAW.................................................................................. 60
11.10 Notices........................................................................................ 61
11.11 Section Titles................................................................................. 62
11.12 Counterparts................................................................................... 62
11.13 WAIVER OF JURY TRIAL........................................................................... 62
11.14 Press Releases................................................................................. 62
11.15 Reinstatement.................................................................................. 63
11.16 Advice of Counsel.............................................................................. 63
11.17 No Strict Construction......................................................................... 63
11.18 Amendment and Restatement...................................................................... 63
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INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (Annex A) - Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule (1.1) - Agent Representative
Disclosure Schedule (3.1) - Type of Entity; State of Organization
Disclosure Schedule (3.2) - Executive Offices; Collateral Locations; FEIN
Disclosure Schedule (3.4(a)) - Financial Statements
Disclosure Schedule (3.4(b)) - Projections
Disclosure Schedule (3.6) - Real Estate and Leases
Disclosure Schedule (3.7) - Labor Matters
Disclosure Schedule (3.8) - Ventures, Subsidiaries and Affiliates; Stock
Disclosure Schedule (3.11) - Tax Matters
Disclosure Schedule (3.12) - ERISA Plans
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.15) - Intellectual Property
Disclosure Schedule (3.17) - Hazardous Materials
Disclosure Schedule (3.18) - Insurance
Disclosure Schedule (3.19) - Deposit and Disbursement Accounts
Disclosure Schedule (3.20) - Government Contracts
Disclosure Schedule (3.22) - Material Agreements
Disclosure Schedule (5.1) - Trade Names
Disclosure Schedule (6.3) - Indebtedness
Disclosure Schedule (6.6) - Guaranteed Indebtedness
Disclosure Schedule (6.7) - Existing Liens
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THIS AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is entered
into as of September 19, 2003, by and among WESTERN DIGITAL TECHNOLOGIES, INC.,
a Delaware corporation formerly known as Western Digital Corporation
("Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE
Capital"), for itself as a Lender, and as Administrative Agent for Lenders and,
as the context may require, Security Trustee for Beneficiaries (in such
capacity, "Agent"), BANK OF AMERICA, N.A. (in its individual capacity, "Bank of
America"), for itself as a Lender, and as documentation agent for Lenders (in
such capacity, "Documentation Agent"; Administrative Agent, Documentation Agent
and, as the context may require, Security Trustee, are collectively referred to
as "Co-Agents" and each, a "Co-Agent"), and the other Lenders signatory hereto
from time to time.
RECITALS
A. Borrower, the other Credit Parties party thereto, Lenders, and
Co-Agents have entered into the Credit Agreement dated as of September 20, 2000,
as amended by the First Amendment to Credit Agreement dated as of March 8, 2001,
the Second Amendment to Credit Agreement dated as of March 23, 2001, the Third
Amendment to Credit Agreement dated as of April 7, 2001, the Fourth Amendment to
Credit Agreement dated as of September 26, 2001, the Fifth Amendment to the
Credit Agreement dated as of December 21, 2001, the Sixth Amendment to the
Credit Agreement dated as of January 11, 2002, and the Seventh Amendment to
Credit Agreement dated as of June 28, 2002 (including all exhibits and schedules
thereto, and as the same may be subsequently amended, restated, supplemented or
otherwise modified from time to time, collectively, the "Existing Credit
Agreement"; capitalized terms used in Recitals A-D that are not otherwise
defined in such Recitals or in the preamble are as defined in the Existing
Credit Agreement), pursuant to which Co-Agents and Lenders are providing
financial accommodations to or for the benefit of Borrower upon the terms and
conditions contained therein.
B. Borrower has created a wholly-owned subsidiary, Western
Digital (Fremont), Inc., a Delaware corporation formerly known as RR(US)
Acquisition Corporation ("WD Fremont"), and WD Fremont has acquired
substantially all of the assets of Read-Rite Corporation ("Read-Rite") and an
option to purchase the capital stock of Read-Rite International, a Cayman
Islands corporation and a subsidiary of Read-Rite ("Read-Rite International"),
which option has been exercised by WD Fremont, pursuant to the Asset Purchase
Agreement dated as of July 24, 2003, between the Chapter 7 Trustee for the
Bankruptcy Estate of Read-Rite Corporation, a Delaware corporation, as the
Trustee, and Borrower (including all exhibits and schedules thereto, the
"Read-Rite Purchase Agreement").
C. Borrower and the other Credit Parties have requested that
Co-Agents and Lenders amend and restate the Existing Credit Agreement so as to
provide for (i) the consent of Co-Agents and Lenders to (a) the acquisition of
assets and option to purchase capital stock evidenced by the Read-Rite Purchase
Agreement, and (b) the creation of WD Fremont, (ii) the extension of the
maturity date of the Obligations, (iii) a term loan to be made to Borrower in
the amount of $50,000,000, and (iv) certain other amendments to the Existing
Credit Agreement.
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D. Agent and Lenders are willing to agree to such requests of
Borrower and the other Credit Parties, in all cases subject to the terms and
conditions set forth in this Agreement and the other Loan Documents.
E. Subject (with respect to Recitals A-D) to Recital A,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in Annex A and, for purposes of this Agreement and the other Loan
Documents, the rules of construction set forth in Annex A shall govern. All
exhibits, schedules, annexes and other attachments (collectively, "Appendices")
hereto, or expressly identified to this Agreement, are incorporated herein by
reference and, taken together with this Agreement, shall constitute but a single
agreement. These Recitals shall be construed as part of the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof,
each Revolving Lender agrees to make available to Borrower from time to time
until the Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). The Pro Rata Share of the Revolving Loan of any
Revolving Lender shall not at any time exceed its separate Revolving Loan
Commitment. The obligations of each Revolving Lender hereunder shall be several
and not joint. Except to the extent otherwise provided in Section 1.1(a)(iii),
the aggregate amount of Revolving Credit Advances outstanding shall not exceed
at any time the lesser of (A) the Maximum Amount and (B) the Borrowing Base, in
each case less the sum of the Letter of Credit Obligations, the Swing Line Loan
and the Term Loan outstanding at such time ("Borrowing Availability"). Borrowing
Availability shall be reduced by Reserves imposed by Agent in its reasonable
credit judgment. Until the Commitment Termination Date, Borrower may from time
to time borrow, repay and reborrow under this Section 1.1(a). Each Revolving
Credit Advance shall be made on notice by Borrower to the representative of
Agent identified in Schedule (1.1) at the address specified therein. Any such
notice must be given no later than (1) 10:30 a.m. (California time) on the
Business Day of the proposed Revolving Credit Advance, in the case of an Index
Rate Loan, or (2) 10:30 a.m. (California time) on the date that is three
Business Days prior to the proposed Revolving Credit Advance, in the case of a
LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance") shall be
given in writing (by telecopy or overnight courier) substantially in the form of
Exhibit 1.1(a)(i), and shall include the information required in such Exhibit
and such other information as may be required by Agent. If Borrower desires to
have the Revolving Credit Advances bear interest by reference to a LIBOR Rate,
it must comply with Section 1.5(e).
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(ii) Except as provided in Section 1.12, Borrower
shall execute and deliver to each Revolving Lender a note to evidence the
Revolving Loan Commitment of such Revolving Lender, which note shall be (A) in
the principal amount of the Revolving Loan Commitment of such Revolving Lender,
(B) dated the Closing Date and (C) substantially in the form of Exhibit
1.1(a)(ii) (each a "Revolving Note" and collectively the "Revolving Notes").
Each Revolving Note shall represent the obligation of Borrower to pay the amount
of the applicable Revolving Lender's Revolving Loan Commitment or, if less, such
Revolving Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances made to Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Revolving Loan and
all other noncontingent Obligations shall be immediately due and payable in full
in immediately available funds on the Commitment Termination Date.
(iii) Notwithstanding anything to the contrary in
this Agreement, at the request of Borrower, Agent may (but shall have absolutely
no obligation to), in its discretion, make Revolving Credit Advances to Borrower
on behalf of Revolving Lenders in amounts that cause the outstanding balance of
the aggregate Revolving Loan and the outstanding portion of the Term Loan to
exceed the Borrowing Base (less the Swing Line Loan) (any such excess Revolving
Credit Advances are herein referred to collectively as "Overadvances");
provided, that (A) no such event or occurrence shall cause or constitute a
waiver of Agent's, Co-Agents', the Swing Line Lender's or Lenders' right to
refuse to make any further Overadvances, Swing Line Advances or Revolving Credit
Advances, or incur any Letter of Credit Obligations, as the case may be, at any
time that an Overadvance exists or would result therefrom, and (B) no
Overadvance shall result in a Default or Event of Default based on Borrower's
failure to comply with Section 1.3(b)(i) for so long as Agent permits such
Overadvance to be outstanding, but solely with respect to the amount of such
Overadvance. In addition, Overadvances may be made even if the conditions to
lending set forth in Section 2.2 have not been met. All Overadvances shall
constitute Index Rate Loans, shall bear interest at the Default Rate and shall
be payable on the earlier of demand or the Commitment Termination Date. Except
as otherwise provided in Section 1.11(b), the authority of Agent to make
Overadvances (1) is limited to an aggregate amount not to exceed $6,250,000 at
any time, (2) shall not cause the sum of the Revolving Loan and the Term Loan to
exceed the Maximum Amount, and (3) may be revoked prospectively by a written
notice to Agent signed by Revolving Lenders holding more than fifty percent
(50%) of the Revolving Loan Commitments.
(iv) So long as no Default or Event of Default
has occurred and is continuing, Borrower may request, at any time prior to the
Commitment Termination Date, that Lenders consider providing a one-time increase
in the aggregate amount of the Revolving Loan Commitments from $125,000,000 to
$175,000,000 ("Commitment Increase") by providing written notice to Agent and
each Lender (the "Commitment Increase Request Notice"). After its receipt of the
Commitment Increase Request Notice, each Lender will review the information
available to it, conduct any legal and business due diligence deemed necessary
by it in connection with its attempt to obtain the requisite approvals from such
Lender's management. Each Lender will seek to provide notice to Agent and
Borrower within a reasonable period of time after receipt of the Commitment
Increase Request Notice as to whether it would be willing to provide the
Commitment Increase. This agreement by Lenders to consider providing the
Commitment Increase is not, and is not to be construed as, a commitment, offer,
agreement-in-principle or agreement to provide such increase, and any such
increase would be conditioned
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upon payment to Lenders by Borrower of fees mutually agreed to by Lenders and
Borrower and the prior execution and delivery of amendment documentation on
terms and conditions acceptable to Agent, Lenders and Credit Parties and their
respective counsel, including as to the respective Commitment amounts of the
Lenders; provided, that if the Commitment Increase is agreed to by each Lender,
then the amount of the Revolving Loan Commitment of such Lender would be
increased in the amount of its respective Pro Rata Share.
(b) Term Loan.
(i) Subject to the terms and conditions hereof,
each Term Lender agrees to make a term loan (collectively, the "Term Loan") on
the Closing Date to Borrower in the amount of the applicable Term Lender's Term
Loan Commitment. The obligations of each Term Lender hereunder shall be several
and not joint. Each such Term Loan shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(b) (each a "Term Note" and collectively
the "Term Notes"), and Borrower shall execute and deliver a Term Note to each
Term Lender on the Closing Date to evidence the Term Loan Commitment of such
Term Lender. Each Term Note shall represent the obligation of Borrower to pay
the applicable Term Lender's Term Loan Commitment, together with interest
thereon as prescribed in Section 1.5. Each Lender's Term Loan Commitment shall
constitute a subfacility of that Lender's Revolving Loan Commitment.
(ii) Borrower shall repay the Term Loan in 15
consecutive quarterly installments of $3,125,000 each on the first day of
January, April, July and October of each year, commencing on October 1, 2004,
and a final installment due on July 1, 2008, on which date the entire remaining
principal balance of and all accrued and unpaid interest and other Fees and
charges with respect to the Term Loan shall be due and payable.
(iii) Notwithstanding Section 1.1(b)(ii), the
aggregate outstanding principal balance of the Term Loan shall be due and
payable in full in immediately available funds on the Commitment Termination
Date, if not sooner paid in full. No payment with respect to the Term Loan may
be reborrowed.
(iv) Each payment of principal with respect to
the Term Loan shall be paid to Agent for the ratable benefit of each Term Lender
making a Term Loan, ratably in proportion to each such Term Lender's respective
Term Loan Commitment.
(c) Swing Line Facility.
(i) Swing Line Advances. Agent shall notify the
Swing Line Lender upon Agent's receipt of any Notice of Revolving Credit
Advance. Subject to the terms and conditions hereof, the Swing Line Lender may,
in its discretion, make available from time to time until the Commitment
Termination Date advances (each, a "Swing Line Advance") in accordance with any
such notice. The aggregate amount of Swing Line Advances outstanding shall not
exceed at any time the lesser of (A) the Swing Line Commitment and (B) the
lesser of (1) the Maximum Amount and (2) (except for Overadvances) the Borrowing
Base, in each case less the outstanding balance of the Revolving Loan and Term
Loan at such time ("Swing Line Availability"). Until the Commitment Termination
Date, Borrower may from time to time
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borrow, repay and reborrow under this Section 1.1(c). Each Swing Line Advance
shall be made pursuant to a Notice of Revolving Credit Advance delivered by
Borrower to Agent in accordance with Section 1.1(a). Any such notice must be
given no later than 10:30 a.m. (California time) on the Business Day of the
proposed Swing Line Advance. Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. Unless the Swing Line Lender has received at least one Business
Day's prior written notice from Requisite Revolving Lenders instructing it not
to make any Swing Line Advance, the Swing Line Lender shall, notwithstanding the
failure of any condition precedent set forth in Section 2.2 (other than the
condition precedent set forth in Section 2.2(e)) be entitled to fund such Swing
Line Advance and, in connection with such Swing Line Advance, to have each
Revolving Lender make Revolving Credit Advances in accordance with Section
1.1(c)(iii) and to purchase participating interests in accordance with Section
1.1(c)(iv). Borrower shall repay the aggregate outstanding principal amount of
the Swing Line Loan upon demand therefor by Agent.
(ii) Swing Line Note. Borrower shall execute and
deliver to the Swing Line Lender a promissory note to evidence the Swing Line
Commitment. Such note shall be (A) in the principal amount of the Swing Line
Commitment, (B) dated the Closing Date, and (C) substantially in the form of
Exhibit 1.1(c)(ii) (the "Swing Line Note"). The Swing Line Note shall represent
the obligation of Borrower to pay the amount of the Swing Line Commitment or, if
less, the aggregate unpaid principal amount of all Swing Line Advances made to
Borrower together with interest thereon as prescribed in Section 1.5. The entire
unpaid balance of the Swing Line Loan and all other noncontingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing
Line Lender, at any time and from time to time in its sole and absolute
discretion, but no less frequently than once weekly, shall on behalf of Borrower
(and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on
its behalf) request each Revolving Lender (including the Swing Line Lender) to
make a Revolving Credit Advance to Borrower (which shall be an Index Rate Loan)
in an amount equal to such Revolving Lender's Pro Rata Share of the principal
amount of the Swing Line Loan (the "Refunded Swing Line Loan") outstanding on
the date such notice is given. Unless any of the events described in Sections
8.1(h) or 8.1(i) shall have occurred (in which event the procedures of Section
1.1(c)(iv) shall apply) and regardless of whether the conditions precedent set
forth in this Agreement to the making of a Revolving Credit Advance are then
satisfied, each Revolving Lender shall disburse directly to Agent its Pro Rata
Share of a Revolving Credit Advance on behalf of the Swing Line Lender prior to
12:00 noon (California time) in immediately available funds on the Business Day
next succeeding the date such notice is given. The proceeds of such Revolving
Credit Advances shall be immediately paid to the Swing Line Lender and applied
to repay the Refunded Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior
to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to
Section 1.1(c)(iii), one of the events described in Sections 8.1(h) or 8.1(i)
shall have occurred, then, subject to the provisions of Section 1.1(c)(v) below,
each Revolving Lender shall, on the date such Revolving Credit Advance was to
have been made for the benefit of Borrower, purchase from the Swing Line Lender
an undivided participation interest in the Swing Line Loan in an amount equal to
its Pro
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Rata Share of such Swing Line Loan. Upon request, each Revolving Lender shall
promptly transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation interest.
(v) Lenders' Obligations Unconditional. Each
Revolving Lender's obligation to make Revolving Credit Advances in accordance
with Section 1.1(c)(iii) and to purchase participating interests in accordance
with Section 1.1(c)(iv) shall be absolute and unconditional and shall not be
affected by any circumstance, including: (A) any setoff, counterclaim,
recoupment, defense or other right that such Revolving Lender may have against
the Swing Line Lender, Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of any Default or Event of Default; (C) any
inability of Borrower to satisfy the conditions precedent to borrowing set forth
in this Agreement on the date upon which such participating interest is to be
purchased; or (D) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing. If any Revolving Lender does not make
available to Agent or the Swing Line Lender, as applicable, the amount required
pursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing
Line Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate for the
first two Business Days and at the Index Rate thereafter.
(d) Reliance on Notices. Agent shall be entitled to rely
upon, and shall be fully protected in relying upon, any Notice of Revolving
Credit Advance, Notice of Conversion/Continuation or similar notice believed by
Agent to be genuine. Agent may assume that each Person executing and delivering
any such notice was duly authorized, unless the responsible individual acting
thereon for Agent has actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments. Borrower may at any time on at
least five days' prior written notice to each Co-Agent, (i) voluntarily prepay
all or part of the Term Loan or (ii) voluntarily prepay all or part of the
Revolving Loan and permanently reduce (but not terminate) the Revolving Loan
Commitment; provided, that (A) any such prepayments or reductions shall be in a
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
such amount and (B) the Revolving Loan Commitment shall not be reduced to an
amount less than the greater of (I) $75,000,000 and (II) the L/C Sublimit.
Borrower may at any time on at least ten days' prior written notice to Co-Agents
terminate the Revolving Loan Commitment; provided, that upon such termination
all Loans and other Obligations shall be immediately due and payable in full and
Borrower shall make arrangements, in accordance with the terms and conditions of
Annex B, for the satisfaction of any outstanding Letter of Credit Obligations.
Any such voluntary prepayment and any such reduction or termination of the
Revolving Loan Commitment must be accompanied by payment of the Fee required by
Section 1.9(c), if any, each Co-Agent's and each Lender's out-of-pocket
expenses, and payment
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of any LIBOR funding breakage costs in accordance with Section 1.13(b). Upon any
such prepayment and reduction or termination of the Revolving Loan Commitment,
Borrower's right to request Revolving Credit Advances, or request that Letter of
Credit Obligations be incurred on its behalf, or request Swing Line Advances,
shall simultaneously be permanently reduced or terminated, as the case may be;
provided, that a permanent reduction of the Revolving Loan Commitment shall
require a corresponding pro rata reduction in the L/C Sublimit. Each notice of
partial prepayment shall designate the Loan or other Obligations to which such
prepayment is to be applied; provided, that any partial prepayment of the Term
Loan made by Borrower shall be applied to prepay the scheduled installments of
the Term Loan in inverse order of maturity.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of
the Revolving Loan exceeds the lesser of (A) the Maximum Amount and (B) the
Borrowing Base, in each case less the outstanding Swing Line Loan and Term Loan
at such time, then Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such excess. If
any such excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for the Letter
of Credit Obligations in the manner set forth in Annex B to the extent required
to eliminate such excess. Notwithstanding the foregoing, any Overadvance made
pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section
1.1(a)(iii).
(ii) Except as provided below, immediately upon
receipt by any Credit Party of any cash proceeds of any disposition of any of
its assets (other than a pledge of (A) any Stock of any Excluded Subsidiary or
(B) any Excluded Investment) or any sale of Stock of any Subsidiary of any
Credit Party, Borrower shall cause the Loans to be prepaid in an amount equal to
all such proceeds, net of (I) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrower in connection therewith (in each case, paid to
non-Affiliates), (II) transfer taxes, (III) amounts payable to holders of senior
Liens on such asset (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (A) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith. Any such prepayment shall be
applied in accordance with Section 1.3(c). Notwithstanding the generality of the
foregoing, Borrower shall not be required to prepay the Loans from the proceeds
of (x) asset dispositions permitted by Section 6.8(a), (y) the sale of the Stock
of any Excluded Subsidiary, or (z) asset dispositions permitted by Sections
6.8(b) through (d) at any time that no Default or Event of Default has occurred
and is continuing in an amount not to exceed (1) $250,000 in any single
transaction or series of related transactions or (2) $1,000,000 in the aggregate
for all such transactions.
(iii) If Borrower issues Stock, no later than the
Business Day following the date of receipt of the cash proceeds thereof,
Borrower shall prepay the Loans (and cash collateralize Letter of Credit
Obligations) in an amount equal to all such cash proceeds, net of underwriting
discounts and commissions and other reasonable costs paid to non-Affiliates in
connection therewith. Any such prepayment shall be applied in accordance with
Section 1.3(c).
(c) Application of Certain Mandatory Prepayments. Any
prepayments made by Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) shall
be applied as follows: first, to Fees
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and reimbursable expenses of Agent then due and payable pursuant to any of the
Loan Documents (other than amounts relating to Bank Products); second, to
interest then due and payable on the Term Loan; third, to prepay the scheduled
principal installments of the Term Loan in inverse order of maturity, until such
Loan shall have been prepaid in full; fourth, to interest then due and payable
on the Swing Line Loan; fifth, to the principal balance of the Swing Line Loan
until the same shall have been repaid in full; sixth, to interest then due and
payable on the Revolving Credit Advances; seventh, to the outstanding principal
balance of Revolving Credit Advances until the same shall have been paid in
full; eighth, in the event that Agent has delivered an Activation Notice at any
time prior to any such prepayment, to any Letter of Credit Obligations, to
provide cash collateral therefor in the manner set forth in Annex B, until all
such Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in Annex B; and ninth, to the payment to Bank of America of any
reimbursable amounts relating to Bank Products. Neither the Revolving Loan
Commitment nor the Swing Line Commitment shall be permanently reduced by the
amount of any such prepayments.
(d) Application of Prepayments from Insurance and
Condemnation Proceeds. Prepayments from insurance or condemnation proceeds in
accordance with Sections 5.4(c) or 5.4(d), respectively, shall be applied first,
to the Term Loan, second, to the Swing Line Loans and third to the Revolving
Credit Advances. Neither the Revolving Loan Commitment nor the Swing Line Loan
Commitment shall be permanently reduced by the amount of any such prepayments.
(e) No Consent to Prohibited Transactions. Nothing in
this Section 1.3 shall be construed to constitute any Co-Agent's or any Lender's
consent to any transaction that is not permitted by other provisions of this
Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the
Loans solely for the financing of Borrower's ordinary working capital and
general corporate needs (but excluding in any event the making of any Restricted
Payment not specifically permitted by Section 6.14).
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being made by each
Lender, in arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus
the Applicable Revolver Index Margin per annum or, at the election of Borrower,
the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum;
(ii) with respect to the Term Loan, the Index Rate plus the Applicable Term Loan
Index Margin per annum or, at the election of Borrower, the applicable LIBOR
Rate plus the Applicable Term Loan LIBOR Margin per annum; and (iii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver
Index Margin per annum. The Applicable Revolver Index Margin, Applicable
Revolver LIBOR Margin, Applicable Term Loan Index Margin, Applicable Term Loan
LIBOR Margin, Applicable L/C Margin, and Applicable Unused Line Fee Margin shall
be 0.50%, 2.00%, 0.75%, 2.25%, 1.50%, and 0.375% per annum, respectively.
(b) If any payment of any of the Obligations becomes due
and payable on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding
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Business Day (except as set forth in the definition of LIBOR Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Agent on the basis of a 360-day year, in
each case for the actual number of days occurring in the period for which such
Fees or interest are payable. Each determination by Agent of an interest rate
and Fees hereunder shall be final, binding and conclusive on Borrower (absent
manifest error).
(d) So long as an Event of Default shall have occurred
and be continuing under Section 8.1(a), 8.1(h) or 8.1(i), or so long as any
other Default or Event of Default shall have occurred and be continuing and at
the election of Agent (or upon the written request of Requisite Lenders)
confirmed by written notice from Agent to Borrower, the interest rates
applicable to the Loans and the Letter of Credit Fees shall be increased by two
percentage points (2.0%) per annum above the rates of interest or the rate of
such Fees otherwise applicable hereunder (the "Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Default or Event of Default until that
Default or Event of Default is cured or waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in
Section 2.2, Borrower shall have the option to (i) request that any Revolving
Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part
of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to
LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
first day after the last day of the LIBOR Period of the Loan to be continued.
Any Loan to be made or continued as, or converted into, a LIBOR Loan must be in
a minimum amount of $5,000,000 and integral multiples of $500,000 in excess of
such amount. Any such election must be made by 10:30 a.m. (California time) on
the third Business Day prior to (A) the date of any proposed Advance that is to
bear interest at the LIBOR Rate, (B) the end of each LIBOR Period with respect
to any LIBOR Loans to be continued as such, or (C) the date on which Borrower
wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period
designated by Borrower in such election. If no election is received with respect
to a LIBOR Loan by 10:30 a.m. (California time) on the third Business Day prior
to the end of the LIBOR Period with respect thereto (or if a Default or an Event
of Default shall have occurred and be continuing or the additional conditions
precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR
Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period.
Borrower must make such election by notice to Agent in writing, by telecopy or
overnight courier. In the case of any conversion or continuation, such election
must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 1.5(e).
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(f) Notwithstanding anything to the contrary set forth in
this Section 1.5, if a court of competent jurisdiction determines in a final
order that the rate of interest payable hereunder exceeds the highest rate of
interest permissible under law (the "Maximum Lawful Rate"), then so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. Based on the most recent Borrowing Base
Certificate delivered by Borrower to each Co-Agent and on any other information
available to Agent, Agent shall in its reasonable credit judgment determine
which Accounts of Borrower shall be "Eligible Accounts" for purposes of this
Agreement. In determining whether a particular Account constitutes an Eligible
Account, Agent shall not include any such Account to which any of the
exclusionary criteria set forth below applies. Agent reserves the right, at any
time and from time to time after the Closing Date in its reasonable credit
judgment, to adjust any such criteria, to adjust advance rates, to establish
Reserves, and to modify Reserves with respect to Eligible Accounts, subject to
the approval of Supermajority Revolving Lenders in the event any such
adjustments or the establishment of such new criteria or Reserves have the
effect of making more credit available. Eligible Accounts shall not include any
Account of Borrower:
(a) that does not arise from the sale of goods or the
performance of services by Borrower in the ordinary course of its
business;
(b) upon which Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition
whatsoever or (i) as to which Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through
judicial process, or (ii) if the Account represents a progress billing
consisting of an invoice for goods sold or used or services rendered
pursuant to a contract under which the Account Debtor's obligation to
pay that invoice is subject to Borrower's completion of further
performance under such contract or is subject to the equitable lien of
a surety bond issuer;
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(c) to the extent that any defense, counterclaim, setoff
or dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold
to or services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent
in form and substance, has not been sent to the applicable Account
Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject
to any Lien of any other Person, other than Liens in favor of Agent, on
behalf of Co-Agents and Lenders;
(g) that arises from a sale to any director, officer,
other employee or Affiliate of any Credit Party or any Subsidiary of
any Credit Party, or to any entity that has any common officer or
director with any such Credit Party or Subsidiary;
(h) that is the obligation of an Account Debtor that is
the United States government or a political subdivision thereof, or any
state, county or municipality or department, agency or instrumentality
thereof unless Agent, in its sole discretion, has agreed to the
contrary in writing and Borrower, if necessary or desirable, has
complied with respect to such obligation with the Federal Assignment of
Claims Act of 1940 or any applicable state statute, county or municipal
law restricting assignment thereof;
(i) except as otherwise set forth in clause (b) or (c) of
the definition of "Borrowing Base" set forth in Annex A, that is the
obligation of an Account Debtor located in a foreign country other than
Canada (excluding the provinces of Quebec and Newfoundland and the
Northwest Territories);
(j) to the extent Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account
Debtor to Borrower or any Subsidiary thereof but only to the extent of
the potential offset;
(k) that arises with respect to goods that are delivered
on a bill-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the
Account Debtor is or may be conditional;
(l) that is in default; provided, that without limiting
the generality of the foregoing, an Account shall be deemed in default
upon the occurrence of any of the following:
(i) such Account is not paid within the earlier
of 60 days following its due date or 90 days following its
original invoice date;
(ii) the Account Debtor obligated upon such
Account suspends business, makes a general assignment for the
benefit of creditors or fails to pay its debts generally as
they come due; or
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(iii) a petition is filed by or against any
Account Debtor obligated upon such Account under any
bankruptcy law or any other federal, state or foreign
(including any provincial) receivership, insolvency relief or
other law or laws for the relief of debtors;
(m) that is an obligation of an Account Debtor with
respect to which fifty percent (50%) or more of the Dollar amount of
all Accounts owing by such Account Debtor are ineligible under the
other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of
Co-Agents and Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties
pertaining to such Account in the Loan Documents is untrue;
(p) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment, following
prior notice of such limit by Agent to Borrower;
(r) to the extent that (i) such Account, together with
all other Accounts owing by such Account Debtor (other than a Qualified
Account Debtor) and its Affiliates as of any date of determination
exceed fifteen percent (15%) of all Eligible Accounts, or (ii) if the
Account Debtor is a Qualified Account Debtor, such Account, together
with all other Accounts owing by such Account Debtor and its Affiliates
as of any date of determination exceed 25% of all Eligible Accounts;
(s) that is payable in any currency other than Dollars;
or
(t) that is otherwise unacceptable to Agent, in its
reasonable credit judgment.
1.7 [INTENTIONALLY OMITTED]
1.8 Cash Management System. On or prior to the Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash
management system described in Annex C (the "Cash Management System").
1.9 Fees.
(a) Borrower shall pay to GE Capital, individually, the
Fees specified in the Fee Letter, at the times specified for payment therein.
(b) As additional compensation for the Revolving Lenders,
Borrower shall pay to Agent, for the ratable benefit of such Revolving Lenders,
in arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrower's
non-use of available funds in an amount equal to (i) the
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Applicable Unused Line Fee Margin (calculated on the basis of a 360 day year for
actual days elapsed) multiplied by (ii) (A) the Maximum Amount (as it may be
reduced from time to time) minus (B) the average for the period of the daily
closing balances of the Revolving Loan, the Term Loan and the Swing Line Loan
outstanding during the period for which such Fee is due.
(c) If (i) Borrower voluntarily prepays all or any
portion of the Term Loan, (ii) Borrower voluntarily prepays the Revolving Loan
and terminates the Revolving Loan Commitment, or voluntarily prepays the
Revolving Loan and reduces the Revolving Loan Commitment below $75,000,000, in
each case whether before or after acceleration of the Obligations, or (iii) the
Revolving Loan Commitment is otherwise terminated as a result of the occurrence
of an Event of Default under Section 8.1(h) or (i), then Borrower shall pay to
Agent, for the benefit of Lenders as liquidated damages and compensation for the
costs of being prepared to make funds available hereunder an amount equal to (A)
the Applicable Percentage multiplied by (B) (I) the principal amount of the Term
Loan prepaid plus the amount of the reduction of the Revolving Loan Commitment
or, if terminated, the amount of the Revolving Loan Commitment at such time. As
used herein, the term "Applicable Percentage" shall mean one percent (1.0%), in
the case of a prepayment on or prior to the first anniversary of the Closing
Date. Notwithstanding the foregoing, no prepayment fee shall be payable by
Borrower upon a mandatory prepayment made pursuant to Sections 1.3(b) or
1.16(c); provided, that Borrower does not permanently reduce the Revolving Loan
Commitment upon any such prepayment and, in the case of prepayments made
pursuant to Sections 1.3(b)(ii) or (b)(iii), the transaction giving rise to the
applicable prepayment is expressly permitted under Section 6.
(d) Borrower shall pay to Agent, for the ratable benefit
of Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrower shall make each payment under
this Agreement not later than 11:00 a.m. (California time) on the day when due
in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing Availability
or Net Borrowing Availability as of any date, all payments shall be deemed
received on the Business Day of receipt of immediately available funds therefor
in the Collection Account prior to 11:00 a.m. (California time). Payments
received after 11:00 a.m. (California time) on any Business Day or on a day that
is not a Business Day shall be deemed to have been received on the following
Business Day.
1.11 Application and Allocation of Payments.
(a) So long as no Default or Event of Default shall have
occurred and be continuing: (i) payments consisting of proceeds of Accounts
received in the ordinary course of business shall be applied first to the Swing
Line Loan, second to the Revolving Loan, and third to the Term Loan; (ii)
payments matching specific scheduled payments then due shall be applied to those
scheduled payments; (iii) voluntary prepayments shall be applied as determined
by Borrower, subject to the provisions of Section 1.3(a); and (iv) mandatory
prepayments shall be applied as set forth in Section 1.3(c) and 1.3(d). All
payments and prepayments applied to a particular Loan shall be applied ratably
to the portion thereof held by each Lender as determined by its Pro Rata Share.
As to each other payment, and as to all payments made when a Default or Event or
Default shall have occurred and be continuing or following the Commitment
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Termination Date, Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of Borrower, and
Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations as
Agent may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order: (A) to Fees and Agent's
expenses reimbursable hereunder; (B) to interest on the Swing Line Loan; (C) to
principal payments on the Swing Line Loan; (D) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (E) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; (F) to all other Obligations, including expenses of Lenders to the
extent reimbursable under Section 11.3; and (G) to the payment to Bank of
America of any reimbursable amounts relating to Bank Products.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of Borrower and cause to be paid
all Fees, expenses, Charges, costs (including insurance premiums in accordance
with Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if such charges would cause the aggregate amount of
Revolving Credit Advances and Swing Line Advances outstanding after giving
effect to such charges to exceed Borrowing Availability. At Agent's option and
to the extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record: (a) all Advances and the
Term Loan; (b) all payments made by Borrower; and (c) all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall, absent manifest error, be presumptive evidence
of the amounts due and owing to Agent and Lenders by Borrower; provided, that
any failure to so record or any error in so recording shall not limit or
otherwise affect Borrower's duty to pay the Obligations. Agent shall render to
Borrower a monthly accounting of transactions with respect to the Loans setting
forth the balance of the Loan Account for the immediately preceding month.
Unless Borrower notifies Agent in writing of any objection to any such
accounting (specifically describing the basis for such objection), within 30
days after the date thereof, each and every such accounting shall be deemed
final, binding and conclusive on Borrower (absent manifest error) in all
respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower.
Notwithstanding any provision herein contained to the contrary, any Lender may
elect (which election may be revoked) to dispense with the issuance of Notes to
that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.
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1.13 Indemnity.
(a) Each Credit Party shall jointly and severally
indemnify and hold harmless each Co-Agent, each Lender, and their respective
Affiliates, and each such Person's respective officers, directors, employees,
attorneys, agents and representatives (each, an "Indemnified Person"), from and
against any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys' fees and disbursements
and other costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and the
administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, "Indemnified Liabilities"); provided, that: (i) the liability of
WD UK or WS IS, as the case may be, under this Section 1.13 shall be limited to
the net book value of such Credit Party's assets; and (ii) no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results solely from (A) such Indemnified Person's gross negligence or
willful misconduct, as finally determined by a court of competent jurisdiction,
or (B) disputes among Co-Agents and Lenders that are not caused by any action or
inaction of any Credit Party or any Subsidiary of any Credit Party. NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN
DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR
ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR
AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if: (i) any LIBOR Loans are repaid in whole or in
part prior to the last day of any applicable LIBOR Period (whether such
repayment is made pursuant to any provision of this Agreement or any other Loan
Document or occurs as a result of acceleration, by operation of law or
otherwise); (ii) Borrower shall default in payment when due of the principal
amount of or interest on any LIBOR Loan; (iii) Borrower shall default in making
any borrowing of, conversion into or continuation of LIBOR Loans after Borrower
has given notice requesting the same in accordance herewith; or (iv) Borrower
shall fail to make any prepayment of a LIBOR Loan after Borrower has given a
notice thereof in accordance herewith, then Borrower shall indemnify and hold
harmless each Lender from and against all losses, costs and expenses resulting
from or arising from any of the foregoing. Such indemnification shall include
any loss (including loss of margin) or expense arising from the reemployment of
funds obtained by it or from fees payable to terminate deposits from which such
funds were obtained. For the purpose of calculating amounts payable to a Lender
under this subsection, each Lender shall be deemed to have actually funded its
relevant LIBOR Loan through the purchase of a deposit bearing interest at the
LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a
maturity comparable to the relevant LIBOR Period; provided, that each Lender may
fund each of
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its LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this subsection. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder. As promptly as practicable under
the circumstances, each Lender shall provide Borrower with its written
calculation of all amounts payable pursuant to this Section 1.13(b), and such
calculation shall be binding on the parties hereto unless Borrower shall object
in writing within ten Business Days of receipt thereof, specifying the basis for
such objection in detail.
1.14 Access. Each Credit Party shall, during normal business hours,
from time to time upon one Business Day's prior notice as frequently as Agent
reasonably determines to be appropriate: (a) provide Agent and any of its
officers, employees and agents reasonable access to (i) the properties,
facilities, advisors and employees (including officers) of each Credit Party,
(ii) subject to the requirements of any applicable confidentiality agreement,
each Subsidiary of each Credit Party (provided that such Credit Party shall use
commercially reasonable efforts to obtain the consent from the Person enforcing
the confidentiality provisions of any such agreement), and (iii) the Collateral;
(b) permit Agent and any of its officers, employees and agents to inspect, audit
and make extracts from the books and records of any Credit Party or any
Subsidiary of any Credit Party; and (c) permit Agent and its officers, employees
and agents to inspect, review, evaluate and make test verifications and counts
of the Accounts, Inventory and other Collateral of any Credit Party; provided,
that so long as either (i) no Event of Default shall have occurred and be
continuing, or (ii) Agent shall not have delivered an Activation Notice, then
Agent shall be entitled to be reimbursed for only two field examinations in any
calendar year. If a Default or Event of Default shall have occurred and be
continuing or if access is necessary to preserve or protect the Collateral as
determined by any Agent, each such Credit Party shall provide such access to
each Co-Agent and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default shall have occurred and be
continuing, each Credit Party shall use commercially reasonable efforts to
provide each Co-Agent and each Lender with access to such Credit Party's
suppliers and customers. Each Credit Party shall make available to Agent and its
counsel, as quickly as is possible under the circumstances, originals or copies
of all books and records that Agent may reasonably request. Each Credit Party
shall deliver any document or instrument necessary for Agent, as it may from
time to time request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by such Credit Party. Agent will give Lenders at least ten days' prior
written notice of regularly scheduled audits. Representatives of each Co-Agent
and each Lender may accompany Agent's representatives on regularly scheduled
audits at no charge to Borrower.
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with this Section 1.15, free and clear of
and without deduction for any and all present or future Taxes. If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) the sum payable shall be increased as much as
shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.15)
Co-Agents or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions
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been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall
pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law. Within 30 days after the date of any payment of
the Taxes referred to in this Section 1.15(a), Borrower shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party shall indemnify and, within ten
days of demand therefor, pay each Co-Agent and each Lender for the full amount
of Taxes (including any Taxes imposed by any jurisdiction on amounts payable
under this Section 1.15) paid by such Co-Agent or Lender, as appropriate, and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Forms 4224 (or IRS
Forms W-8ECI) or IRS Forms 1001 (or IRS Forms W-8BEN), or other applicable form,
certificate or document prescribed by the IRS or the United States certifying as
to such Foreign Lender's entitlement to such exemption (a "Certificate of
Exemption"). Any foreign Person that seeks to become a Lender under this
Agreement shall provide a Certificate of Exemption to Borrower and Agent prior
to becoming a Lender hereunder. No foreign Person may become a Lender hereunder
if such Person is unable to deliver a Certificate of Exemption.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that the adoption
after the date hereof of any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law) from any central bank or
other Governmental Authority increases or would have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such Lender to
Borrower and to Agent shall be final, binding and conclusive on Borrower (absent
manifest error) for all purposes.
(b) If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall, from time to time upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted
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to Borrower and to Agent by such Lender, shall be final, binding and conclusive
on Borrower (absent manifest error) for all purposes. Each Lender agrees that,
as promptly as practicable after it becomes aware of any circumstances referred
to above that would result in any such increased cost, the affected Lender
shall, to the extent not inconsistent with such Lender's internal policies of
general application, use reasonable commercial efforts to minimize costs and
expenses incurred by it and payable to it by Borrower pursuant to this Section
1.16(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any LIBOR
Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in
that Lender's opinion, adversely affecting it or its Loans or the income
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make or to
make or to continue to fund or maintain LIBOR Loans shall terminate, and (ii)
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing to
such Lender, together with interest accrued thereon, unless Borrower, within
five Business Days after the delivery of such notice and demand, converts all
such LIBOR Loans into Index Rate Loans.
(d) Within 15 days after receipt by Borrower of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.15(a), 1.16(a)
or 1.16(b), Borrower may, at its option, notify Agent and such Affected Lender
of its intention to replace the Affected Lender. So long as no Default or Event
of Default shall have occurred and be continuing, Borrower, with the consent of
each Co-Agent, may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for the Affected Lender, which Replacement Lender must be
satisfactory to Agent. If Borrower obtains a Replacement Lender within 90 days
following notice of its intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale and
such assignment shall not require the payment of an assignment fee to Agent;
provided, that Borrower shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrower's notice of intention
to replace such Affected Lender. Furthermore, if Borrower gives a notice of
intention to replace and does not so replace such Affected Lender within 90 days
thereafter, Borrower's rights under this Section 1.16(d) shall terminate with
respect to such Affected Lender and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15(a), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
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1.18 WD UK and WD IS.
(a) If at any time the Revolving Loan (excluding the
least of: (i) the face amount of Letters of Credit (A) for bank guarantees
issued on behalf of WD UK, (B) to support Borrower's replacement real estate
lease for its headquarters location, (C) posted in the approximate amount of
$25,200,000 in satisfaction of the writs of attachment obtained by Cirrus Logic,
Inc. against Borrower and WD Malaysia, and (D) to support other corporate
purposes acceptable to Agent in an aggregate amount not to exceed $10,000,000;
(ii) $20,000,000; and (iii) 33% of the value of all Collateral included in
clauses (a) and (b) of the definition of "Borrowing Base") exceeds the lesser of
(x) $50,000,000 and (y) 50% of the value of all Collateral included in clauses
(a) and (b) of the definition of "Borrowing Base," then the Collateral set forth
in clause (c) of the definition of "Borrowing Base" shall be excluded from the
calculation of Borrowing Availability and Net Borrowing Availability as of such
time, and WD UK and WD IS will enter into a separate credit agreement and any
related loan documents (A) deemed necessary by Agent and its counsel and (B)
containing terms and conditions satisfactory to Agent and WD UK and WD IS and
their respective counsel, prior to receiving the proceeds of any additional
Revolving Credit Advances from Lenders with respect to such excluded Collateral.
(b) The liability of WD IS and WD UK under this Agreement
and their respective Guaranties shall be limited to the net book value of the
assets of WD IS or WD UK, as applicable.
1.19 Bank Products. Borrower may request and Bank of America may,
in its sole discretion, arrange for Borrower to obtain from Bank of America or
one of its Affiliates Bank Products although Borrower is not required to do so.
Borrower agrees to indemnify and hold Bank of America, each Co-Agent and each
Lender harmless from any and all costs and obligations now or hereafter incurred
by or owing to any other Person by Bank of America, any Co-Agent, or any Lender
or Bank of America's Affiliates arising from or related to such Bank Products;
provided, that nothing contained herein is intended to limit Borrower's rights,
if any, that arise as a result of the execution of documents by and between
Borrower and Bank of America that relate to Bank Products. The agreement
contained in this Section shall survive termination of this Agreement. Borrower
acknowledges and agrees that the obtaining of Bank Products from Bank of America
or its Affiliates (a) is in the sole discretion of Bank of America or such
Affiliates, and (b) is subject to all rules and regulations of Bank of America
or such Affiliates.
1.20 Consents. *******************
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated
to make the initial Loan or incur the initial Letter of Credit Obligations, or
to take, fulfill, or perform any other action hereunder, and the Existing Credit
Agreement shall remain in full force and effect, until the following conditions
have been satisfied or provided for in a manner satisfactory to Agent, or waived
in writing by Agent and Lenders:
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* Material has been omitted pursuant to a request for confidential treatment.
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by and delivered to
Borrower, each other Credit Party a party thereto, each Co-Agent and
Lenders, and Agent shall have received such documents, instruments,
agreements and legal opinions as any Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the
other Loan Documents, including all those listed in the Schedule of
Documents, each in form and substance satisfactory to each Co-Agent.
(b) Approvals. Agent shall have received as of the
Closing Date (i) satisfactory evidence that the Credit Parties have
obtained all required consents and approvals of all Persons, including
all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions; or (ii) an officer's
certificate in form and substance satisfactory to Agent affirming that
no such consents or approvals are required.
(c) Opening Available Liquidity. The Eligible Accounts
supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be
established on the Closing Date shall be sufficient in value, as
determined by Co-Agents, to provide Borrower and its Subsidiaries
(other than the Excluded Subsidiaries) with Available Liquidity, after
giving effect to the Term Loan and the incurrence of any initial Letter
of Credit Obligations and the consummation of the Related Transactions
(on a pro forma basis, with trade payables being paid currently, and
expenses and liabilities being paid in the ordinary course of business
and without acceleration of sales) of at least $299,000,000.
(d) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts
specified in Section 1.9 (including the Fees specified in the Fee
Letter), and shall have reimbursed Co-Agents for all fees, costs and
expenses of closing presented as of the Closing Date.
(e) Capital Structure; Other Indebtedness. The capital
structure of each Credit Party and each Subsidiary of each Credit Party
(other than the Excluded Subsidiaries), and the terms and conditions of
all Indebtedness of each Credit Party shall be acceptable to Agent in
its sole discretion as of the Closing Date.
(f) Due Diligence. Agent shall have completed its
business and legal due diligence, including a roll forward of its
previous Collateral audit, with results satisfactory to Agent as of the
Closing Date.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document shall be untrue or
incorrect as of such date, except to the extent that such
representation or warranty expressly relates to an earlier date and
except for
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changes therein expressly permitted or expressly contemplated by this
Agreement; and Agent or Requisite Revolving Lenders shall have
determined not to make any Loan or incur any Letter of Credit
Obligation so long as such representation or warranty continues to be
untrue or incorrect;
(b) any event or circumstance having a Material Adverse
Effect shall have occurred since the date hereof as determined by the
Requisite Revolving Lenders;
(c) (i) any Default or Event of Default shall have
occurred and be continuing or would result after giving effect to any
Loan or the incurrence of any Letter of Credit Obligation, and (ii)
Agent or Requisite Revolving Lenders shall have determined not to make
any Loan or incur any Letter of Credit Obligation so long as such
Default or Event of Default is continuing; provided, that if an Event
of Default specified in Section 8.1(a) (other than an Event of Default
arising under Section 8.1(a) as a result of Borrower's failure to repay
any Overadvance) or Section 8.1(b) has occurred and is continuing for
30 days or more, then no Lender having (A) more than 15% of the
Commitments of all Lenders, or (B) if the Commitments have been
terminated, more than 15% of the aggregate outstanding amount of all
Loans, shall be required to fund Revolving Credit Advances or incur any
Letter of Credit Obligations for more than 30 days after the occurrence
of that Event of Default;
(d) after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligations), the outstanding principal amount
of the Revolving Loan would exceed the lesser of the Borrowing Base and
the Maximum Amount, in each case less the then outstanding principal
amount of the Swing Line Loan and Term Loan; or
(e) after giving effect to any Swing Line Advance, the
outstanding principal amount of the Swing Line Loan would exceed Swing
Line Availability.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request, acceptance or incurrence, (i) a
representation and warranty by Borrower that the conditions in this Section 2.2
have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of Co-Agents and Lenders, pursuant to
the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make Revolving Credit Advances, Swing Line
Advances and the Term Loan and to incur Letter of Credit Obligations, each
Credit Party makes the following representations and warranties to each Co-Agent
and each Lender with respect to such Credit Party and its Subsidiaries, each and
all of which shall survive the execution and delivery of this Agreement:
3.1 Corporate Existence; Compliance with Law. Such Credit Party
and each Subsidiary of such Credit Party: (a) is a corporation or other entity
duly organized, validly existing and, if applicable, in good standing under the
laws of its jurisdiction of incorporation or
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organization set forth in Disclosure Schedule (3.1); (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not result in
exposure to losses, damages or liabilities in excess of $100,000; (c) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws and except with respect to WD Fremont and WD BPI as disclosed
in Disclosure Schedule (3.22) has all licenses, permits, consents or approvals
from or by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter, bylaws,
memorandum of association and articles of association, as applicable; and (f)
subject to specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices; Collateral Locations; FEIN. As of the
Closing Date, (a) each Credit Party's name as it appears in official filings in
its state of incorporation or organization, (b) state of incorporation or
organization, (c) organization type, (d) organization number, if any, issued by
its state of incorporation or organization, and (e) the current location of such
Credit Party's chief executive office and the warehouses and premises within
which any Collateral is stored or located are set forth in Disclosure Schedule
(3.2), and except as set forth in such Disclosure Schedule, none of such
locations has changed within the 12 months preceding the Closing Date, and each
Credit Party (other than WD IS and WD UK) has only one state of incorporation or
organization. In addition, Disclosure Schedule (3.2) lists the federal employer
identification number and organizational identification number of such Credit
Party, if any.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by such Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Credit Party's corporate power; (b) have been duly authorized by
all necessary or proper corporate and shareholder action; (c) do not contravene
any provision of such Credit Party's charter or bylaws, or memorandum of
association and articles of association, as the case may be; (d) do not violate
any law or regulation, or any order or decree of any court or Governmental
Authority; (e) do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Credit Party is a party or by which
such Credit Party or any of its property is bound; (f) do not result in the
creation or imposition of any Lien upon any of the property of such Credit Party
other than those in favor of Agent, on behalf of Co-Agents and Lenders, pursuant
to the Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(b), all of which will have been duly obtained, made or complied with prior
to the Closing Date. On or prior to the Closing Date, each of the Loan Documents
to which such Credit Party is a party shall have been duly executed and
delivered by such Credit Party and each such Loan Document shall then constitute
a legal, valid and binding obligation of such Credit Party enforceable against
it in accordance with its terms.
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3.4 Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Borrower and its Subsidiaries
that are referenced below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal quarterly and year-end adjustments) and present fairly in
all material respects the financial position of the Persons covered thereby as
at the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) Financial Statements. The following Financial
Statements attached hereto as Disclosure Schedule (3.4(a)) have been delivered
on the date hereof:
(i) The audited consolidated balance sheets at
June 28, 2002, and the related statements of income and cash flows of
Holdings and its Subsidiaries for the Fiscal Year then ended, audited
by KPMG LLP.
(ii) The unaudited consolidated balance sheet at
June 27, 2003, and the related statement of income and cash flows of
Holdings and its Subsidiaries and Borrower and its Subsidiaries for the
four Fiscal Quarters then ended.
(b) Projections. The Projections delivered on the Closing
Date and attached hereto as Disclosure Schedule (3.4(b)) have been prepared by
Borrower in light of the past operations of its businesses, but including future
payments of known contingent liabilities reflected in the Projections, and
reflect projections for the five-quarter period beginning on June 28, 2003, on a
quarter-by-quarter basis. The Projections are based upon the same accounting
principles as those used in the preparation of the financial statements
described above and the estimates and assumptions stated therein, all of which
Borrower believes to be reasonable and fair in light of current conditions and
current facts known to Borrower and, as of the Closing Date, reflect Borrower's
good faith and reasonable estimates of the future financial performance of
Borrower and of the other information projected therein for the period set forth
therein.
3.5 Material Adverse Effect. Between June 28, 2002, and the
Closing Date: (a) neither such Credit Party nor any Subsidiary of such Credit
Party has incurred any obligations, contingent or noncontingent liabilities,
liabilities for Charges, long-term leases or unusual forward or long-term
commitments that are not reflected in the Projections and that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (b)
no contract, lease or other agreement or instrument has been entered into by
such Credit Party or any Subsidiary of such Credit Party has become binding upon
such Credit Party's or any such Subsidiary's assets, and no law or regulation
applicable to such Credit Party or any Subsidiary of such Credit Party has been
adopted that has had or could reasonably be expected to have a Material Adverse
Effect; and (c) neither such Credit Party nor any Subsidiary of such Credit
Party is in default and, to the best of such Credit Party's knowledge, no third
party is in default under any material contract, lease or other agreement or
instrument to which such Credit Party or Subsidiary is a party that alone or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
Between June 28, 2002, and the Closing Date, no event has occurred that alone or
together with other events could reasonably be expected to have a Material
Adverse Effect.
-23-
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by such Credit Party. Such
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid leasehold interests in all of its leased Real Estate, all as
described in Disclosure Schedule (3.6), and copies of all such leases or a
summary of terms thereof satisfactory to Agent have been delivered to Agent.
Disclosure Schedule (3.6) further describes any Real Estate with respect to
which such Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Such Credit Party also has good title to, or valid leasehold interests in,
all of its personal property and assets. As of the Closing Date, none of the
personal property assets of such Credit Party are subject to any Liens other
than Permitted Encumbrances, and there are no facts, circumstances or conditions
known to such Credit Party that may result in any Liens (including Liens arising
under Environmental Laws) other than Permitted Encumbrances. Such Credit Party
has received all deeds, assignments, waivers, consents, nondisturbance and
attornment or similar agreements, bills of sale and other documents, and has
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
its owned Real Estate. Disclosure Schedule (3.6) also describes any purchase
options, rights of first refusal or other similar contractual rights pertaining
to any owned Real Estate. As of the Closing Date, no portion of such Credit
Party's Real Estate has suffered any material damage by fire or other casualty
loss that has not heretofore been repaired and restored in all material respects
to its original condition or otherwise remedied. Except as set forth in
Disclosure Statement (3.6), as of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date: (a) no strikes or other
material labor disputes against such Credit Party or any Subsidiary of such
Credit Party are pending or, to such Credit Party's knowledge, threatened; (b)
hours worked by and payment made to employees of such Credit Party and each
Subsidiary of such Credit Party comply with each federal, state, local or
foreign law applicable to such matters (including, as applicable, the Fair Labor
Standards Act); (c) all payments due from such Credit Party and any Subsidiary
of such Credit Party for employee health and welfare insurance have been paid or
accrued as a liability on the books of such Credit Party or Subsidiary; (d)
except as set forth in Disclosure Schedule (3.7), such Credit Party is not a
party to or bound by any collective bargaining agreement, management agreement,
consulting agreement with an Affiliate of such Credit Party, employment
agreement, bonus plan or agreement or stock option, restricted stock, stock
appreciation right or any similar plan, agreement or arrangement (and true and
complete copies of any agreements described in Disclosure Schedule (3.7) have
been delivered to Agent); (e) there is no organizing activity involving such
Credit Party or any Subsidiary of such Credit Party pending or, to such Credit
Party's knowledge, threatened by any labor union or group of employees; (f)
there are no representation proceedings pending or, to such Credit Party's
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of such Credit Party or any Subsidiary of
such Credit Party has made a pending demand for recognition; and (g) except as
set forth in Disclosure Schedule (3.7), there are no complaints or charges
against such Credit Party or any Subsidiary of such Credit Party pending or, to
the knowledge of such Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of
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employment by such Credit Party or any Subsidiary of such Credit Party of any
individual, that seeks damages in excess of $1,000,000.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), neither such
Credit Party nor any Subsidiary of such Credit Party has any Subsidiaries, is
engaged in any joint venture or partnership with any other Person, or is an
Affiliate of any other Person. All of the issued and outstanding Stock of such
Credit Party and each Subsidiary of such Credit Party is owned by each of the
Stockholders and in the amounts set forth in Disclosure Schedule (3.8). Except
as set forth in Disclosure Schedules (3.7) and (3.8), there are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which such Credit Party or any Subsidiary of such Credit Party may be
required to issue, sell, repurchase or redeem any of its Stock or other equity
securities or any Stock or other equity securities of its Subsidiaries (other
than the Excluded Subsidiaries). All outstanding Indebtedness and Guaranteed
Indebtedness (except for the Obligations) of such Credit Party and each
Subsidiary of such Credit Party (other than the Excluded Subsidiaries) as of the
Closing Date is described in Section 6.3 (including Disclosure Schedule (6.3)).
Except as described in Disclosure Schedules (6.3) and (6.6), such Credit Party
has no Indebtedness or Guaranteed Indebtedness (other than the Obligations).
3.9 Government Regulation. Such Credit Party is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. Such Credit Party is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, or any other
federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrower, the incurrence of the Letter of Credit Obligations on
behalf of Borrower, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
3.10 Margin Regulations. Such Credit Party is not engaged, and will
not engage, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). Such Credit Party does not own any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock
or for any other purpose that might cause any of the Loans or other extensions
of credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulations T, U or X of the Federal Reserve Board. such Credit Party
will not take or permit to be taken any action that might cause any Loan
Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by such
Credit Party and any Subsidiary of such Credit Party have been filed with the
appropriate Governmental Authority, and all Charges
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reflected on such returns, reports and statements have been paid prior to the
date on which any fine, penalty, interest or late charge may be added thereto
for nonpayment thereof (or any such fine, penalty, interest, late charge or loss
has been paid), excluding Charges or other amounts being contested in accordance
with Section 5.2(b). Proper and accurate amounts have been withheld by such
Credit Party and each Subsidiary of such Credit Party from its respective
employees for all periods in full and complete compliance with all applicable
federal, state, local and foreign laws and such withholdings have been timely
paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets
forth as of the Closing Date those taxable years for which such Credit Party's
or any Subsidiary of such Credit Party's tax returns are currently being audited
by the IRS or any other applicable Governmental Authority, and any assessments
or threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in Disclosure Schedule (3.11), neither such
Credit Party nor any Subsidiary of such Credit Party has executed or filed with
the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. Neither such Credit Party nor any Subsidiary of such
Credit Party, nor their respective predecessors, is liable for any Charges: (a)
under any agreement (including any tax sharing agreements); or (b) to such
Credit Party's knowledge, as a transferee. As of the Closing Date, neither such
Credit Party nor any Subsidiary of such Credit Party has agreed or been
requested to make any adjustment under IRC Section 481(a), by reason of a change
in accounting method or otherwise, that would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA
Affiliates and (ii) all Plans and separately identifies all Pension Plans
(including all Title IV Plans, Multiemployer Plans, and ESOPs) and Welfare
Plans, including all Retiree Welfare Plans. Copies of all such listed Plans,
together with a copy of the latest IRS/DOL 5500-series form for each such Plan,
have been delivered to Agent. Each Qualified Plan has been determined by the IRS
to qualify under Section 401 of the IRC, the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC,
and nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Except as would not have a Material Adverse Effect: (i) each
Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23; (ii) neither any
Credit Party nor any ERISA Affiliate has failed to make any contribution or pay
any amount due as required by either Section 412 of the IRC or Section 302 of
ERISA or the terms of any such Plan; (iii) neither any Credit Party nor any
ERISA Affiliate has engaged in a "prohibited transaction," as defined in Section
406 of ERISA and Section 4975 of the IRC, in connection with any Plan, that
would subject any Credit Party to a tax on prohibited transactions imposed by
Section 502(i) of ERISA or Section 4975 of the IRC; and (iv) each Credit Party
and each ERISA Affiliate has performed all of its respective obligations under
all Plans. Borrower's Executive Bonus Plan effective as of May 16, 1994 is not
an "employee benefit plan" within the meaning of Section 3(3) of ERISA for
purposes of Titles I and IV thereof.
(b) Neither any Credit Party nor any ERISA Affiliate has
ever maintained, contributed to, or had an obligation to contribute to, a Title
IV Plan, a Multiemployer Plan, or an ESOP, and except as set forth in Disclosure
Schedule (3.12): (i) there are no pending, or to the
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knowledge of any Credit Party, threatened claims (other than claims for benefits
in the normal course), sanctions, actions or lawsuits, asserted or instituted
against any Plan or any Person as fiduciary or sponsor of any Plan except as
would not have a Material Adverse Effect; and (ii) Stock of all Credit Parties
and their ERISA Affiliates makes up, in the aggregate, no more than 10% of the
assets of any Plan, measured on the basis of fair market value as of the latest
valuation date of any Plan.
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of such Credit
Party, threatened against such Credit Party or any Subsidiary of such Credit
Party before any Governmental Authority or before any arbitrator or panel of
arbitrators (collectively, "Litigation") that (a) challenges such Credit Party's
right or power to enter into or perform any of its obligations under the Loan
Documents to which it is a party, or the validity or enforceability of any Loan
Document or any action taken thereunder, or (b) has a reasonable risk of being
determined adversely to such Credit Party or any Subsidiary of such Credit Party
and that, if so determined, could have a Material Adverse Effect. Except as set
forth in Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened that seeks damages in excess of $1,000,000 or
injunctive relief against, or alleges criminal misconduct by, such Credit Party
or any Subsidiary of such Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Person
brought about the obtaining, making or closing of the Loans or the Related
Transactions, and such Credit Party has no obligation to any Person in respect
of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, such Credit
Party and each Subsidiary of such Credit Party owns or has rights to use all
Intellectual Property necessary to continue to conduct its business as now or
heretofore conducted by it or proposed to be conducted by it, and each Patent,
Trademark, Copyright and License is listed, together with application or
registration numbers, as applicable, in Disclosure Schedule (3.15). Except as
set forth in Disclosure Schedule (3.13), such Credit Party is not aware of any
infringement or claim of infringement by others of any Intellectual Property
Collateral that has a reasonable risk of being determined adversely to such
Credit Party or any Subsidiary of such Credit Party and that, if so determined,
could reasonably be expected to have a Material Adverse Effect.
3.16 Full Disclosure. No information contained in this Agreement,
any of the other Loan Documents, any Projections, Financial Statements or
Collateral Reports or other reports from time to time prepared by any Credit
Party and delivered hereunder or any written statement furnished by or on behalf
of such Credit Party to Agent or any Lender pursuant to the terms of this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of Co-Agents and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
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3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), to
the best knowledge of such Credit Party (based solely upon the review of its
existing books and records), as of the Closing Date: (i) the Real Estate is free
of contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and
that would not result in Environmental Liabilities that could reasonably be
expected to exceed $250,000; (ii) neither such Credit Party nor any Subsidiary
of such Credit Party has caused or suffered to occur any Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) such Credit Party and its Subsidiaries are and have been in compliance
with all Environmental Laws, except for such noncompliance that would not result
in Environmental Liabilities that could reasonably be expected to exceed
$250,000; (iv) such Credit Party and its Subsidiaries have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities that
could reasonably be expected to exceed $250,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) neither such Credit
Party nor any Subsidiary of such Credit Party is involved in operations or knows
of any facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party or Subsidiary that could reasonably be expected to exceed $250,000,
and neither such Credit Party nor any Subsidiary of such Credit Party has
permitted any of its current or former tenants or occupants of the Real Estate
to engage in any such operations; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material
that seeks damages, penalties, fines, costs or expenses in excess of $100,000 or
injunctive relief against, or that alleges criminal misconduct by, such Credit
Party or any Subsidiary of such Credit Party ; (vii) no notice has been received
by such Credit Party or any Subsidiary of such Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of such Credit Party, there are
no facts, circumstances or conditions that may result in such Credit Party or
any Subsidiary of such Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (viii) such
Credit Party has provided to Agent copies of all existing environmental reports,
reviews and audits and all written information prepared by or provided to such
Credit Party pertaining to actual or potential Environmental Liabilities that
could reasonably be expected to exceed $250,000, in each case relating to such
Credit Party and any Subsidiary of such Credit Party.
(b) Such Credit Party hereby acknowledges and agrees that
neither Co-Agent (i) is now, or has ever been, in control of any of the Real
Estate or the affairs of such Credit Party or any Subsidiary of such Credit
Party, and (ii) has the capacity through the provisions of the Loan Documents or
otherwise to influence the conduct of such Credit Party or any Subsidiary of
such Credit Party with respect to the ownership, operation or management of any
of its Real Estate or compliance with Environmental Laws or Environmental
Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by such Credit Party, as well as a brief description of the policy.
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3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which such Credit Party
maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure
Schedule (3.20), as of the Closing Date, such Credit Party is not a party to any
contract or agreement with any Governmental Authority and such Credit Party's
Accounts are not subject to the Federal Assignment of Claims Act (31 U.S.C.
Section 3727) or any similar state or local law.
3.21 Customer and Trade Relations. As of the Closing Date, there
exists no actual or, to the knowledge of such Credit Party, threatened
termination or cancellation of, or any modification or change that could
reasonably be expected to have a Material Adverse Effect in: (a) the business
relationship of such Credit Party or any Subsidiary of such Credit Party with
any customer or group of customers whose purchases during the preceding 12
months caused them to be ranked among the ten largest customers of such Credit
Party or Subsidiary; or (b) the business relationship of such Credit Party or
any Subsidiary of such Credit Party with any supplier material to its
operations.
3.22 Agreements and Other Documents. As of the Closing Date, such
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which any of them are subject, each of which is listed in
Disclosure Schedule (3.22): (a) supply agreements and purchase agreements not
terminable by such Credit Party or any Subsidiary of such Credit Party within 90
days following written notice issued by such Credit Party or Subsidiary and
involving transactions in excess of $1,000,000 per annum; (b) leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $500,000 per annum; (c) licenses and
permits held by such Credit Party and its Subsidiaries, the absence of which
could be reasonably likely to have a Material Adverse Effect; and (d)
instruments and documents evidencing any Indebtedness or Guaranteed Indebtedness
of such Credit Party or any Subsidiary of such Credit Party and any Lien granted
by such Credit Party or Subsidiary with respect thereto.
3.23 Solvency. Both before and after giving effect to: (a) the
Loans and Letter of Credit Obligations to be made or incurred on the Closing
Date or such other date as Loans and Letter of Credit Obligations requested
hereunder are made or incurred; (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower; (c) the consummation of the
Related Transactions; and (d) the payment and accrual of all transaction costs
in connection with the foregoing, such Credit Party and each Subsidiary of such
Credit Party is and will be Solvent.
3.24 Subordinated Debt. As of the Closing Date, Borrower has (a) no
outstanding Subordinated Debt and (b) has no further Indebtedness or other
obligations pursuant to the Subordinated Indenture or the other agreements,
instruments, documents and certificates executed in connection therewith.
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4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party hereby agrees that, from and after
the Closing Date and until the Termination Date, it shall deliver to Co-Agents
or Lenders, as required, the Financial Statements, notices, Projections and
other information at the times, to the Persons and in the manner set forth in
Annex E.
(b) Each Credit Party hereby agrees that, from and after
the Closing Date and until the Termination Date, it shall deliver to Co-Agents
or Lenders, as required, the various Collateral Reports (including Borrowing
Base Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons
and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party authorizes
Agent and, so long as a Default or Event of Default shall have occurred and be
continuing, each Lender, to communicate directly with its independent certified
public accountants, including KPMG LLP, and authorizes and shall request those
accountants and advisors to disclose and make available to Agent and each Lender
any and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party or any Subsidiary of any
Credit Party (including copies of any issued management letters) with respect to
the business, financial condition and other affairs of any such Credit Party or
Subsidiary.
5. AFFIRMATIVE COVENANTS
Each Credit Party agrees as to itself and its Subsidiaries that from
and after the date hereof and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. (a) Such
Credit Party shall (and shall cause each of its Subsidiaries to) do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence and its rights and franchises; (b) such Credit Party shall
(and shall cause each of its Subsidiaries (other than an Excluded Subsidiary)
to) continue to conduct its business substantially as now conducted or as
otherwise permitted hereunder; (c) such Credit Party shall (and shall cause each
of its Subsidiaries to) at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep
the same in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and (d) such Credit
Party shall (and shall cause each of its Subsidiaries (other than an Excluded
Subsidiary) to) transact business only in such corporate and trade names as are
set forth in Disclosure Schedule (5.1) or as otherwise permitted under Section
6.15. Without limiting the generality of the foregoing, and unless otherwise
consented to in writing by Agent, (i) Western Digital Canada Corporation,
Western Digital Japan, Ltd., Western Digital (Deutschland) GmbH, Western Digital
(France) SARL, Western Digital Taiwan Co., Ltd., Western Digital Hong Kong
Limited, and Western Digital (S.E. Asia) Pte Ltd. shall only conduct business as
****, (ii) Pacifica shall only conduct business as **** (iii) Western Digital
Ireland, Ltd. shall only conduct business as ****, (iv) Western Digital
(Singapore)
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* Material has been omitted pursuant to a request for confidential treatment.
Pte Ltd. ****, and Western Digital (Tuas-Singapore) Pte Ltd., has been
liquidated for tax purposes and dissolved effective as of October 30, 2002, (v)
Read-Rite International shall only conduct business as ****, (vi) WD Latin
America shall only conduct business as a ****, (vii) each of Keen Personal
Media, Inc., Keen Personal Technologies, Inc., Connex and WDC SAN Subsidiary,
Inc. ****, (viii) Cameo Technologies, Inc. has been dissolved under the laws of
the State of Delaware effective as of June 11, 2003, and (ix) SageTree, Inc. is
no longer a Subsidiary of Borrower.
5.2 Payment of Obligations.
(a) Subject to Section 5.2(b), such Credit Party shall
(and shall cause each of its Subsidiaries to) pay and discharge or cause to be
paid and discharged promptly (i) all Charges payable by it, including Charges
imposed upon it, its income and profits, or any of its property (real, personal
or mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, and (ii) lawful claims for labor,
materials, supplies and services or otherwise, in each case before any thereof
shall become past due.
(b) Such Credit Party and each Subsidiary of such Credit
Party may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges, Taxes or claims described in Section 5.2(a); provided,
that: (i) adequate reserves with respect to such contest are maintained on the
books of such Credit Party, in accordance with GAAP; (ii) no Lien shall be
imposed on the Collateral to secure payment of such Charges, Taxes or claims
that is superior to any of the Liens securing payment of the Obligations and
such contest is maintained and prosecuted continuously and with diligence and
operates to suspend collection or enforcement of such Charges or claims; (iii)
none of the Collateral becomes subject to forfeiture or loss as a result of such
contest (other than such Collateral consisting of cash used to pay such Charges,
Taxes or claims); and (iv) such Credit Party or such Subsidiary shall promptly
pay or discharge such contested Charges, Taxes or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence acceptable to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or
Subsidiary or the conditions set forth in this Section 5.2(b) are no longer met.
5.3 Books and Records. Such Credit Party shall (and shall cause each of
its Subsidiaries to) keep adequate books and records with respect to its
business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements attached as Disclosure Schedule (3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral;
Condemnation.
(a) Such Credit Party shall (and shall cause each of its
Subsidiaries to), at its sole cost and expense, maintain the policies of
insurance described in Disclosure Schedule (3.18) as in effect on the date
hereof or otherwise in form and in amounts and with insurers acceptable to
Agent. Such policies of insurance shall contain provisions pursuant to which the
insurer agrees to provide 30 days' prior written notice to Agent in the event of
any non-renewal, cancellation or amendment of any such insurance policy. If such
Credit Party at any time or times hereafter shall fail to obtain or maintain any
of the policies of insurance required above, or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and
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* Material has been omitted pursuant to a request for confidential treatment.
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable. Agent shall not have any
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b) Agent reserves the right at any time upon any change
in any Credit Party's or any Subsidiary of any Credit Party's risk profile
(including any change in the product mix maintained by any such Credit Party or
Subsidiary or any laws affecting the potential liability of such Credit Party or
Subsidiary) to require additional forms and limits of insurance to, in Agent's
reasonable opinion, adequately protect each Co-Agent's and each Lender's
interests in all or any portion of the Collateral and to ensure that each Credit
Party and each Subsidiary of each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If requested by Agent,
such Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, satisfactory to Agent, with respect to its and its
Subsidiaries' insurance policies.
(c) Such Credit Party shall deliver to Agent, in form and
substance satisfactory to each Co-Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of Co-Agents and
Lenders, as loss payee as its interests may appear, and (ii) all general
liability and other liability policies naming Agent, on behalf of Co-Agents and
Lenders, as additional insured. Such Credit Party irrevocably makes, constitutes
and appoints Agent (and all officers, employees or agents designated by Agent),
so long as any Default or Event of Default shall have occurred and be continuing
or the anticipated insurance proceeds payable to Borrower or such Guarantor
(other than Holdings) exceed $5,000,000, as such Credit Party's true and lawful
agent and attorney-in-fact for the purpose of making, settling and adjusting
claims under such "All Risk" policies of insurance, endorsing the name of such
Credit Party on any check or other item of payment for the proceeds of such "All
Risk" policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral (specifically excluding the real property interest
of any landlord of any leased Real Estate) in the amount of $1,000,000 or more,
whether or not covered by insurance. After deducting from such proceeds (A) the
expenses, if any, incurred by Agent in the collection or handling thereof, and
(B) amounts that are required under the terms of a lease of Real Estate to be
used to repair or replace the premises demised by such Lease, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d) (provided, that in the case of insurance proceeds pertaining
to any Guarantor (other than Holdings), such insurance proceeds shall be applied
to the Loans owing by Borrower), or permit or require such Credit Party to use
such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $5,000,000 in the aggregate,
Agent shall permit each Credit Party, as applicable, to replace,
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restore, repair or rebuild the property; provided, that if such Credit Party has
not completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 240 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d); provided further, that in the case of insurance proceeds pertaining to
any Guarantor (other than Holdings), such insurance proceeds shall be applied to
the Loans owing by Borrower. All insurance proceeds that are to be made
available to Borrower to replace, repair, restore or rebuild the Collateral
(specifically excluding the real property interest of any landlord of any leased
Real Estate) shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan (which application shall not result in a permanent
reduction of the Revolving Loan Commitment) and upon such application, Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. All insurance proceeds made available to any
Credit Party that is not a Borrower to replace, repair, restore or rebuild
Collateral shall be deposited in a cash collateral account. Thereafter, such
funds shall be made available to each Credit Party to provide funds to replace,
repair, restore or rebuild the Collateral as follows: (I) Borrower shall request
a Revolving Credit Advance or release from the cash collateral account to be
made to Borrower or such each Guarantor (other than Holdings) in the amount
requested to be released; (II) so long as the conditions set forth in Section
2.2 have been met, Lenders shall make such Revolving Credit Advance or Agent
shall release funds from the cash collateral account; and (III) in the case of
insurance proceeds applied against the Revolving Loan, the Reserve established
with respect to such insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance. To the extent not used to replace, repair, restore or
rebuild the Collateral, such insurance proceeds shall be applied in accordance
with Section 1.3(d); provided, that in the case of insurance proceeds pertaining
to any Guarantor (other than Holdings), such insurance proceeds shall be applied
to the Loans owing by Borrower.
(d) Such Credit Party shall, immediately upon learning of
the institution of any proceeding for the condemnation or other taking of any of
its property (specifically excluding the real property interest of any landlord
of any leased Real Estate), notify Agent of the pendency of such proceeding, and
agrees that Agent may participate in any such proceeding, and such Credit Party
from time to time will deliver to Agent all instruments reasonably requested by
Agent to permit such participation. Agent is authorized to collect the proceeds
of any condemnation claim or award and apply them, at the direction of Required
Lenders, to the reduction of the Obligations; provided, that if the amount of
any condemnation is less than $1,000,000, Co-Agents shall permit such Credit
Party to replace, restore, repair or rebuild the property so long as no Default
or Event of Default shall have occurred and be continuing at the time of any
requested release of funds. If the condemned property is to be replaced,
repaired, restored or rebuilt, such replacement, repair, restoration or
rebuilding shall be done with materials and workmanship of substantially as good
a quality as existed before such condemnation or taking. Such Credit Party shall
commence the work of replacement, repair, restoration or rebuilding as soon as
practicable and proceed diligently with it until completion. Plans and
specifications for any such repair or restoration shall be reasonably
satisfactory to Agent and shall be submitted to Agent prior to commencement of
the work and shall be subject to the reasonable approval of Agent.
5.5 Compliance with Laws. Such Credit Party shall (and shall cause
each of its Subsidiaries to) comply with all federal, state, local and foreign
laws and regulations applicable
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to it, including those relating to ERISA and labor matters and Environmental
Laws and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be requested
by Agent (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default or an Event of Default), the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or that is necessary to
correct any information in such Disclosure Schedule or representation that has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided, that (a) no such supplement to any
such Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters disclosed
therein, except as consented to by Agent and Requisite Lenders in writing, and
(b) no supplement shall be required as to representations and warranties that
relate solely to the Closing Date.
5.7 Intellectual Property. Such Credit Party shall (and shall
cause each of its Subsidiaries to) conduct its business and affairs without
infringement of any Intellectual Property of any other Person to the extent any
such infringement could reasonably be expected to have a Material Adverse
Effect.
5.8 Environmental Matters. Such Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real Estate that is
reasonably likely to result in Environmental Liabilities in excess of $250,000;
and (d) promptly forward to Agent a copy of any order, notice, request for
information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $250,000, in each
case whether or not the Environmental Protection Agency or any Governmental
Authority has taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then
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each Credit Party shall, upon Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, in each case at
Borrower's expense, as Agent may from time to time reasonably request, all of
which shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and, to the extent not
prohibited by the terms of the lease of any such Real Estate, testing as Agent
deems appropriate, including subsurface sampling of soil and groundwater.
Borrower shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee
Letters. Each Credit Party shall use commercially reasonable efforts to obtain a
landlord's agreement, mortgagee agreement or bailee letter, as applicable, from
the lessor of each leased property, mortgagee of owned property or bailee with
respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be satisfactory in form and substance to Agent; provided, that a Credit Party
may store (a) Collateral at a location in a jurisdiction outside of the United
States (i) having a book value of less than $**** in the aggregate at any such
location or (ii) at which Agent determines that a landlord's agreement,
mortgagee agreement or bailee agreement is not commonly obtained in such foreign
jurisdiction, or (b) Collateral having a book value of less than $**** in the
aggregate at a location within the United States, in each case without using
reasonable efforts to obtain a landlord's agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of such leased property. Each
Credit Party shall timely and fully pay and perform its obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located.
5.10 Further Assurances. Each Credit Party agrees that it shall
(and shall cause each of its Subsidiaries to), at such Credit Party's expense
and upon request of Agent, duly execute and deliver, or cause to be duly
executed and delivered, to Agent such further instruments and do and cause to be
done such further acts as may be necessary or proper in the reasonable opinion
of Agent to carry out more effectively the provisions and purposes of this
Agreement or any other Loan Document.
6. NEGATIVE COVENANTS
Each Credit Party agrees as to itself and its Subsidiaries that,
without the prior written consent of Agent and Requisite Lenders, from and after
the date hereof until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. Except as otherwise expressly
permitted by Section 6.5, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) directly or indirectly, by operation of
law or otherwise, (a) form or acquire any Subsidiary, or (b) merge with,
consolidate with, acquire all or substantially all of the assets or capital
Stock of, or otherwise combine with or acquire, any Person. Notwithstanding the
generality of the foregoing, Borrower may form a direct and wholly-owned
Subsidiary, or acquire all of the
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* Material has been omitted pursuant to a request for confidential treatment.
capital Stock or all or substantially all of the assets of any Person (such
Subsidiary or Person being the "Target"), subject to the satisfaction of each of
the following conditions (such formation or acquisition being a "Permitted
Acquisition"):
(i) Agent shall receive at least 30 days' prior written
notice of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description thereof;
(ii) the assets of the Target (A) shall either be (1)
located in the United States or such other jurisdiction under which
Agent, on behalf of Co-Agents and Lenders, will receive a first
priority perfected Lien thereon, or (2) not located in the United
States or such other jurisdiction described above and have a fair
market value at all times of less than $****, and (B) shall comprise a
business, or those assets of a business, of the types or similar to the
types engaged in by Borrower as of the Closing Date, and which business
would not subject any Co-Agent or Lender to regulatory or third party
approvals in connection with the exercise of its rights and remedies
under this Agreement or any other Loan Documents, other than approvals
applicable to the exercise of such rights and remedies with respect to
Borrower prior to such Permitted Acquisition;
(iii) with respect to an acquisition, such Permitted
Acquisition shall be consensual and shall have been approved by the
Target's board of directors;
(iv) no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities shall be incurred, assumed
or otherwise be reflected on a consolidated balance sheet of Borrower
and Target after giving effect to such Permitted Acquisition, except
(A) Loans made hereunder and (B) ordinary course trade payables,
accrued expenses and unsecured Indebtedness of the Target to the extent
no Default or Event of Default shall have occurred and be continuing or
would result after giving effect to such Permitted Acquisition;
(v) the sum of all amounts payable in connection with (A)
any one Permitted Acquisition (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or
assumed in connection therewith or otherwise reflected in a
consolidated balance sheet of Borrower and Target) shall not exceed
$**** and (B) all such Permitted Acquisitions during the term hereof
shall not exceed $****;
(vi) the Target shall not have incurred an operating loss
of more than $**** for the trailing 12-month period preceding the date
of the Permitted Acquisition, as determined based upon the Target's
financial statements for its most recently completed fiscal year and
its most recent interim financial period completed within 60 days prior
to the date of consummation of such Permitted Acquisition;
(vii) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(viii) at the closing of any Permitted Acquisition, either
(A) the Target shall become a "Guarantor" and "Credit Party" hereunder,
Agent will be granted, for the benefit of Co-Agents and Lenders, a
first priority perfected Lien (subject to Permitted
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* Material has been omitted pursuant to a request for confidential treatment.
Encumbrances) in the assets and capital Stock of the Target, and each
Credit Party and the Target shall have executed such documents and
taken such actions as may be required by Agent in connection therewith,
or (B) with the written consent of Agent and Supermajority Revolving
Lenders, the Target shall become an "Excluded Subsidiary" hereunder;
provided, that any amounts payable in connection with such Permitted
Acquisition are permitted under Section 6.2;
(ix) concurrently with delivery of the notice referred to
in clause (i) above, Borrower shall have delivered to Agent, in form
and substance satisfactory to Agent:
(A) a pro forma consolidated balance sheet of
Borrower and its Subsidiaries (the "Acquisition Pro Forma"),
based on recent financial data, which shall be complete and
shall accurately and fairly represent the assets, liabilities,
financial condition and results of operations of Borrower and
its Subsidiaries in accordance with GAAP consistently applied,
but taking into account such Permitted Acquisition and the
funding of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that (1) Available
Liquidity for the 90-day period preceding the consummation of
such Permitted Acquisition would have exceeded $150,000,000 on
a pro forma basis (after giving effect to such Permitted
Acquisition and all Loans funded in connection therewith as if
made on the first day of such period) and the Acquisition
Projections (as hereinafter defined) shall reflect that such
Available Liquidity of $150,000,000 shall continue for at
least 90 days after the consummation of such Permitted
Acquisition, and (2) on a pro forma basis, no Event of Default
shall have occurred and be continuing or would result after
giving effect to such Permitted Acquisition, and Borrower
would have been in compliance with the financial covenants set
forth in Annex G that are required to be tested for the four
quarter period reflected in the Compliance Certificate most
recently delivered to Agent pursuant to Annex E prior to the
consummation of such Permitted Acquisition (after giving
effect to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such
period, including for purposes of determining Available
Liquidity during such period);
(B) for each Permitted Acquisition for which
total cash and non-cash consideration paid by Credit Parties
is in excess of $1,000,000, updated versions of the most
recently delivered Projections covering the one year period
commencing on the date of such Permitted Acquisition and
otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial
data of a recent date satisfactory to Agent, taking into
account such Permitted Acquisition; and
(C) a statement of the chief financial officer
of Borrower to the effect that: (1) Borrower (after taking
into consideration all rights of contribution and indemnity of
Borrower) will be Solvent upon the consummation of the
Permitted Acquisition; (2) the Acquisition Pro Forma fairly
presents the financial condition of Borrower on a consolidated
basis as of the date thereof after giving effect to the
Permitted Acquisition; (3) the Acquisition Projections, if
any, are reasonable
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estimates of the future financial performance of Borrower and
its Subsidiaries subsequent to the date thereof based upon the
historical performance of Borrower, its subsidiaries and the
Target, and show (without guaranty of) that Borrower shall
continue to be in compliance with the financial covenants set
forth in Annex G for the three year period thereafter; and (4)
Borrower has completed their due diligence investigation with
respect to the Target and such Permitted Acquisition, which
investigation was conducted in a manner similar to that which
would have been conducted by a prudent purchaser of a
comparable business and the results of which investigation
were delivered to Agent and Lenders;
(x) on or prior to the date of such Permitted
Acquisition, Co-Agents shall have received, in form and substance
satisfactory to Co-Agents, all opinions, certificates, lien search
results and other documents reasonably requested by Co-Agents; and
(xi) at the time of such Permitted Acquisition and after
giving effect thereto, no Default or Event of Default shall have
occurred and be continuing.
In no event shall the Accounts of Target be included in Eligible Accounts
without the prior written consent of Agent and Requisite Lenders.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party (other than an Excluded Subsidiary) not to) make
or permit to exist any investment in, or make, accrue or permit to exist loans
or advances of money to, any Person (including any Excluded Subsidiary), through
the direct or indirect lending of money, holding of securities or otherwise,
except that (without duplication): (a) Borrower may hold investments comprised
of notes payable, or stock or other securities issued by Account Debtors to
Borrower pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business, so long as the
aggregate amount of such Accounts so settled by Borrower does not exceed
$2,500,000; (b) each Credit Party and each Subsidiary of each Credit Party may
maintain its existing investments (without any increase thereto) in its
Subsidiaries as of the Closing Date; (c) Borrower may make investments
consisting of Permitted Credit Party Transactions; (d) *******; and (e) so long
as no Default or Event of Default has occurred and is continuing, Borrower may
make investments subject to Control Letters in favor of Agent, for the benefit
of Co-Agents and Lenders, or otherwise subject to a perfected security interest
in favor of Agent, for the benefit of Co-Agents and Lenders, in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year from
the date of creation thereof and currently having the highest rating obtainable
from either Standard & Poor's Rating Group or Moody's Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one year from the date of
creation thereof issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior unsecured rating of
"A" or better by a nationally recognized rating agency (an "A Rated Bank"), (iv)
time deposits maturing no more than 30 days from the date of creation thereof
with A Rated Banks, and (v) mutual funds that invest solely in one or more of
the investments described in clauses (i) through (iv) above; provided, that such
investments may be maintained
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* Material has been omitted pursuant to a request for confidential treatment.
without a Control Letter in favor of Agent, for the benefit of Co-Agents and
Lenders, in one or more accounts so long as the aggregate amount of such
investments maintained in accounts that are subject to Control Letters in favor
of Agent, for the benefit of Co-Agents and Lenders, is not less than $****.
6.3 Indebtedness.
(a) Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party (other than an Excluded Subsidiary) not to)
create, incur, assume or permit to exist any Indebtedness, except (without
duplication) (i) Indebtedness secured by purchase money security interests and
Capital Leases permitted in clause (k) of the definition of Permitted
Encumbrances, (ii) the Loans and the other Obligations, (iii) unfunded pension
fund and other employee benefit plan obligations and liabilities to the extent
they are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness described in Disclosure Schedule (6.3) and refinancings thereof or
amendments or modifications thereof that do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than to
extend the same) and that are otherwise on terms and conditions no less
favorable to any Credit Party, any Co-Agent or any Lender, as determined by
Agent, than the terms of the Indebtedness being refinanced, amended or modified,
(v) Indebtedness specifically permitted under Section 6.17, and (vi)
Indebtedness consisting of Permitted Credit Party Transactions.
(b) Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to), directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than: (i) the
Obligations; and (ii) Indebtedness secured by a Permitted Encumbrance if the
asset securing such Indebtedness has been sold or otherwise disposed of in
accordance with Sections 6.8(b) or (c).
(c) Neither Borrower, WD Malaysia nor any of their
respective Subsidiaries (other than WD Thailand and WD BPI) shall have any
obligations pursuant to the "provident fund" under Thai Labor Protection Act
B.E. 2541, as amended.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this
Section 6 with respect to Affiliates, such Credit Party shall not (and shall
cause each Subsidiary of such Credit Party not to) enter into or be a party to
any transaction with any other Credit Party or any Affiliate thereof, except for
the following to the extent arising in the ordinary course of business: (i)
sales of Inventory and related commission obligations between Credit Parties and
their Subsidiaries; and (ii) the purchase of insurance from Pacifica.
(b) Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to its
employees on an arm's length basis in the ordinary course of business consistent
with past practices for travel expenses, relocation costs and similar purposes
and stock option financing up to a maximum of $1,000,000 to any employee and up
to a maximum of $5,000,000 in the aggregate at any one time outstanding.
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* Material has been omitted pursuant to a request for confidential treatment.
6.5 Capital Structure and Business. (a) Such Credit Party shall
not (and shall cause each Subsidiary of such Credit Party not to) make any
changes in any of its business objectives, purposes or operations that could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect; (b) such Credit Party shall not (and shall cause each Subsidiary
of such Credit Party (other than the Excluded Subsidiaries) not to) make any
change in its capital structure as described in Disclosure Schedule (3.8),
including the issuance of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of its outstanding Stock;
provided, that Borrower may make a Public Offering or Private Offering of its
common Stock so long as (i) the proceeds thereof are applied in prepayment of
the Obligations as required by Section 1.3(b)(iii), and (ii) no Change of
Control occurs after giving effect thereto; or (c) such Credit Party shall not
(and shall cause each Subsidiary of such Credit Party not to) amend its charter
or bylaws, or memorandum of association or articles of association, as the case
may be, in a manner that would adversely affect Co-Agents or Lenders or such
Credit Party's duty or ability to repay the Obligations. **************. Such
Credit Party shall not (and shall cause each Subsidiary of such Credit Party not
to) engage in any business other than the same or similar lines of businesses
currently engaged in by it.
6.6 Guaranteed Indebtedness. Except as otherwise set forth in
Disclosure Schedule (6.6), Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) create, incur, assume or permit to exist
any Guaranteed Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of such Credit Party, and (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party if
the primary obligation is expressly permitted by this Agreement.
6.7 Liens. Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party (other than an Excluded Subsidiary) not to)
create, incur, assume or permit to exist any Lien on or with respect to its
Accounts or any of its other properties or assets (whether now owned or
hereafter acquired) except for Liens in existence on the date hereof and
summarized on Disclosure Schedule (6.7) and other Permitted Encumbrances. In
addition, such Credit Party shall not become a party to any agreement, note,
indenture or instrument or take any other action that would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of Co-Agents and Lenders, as additional Collateral for the
Obligations, except operating leases, Capital Leases or Licenses that prohibit
Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. Such Credit Party shall not (and
shall cause each Subsidiary of such Credit Party not to) sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
the capital Stock of any of its Subsidiaries (other than the Excluded
Subsidiaries) and the Excluded Intellectual Property, whether in a public or a
private offering or otherwise, or any of its Accounts, other than: (a) the sale
of Inventory in the ordinary course of business; (b) the sale, transfer,
conveyance or other disposition of Equipment, Fixtures or Real Estate that is
obsolete or no longer used or useful in such Person's business and having a
value not exceeding $**** in any single transaction or $**** in the aggregate in
any Fiscal Year; (c) other Equipment and Fixtures having a value not exceeding
$**** in any single transaction or $**** in the aggregate in any Fiscal Year;
and (d) the transfers of the Excluded Intellectual Property by Borrower to an
Excluded Subsidiary set forth in Supplement A to
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* Material has been omitted pursuant to a request for confidential treatment.
Disclosure Schedule (3.15) . With respect to any disposition of assets or other
properties permitted pursuant to clauses (b), (c) and (d) above, Agent agrees on
reasonable prior written notice to release its Lien on such assets or other
properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrower, at Borrower's expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrower.
6.9 ERISA. Such Credit Party shall not (and shall cause each ERISA
Affiliate of such Credit Party not to) cause or permit to occur an event that
could result in the imposition of a Lien under Section 412 of the IRC or Section
302 or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent
such ERISA Event could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to
comply with any of the financial covenants set forth in Annex G (the "Financial
Covenants"); provided, that the Financial Covenants shall not be tested until
such time as (a) there are any outstanding Revolving Credit Advances or Letter
of Credit Obligations (excluding Letters of Credit (i) for bank guarantees
issued on behalf of WD UK, (ii) to support Borrower's replacement real estate
lease for its headquarters location, (iii) posted in the approximate amount of
$25,200,000 in satisfaction of the writs of attachment obtained by Cirrus Logic,
Inc. against Borrower and WD Malaysia, and (iv) to support other corporate
purposes acceptable to Agent in an aggregate outstanding amount not to exceed
$****), (b) (i) as of the end of September 2003, Borrower and its Subsidiaries
(other than Excluded Subsidiaries) shall have Available Liquidity of less than
$****, or (ii) as of the end of any March, June, September or December of each
year (other than September 2003), Borrower and its Subsidiaries (other than
Excluded Subsidiaries) shall have Available Liquidity of less than $****, or (c)
as of the end of any month other than March, June, September or December of each
year, Borrower and its Subsidiaries (other than Excluded Subsidiaries) shall
have Available Liquidity of less than $****.
6.11 Hazardous Materials. Such Credit Party shall not (and shall
cause each Subsidiary of such Credit Party not to) cause or permit a Release of
any Hazardous Material on, at, in, under, above, to, from or about any of the
Real Estate where such Release would (a) violate in any respect, or form the
basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits, or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. Except (i) for the sale-leaseback of WD
Malaysia's manufacturing plant on terms and conditions consented to in writing
by Co-Agents, and (ii) as otherwise specifically provided in Section 6.8, such
Credit Party shall not (and shall cause each Subsidiary of such Credit Party not
to) engage in any sale-leaseback, synthetic lease or similar transaction
involving any of its assets.
6.13 Cancellation of Indebtedness. Except as otherwise expressly
provided in this Section 6, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not
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* Material has been omitted pursuant to a request for confidential treatment.
to) cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's length basis and in the ordinary course of its business
consistent with past practices.
6.14 Restricted Payments. Such Credit Party shall not (and shall
cause each Subsidiary of such Credit Party not to) make any Restricted Payment,
except: (a) intercompany loans and advances between Borrower and Guarantors to
the extent permitted by Section 6.3; (b) dividends, distributions and other
payments by Subsidiaries of Borrower paid to Borrower; (c) employee loans
permitted under Section 6.4(b); and (d) dividends or other distributions made by
Borrower to Holdings out of legally available funds to enable Holdings to pay
its reasonable legal, accounting and operational expenses incurred in the
ordinary course in an aggregate amount not to exceed $**** in any Fiscal Year.
6.15 Change of Corporate Name or Location; Change of Fiscal Year.
Except as otherwise permitted in Section 6, such Credit Party shall not (and
shall cause each Subsidiary of such Credit Party (other than an Excluded
Subsidiary) not to): (a) change its corporate name; (b) add new trade names; or
(c) other than as disclosed in Disclosure Schedule (3.2), change its chief
executive office, principal place of business, registered office, corporate
offices or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in each case without at least
10 Business Days' prior written notice to each Co-Agent and after Borrower has
executed and delivered to Agent all UCC financing statements or other documents
deemed necessary by Agent to continue the perfection of any Liens in favor of
Agent, on behalf of Co-Agents and Lenders, in any Collateral, and provided that
any such new location (i) of Borrower or WD Fremont shall be situated in the
continental United States of America, (ii) of WD IS shall be situated in
Ireland, and (iii) of WD UK, shall be situated in the United Kingdom. Without
limiting the generality of the foregoing, no Credit Party shall change its name,
identity or corporate structure in any manner that might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Sections 9506 or 9507 of the Code or any other then applicable
provision of the Code except upon prior written notice to each Co-Agent and
Lenders and after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue the perfection
of any Liens in favor of Agent, on behalf of Co-Agents and Lenders, in any
Collateral, has been completed or taken. No Credit Party shall change its Fiscal
Year.
6.16 No Impairment of Intercompany Transfers. Such Credit Party
shall not (and shall cause each Subsidiary of such Credit Party not to) directly
or indirectly enter into or become bound by any agreement, instrument, indenture
or other obligation (other than this Agreement and the other Loan Documents)
that could directly or indirectly restrict, prohibit or require the consent of
any Person with respect to the payment of dividends or distributions or the
making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.
6.17 No Speculative Transactions. Such Credit Party shall not (and
shall cause each Subsidiary of such Credit Party not to) engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
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* Material has been omitted pursuant to a request for confidential treatment.
6.18 Leases. Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) enter into any operating lease for
Equipment or Real Estate if the aggregate amount of all rental payments under
such operating lease in any year for Borrower and its Subsidiaries on a
consolidated basis (excluding payments under existing leases and renewals
thereof) would exceed $****.
6.19 Changes Relating to Subordinated Debt. Such Credit Party shall
not (and shall cause each Subsidiary of such Credit Party not to) change or
amend the terms of any Subordinated Debt (or any indenture or agreement in
connection therewith) if the effect of such amendment is to: (a) increase the
interest rate on such Subordinated Debt; (b) change the dates upon which
payments of principal or interest are due on such Subordinated Debt other than
to extend such dates; (c) change any default or event of default other than to
delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt; (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of such Credit Party thereunder or confer additional
material rights on the holder of such Subordinated Debt in a manner adverse to
any Credit Party, any Co-Agent or any Lender.
6.20 Subsidiaries. Neither Western Digital Ireland, Ltd., Keen
Personal Media, Inc., Keen Personal Technologies, Inc., Read-Rite (Malaysia)
Sdn. Bhd., Read-Rite International, Connex, WD Latin America, nor WDC SAN
Subsidiary, Inc. shall ****; provided, that (a) Western Digital Ireland, Ltd.
may **** and (b) WD Latin America shall ****.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby
shall be in effect until the Commitment Termination Date, and the Loans and all
other Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Co-Agents and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of each
Co-Agent and each Lender, all as contained in the Loan Documents, shall not
terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Section 11, the payment obligations under
Sections 1.15 and 1.16, and the indemnities contained in the Loan Documents
shall survive the Termination Date.
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* Material has been omitted pursuant to a request for confidential treatment.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower (i) shall fail to make any payment of
principal of, or interest on, or Fees owing in respect of, the Loans
when due and payable, or (ii) shall fail to pay or reimburse Co-Agents
or Lenders for any expense reimbursable hereunder or under any other
Loan Document within ten days following Agent's demand for such
reimbursement or payment of expenses.
(b) Any Credit Party shall fail or neglect to perform,
keep or observe any of the provisions of Sections 1.4, 1.8, 5.4 or 6,
or any of the provisions set forth in Annexes C or G, respectively.
(c) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 4 or any provisions set forth
in Annexes E or F, respectively, and the same shall remain unremedied
for three days or more.
(d) Any Credit Party shall fail or neglect to perform,
keep or observe any other provision of this Agreement or of any of the
other Loan Documents (other than any provision embodied in or covered
by any other clause of this Section 8.1) and the same shall remain
unremedied for 30 days or more following the earlier of (i) receipt by
such Credit Party of written notice of such failure and (ii) such
Credit Party's knowledge of such failure.
(e) A default or breach shall occur under any other
agreement, document or instrument to which any Credit Party is a party
that is not cured within any applicable grace period therefor, and such
default or breach (i) involves the failure to make any payment when due
in respect of any Indebtedness or Guaranteed Indebtedness (other than
the Obligations) of any Credit Party in excess of $500,000 in the
aggregate (including (A) undrawn committed or available amounts and (B)
amounts owing to all creditors under any combined or syndicated credit
arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause,
Indebtedness or Guaranteed Indebtedness or a portion thereof in excess
of $500,000 in the aggregate to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment, or such
Guaranteed Indebtedness to become payable or cash collateral in respect
thereof to be demanded, in each case regardless of whether such default
is waived, or such right is exercised, by such holder or trustee.
(f) (i) Any information contained in any Borrowing Base
Certificate shall be untrue or incorrect in any respect (other than for
misstatements or errors contained therein that, if corrected, would
result in the actual Net Borrowing Availability as of the date of such
Borrowing Base Certificate to be (A) more than zero and (B) less than
$10,000 below the Net Borrowing Availability as represented therein),
or (ii) any representation or warranty herein or in any Loan Document
or in any written statement, report, financial statement or certificate
(other than a Borrowing Base Certificate) made
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or delivered to Agent or any Lender by any Credit Party is untrue or
incorrect in any material respect as of the date when made or deemed
made.
(g) Assets of any Credit Party or any Subsidiary of any
Credit Party with a fair market value of $2,500,000 or more shall be
attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, administrator,
administrative receiver, trustee, examiner, custodian or assignee for
the benefit of creditors of any Credit Party and such condition
continues for 60 days or more.
(h) A case or proceeding shall have been commenced
against any Credit Party or any Subsidiary of any Credit Party seeking
a decree or order in respect of such Person (i) under the Bankruptcy
Code or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver,
administrator, administrative receiver, liquidator, assignee, trustee,
examiner or sequestrator (or similar official) for such Person or for
any substantial part of such Person's assets, or (iii) ordering the
winding-up, liquidation, dissolution or re-organization of the affairs
of such Person, and such case or proceeding shall remain undismissed or
unstayed for 60 days or more or a decree or order granting the relief
sought in such case or proceeding shall be entered by a court of
competent jurisdiction over such case or proceeding.
(i) Any Credit Party or any Subsidiary of any Credit
Party shall (i) file a petition seeking relief under the Bankruptcy
Code or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) consent to or fail to contest in a timely and
appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession
by a custodian, receiver, administrator, administrative receiver,
liquidator, assignee, trustee, examiner or sequestrator (or similar
official) for such Person or for any substantial part of such Person's
assets, (iii) make an assignment for the benefit of or composition with
its creditors, (iv) take any corporate action in furtherance of any of
the foregoing, or (v) admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due.
(j) A final judgment or judgments for the payment of
money in excess of $2,500,000 in the aggregate at any time outstanding
shall be rendered against any Credit Party and the same shall not,
within 30 days after the entry thereof, have been discharged or
execution thereof stayed or bonded pending appeal, or shall not have
been discharged prior to the expiration of any such stay, except to the
extent that such judgment or judgments are, subject to applicable
deductibles, fully covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage in writing.
(k) Any material provision of any Loan Document shall for
any reason cease to be valid, binding and enforceable in accordance
with its terms (or any Credit Party or any Subsidiary of any Credit
Party) shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any
such assertion, that any provision of any of the Loan Documents has
ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms), or any Lien created under any Loan Document
shall cease to be a valid and perfected first priority
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Lien (except as otherwise permitted herein or therein) in any of the
Collateral having an aggregate value in excess of $100,000 purported to
be covered thereby.
(l) Any Change of Control shall occur.
(m) Any event shall occur, whether or not insured or
insurable, as a result of which the revenue-producing activities cease
or are reduced by more than 75% (measured over the immediately
preceding 12 months), in each case at any facility of Borrower or any
Subsidiary of Borrower generating more than 25% of Borrower's revenues
for the Fiscal Year preceding such event, and such cessation or
reduction continues for more than 30 days.
(n) Any default or breach by Borrower shall occur and be
continuing under any of the following agreements or any of the
following agreements shall be terminated prior to the expiration of its
stated terms due to a breach by Borrower thereunder: (i) the OEM
Component Supply Agreement dated June 7, 1998, between Borrower and
International Business Machines Corporation, as amended; and (ii) the
Volume Purchase Agreement dated as of April 8, 1999, by and between
Borrower and Komag, Incorporated, as amended.
8.2 Remedies.
(a) If any Event of Default shall have occurred and be
continuing, or if any Default shall have occurred and be continuing and Agent or
Requisite Revolving Lenders shall have determined not to make any Advances or
incur any Letter of Credit Obligations so long as such Default is continuing,
then Agent may (and at the written request of Agent or the Requisite Revolving
Lenders shall), without notice, suspend the Revolving Loan facility with respect
to further Advances or the incurrence of further Letter of Credit Obligations,
whereupon any further Advances or the incurrence of further Letter of Credit
Obligations shall be made or incurred in Agent's sole discretion (or in the sole
discretion of the Requisite Revolving Lenders, if such suspension occurred at
their direction) so long as such Default or Event of Default is continuing. If
any Default or Event of Default shall have occurred and be continuing, Agent may
(and at the written request of Requisite Revolving Lenders shall), without
notice except as otherwise expressly provided herein, increase the rate of
interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.
(b) If any Event of Default shall have occurred and be
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice: (i) terminate the Revolving Loan facility with respect
to further Advances or the incurrence of further Letter of Credit Obligations,
(ii) reduce the Revolving Loan Commitment from time to time, (iii) declare all
or any portion of the Obligations, including all or any portion of any Loan, to
be forthwith due and payable, and require that the Letter of Credit Obligations
be cash collateralized as provided in Annex B, all without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower and each other Credit Party, or (iv) exercise any rights and remedies
provided to Agent under the Loan Documents or at law or in equity, including all
remedies provided under the Code; provided, that upon the occurrence of an Event
of Default specified in Sections 8.1(g), (h) or (i), the Commitments shall be
immediately
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terminated and all of the Obligations, including the Revolving Loan, shall
become immediately due and payable without declaration, notice or demand by any
Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard;
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or Agent's replevy, attachment or levy upon, the Collateral or any
bond or security that might be required by any court prior to allowing Agent to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF CO-AGENTS
9.1 Assignment and Participations.
(a) Each Credit Party consents to any Lender's assignment
of, or sale of participations in, at any time or times, the Loan Documents,
Loans, Letter of Credit Obligations or any Commitment or of any portion thereof
or interest therein, including any Lender's rights, title, interests, remedies,
powers or duties thereunder, whether evidenced by a writing or not. Any
assignment by a Lender shall: (i) require the consent of Agent and Borrower
(which consent shall not be unreasonably withheld or delayed and which consent
shall not be required so long as any Event of Default has occurred and is
continuing) and the execution of an assignment agreement (an "Assignment
Agreement") substantially in the form attached hereto as Exhibit 9.1(a) and
otherwise in form and substance satisfactory to, and acknowledged by, Agent;
(ii) be conditioned on such assignee Lender representing to the assigning Lender
and Agent that it is purchasing the applicable Loans to be assigned to it for
its own account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, (A) be in an amount at least equal to
$5,000,000, (B) after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000 and (C) the Pro Rata Shares of the Revolving Loan Commitment and Term
Loan Commitment being assigned shall be equal; (iv) include a payment to Agent
of an assignment fee of $3,500; (v) be subject to the terms of the Overseas
Security Documents and to the due execution of any amendment, variation,
accession, memorandum or any other supplemental agreement or deed as may be
required by Agent; and (vi) if an assignment by Bank of America or GE Capital,
the non-assigning Lender shall be offered the right of first refusal to purchase
the applicable Loans being assigned by such assigning Lender; provided, that the
non-assigning Lender shall provide written notice to such assigning Lender of
its acceptance or rejection of such offer within ten Business Days following
receipt by such non-assigning Lender of written notice of such assigning
Lender's offer of assignment. In the case of an assignment by a Lender under
this Section 9.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations of all other Lenders hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Borrower hereby acknowledges and agrees that any assignment
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shall give rise to a direct obligation of Borrower to the assignee and that the
assignee shall be a "Lender." In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrower and Borrower shall, upon the request
of Agent or such Lender, execute new Notes, if any, in exchange for the Notes
being assigned. Notwithstanding the foregoing provisions of this Section 9.1(a),
any Lender may at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank, and any Lender that is an investment fund may assign the Obligations held
by it and such Lender's rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; provided,
that no such pledge to a Federal Reserve Bank shall release such Lender from
such Lender's obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of
its Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the
participant shall be considered to be a "Lender." Except as set forth in the
preceding sentence neither Borrower nor any other Credit Party shall have any
obligation or duty to any participant. Neither any Co-Agent nor any Lender
(other than the Lender selling a participation) shall have any duty to any
participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party shall assist any Lender permitted
to sell assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to effect any such assignment
or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
the preparation of informational materials for, and the participation of
management in meetings with, potential assignees or participants. Each Credit
Party shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their respective affairs contained in any
selling materials provided by them and all other information provided by it and
included in such materials, except that any Projections delivered by Borrower
shall only be certified by Borrower as having been prepared by Borrower in
compliance with the representations contained in Section 3.4(b).
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(e) Any Lender may furnish any information concerning
Credit Parties and the Subsidiaries of Credit Parties in the possession of such
Lender from time to time to assignees and participants (including prospective
assignees and participants); provided, that such Lender shall obtain from
assignees or participants confidentiality covenants substantially equivalent to
those contained in Section 11.8.
(f) So long as no Event of Default shall have occurred
and be continuing, no Lender shall assign or sell participations in any portion
of its Loans or Commitments to a potential Lender or participant if, as of the
date of the proposed assignment or sale, the assignee Lender or participant
would be subject to capital adequacy or similar requirements under Section
1.16(a), increased costs under Section 1.16(b), an inability to fund LIBOR Loans
under Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).
9.2 Appointment of Co-Agents.
(a) GE Capital is hereby appointed to act on behalf of
all Lenders as Administrative Agent, and Bank of America is hereby appointed to
act on behalf of all Lenders as Documentation Agent, in each case under this
Agreement and the other Loan Documents. The provisions of this Section 9.2 are
solely for the benefit of Co-Agents and Lenders and no Credit Party nor any
other Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and the other Loan Documents, each Co-Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Credit
Party or any other Person. Each Co-Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of each Co-Agent shall be mechanical and
administrative in nature and neither Co-Agent shall have, or be deemed to have,
by reason of this Agreement, any other Loan Document or otherwise, a fiduciary
relationship in respect of any Lender. Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity.
(b) If Agent shall request instructions from Requisite
Lenders, Requisite Revolving Lenders, Supermajority Revolving Lenders or all
affected Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders, or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (i) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (ii) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (iii) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from
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acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance. Neither Agent nor any of its Affiliates nor
any of their respective 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 or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent, as applicable: (a) may treat the payee of
any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Agent; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations made in or in connection with this Agreement or the other
Loan Documents; (d) 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 Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender 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 (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by facsimile, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital, Bank of America and their Affiliates. With respect
to its Commitments hereunder, each of GE Capital and Bank of America shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise the same as though it were not a Co-Agent; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include each of GE Capital and Bank of America in its individual capacity. GE
Capital, Bank of America and their respective Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any Credit Party,
any of their Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital or
Bank of America were not a Co-Agent and without any duty to account therefor to
Lenders. GE Capital, Bank of America and their respective Affiliates may accept
fees and other consideration from any Credit Party for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders. Each Lender acknowledges the potential conflict of interest between GE
Capital and Bank of America, each as a Lender holding disproportionate interests
in the Loans, and GE Capital and Bank of America, as a Co-Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon any Co-Agent or any other Lender and
based on the Financial Statements referred to in Section 3.4(a) and such other
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and the Subsidiaries of Credit Parties
and its own decision to enter into this Agreement. Each Lender
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also acknowledges that it will, independently and without reliance upon any
Co-Agent or any other Lender 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. Each Lender acknowledges the
potential conflict of interest of each other Lender as a result of Lenders
holding disproportionate interests in the Loans, and expressly consents to, and
waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Credit Parties and without limiting the obligations of
Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted to be taken by Agent in
connection therewith; provided, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by 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 each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Credit Parties.
9.7 Successor Co-Agents. Each Co-Agent may resign at any time by
giving not less than 30 days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Co-Agent. If no successor Co-Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Co-Agent's giving notice of resignation, then
the resigning Co-Agent may, on behalf of Lenders, appoint a successor Co-Agent,
which shall be a Lender if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Co-Agent has been appointed pursuant to the
foregoing within 30 days after the date such notice of resignation was given by
the resigning Co-Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of such Co-Agent
hereunder until such time, if any, as the Requisite Lenders appoint a successor
Co-Agent as provided above. Any successor Co-Agent appointed by Requisite
Lenders hereunder shall be subject to the approval of Borrower, such approval
not to be unreasonably withheld or delayed; provided, that such approval shall
not be required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as a Co-Agent hereunder by a
successor Co-Agent, such successor Co-Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the resigning Co-Agent.
Upon the earlier of the acceptance of any appointment as Co-Agent hereunder by a
successor Co-Agent or the effective date of the resigning Co-Agent's
resignation, the resigning Co-Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan
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Documents, except that any indemnity rights or other rights in favor of such
resigning Co-Agent shall continue. After any resigning Co-Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as a Co-Agent
under this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights and subject to the provisions of Section 9.9(f), upon the occurrence
and during the continuance of any Event of Default, each Lender and each holder
of any Note is hereby authorized at any time or from time to time, without prior
notice to any Credit Party or to any Person other than Agent, any such notice
being hereby expressly waived, to offset and to appropriate and to apply any and
all balances held by it at any of its offices for the account of Borrower or any
Guarantor (other than Holdings), regardless of whether such balances are then
due to Borrower or any Guarantor (other than Holdings), and any other properties
or assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower or any Guarantor (other than Holdings)
against and on account of any of the Obligations that are not paid when due;
provided, that any Lender exercising such offset rights shall give notice
thereof to the affected Credit Party promptly after exercising such rights. Any
Lender or holder of any Note exercising a right to offset or otherwise receiving
any payment on account of the Obligations in excess of its Pro Rata Share
thereof shall purchase for cash (and the other Lenders or holders shall sell)
such participations in each such other Lender's or holder's Pro Rata Share of
the Obligations as would be necessary to cause such Lender to share the amount
so offset or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Sections 1.13, 1.15 or 1.16). Each Lender's obligation
under this Section 9.8 shall be in addition to and not in limitation of its
obligations to purchase a participation in an amount equal to its Pro Rata Share
of the Swing Line Loans under Section 1.1. Borrower and each Guarantor (other
than Holdings) agrees, to the fullest extent permitted by law, that (a) any
Lender or holder may exercise its right to offset with respect to amounts in
excess of its Pro Rata Share of the Obligations and may sell participations in
such amounts so offset to other Lenders and holders and (b) any Lender or
holders so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of setoff, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the setoff amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of setoff, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9 Advances; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or
participate in the Swing Line Loan in accordance with clauses (iii) and
(iv) of Section 1.1(c). If the Swing Line Lender declines to make a
Swing Line Loan or if Swing Line Availability is zero, Agent shall
notify Revolving Lenders promptly after receipt of a Notice of
Revolving Advance and in any event prior to 11:00 a.m. (California
time) on the date such Notice of Revolving
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Advance is received, by telecopy, telephone or other similar form of
transmission. Each Revolving Lender shall make the amount of such
Lender's Pro Rata Share of such Revolving Credit Advance available to
Agent in same day funds by wire transfer to Agent's account as set
forth in Annex H not later than 1:00 p.m. (California time) on the
requested funding date, in the case of an Index Rate Loan, and not
later than 10:00 a.m. (California time) on the requested funding date,
in the case of a LIBOR Loan. After receipt of such wire transfers (or,
in the Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested Revolving
Credit Advance to Borrower. All payments by each Revolving Lender shall
be made without setoff, counterclaim or deduction of any kind.
(ii) Not less than once during each calendar week
(each, a "Settlement Date"), Agent shall advise each Lender by
telephone or telecopy of the amount of such Lender's Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that such Lender has funded
all payments and Advances required to be made by it and purchased all
participations required to be purchased by it under this Agreement and
the other Loan Documents as of such Settlement Date, Agent shall pay to
each Lender such Lender's Pro Rata Share of principal, interest and
Fees paid by Borrower since the previous Settlement Date for the
benefit of that Lender on the Loans held by it. To the extent that any
Lender (a "Non-Funding Lender") has failed to fund all such payments
and Advances required to be made by it or failed to fund the purchase
of all such participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date,
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender's
account (as specified by such Lender in Annex H or the applicable
Assignment Agreement) not later than 11:00 a.m. (California time) on
the next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may
assume that each Revolving Lender will make its Pro Rata Share of each Revolving
Credit Advance available to Agent on each funding date. If such Pro Rata Share
is not, in fact, paid to Agent by such Revolving Lender when due, Agent will be
entitled to recover such amount on demand from such Revolving Lender without
setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to
pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower and Borrower shall immediately repay such amount to
Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrower
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to Borrower
on behalf of any Revolving Lender and is not reimbursed therefor on the same
Business Day as such Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by the applicable
Revolving Lender.
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(c) Return of Payments.
(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has
been or will be received by Agent from Borrower and such related
payment is not received by Agent, then Agent will be entitled to
recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to
Borrower or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender
will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if
any, as Agent is required to pay to Borrower or such other Person
without setoff, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding
Lender to make any Revolving Credit Advance or any payment required by it
hereunder, or to purchase any participation in any Swing Line Loan to be made or
purchased by it on the date specified therefor shall not relieve any other
Lender (each such other Lender, an "Other Lender") of its obligations to make
such Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, or to purchase a participation required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" or a "Revolving Lender" (or be included in the
calculation of "Requisite Lenders," "Requisite Revolving Lenders," or
"Supermajority Revolving Lenders" hereunder) for any voting or consent rights
under or with respect to any Loan Document.
(e) Dissemination of Information. Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party, with
notice of any Event of Default of which Agent has actually become aware and with
notice of any action taken by Agent following any Event of Default; provided,
that Agent shall not be liable to Documentation Agent or any Lender for any
failure to do so, except to the extent that such failure is attributable to
Agent's gross negligence or willful misconduct. Lenders acknowledge that
Borrower is required to provide Financial Statements and Collateral Reports to
Lenders in accordance with Annexes E and F hereto and agree that Agent shall
have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
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9.10 Relationship Between Co-Agents. Administrative Agent shall
serve as designated agent for Co-Agents and Lenders under this Agreement and the
other Loan Documents with respect to the structuring, preparation, and
negotiation of the Loan Documents, the filing, recordation and perfection of
Liens, the receipt and disbursement of funds to, from, and on behalf of Credit
Parties and Lenders, and the other administrative functions specifically set
forth in this Agreement and the other Loan Documents as assigned to
Administrative Agent. Neither Co-Agent shall attempt to take action inconsistent
with the foregoing allocation of responsibility. Each Co-Agent shall exercise
reasonable credit judgment in performing its duties hereunder; provided, that no
provision of this Section 9.10 shall be deemed (A) to modify the provisions of
Section 9.3, or (B) restrict or modify the authority of a Co-Agent, in its
capacity as a Lender, accorded such Co-Agent by Section 9.4.
10. SUCCESSORS AND ASSIGNS
This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Credit Party, Co-Agents, Lenders and their
respective successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein. No Credit Party may assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent and Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Agent and Lenders shall be void. The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Credit Party, Co-Agents and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2. Any letter of interest, commitment letter, or fee
letter (other than the Fee Letter) between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement, any of the Notes or any other Loan Document, or any consent to
any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by Agent and Borrower, and by
Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving Lenders
or all affected Lenders, as applicable. Except as set forth in clauses (b) and
(c) below or as otherwise expressly set forth in this Agreement, all such
amendments,
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modifications, terminations or waivers requiring the consent of any Lenders
shall require the written consent of Agent and Requisite Lenders.
(b) No amendment, modification, termination or waiver of
or consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Borrowing Base or
that makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts set forth in Section 1.6 shall be effective unless the same
shall be in writing and signed by Agent, Supermajority Revolving Lenders and
Borrower. No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that waives compliance with the
conditions precedent set forth in Section 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower or as otherwise expressly provided in the proviso to Section 2.2(c).
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in Section 2.2 unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender directly affected
thereby: (i) increase the principal amount of any Lender's Commitment (which
action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date (other than payment dates of mandatory
prepayments under Section 1.3(b)(ii), (iii) or (iv)) of the principal amount of
any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone
any payment of interest, principal or Fees as to any affected Lender; (v)
release any Guaranty or, except as otherwise permitted herein or in the other
Loan Documents, release, or permit any Credit Party to sell or otherwise dispose
of any Collateral with a value exceeding $15,000,000 in any Fiscal Year (which
action shall be deemed to directly affect all Lenders); (vi) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Loans that shall be required for Lenders or any of them to take any action
hereunder; and (vii) amend or waive this Section 11.2 or the definitions of the
terms "Requisite Lenders," "Requisite Revolving Lenders" or "Supermajority
Revolving Lenders" insofar as such definitions affect the substance of this
Section 11.2. Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of any Co-Agent or L/C Issuer under this
Agreement or any other Loan Document shall be effective unless in writing and
signed by such Co-Agent or L/C Issuer, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
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(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this clause (i)
and in clauses (ii), (iii) and (iv) below being referred to as a
"Non-Consenting Lender"),
(ii) requiring the consent of Supermajority
Revolving Lenders, the consent of Requisite Lenders is obtained, but
the consent of Supermajority Revolving Lenders is not obtained,
(iii) requiring the consent of Requisite Revolving
Lenders, the consent of Revolving Lenders holding 51% or more of the
aggregate Revolving Loan Commitments is obtained, but the consent of
Requisite Revolving Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders,
the consent of Lenders holding 51% or more of the aggregate Commitments
is obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person acceptable to Agent, shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount equal to the
principal balance of all Loans held by such Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon indefeasible payment in full in cash and
performance of all of the Obligations (other than indemnification Obligations
under Section 1.13) and termination of the Commitments, and so long as no suits,
actions, proceedings or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrower termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse each Co-Agent and,
with respect to syndication expenses, GE Capital, for all reasonable and actual
out-of-pocket expenses incurred in connection with the negotiation, preparation
and syndication of the Loan Documents (including the reasonable fees and
expenses of all of its special loan counsel, advisors, consultants and auditors
retained in connection with the Loan Documents and the Related Transactions and
advice in connection therewith). Borrower shall reimburse each Co-Agent (and,
with respect to clauses (c), (d) and (e) below, all Lenders) for all reasonable
and actual fees, costs and expenses, including the reasonable fees, costs and
expenses of counsel or other
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advisors (including environmental and management consultants and appraisers) for
advice, assistance, or other representation in connection with:
(a) the forwarding to Borrower or any other Person on
behalf of Borrower by Agent of the proceeds of any Loan;
(b) any amendment, modification or waiver of, consent
with respect to, or termination of, any of the Loan Documents or
Related Transactions Documents or advice in connection with the
syndication and administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Credit Party or
any other Person, and whether as a party, witness or otherwise) in any
way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection herewith or
therewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection
with a case commenced by or against any or all of the Credit Parties or
any other Person that may be obligated to any Co-Agent by virtue of the
Loan Documents, including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or
restructuring of the Loans during the pendency of one or more Events of
Default; provided, that in the case of reimbursement of counsel for
Lenders other than Agent, such reimbursement shall be limited to one
counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent or any
Lender against any or all of the Credit Parties or any other Person
that may be obligated to any Co-Agent or any Lender by virtue of any of
the Loan Documents, including any such attempt to enforce any such
remedies in the course of any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided, that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; and
(f) efforts to, in accordance with the provisions of the
Loan Documents, (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their
respective Subsidiaries or the affairs of the Credit Parties or their
respective Subsidiaries, and (iii) verify, protect, evaluate, assess,
appraise, collect, sell, liquidate or otherwise dispose of any of the
Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services and other
advice, assistance or other representation, including those in connection with
any appellate proceedings, and all expenses, costs, charges and other fees
incurred by such counsel and others in connection with or relating to any of the
events or actions described in this Section 11.3, all of which shall be payable,
on demand, by Borrower to Agent. Without limiting the generality of the
foregoing, such expenses,
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costs, charges and fees may include: fees, costs and
expenses of accountants, environmental advisors, appraisers, investment bankers,
management and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal or other
advisory services.
Notwithstanding the generality of the foregoing, Borrower shall not be
required to reimburse any Co-Agent or Lender for any fees, costs or expenses
incurred in connection with any (I) syndication or participation of the Loans
after the Closing Date and prior to the date on which Borrower sends the
Commitment Increase Request Notice unless (A) a Default or Event of Default has
occurred and is continuing at the time of such syndication or participation or
(B) Borrower, in each such instance, consents thereto, or (II) litigation,
arbitration or court proceeding of the type described in clause (c) above (other
than any litigation, contest, dispute, suit, proceeding or action, including any
motion practice, application or other matter in connection therewith, arising in
or under a case or proceeding that has been commenced against any Credit Party
or any Subsidiary of any Credit Party under the Bankruptcy Code or any other
applicable federal, state or foreign bankruptcy or other similar law, all of
which shall be reimbursable under this Section 11.3) between any Credit Party,
on the one hand, and any Co-Agent or Lender, on the other hand, (A) pending
before a court of competent jurisdiction, (B) that has not been voluntarily
dismissed pursuant to a settlement thereof, and (C) in which a final,
non-appealable judgment or order shall have been entered in favor of such Credit
Party containing a determination that such Credit Party is the prevailing party.
11.4 No Waiver. Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement or any other Loan Document shall not waive, affect or diminish
any right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement or any other Loan Document shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
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extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement or such other Loan
Document.
11.7 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.8 Confidentiality. Each Co-Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts such Co-Agent or such
Lender applies to maintaining the confidentiality of its own confidential
information) to maintain as confidential all confidential information provided
to them by the Credit Parties and designated as confidential for a period of two
years following receipt thereof, except that each Co-Agent and each Lender may
disclose such information: (a) to Persons employed or engaged by such Co-Agent
or such Lender in evaluating, approving, structuring or administering the Loans
and the Commitments; (b) to any bona fide assignee or participant or potential
assignee or participant that has agreed to comply with the covenant contained in
this Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by such Co-Agent or such
Lender to be compelled by any court decree, subpoena or legal or administrative
order or process; (d) as, on the advice of such Co-Agent's or such Lender's
counsel, is required by law; (e) in connection with the exercise of any right or
remedy under the Loan Documents or in connection with any Litigation to which
such Co-Agent or such Lender is a party; or (f) that ceases to be confidential
through no fault of any Co-Agent or any Lender; provided, that with respect to
clauses (c) and (d) above, such Co-Agent or Lender shall notify Borrower as soon
as is reasonably practicable under the circumstances prior to any proposed
disclosure and afford Borrower the opportunity, at Borrower's expense, to limit
or eliminate the disclosure or obtain one or more protective orders with respect
thereto, in each case only to the extent that such Co-Agent or Lender has
determined that the failure to immediately disclose would not subject it to any
liability. Notwithstanding anything to the contrary set forth in this Agreement
or in any other agreement to which the parties hereto are parties or by which
they are bound, the obligations of confidentiality contained herein and therein,
as they relate to the transactions contemplated by the Credit Agreement and the
other loan documents (the "Transaction"), shall not apply to the federal tax
structure or federal tax treatment of the Transaction, and each party hereto
(and any employee, representative, agent or Affiliate of any party hereto) may
disclose to any and all Persons, without limitation of any kind, the federal tax
structure and federal tax treatment of the Transaction. The preceding sentence
is intended to cause the Transaction to be treated as not having been offered
under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or
any successor provision) of the Treasury Regulations promulgated under Section
6011 of the IRC and shall be construed in a manner consistent with such purpose.
In addition, each party hereto acknowledges that it has no proprietary or
exclusive rights to the federal tax structure of the Transaction or any federal
tax matter or federal tax idea related to the Transaction.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY
OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS
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OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE
OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS
THEREOF) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT
PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN LOS
ANGELES COUNTY, CITY OF LOS ANGELES, CALIFORNIA, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT
PARTIES, CO-AGENTS AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT CO-AGENTS, LENDERS AND THE
CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF LOS ANGELES COUNTY, CITY OF LOS ANGELES,
CALIFORNIA; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH CREDIT PARTY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT
PARTY'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES
MAIL, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered: (a) upon the earlier of actual receipt and three
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
prior to 5:00 p.m. local time of the recipient, or otherwise on the immediately
succeeding
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Business Day (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 11.10); (c) one Business Day after deposit with a reputable overnight
courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated in Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated in Annex I
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG CO-AGENTS, LENDERS AND ANY CREDIT PARTY
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party on the one hand, and each
Co-Agent on the other, agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure using the name of
Borrower, any Co-Agent, or any of their respective Affiliates, or referring to
this Agreement, the other Loan Documents or the Related Transactions Documents,
without at least two Business Days' prior notice to such other Person and
without the prior written consent of such other Person unless (and only to the
extent that) such Credit Party, such Co-Agent or their respective Affiliates is
required to do so under law and then, in any event, such Credit Party, such
Co-Agent or their respective Affiliates will consult with such other Person
before issuing such press release or other public disclosure. Each Credit Party
consents to the publication by any Co-Agent or any Lender of advertising
material relating to the financing transactions contemplated by this Agreement
using Borrower's name, logo or trademarks; provided, that such Co-Agent or such
Lender shall provide a draft of any advertising
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material to each Credit Party for review and approval prior to the publication
thereof. Each Co-Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements with Borrower's consent, which consent shall not be unreasonably
withheld or delayed.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Credit Party for liquidation or reorganization, should any Credit Party
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party's assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.18 Amendment and Restatement. Effective on and as of the Closing
Date, this Agreement amends and restates in its entirety the Existing Credit
Agreement insofar as the two are inconsistent. Neither this Agreement nor any of
the other Loan Documents being executed in connection herewith shall constitute
an accord and satisfaction or a novation of the obligations evidenced by the
Existing Credit Agreement or the other "Loan Documents" (as such term is defined
in the Existing Credit Agreement). However, the execution and delivery of this
Agreement shall not excuse, or constitute a waiver of, any Defaults or Events of
Default under the Existing Credit Agreement other than those defaults or events
of default specifically waived in Section 1.20, it being understood that this
Agreement is not a termination of the Existing Credit Agreement or the written
consents agreed to by Co-Agents or Lenders thereunder, but is a modification
(and, as modified, a continuation) of the Existing Credit Agreement. Each of
Borrower and each Credit Party acknowledges and agrees that the Existing Credit
Agreement, as amended and restated hereby, is reaffirmed in all respects.
Amounts in respect of interest, fees, and other amounts payable to or for the
account of Co-Agents or Lenders shall be calculated in accordance with the
provisions of (i) the Existing Credit Agreement with respect to any period (or
portion of any period) ending on or prior to the Closing Date and (ii) this
Agreement with respect to any period (or portion of any period) commencing on or
after the Closing Date. Notwithstanding the foregoing or anything to the
contrary herein, nothing herein shall be deemed
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to limit or terminate any of Co-Agents' or Lenders' rights under the Existing
Credit Agreement that expressly survive the Termination Date (as defined
therein).
[remainder of page left blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
"BORROWER"
WESTERN DIGITAL TECHNOLOGIES, INC.
By: /s/ Steven M. Slavin
----------------------------------------
Steven M. Slavin
Vice President, Taxes and Treasurer
"ADMINISTRATIVE AGENT" and "LENDER"
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Scott B. Kaplan
----------------------------------------
Scott B. Kaplan
Duly Authorized Signatory
"DOCUMENTATION AGENT" and "LENDER"
BANK OF AMERICA, N.A.
By: /s/ Robert Mostert
----------------------------------------
Name: Robert Mostert
--------------------------------------
Title: Vice President
-------------------------------------
"LENDER"
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Robert S. Yaguda
----------------------------------------
Name: Robert S. Yaguda
--------------------------------------
Title: Vice President
-------------------------------------
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as a Borrower.
"CREDIT PARTIES"
WESTERN DIGITAL (FREMONT), INC.,
a Delaware corporation
By: /s/ Steven M. Slavin
----------------------------------
Steven M. Slavin
Vice President, Finance
WESTERN DIGITAL (U.K.), LTD., a
corporation organized under the laws of
the United Kingdom
By: /s/ Raymond Bukaty
----------------------------------
Name: Raymond Bukaty
--------------------------------
Title: Director
-------------------------------
WESTERN DIGITAL (I.S.) LIMITED, a
corporation organized under
the laws of Ireland
By: /s/ Raymond Bukaty
----------------------------------
Name: Raymond Bukaty
--------------------------------
Title: Director
-------------------------------
ANNEX A (RECITALS)
TO
AMENDED AND RESTATED CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings, and all references in the following definitions to
Sections, Exhibits, Schedules or Annexes shall refer to Sections, Exhibits,
Schedules or Annexes of the Agreement:
"Account Debtor" means any Person who may become obligated to
any other Person under, with respect to, or on account of, an Account, Chattel
Paper or General Intangible (including a payment intangible).
"Accounting Changes" shall have the meaning assigned to it in
Annex G.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Person, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Person's rights in,
to and under all purchase orders or receipts for goods or services, (c) all of
each Person's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Person for property sold, leased, licensed, assigned or
otherwise disposed of, for a policy of insurance issued or to be issued, for a
secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all health-care-insurance receivables and (f) all collateral
security of any kind, given by any Account Debtor or any other Person with
respect to any of the foregoing.
"ACH Transactions" means any cash management or related
services provided by Bank of America to Borrower or any other Credit Party,
including the automatic clearing house transfer of funds by Bank of America for
the account of the Borrower pursuant to agreement or overdrafts.
"Acquisition Pro Forma" shall have the meaning assigned to it
in Section 6.1.
"Acquisition Projections" shall have the meaning assigned to
it in Section 6.1.
"Activation Event" and "Activation Notice" shall have the
respective meanings assigned to them in Annex C.
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"Administrative Agent" shall mean GE Capital, in its capacity
as administrative agent for Co-Agents and Lenders, or its successor appointed
pursuant to Section 9.7.
"Advance" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with
such Person, (c) each of such Person's officers, directors, joint venturers and
partners or (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, that the term "Affiliate" shall specifically
exclude each Co-Agent and each Lender.
"Agent" shall mean Administrative Agent and, as the context
may require, Security Trustee.
"Agreement" shall mean the Amended and Restated Credit
Agreement by and among Borrower, the other Credit Parties party thereto, GE
Capital, as Administrative Agent and a Lender, Bank of America, as Documentation
Agent and a Lender, and the other Lenders from time to time party thereto, as
the same may be amended, supplemented, restated or otherwise modified from time
to time in accordance with the terms thereof.
"Appendices" shall have the meaning assigned to it in the
recitals to the Agreement.
"Applicable L/C Margin" shall mean the per annum fee, from
time to time in effect, payable with respect to outstanding Letter of Credit
Obligations as determined by reference to Section 1.5(a).
"Applicable Percentage" shall have the meaning assigned to it
in Section 1.9(c).
"Applicable Revolver Index Margin" shall mean the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
Section 1.5(a).
"Applicable Revolver LIBOR Margin" shall mean the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a).
"Applicable Term Loan Index Margin" shall mean the per annum
interest rate from time to time in effect and payable in addition to the Index
Rate applicable to the Term Loan, as determined by reference to Section 1.5(a).
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"Applicable Term Loan LIBOR Margin" shall mean the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Term Loan, as determined by reference to Section 1.5(a).
"Applicable Unused Line Fee Margin" shall mean the per annum
fee, from time to time in effect, payable in respect of Borrower's non-use of
available funds pursuant to Section 1.9(b), which fee is determined by reference
to Section 1.5(a).
"Assignment Agreement" shall have the meaning assigned to it
in Section 9.1(a).
"Available Liquidity" shall mean, at any time, the sum of (a)
Net Borrowing Availability plus (b) available cash balances in Borrower's
deposit accounts set forth in Disclosure Schedule (3.19) plus (c) available cash
balances in the deposit accounts of Borrower's Subsidiaries (other than the
Excluded Subsidiaries), in each case at such time.
"Average Borrowing Availability" shall mean, for any calendar
month, the average daily Net Borrowing Availability for such month.
"Bank of America" shall mean Bank of America, N.A.
"Bank Products" means any one or more of the following types
of services or facilities extended to Borrower by Bank of America or any of its
Affiliates of the Bank in reliance on Bank of America's agreement to indemnify
such Affiliate: (a) credit cards; (b) ACH Transactions; and (c) Interest Rate
Protection Agreements.
"Bankruptcy Code" shall mean the provisions of title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq.
"Beneficiaries" shall mean the Co-Agents, Lenders and Security
Trustee.
"Borrower" shall mean Western Digital Technologies, Inc., a
Delaware corporation formerly known as Western Digital Corporation.
"Borrower Accounts" shall have the meaning assigned to it in
Annex C.
"Borrower Pledge Agreement" shall mean the Pledge Agreement
dated as of September 20, 2000, executed by Borrower in favor of Agent, on
behalf of Co-Agents and Lenders, as amended by the First Amendment to Pledge
Agreement of even date herewith executed by Borrower and WD Fremont in favor of
Agent, on behalf of Co-Agents and Lenders, and as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"Borrowing Availability" shall have the meaning assigned to it
in Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of determination
by Agent, from time to time, an amount equal to the sum at such time of:
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(a) (i) ****% of Borrower's Eligible Domestic Accounts,
minus (ii) the Dilution Reserve with respect to such Eligible Domestic
Accounts; plus
(b) the least of (i) $****, (ii) ****% of the value of
all Collateral included in clauses (a), (b) and (c) of this definition
of "Borrowing Base," and (iii) (A) ****% of Borrower's Eligible Foreign
Accounts, minus (B) the Dilution Reserve with respect to such Eligible
Foreign Accounts; plus
(c) the lesser of (i) $**** and (ii) (A) ****% of WD UK's
and WD IS's Eligible Accounts, subject to an acceptable credit review
by Agent of the Account Debtors of WD UK and WD IS, minus (B) the
Dilution Reserve with respect to WD UK's and WD IS's Eligible Accounts.
"Borrowing Base Certificate" shall mean a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
States of California or New York and in reference to LIBOR Loans shall mean any
such day that is also a LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any fixed assets or improvements
or for replacements, substitutions or additions thereto that have a useful life
of more than one year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.
"Cash Collateral Account" shall have the meaning assigned to
it in Annex B.
"Cash Equivalents" shall have the meaning assigned to it in
Annex B.
"Cash Management System" shall have the meaning assigned to it
in Section 1.8.
"Change of Control" means any of the following: (a) any Person
or group of Persons (within the meaning of the Securities Exchange Act) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act) of
20% or more of the issued and outstanding shares of capital Stock of Holdings
having the right to vote for the election of directors of Holdings under
ordinary circumstances; (b) the occurrence of a change in the composition of the
board of directors of Holdings as a result of which fewer than a majority of all
directors are
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* Material has been omitted pursuant to a request for confidential treatment.
Incumbent Directors (as defined below); (c) Borrower shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries; and (d) Holdings shall
cease to own and control all of the economic and voting rights associated with
all of the outstanding capital Stock of Borrower. For purposes of this
definition, "Incumbent Director" means any director who is either (i) a director
of Holdings as of the date on which the Third Amendment becomes effective, or
(ii) a director who is elected or nominated for election to the board of
directors of Holdings with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include any individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to
Holdings).
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Person,
(d) any Person's ownership or use of any properties or other assets, or (e) any
other aspect of any Person's business.
"Chattel Paper" shall mean any "chattel paper," as such term
is defined in the Code, including electronic chattel paper, now owned or
hereafter acquired by any Person, wherever located.
"Closing Date" shall mean September 19, 2003.
"Co-Agents" shall collectively mean Administrative Agent,
Documentation Agent and, as the context may require, Security Trustee; provided,
that in the event that the Commitments owned directly by Bank of America are
less than $25,000,000, then "Co-Agents" shall be a reference to Administrative
Agent and Security Trustee only.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of California;
provided, that to the extent that the Uniform Commercial Code is used to define
any term in the Agreement or in any other Loan Document and such term is defined
differently in different Articles or Divisions of the Uniform Commercial Code,
the definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, any Co-Agent's or any Lender's Lien on any Collateral is governed by
the Uniform Commercial Code as enacted and in effect from time to time in a
jurisdiction other than the State of California, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" shall mean the property covered by the Security
Agreement, and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of Co-Agents and Lenders, to secure the Obligations.
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"Collateral Documents" shall mean the Security Agreement, the
Borrower Pledge Agreement, the Overseas Security Documents, the Patent,
Trademark and Copyright Security Agreement and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to
the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of Agent,
account number 502-328-54 in the name of Agent at DeutscheBank Trust Company
Americas in New York, New York, ABA No. 021 001 033, or such other account as
may be designated in writing by Agent as the "Collection Account."
"Commitment Increase" shall have the meaning assigned to it in
Section 1.1(a)(iv).
"Commitment Increase Request Notice" shall have the meaning
assigned to it in Section 1.1(a)(iv).
"Commitment Termination Date" shall mean the earliest of (a)
September 20, 2008, (b) the date of termination of Lenders' obligations to make
Advances and to incur Letter of Credit Obligations or permit existing Loans to
remain outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans, the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars ($0), in each case in accordance with the provisions of Section 1.3(a).
"Commitments" shall mean (a) as to any Lender, the aggregate
of such Lender's Revolving Loan Commitment (including without duplication the
Swing Line Lender's Swing Line Commitment as a subset of its Revolving Loan
Commitment) and Term Loan Commitment as set forth on Annex J to the Agreement or
in the most recent Assignment Agreement executed by such Lender, and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments
(including, without duplication, the Swing Line Lender's Swing Line Commitment
as a subset of its Revolving Loan Commitment) and Term Loan Commitments, which
aggregate commitment shall be One Hundred Twenty Five Million Dollars
($125,000,000) on the Closing Date, as to each of clauses (a) and (b), as such
Commitments may be increased, reduced, amortized or adjusted from time to time
in accordance with the Agreement.
"Compliance Certificate" shall have the meaning assigned to it
in Annex E.
"Concentration Account" shall have the meaning assigned to it
in Annex C.
"Connex" shall mean Connex, Inc., a Delaware corporation
formerly known as Crag Technologies, Inc.
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"Contracts" shall mean all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which such Person may now or hereafter have any right,
title or interest, including any agreement relating to the terms of payment or
the terms of performance of any Account.
"Control Letter" shall mean a letter agreement between Agent
and (a) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (b) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (c) a futures commission merchant or clearing house with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant, as applicable, limits any security interest in the
applicable financial assets in a manner reasonably satisfactory to Agent,
acknowledges the Lien of Agent, on behalf of Co-Agents and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Person under any written agreement granting any right
to use any Copyright or Copyright registration.
"Copyrights" shall mean all of the following now owned or
existing or hereafter adopted or acquired by any Person: (a) all copyrights and
General Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, or any territory thereof, or any other country or any political
subdivision thereof; and (b) all extensions or renewals thereof.
"Credit Parties" shall mean Borrower, WD UK, WD IS, WD
Fremont, and any Target that becomes a "Credit Party" in accordance with the
provisions of Section 6.1.
"Default" shall mean any event that, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Deposit Accounts" shall mean any "deposit accounts," as such
term is defined in the Code, now owned or hereafter acquired by any Person,
wherever located.
"Dilution Reserve" shall mean the Reserve maintained from time
to time against each of clauses (a), (b) and (c) set forth in the definition of
"Borrowing Base" in an amount equal to (a) the value of each of Borrower's, WD
UK's and WD IS's Accounts, as applicable, multiplied by (b) the amount by which
the dilution of all such Accounts exceeds 7.5% at such time, multiplied by (c)
two.
"Disbursement Account" shall have the meaning assigned to it
in Annex C.
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"Disclosure Schedules" shall mean the Schedules prepared by
Borrower and denominated as Disclosure Schedules (3.1) through (6.7) in the
Index to the Agreement.
"Documentation Agent" shall mean Bank of America, in its
capacity as Documentation Agent for Lenders.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located.
"Dollars" or "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to Borrower and its
Subsidiaries (other than the Excluded Subsidiaries) for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Persons for such period, minus (b) the sum of (i) income tax credits, (ii)
interest income, (iii) gain from extraordinary items for such period, (iv) any
aggregate net gain (but not any aggregate net loss) during such period arising
from the sale, exchange or other disposition of capital assets by such Persons
(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities), and (v)
any other non-cash gains that have been added in determining consolidated net
income, in each case to the extent included in the calculation of consolidated
net income of such Persons for such period in accordance with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income taxes, (ii)
Interest Expense, (iii) loss from extraordinary items for such period, (iv) the
amount of non-cash charges (including depreciation and amortization) for such
period, (v) amortized debt discount for such period, and (vi) the amount of any
deduction to consolidated net income as the result of any grant to any members
of the management of such Persons of any Stock, in each case to the extent
included in the calculation of consolidated net income of such Persons for such
period in accordance with GAAP, but without duplication. For purposes of this
definition, the following items shall be excluded in determining consolidated
net income of Borrower and its Subsidiaries (other than the Excluded
Subsidiaries): (A) the income (or deficit) of any other Person accrued prior to
the date it became a Subsidiary of, or was merged or consolidated into, such
Person or any of such Person's Subsidiaries; (B) the income (or deficit) of any
other Person (other than a Subsidiary) in which such Person has an ownership
interest, except to the extent any such income has actually been received by
such Person in the form of cash dividends or distributions; (C) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (D) any restoration to income
of any contingency reserve, except to the extent that provision for such reserve
was made out of income accrued during such period; (E) any write-up of any
asset; (F) any net gain from the collection of the proceeds of life insurance
policies; (G) any net gain arising from the acquisition of any securities, or
the extinguishment, under GAAP, of any Indebtedness, of such Person; (H) in the
case of a successor to such Person by consolidation or merger or as a transferee
of its assets, any earnings of such successor prior to such consolidation,
merger or transfer of assets; and (I) any deferred credit representing the
excess of equity in any Subsidiary of such Person at the date of acquisition of
such Subsidiary over the cost to such Person of the investment in such
Subsidiary.
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"Eligible Accounts" shall have the meaning assigned to it in
Section 1.6.
"Eligible Domestic Account" shall mean an Eligible Account
that is an obligation of an Account Debtor located in the United States and
Canada (excluding the provinces of Quebec and Newfoundland and the Northwest
Territories).
"Eligible Foreign Account" shall mean an Account that (a)
qualifies as an Eligible Account without regard to clause (i) of Section 1.6 and
(b) is an obligation of an Account Debtor located in a foreign country
(excluding Canada).
"Environmental Laws" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et
seq.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic
Substance Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42
U.S.C. Sections 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Sections
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Person, wherever located and,
in any event, including all such Person's machinery and equipment, including
processing equipment, conveyors, machine
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tools, data processing and computer equipment, including embedded software and
peripheral equipment and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and nature, trade fixtures and fixtures not forming a part of real
property, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) that, together with
such Credit Party, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a "substantial employer," as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by
any Credit Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status;
or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Excluded Intellectual Property" shall mean all of the right,
title and interest of Borrower and any Grantor or Pledgor under any Collateral
Document and each Excluded Subsidiary in, to and under the Intellectual Property
designated as "Excluded Intellectual Property" in Supplement A to Disclosure
Schedule (3.15).
"Excluded Investments" shall mean the now existing or
hereafter acquired promissory notes, certificated or uncertificated Stock, or
other Investment Property of any Credit
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Party (or any Subsidiary of any Credit Party) in or with respect to Valence
Semiconductor, Inc., a California corporation, e-Hitex, Inc., a Delaware
corporation, Intera Systems, Inc., a California corporation, and Aristos Logic
Corporation, a California corporation.
"Excluded Subsidiaries" shall mean Connex, Pacifica, Keen
Personal Media, Inc., a Delaware corporation, Keen Personal Technologies, Inc.,
a Delaware corporation, WDC SAN Subsidiary, a Delaware corporation formerly
known as SANavigator, Inc., Western Digital Ventures, Inc., a Delaware
corporation, WD Merger Sub, Inc., a Delaware corporation, WD Korea, WD Latin
America, RS Patent Holding Co., Read-Rite International, Read-Rite (Malaysia)
Sdn. Bhd., and Targets that become "Excluded Subsidiaries" in accordance with
the provisions of Section 6.1.
"Existing Credit Agreement" shall have the meaning assigned to
it in the recitals to the Agreement.
"Fair Labor Standards Act" shall mean the provisions of the
Fair Labor Standards Act, 29 U.S.C. Sections 201 et seq.
"Federal Funds Rate" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by Agent
in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System.
"Fee Letter" shall mean that certain letter of even date
herewith between GE Capital and Borrower with respect to certain Fees to be paid
from time to time by Borrower.
"Fees" shall mean any and all fees payable to any Co-Agent or
any Lender pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" shall have the meaning assigned to it in
Section 6.10.
"Financial Statements" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrower or Holdings, as the case may be, delivered in accordance with Section
3.4 and Annex E.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower.
"Fiscal Year" shall mean any of the 52 or 53-week annual
accounting periods of Borrower ending on the Friday nearest June 30 of each
year.
"Fixtures" shall mean all "fixtures," as such term is defined
in the Code, now owned or hereafter acquired by any Person, wherever located.
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"Funded Debt" shall mean, with respect to any Person, without
duplication, all Indebtedness of such Person for borrowed money evidenced by
notes, bonds, debentures or similar evidences of Indebtedness that 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 Lease
Obligations, 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 Borrower, the Obligations and, without duplication,
Guaranteed Indebtedness consisting of guaranties of Funded Debt of other
Persons.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, consistently applied, as such term is further
defined in Annex G to the Agreement.
"GE Capital" shall mean General Electric Capital Corporation,
a Delaware corporation.
"General Intangibles" shall mean all "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any Person,
including all right, title and interest that such Person may now or hereafter
have in or under any Contracts, Licenses, Copyrights, Trademarks, Patents,
websites, domain names, and all applications therefor and reissues, extensions
or renewals thereof, interests in partnerships, joint ventures and other
business associations, permits, inventions (whether or not patented or
patentable), knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, Goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated and
certificated securities, choses in action, deposit, checking and other bank
accounts, rights to receive tax refunds and other payments, rights to receive
dividends, distributions, cash, instruments and other property in respect of or
in exchange for pledged shares or other equity interests, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Person or any computer
bureau or service company from time to time acting for such Person.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Person, wherever located, including embedded Software
to the extent included in "goods" as defined in the Code.
"Goodwill" shall mean all goodwill, trade secrets, proprietary
or confidential information, technical information, procedures, formulae,
quality control standards, designs, operating and training manuals, customer
lists, and other General Intangibles now or hereafter owned or acquired by any
Person.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising
A-12
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) indemnify the owner of such
primary obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser at
such time of (x) the stated or determinable amount of the primary obligation in
respect of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.
"Guaranties" shall mean, collectively, the Ireland Guarantee
and Debenture and the UK Guarantee and Debenture, and any other guaranty
executed by any Guarantor in favor of Agent and Lenders in respect of the
Obligations.
"Guarantors" shall mean each of WD UK, WD IS, WD Fremont and
Holdings, and each other Person, if any, that executes a guaranty or other
similar agreement in favor of Agent, for the benefit of Co-Agents and Lenders,
in connection with the transactions contemplated by the Agreement and the other
Loan Documents.
"Hazardous Material" shall mean any substance, material or
waste that is regulated by, or forms the basis of liability now or hereafter
under, any Environmental Laws, including any material or substance that is (a)
defined as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" shall mean Western Digital Corporation, a Delaware
corporation formerly known as Western Digital Holdings, Inc.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred six months or
more, but excluding obligations to trade creditors (including commission
payments) incurred in the ordinary course of business that are not unsecured and
overdue by more than six months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit, bankers'
acceptances and
A-13
surety bonds, whether or not matured, (c) all obligations evidenced by notes,
bonds, debentures or similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all Capital Lease Obligations and
the present value (discounted at the Index Rate as in effect on the Closing
Date) of future rental payments under all synthetic leases, (f) all obligations
of such Person under commodity purchase or option agreements or other commodity
price hedging arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to
it in Section 1.13.
"Index Rate" shall mean, for any day, a floating rate equal to
the higher of (a) the rate publicly quoted from time to time by The Wall Street
Journal as the "prime rate" (or, if The Wall Street Journal ceases quoting a
prime rate of the type described, the highest per annum rate of interest
published by the Federal Reserve Board in Federal Reserve statistical release
H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (b) the Federal Funds Rate plus 50 basis points per annum. Each
change in any interest rate provided for in the Agreement based upon the Index
Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or any portion thereof
bearing interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including all certificated securities, all certificates of deposit, and
all notes and other evidences of indebtedness, other than instruments that
constitute, or are a part of a group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses,
Patents, Copyrights, Trademarks and the Goodwill associated with any of the
foregoing.
"Intellectual Property Collateral" shall mean all of the
right, title and interest of any Credit Party, whether presently existing or
hereafter arising or acquired, in, to and under the following:
(a) each Patent owned and Patent application filed by
such Person;
(b) each Patent License to which such Person is a party
(or the assignee of a party);
A-14
(c) each Trademark owned and Trademark application filed
by such Person;
(d) each Trademark License to which such Person is a
party (or the assignee of a party);
(e) each Copyright owned and Copyright application filed
by such Person;
(f) each Copyright License to which such Person is a
party;
(g) the Goodwill associated with each Trademark and
Trademark application, and each of such Person's Trademarks licensed
under any Trademark License; and
(h) all Proceeds of the foregoing, including (i) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable
to any Person from time to time with respect to any of the foregoing,
(ii) any and all payments (in any form whatsoever) made or due and
payable to any Person from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the foregoing by any Governmental Authority (or any
Person acting under color of Governmental Authority), (iii) any claim
of any Person against third parties for (A) past, present or future
infringement of any Patent or Patent License, (B) past, present or
future infringement of any Copyright, Copyright License, (C) past,
present or future infringement or dilution of any Trademark or
Trademark License, or (D) injury to the Goodwill associated with any
Trademark or Trademark License, (iv) any recoveries by any Person
against third parties with respect to any litigation or dispute
concerning any of the foregoing, and (v) any and all other amounts from
time to time paid or payable under or in connection with any of the
foregoing, upon disposition or otherwise.
"Intercompany Note" shall mean a demand note to evidence
intercompany Indebtedness owing at any time by any Credit Party or any
Subsidiary of any Credit Party in favor of Borrower, each of which Intercompany
Notes shall be in form and substance satisfactory to each Co-Agent and pledged
and delivered to Agent pursuant to the Pledge Agreement as additional collateral
security for the Obligations.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person, but excluding the accrual of interest under the
Subordinated Debt, if any.
"Interest Rate Protection Agreement" means (a) any and all
rate swap transactions, basis swaps, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such
A-15
transaction is governed by or subject to any master agreement, or (b) any and
all transactions of any kind, and the related confirmations, that are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Associations, Inc., or any
other master agreement (any such master agreement, together with any related
schedules, as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, a "Master Agreement"), including any such obligations
or liabilities under any such Master Agreement.
"Interest Payment Date" shall mean (a) as to any Index Rate
Loan, the first Business Day of each month to occur while such Index Rate Loan
is outstanding, and (b) as to any LIBOR Loan, the last day of the applicable
LIBOR Period; provided, that in addition to the foregoing, each of (x) the date
upon which all of the Revolving Loan Commitments have been terminated and the
Loans have been paid in full and (y) the Commitment Termination Date shall be
deemed to be an "Interest Payment Date" with respect to any interest that has
then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including inventory, merchandise, goods and other personal property
that are held by or on behalf of such Person for sale or lease or are furnished
or are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Person's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies and
embedded software.
"Investment Property" shall mean any "investment property," as
such term is defined in the Code, now owned or hereafter acquired by any Person,
wherever located, including (a) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares, (b) all securities entitlements of such Person, including
the rights of such Person to any securities account and the financial assets
held by a securities intermediary in such securities account and any free credit
balance or other money owing by any securities intermediary with respect to such
account, (c) all securities accounts of such Person, (d) all commodity contracts
held by such Person, and (e) all commodity accounts held by such Person.
"IRC" shall mean the Internal Revenue Code of 1986 and any
regulations promulgated thereunder.
"Ireland Guarantee and Debenture" shall mean that certain All
Assets Guarantee and Debenture dated as of September 20, 2000, entered into by
WD IS in favor of Agent, in its capacity as Security Trustee on behalf of
Beneficiaries, as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof.
"Ireland Share Charge" shall mean that certain Charge Over
Shares dated as of September 20, 2000, entered into by WD IS in favor of Agent,
in its capacity as Security Trustee
A-16
on behalf of Beneficiaries, as the same may be amended, supplemented, restated
or otherwise modified from time to time in accordance with the terms thereof.
"IRS" shall mean the Internal Revenue Service.
"L/C Issuer" shall have the meaning assigned to it in Annex B.
"L/C Sublimit" shall have the meaning assigned to it in Annex
B.
"Lenders" shall mean GE Capital, Bank of America, N.A., The
CIT Group/Business Credit, Inc., and the other Lenders named on the signature
pages of the Agreement and, if any such Lender shall decide to assign all or any
portion of the Obligations, any assignee of such Lender.
"Letter of Credit Fee" shall have the meaning assigned to it
in Annex B.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in Annex B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount that
may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letter-of-Credit-Rights" means all "letter-of-credit rights,"
as such term is defined in the Code, now owned or hereafter acquired by any
Person, including rights to payment or performance under a letter-of-credit,
whether or not such Person, as beneficiary, has demanded or is entitled to
demand payment or performance.
"Letters of Credit" shall mean commercial or standby letters
of credit issued for the account of Borrower by any L/C Issuer, and bankers'
acceptances issued by Borrower, for which Agent and Lenders have incurred Letter
of Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks
in the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower pursuant to
the Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period
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into another calendar month in which event such LIBOR Period shall end
on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond
the Commitment Termination Date shall end two LIBOR Business Days prior
to such date;
(c) any LIBOR Period that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than five separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of
interest determined by Agent equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period that appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the second full LIBOR Business
Day preceding the first day of such LIBOR Period (unless such date is
not a Business Day, in which event the next succeeding Business Day
will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is two LIBOR Business
Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board) that are required to be maintained by a member bank of the
Federal Reserve System.
If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Agent and Borrower.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Person.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or
A-18
agreement to give, any financing statement perfecting a security interest under
the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section
3.13.
"Lloyds Guarantee" shall mean the Lloyds TSB Bank Plc
guarantee issued to HM Customs & Excise.
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the
Collateral Documents and all other agreements, instruments, documents and
certificates identified in the Schedule of Documents executed and delivered to,
or in favor of, any Co-Agent or any Lender and including all other pledges,
powers of attorney, consents, assignments, contracts, notices, letter of credit
agreements and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to any Co-Agent or any Lender in connection with the
Agreement or the transactions contemplated thereby and any "Loan Documents" (as
such term is defined in the Existing Credit Agreement) that are not being
amended and restated or canceled in connection with the transactions
contemplated hereby,. Any reference in the Agreement or any other Loan Document
to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto,
and shall refer to such Agreement or Loan Document as the same may be in effect
at any and all times such reference becomes operative.
"Loans" shall mean the Revolving Loan, the Swing Line Loan and
the Term Loan.
"Lock Boxes" shall have the meaning assigned to it in Annex C.
"Margin Stock" shall have the meaning assigned to it in
Section 3.10.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations or financial condition of the Credit
Parties and their Subsidiaries considered as a whole, (b) Borrower's or any
Guarantor's ability to pay any of the Loans or any of the other Obligations in
accordance with the terms of the Agreement, (c) the Collateral or Agent's Liens,
on behalf of Co-Agents and Lenders, on the Collateral or the priority of such
Liens, or (d) Agent's or any Lender's rights and remedies under the Agreement
and the other Loan Documents.
"Maximum Amount" shall mean, at the time any determination
thereof is to be made, the amount at such time equal to the Revolving Loan
Commitments of all Lenders.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 1.5(f).
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making, is
A-19
obligated to make, or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date of
determination, the lesser of (a) the Maximum Amount and (b) the Borrowing Base,
in each case less the sum of the Revolving Loan, the Swing Line Loan and the
Term Loan then outstanding.
"Non-Funding Lender" shall have the meaning assigned to it in
Section 9.9(a)(ii).
"Notes" shall mean, collectively, the Revolving Notes, the
Swing Line Note and the Term Notes.
"Notice of Conversion/Continuation" shall have the meaning
assigned to it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations for the performance of covenants, tasks or duties or
for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
any Credit Party to any Co-Agent or any Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement, letter of credit agreement or other
instrument, arising under the Agreement or any of the other Loan Documents. This
term includes all principal, interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Credit Party in
bankruptcy, whether or not allowed in such case or proceeding), Fees, Charges,
expenses, attorneys' fees, all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products, and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Overseas Security Documents" shall mean the Ireland Guarantee
and Debenture, the Ireland Share Charge, the UK Guarantee and Debenture, the UK
Share Charge, and the Security Trust Deed.
"Pacifica" shall mean Pacifica Insurance Corporation, a Hawaii
corporation.
"Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by any Person granting any right with respect to
any invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or of any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any
A-20
territory thereof, or any other country, and (b) all reissues, continuations,
continuations-in-part, divisions or extensions thereof.
"Patent, Trademark and Copyright Security Agreement" shall
mean the Patent, Trademark and Copyright Security Agreement made in favor of
Agent, on behalf of Co-Agents and Lenders, by each applicable Credit Party.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean a Plan described in Section 3(2) of
ERISA.
"Permitted Acquisition" shall have the meaning assigned to it
in Section 6.1.
"Permitted Credit Party Transactions" shall mean intercompany
loans, advances or investments made by Borrower to any Credit Party or any
Subsidiary of any Credit Party (other than the Excluded Subsidiaries), so long
as (a) each such Credit Party or Subsidiary shall have executed and delivered to
Borrower, on the Closing Date, an Intercompany Note to evidence all such loans
and advances; (b) Borrower shall record all such loans, advances and investments
on its books and records in a manner satisfactory to each Co-Agent; (c) at the
time of any such loan, advance or investment, and after giving effect thereto,
Borrower shall be Solvent; (d) no Default or Event of Default would occur and be
continuing after giving effect to any such loan, advance or investment; and (e)
the aggregate amount of such loans, advances and investments to all such Credit
Parties and Subsidiaries shall not exceed $**** in any Fiscal Year.
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable; (b) pledges or deposits of money securing statutory
obligations under workmen's compensation, unemployment insurance, social
security or public liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to which any Credit
Party is a party as lessee made in the ordinary course of business; (d) inchoate
and unperfected workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to Equipment, Fixtures or
Real Estate; (e) carriers', warehousemen's, suppliers' or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $1,000,000 at
any time, so long as such Liens do not attach to any Credit Party's Accounts;
(f) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (g) any attachment or judgment
lien not constituting an Event of Default under Section 8.1(j); (h) zoning
restrictions, easements, licenses, or other restrictions on the use of any Real
Estate or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) Liens existing on the Closing Date and
listed in Disclosure Schedule (6.7); (j) presently existing or hereafter created
Liens in favor of Agent, on behalf of Co-Agents and Lenders; (k) Liens created
after the Closing Date by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money Indebtedness
with respect to Equipment and Fixtures acquired by any Credit Party in the
ordinary course of business, involving the incurrence of an aggregate amount of
purchase money Indebtedness and Capital Lease Obligations of not more than $****
outstanding at any one time
A-21
* Material has been omitted pursuant to a request for confidential treatment.
for all such Liens (provided that such Liens attach only to the assets subject
to such purchase money debt and such Indebtedness is incurred within 20 days
following such purchase and does not exceed 100% of the purchase price of the
subject assets); (l) Liens on insurance proceeds in favor of insurance companies
granted solely as security for financed premiums; (m) bankers' rights of offset;
and (n) inchoate and unperfected Liens of landlords of Borrower's Real Estate.
"Permitted Foreign Bank Accounts" shall have the meaning
assigned to it in Annex C.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean, at any time, an "employee benefit plan," as
defined in Section 3(3) of ERISA, that any Credit Party or any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to, or has
maintained, contributed to or had an obligation to contribute to at any time
within the last seven years on behalf of participants who are or were employed
by any Credit Party or any ERISA Affiliate.
"Private Offering" shall mean the sale of Borrower's Stock in
a private equity sale, made in compliance with all applicable laws and
regulations.
"Proceeds" shall mean "proceeds," as such term is defined in
the Code, including (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Person from time to time with respect to any
of the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Person from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Person against third parties (i)
for past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the Goodwill
associated with any Trademark or Trademark License, (any recoveries by any
Person against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.
"Projections" shall mean Borrower's forecasted consolidated:
(a) balance sheets; (b) profit and loss statements; and (c) cash flow
statements, consistent with the historical Financial Statements of Borrower,
together with appropriate supporting details and a statement of underlying
assumptions.
A-22
"Pro Rata Share" shall mean, with respect to all matters
relating to any Lender, (a) at all times prior to the Commitment Termination
Date, (i) with respect to the Revolving Loan, the percentage obtained by
dividing (A) the Revolving Loan Commitment of that Lender by (B) the aggregate
Revolving Loan Commitments of all Lenders, (ii) with respect to the Term Loan,
the percentage obtained by dividing (A) the Term Loan Commitment of that Lender
by (B) the aggregate Term Loan Commitments of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9.1,
(iii) with respect to all Loans, the percentage obtained by dividing (A) the
aggregate Commitments of that Lender by (B) the aggregate Commitments of all
Lenders, and (b) at all times on and after the Commitment Termination Date, the
percentage obtained by dividing (i) the aggregate outstanding principal balance
of the Loans held by such Lender, by (ii) the outstanding principal balance of
the Loans held by all Lenders.
"Public Offering" shall mean a firm underwritten public
offering of common stock registered on form S-1, S-2 or S-3 under the Securities
Act by a nationally-recognized investment banking firm and after giving effect
to which the issuer shall be qualified for listing on the NASDAQ National
Market, the American Stock Exchange or the New York Stock Exchange.
"Qualified Account Debtor" shall mean each of Compaq Computer
Corporation, Dell Computer Corporation, Flextronics International Ltd., Gateway,
Inc., Ingram Micro Inc., Tech Data Corporation, and Synnex Information
Technologies, Inc.
"Qualified Plan" shall mean a Pension Plan that is intended to
be tax-qualified under Section 401(a) of the IRC.
"Read-Rite" shall have the meaning assigned to it in the
recitals to the Agreement.
"Read-Rite International" shall have the meaning assigned to
it in the recitals to the Agreement.
"Read-Rite Purchase Agreement" shall have the meaning assigned
to it in the recitals to the Agreement.
"Real Estate" shall have the meaning assigned to it in Section
3.6.
"Refunded Swing Line Loan" shall have the meaning assigned to
it in Section 1.1(c)(iii).
"Related Transactions" shall mean the initial borrowing under
the Revolving Loan and the Term Loan on the Closing Date and the payment of all
fees, costs and expenses associated with all of the foregoing and the execution
and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" shall mean the Loan Documents
and all other documents executed in connection with the Related Transactions.
A-23
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" shall mean Lenders having (a) more than
sixty-six and two-thirds percent (66-2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated, more than sixty-six and two-thirds
percent (66-2/3%) of the aggregate outstanding amount of all of the Loans.
"Requisite Revolving Lenders" shall mean Lenders having (a)
more than sixty-six and two-thirds percent (66-2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, more than sixty-six and two-thirds percent (66-2/3%) of the
aggregate outstanding amount of the Revolving Loan.
"Reserves" shall mean, with respect to the Borrowing Base of
Borrower, (a) reserves established pursuant to Section 5.4(c), and (b) such
other reserves against Eligible Accounts or Borrowing Availability of Borrower
that Agent may, in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, (i) the Dilution Reserve, (ii)
the UK Reserve, (iii) a Reserve in the amount of any Charges, Taxes or claims
being contested by any Credit Party in accordance with the provisions of Section
5.2, to the extent Agent reasonably believes that nonpayment or nondischarge
thereof could reasonably be expected to result in a Material Adverse Effect, and
(iv) other Reserves established to ensure the payment of accrued Interest
Expenses or Indebtedness where the failure to pay the same could reasonably be
expected to result in a Material Adverse Effect, shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"Restricted Payment" shall mean, with respect to any Person:
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of such Person's Stock; (b) any payment on account of the
purchase, redemption, defeasance, sinking fund or other retirement of such
Person's Stock or any other payment or distribution made in respect thereof,
either directly or indirectly; (c) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with respect to, and
any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to, any Subordinated Debt of
such Person; (d) any payment made to redeem, purchase, repurchase or retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire Stock of such Person now or hereafter outstanding; (e) any payment of a
claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Person's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Person other than payment of compensation in the ordinary course to
Stockholders who are employees of such Person; and (g) any payment of management
fees (or other fees of a similar nature) by such Person to any Stockholder of
such Person or its Affiliates.
A-24
"Retiree Welfare Plan" shall mean, at any time, a Welfare Plan
that provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of
determination, Lenders having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time, (a) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (b) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" shall mean (a) as to any Revolving
Lender, the aggregate commitment of such Revolving Lender to make Revolving
Credit Advances (including without duplication Swing Line Advances as a subset
of such commitment of the Swing Line Lender) or incur Letter of Credit
Obligations as set forth in Annex J or in the most recent Assignment Agreement
executed by such Revolving Lender and (b) as to all Revolving Lenders, the
aggregate commitment of all Revolving Lenders to make Revolving Credit Advances
(including without duplication Swing Line Advances as a subset of such
commitment of the Swing Line Lender) or incur Letter of Credit Obligations,
which aggregate commitment shall be One Hundred and Twenty-Five Million Dollars
($125,000,000) on the Closing Date, as such amount may be adjusted, if at all,
from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in
Section 1.1(a)(ii).
"Schedule of Documents" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Securities Act" shall mean the provisions of the Securities
Act of 1933, 15 U.S.C. Sections 77a et seq.
"Securities Exchange Act" shall mean the provisions of the
Securities Exchange Act of 1934, 15 U.S.C. Sections 78a et seq.
"Security Agreement" shall mean the Security Agreement dated
as of September 20, 2000, entered into by and among Agent, on behalf of
Co-Agents and Lenders, and each Credit Party signatory thereto, as amended by
the First Amendment to Security Agreement dated as of September 26, 2001, and
the Second Amendment to Security Agreement of even date herewith and as the same
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms thereof.
A-25
"Security Trust Deed" shall mean that certain Security Trust
Deed dated as of September 20, 2000, entered into between Borrower, WD IS and WD
UK (as Obligors), Agent (acting in its capacity as Agent and as the Security
Trustee), and the Beneficiaries, as the same may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof.
"Security Trustee" shall mean GE Capital, in its capacity as
Security Trustee for Beneficiaries, or its successor appointed in accordance
with the terms of the Security Trust Deed.
"Software" means all "software," as such term is defined in
the Code, now owned or hereafter acquired by any Person, other than software
embedded in any category of goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date: (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person; (b) the present fair salable value of the assets of
such Person 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 or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership 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 Securities and Exchange Commission under the
Securities Exchange Act).
"Stockholder" shall mean, with respect to any Person, each
holder of Stock of such Person.
"Subordinated Debt" shall mean any Indebtedness of any Credit
Party subordinated to the Obligations in a manner and form satisfactory to Agent
and Lenders in their sole discretion, as to right and time of payment and as to
any other rights and remedies thereunder.
"Subordinated Indenture" shall mean the Indenture dated as of
February 18, 1998, between Borrower, as Issuer, and State Street Bank and Trust
Company of California, N.A., as Trustee, as amended by the First Supplemental
Indenture dated as of April 6, 2001, by and among Borrower, Holdings, and State
Street Bank and Trust Company of California, N.A., as Trustee.
A-26
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person shall
have an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Supermajority Revolving Lenders" shall mean Lenders having
(a) 80% or more of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, 80% or more of the aggregate
outstanding amount of the Revolving Loan (with the Swing Line Loan being
attributed to the Lender making such Loan) and Letter of Credit Obligations.
"Supporting Obligations" means all "supporting obligations" as
such term is defined in the Code, now owned or hereafter acquired by any Person,
including letters of credit and guaranties issued in support of Accounts,
Chattel Paper, Documents, General Intangibles, Instruments or Investment
Property.
"Swing Line Advance" shall have the meaning assigned to it in
Section 1.1(c)(i).
"Swing Line Availability" shall have the meaning assigned to
it in Section 1.1(c)(i).
"Swing Line Commitment" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Advances as
set forth in Annex J, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean at any time, the aggregate amount
of Swing Line Advances outstanding to Borrower.
"Swing Line Note" shall have the meaning assigned to it in
Section 1.1(c)(ii).
"Target" shall have the meaning assigned to it in Section 6.1.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of any Co-Agent or any Lender by the
jurisdictions under the laws of which such Co-Agent or Lenders are organized or
conduct business or by any political subdivision thereof.
A-27
"Termination Date" shall mean the date on which (a) the Loans
have been indefeasibly repaid in full, (b) all other Obligations under the
Agreement and the other Loan Documents have been completely discharged, (c)
Letter of Credit Obligations have been terminated, replaced, guaranteed or cash
collateralized in accordance with Annex B, and (d) Borrower shall not have any
further right to borrow any monies under the Agreement.
"Term Lenders" means those Lenders having Term Loan
Commitments.
"Term Loan" has the meaning assigned to it in Section
1.1(b)(i).
"Term Loan Commitment" means (a) as to any Lender with a Term
Loan Commitment, the commitment of such Lender to make its Pro Rata Share of the
Term Loan as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan Commitment, the aggregate commitment of all Lenders to make the Term
Loan, which aggregate commitment shall be Fifty Million Dollars ($50,000,000) on
the Closing Date. After advancing the Term Loan, each reference to a Lender's
Term Loan Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan.
"Term Note" has the meaning assigned to it in Section
1.1(b)(i).
"Title IV Plan" shall mean a Pension Plan (other than a
Multiemployer Plan) that is covered by Title IV of ERISA and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to, or has maintained, contributed to or had an obligation to
contribute to at any time within the last seven years, on behalf of participants
who are or were employed by any of them.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Person granting any right to
use any Trademark.
"Trademarks" shall mean all of the following now owned or
existing or hereafter adopted or acquired by any Person: (a) all trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
extensions or renewals thereof; and (c) all goodwill associated with or
symbolized by any of the foregoing.
"UK Guarantee and Debenture" shall mean that certain Composite
Guarantee and Debenture dated as of September 20, 2000, entered into by WD UK in
favor of Agent, in its capacity as Security Trustee on behalf of Beneficiaries,
as the same may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms thereof.
A-28
"UK Reserve" shall mean the Reserve maintained from time to
time against the Borrowing Availability and the Net Borrowing Availability in an
amount equal to the sum of (a) the aggregate amount of any preferential debts
(of the types listed in Schedule 6 to the Insolvency Act 1986 (in the case of WD
UK) or Section 285 of the Companies Act 1963 (in the case of WD IS), or any
statutory re-enactment or modification thereof pursuant to which the payment of
certain obligations of a Person are given statutory preference over the payment
of other such obligations) of WD UK and WD IS that would, pursuant to the
provisions of any law relating to liquidation, bankruptcy, insolvency or
creditors' rights generally, be paid in priority or preference to other
Indebtedness in a winding up, dissolution, administration, insolvency,
examination, or other similar process of law in any jurisdiction, and (b) until
such time as the Lloyds Guarantee has been replaced by a Letter of Credit issued
by a Lender or guaranteed by Agent in accordance with Annex B, the amount of the
Lloyds Guarantee.
"UK Share Charge" shall mean that certain Charge Over Shares
dated as of September 20, 2000, entered into by WD UK in favor of Agent, in its
capacity as Security Trustee on behalf of Beneficiaries, as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five years following a transaction that might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Uniform Commercial Code jurisdiction" means any jurisdiction
that had adopted all or substantially all of Article 9 as contained in the 2000
Official Text of the Uniform Commercial Code, as recommended by the National
Conference of Commissioners on Uniform State Laws and the American Law
Institute, together with any subsequent amendments or modifications to the
Official Text.
"WD BPI" shall mean Western Digital (BangPa-In) Company,
Limited, a corporation organized under the laws of Thailand formerly known as
Read-Rite (Thailand) Co., Ltd.
"WD Fremont" shall mean Western Digital (Fremont), Inc., a
Delaware corporation formerly known as RR(US) Acquisition Corporation.
"WD IS" shall mean Western Digital (I.S.) Limited.
"WD Korea" shall mean Western Digital Korea, Ltd., a
corporation organized under the laws of the Republic of Korea.
"WD Latin America" shall mean Western Digital Latin America,
Inc., a Delaware corporation.
A-29
"WD Malaysia" shall mean WD (Malaysia) Sdn. Bhd., a
corporation organized under the laws of Malaysia.
"WD Thailand" shall mean Western Digital (Thailand) Company
Limited, a corporation organized under the laws of Thailand.
"WD UK" shall mean Western Digital (UK) Limited.
"Welfare Plan" shall mean a Plan described in Section 3(1) of
ERISA.
Rules of construction with respect to accounting terms used in
the Agreement or any of the other Loan Documents shall be as set forth in Annex
G. All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code to the extent the same are used or defined therein. Unless otherwise
specified, references in the Agreement or any of the Appendices to a section,
subsection or clause refer to such section, subsection or clause as contained in
the Agreement provided, that in the event that any term is defined differently
in different Articles or Divisions of the Code, the definition thereof contained
in Article or Division 9 shall control. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; all references to
statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations; and all references to agreements and
other contractual instruments (including each of the Loan Documents) shall be
deemed to include all subsequent amendments, supplements, restatements or other
modifications thereto, but only to the extent that such amendments, supplements,
restatements or other modifications are not prohibited by the terms of any Loan
Document. Whenever any provision in any Loan Document refers to the knowledge
(or an analogous phrase) of any Credit Party, such words are intended to signify
that such Credit Party has actual knowledge or awareness of a particular fact or
circumstance or that such Credit Party, if it had exercised reasonable
diligence, would have known or been aware of such fact or circumstance.
A-30
ANNEX B (SECTION 1.2)
TO
AMENDED AND RESTATED CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued (by a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an "L/C Issuer")) for
Borrower's account and guaranteed by Agent; provided, that if the L/C Issuer is
a Revolving Lender, then such Letters of Credit shall not be guaranteed by Agent
but rather each Revolving Lender shall, subject to the terms and conditions
hereinafter set forth, purchase (or be deemed to have purchased) risk
participations in all such Letters of Credit issued with the written consent of
Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount
of all such Letter of Credit Obligations shall not at any time exceed the least
of (i) Thirty-Five Million Dollars ($35,000,000) (the "L/C Sublimit"), (ii) the
Maximum Amount less the aggregate outstanding principal balance of the Revolving
Credit Advances, the Swing Line Loan and the Term Loan, and (iii) the Borrowing
Base less the aggregate outstanding principal balance of the Revolving Credit
Advances, the Swing Line Loan and the Term Loan. No such Letter of Credit shall
have an expiry date that is more than one year following the date of issuance
thereof, and neither Agent nor Revolving Lenders shall be under any obligation
to incur Letter of Credit Obligations in respect of, or purchase risk
participations in, any Letter of Credit having an expiry date that is later than
the Commitment Termination Date unless otherwise determined by Agent, in its
sole discretion.
(b) Advances Automatic; Participations.
(i) In the event that Agent or any Revolving
Lender shall make any payment on or pursuant to any Letter of Credit Obligation,
such payment shall then be deemed automatically to constitute a Revolving Credit
Advance under Section 1.1(a) regardless of whether a Default or Event of Default
shall have occurred and be continuing and notwithstanding Borrower's failure to
satisfy the conditions precedent set forth in Section 2, and each Revolving
Lender shall be obligated to pay its Pro Rata Share thereof in accordance with
the Agreement. The failure of any Revolving Lender to make available to Agent
for Agent's own account its Pro Rata Share of any such Revolving Credit Advance
or payment by Agent under or in respect of a Letter of Credit shall not relieve
any other Revolving Lender of its obligation hereunder to make available to
Agent its Pro Rata Share thereof, but no Revolving Lender shall be responsible
for the failure of any other Revolving Lender to make available such other
Revolving Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for
Borrower to incur Revolving Credit Advances as contemplated by paragraph (b)(i)
above because of an Event of Default described in Sections 8.1(h) or (i) or
otherwise or if it shall be illegal or unlawful for any Revolving Lender to be
deemed to have assumed a ratable share of the reimbursement
B-1
obligations owed to an L/C Issuer, or if the L/C Issuer is a Revolving Lender,
then (A) immediately and without further action whatsoever, each Revolving
Lender shall be deemed to have irrevocably and unconditionally purchased from
Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such Revolving Lender's Pro Rata Share (based on the
Revolving Loan Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (B) thereafter, immediately upon
issuance of any Letter of Credit, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation in such Revolving Lender's
Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations with respect to such Letter of Credit on the date of such issuance.
Each Lender shall fund its participation in all payments or disbursements made
under the Letters of Credit in the same manner as provided in the Agreement with
respect to Revolving Credit Advances.
(c) Cash Collateral.
(i) If Borrower is required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement,
including Section 8.2, prior to the Commitment Termination Date, Borrower will
pay to Agent for the ratable benefit of Co-Agents and Revolving Lenders cash or
cash equivalents acceptable to Agent ("Cash Equivalents") in an amount equal to
105% of the maximum amount then available to be drawn under each applicable
Letter of Credit outstanding. Such funds or Cash Equivalents shall be held by
Agent in a cash collateral account (the "Cash Collateral Account") maintained at
a bank or financial institution acceptable to Agent. The Cash Collateral Account
shall be in the name of Borrower and shall be pledged to, and subject to the
control of, Agent, for the benefit of Co-Agents and Lenders, in a manner
satisfactory to Agent. Borrower hereby pledges and grants to Agent, on behalf of
Co-Agents and Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time and all
proceeds thereof as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Obligations, whether or not then due.
The Agreement, including this Annex B, shall constitute a security agreement
under applicable law.
(ii) If any Letter of Credit Obligations, whether
or not then due and payable, shall for any reason be outstanding on the
Commitment Termination Date, Borrower shall either (A) provide cash collateral
therefor in the manner described above, (B) cause all such Letters of Credit and
guaranties thereof to be canceled and returned, or (C) deliver a stand-by letter
(or letters) of credit in guarantee of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration (plus
30 additional days) as, and in an amount equal to 105% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.
(iii) From time to time after funds are deposited
in the Cash Collateral Account by Borrower, whether before or after the
Commitment Termination Date, Agent may apply such funds or Cash Equivalents then
held in the Cash Collateral Account to the payment of any amounts, and in such
order as Agent may elect, as shall be or shall become due and payable
B-2
by Borrower to Lenders with respect to such Letter of Credit Obligations of
Borrower and, upon the satisfaction in full of all Letter of Credit Obligations
of Borrower, to any other Obligations then due and payable.
(iv) Neither Borrower nor any Person claiming on
behalf of or through Borrower shall have any right to withdraw any of the funds
or Cash Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent or Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations, any remaining amount
shall be paid to Borrower or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be held as additional Collateral.
(d) Fees and Expenses. Borrower agrees to pay (i) to
Agent for the benefit of Revolving Lenders, as compensation to such Lenders for
Letter of Credit Obligations incurred hereunder, (A) all costs and expenses
incurred by Agent or any Lender on account of such Letter of Credit Obligations,
and (B) for each month during which any Letter of Credit Obligation shall remain
outstanding, a Fee (the "Letter of Credit Fee") in an amount equal to the
Applicable L/C Margin from time to time in effect multiplied by the daily
average of the maximum amount available from time to time to be drawn under the
applicable Letter of Credit during such month, which Fee shall be paid to Agent
for Co-Agents and the ratable benefit of the Revolving Lenders in arrears, on
the first day of each month and on the Commitment Termination Date, and (ii) to
any L/C Issuer, on demand, such fees (including all per annum fees), charges and
expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.
(e) Request for Incurrence of Letter of Credit
Obligations. Borrower shall give Agent at least two Business Days' prior written
notice requesting the incurrence of any Letter of Credit Obligation, specifying
the date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary to which such Letter of Credit Obligation relates and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) to be guaranteed and, to the extent not previously delivered to
Agent, copies of all agreements between Borrower and the L/C Issuer pertaining
to the issuance of Letters of Credit. Notwithstanding anything contained herein
to the contrary, Letter of Credit applications by Borrower and approvals by
Agent and the L/C Issuer may be made and transmitted pursuant to electronic
codes and security measures mutually agreed upon and established by and among
Borrower, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to
reimburse Agent and Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances, including the following:
B-3
(i) any lack of validity or enforceability of
any Letter of Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, setoff, defense
or other right that Borrower or any of its Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such transferee may be acting), Agent, any
Lender, or any other Person, whether in connection with the Agreement, the
Letter of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary for which the Letter of Credit was
procured);
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any
Letter of Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of such Letter
of Credit or such guaranty;
(v) any other circumstance or event whatsoever
that is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere
provided in the Agreement, Borrower hereby agrees to pay and to protect,
indemnify, and save harmless Agent and each Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including attorneys' fees and allocated costs of internal counsel) that Agent
or any Lender may incur or be subject to as a consequence, direct or indirect,
of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the
failure of Agent or any Lender seeking indemnification or of any L/C Issuer to
honor a demand for payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in each case
other than to the extent solely as a result of the gross negligence or willful
misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agent and any Lender and
Borrower, Borrower assumes all risks of the acts and omissions of, or misuse of
any Letter of Credit by, beneficiaries of any Letter of Credit. In furtherance
and not in limitation of the foregoing, to the fullest extent permitted by law,
neither Agent nor any Lender shall be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or
B-4
assign any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or ineffective for
any reason; (C) failure of the beneficiary of any Letter of Credit to comply
fully with conditions required in order to demand payment under such Letter of
Credit; provided, that in the case of any payment by Agent under any Letter of
Credit or guaranty thereof, Agent shall be liable to the extent such payment was
made solely as a result of its gross negligence or willful misconduct (as
finally determined by a court of competent jurisdiction) in determining that the
demand for payment under such Letter of Credit or guaranty thereof complies on
its face with any applicable requirements for a demand for payment under such
Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they may be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the transmission or
otherwise of any document required in order to make a payment under any Letter
of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the
proceeds of any drawing under any Letter of Credit or guaranty thereof; and (H)
any consequences arising from causes beyond the control of Agent or any Lender.
None of the above shall affect, impair, or prevent the vesting of any of Agent's
or any Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to
limit or to expand any waivers, covenants or indemnities made by Borrower in
favor of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between Borrower and such
L/C Issuer.
B-5
ANNEX C (SECTION 1.8)
TO
AMENDED AND RESTATED CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the cash management system described below:
(a) On or before the Closing Date and until the
Termination Date, each of Borrower and each Guarantor (other than Holdings)
shall (i) establish lock boxes ("Lock Boxes") at one or more of the banks set
forth in Disclosure Schedule (3.19), and shall request in writing and otherwise
take such reasonable steps to ensure that all Account Debtors forward payment
directly to such Lock Boxes, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all cash, checks, drafts or other similar items of payment relating to
or constituting payments made in respect of any and all Collateral (whether or
not otherwise delivered to a Lock Box) into one or more bank accounts in
Borrower's name or any such Subsidiary's name (each, a "Borrower Account" and
collectively, the "Borrower Accounts") at a bank identified in Disclosure
Schedule (3.19) as a bank at which such Borrower Accounts are maintained (each,
a "Relationship Bank"). On or before the Closing Date, each of Borrower and each
Guarantor (other than Holdings) shall have established a concentration account
in its name (the "Concentration Account") at the bank that shall be designated
as the Concentration Account bank for Borrower in Disclosure Schedule (3.19)
(the "Concentration Account Bank"), which bank shall be satisfactory to
Co-Agents.
(b) Borrower and each Guarantor (other than Holdings) may
maintain, in its name, one or more accounts (each, a "Disbursement Account" and
collectively, the "Disbursement Accounts") at a bank acceptable to Agent into
which Agent shall, from time to time, deposit proceeds of Revolving Credit
Advances and Swing Line Advances made to Borrower pursuant to Section 1.1 for
use by Borrower solely in accordance with the provisions of Section 1.4;
provided, that at no time shall Borrower or any Guarantor (other than Holdings)
maintain deposits in excess of US$**** in any Disbursement Account located
outside of the United States; provided, that the foregoing limitation shall not
apply to deposits maintained in the Disbursement Accounts identified on Appendix
I to this Annex C (collectively, the "Permitted Foreign Bank Accounts").
Borrower and each Guarantor (other than Holdings) shall not accumulate or
maintain cash in any Disbursement Account located in the United States and at a
bank other than Bank of America, as of any date of determination in excess of
checks outstanding against such account as of such date.
(c) On or before the Closing Date (or such later date as
Agent shall consent to in writing), the Concentration Account Bank, the bank
where the Disbursement Account is maintained and all other Relationship Banks
shall have entered into tri-party blocked account agreements with Agent, for the
benefit of Co-Agents and Lenders, and Borrower and Subsidiaries thereof, as
applicable, in form and substance acceptable to Agent, which shall become
operative on or prior to the Closing Date. Each such blocked account agreement
shall provide, among other things, that (i) all items of payment deposited in
such account and proceeds
C-1
* Material has been omitted pursuant to a request for confidential treatment.
thereof deposited in the Concentration Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of Co-Agents and Lenders, (ii) the
bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date (A) with respect to banks at which a Borrower Account is
maintained, such bank agrees, from and after the receipt of a notice (an
"Activation Notice") from Agent (which Activation Notice may be given by Agent
at any time at which (1) a Default or Event of Default shall have occurred and
be continuing, (2) Agent reasonably believes based upon information available to
it that a Default or an Event of Default is likely to occur, (3) Agent
reasonably believes that an event or circumstance that is likely to have a
Material Adverse Effect has occurred, (4) Borrower and its Subsidiaries (other
than the Excluded Subsidiaries) have Available Liquidity of less than $****, or
(5) Agent reasonably has grounds to question the integrity of Borrower's Cash
Management System or Borrower's compliance with the provisions of this Annex C
or any other provisions of the Loan Documents to the extent related to such Cash
Management System (any of the foregoing being referred to herein as an
"Activation Event")), to forward immediately all amounts in each Borrower
Account to the Concentration Account Bank and to commence the process of daily
sweeps from such Borrower Account into the Concentration Account and (B) with
respect to the Concentration Account Bank, such bank agrees from and after the
receipt of an Activation Notice from Agent upon the occurrence of an Activation
Event, to immediately forward all amounts received in the Concentration Account
to the Collection Account through daily sweeps from such Concentration Account
into the Collection Account. From and after the date Agent has delivered an
Activation Notice to any bank with respect to any Borrower Account(s), Borrower
and each Guarantor (other than Holdings) shall not, and shall not cause or
permit any Subsidiary thereof to, accumulate or maintain cash in the
Disbursement Accounts or payroll accounts as of any date of determination in
excess of checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.
(d) So long as no Default or Event of Default shall have
occurred and be continuing, Borrower and each Guarantor (other than Holdings)
may amend Disclosure Schedule (3.19) to add or replace a Relationship Bank, Lock
Box or Borrower Account or to replace any Concentration Account or the
Disbursement Account; provided, that (i) Agent shall have consented in writing
in advance to the opening of such account or Lock Box with the relevant bank and
(ii) prior to the time of the opening of such account or Lock Box, Borrower and
each Guarantor (other than Holdings), as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance satisfactory to Agent. Each of Borrower and each Guarantor (other
than Holdings) shall close any of its accounts (and establish replacement
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days following notice from Agent that the creditworthiness of any bank
maintaining an account is no longer acceptable in Agent's reasonable judgment,
or as promptly as practicable and in any event within 60 days following notice
from Agent that the operating performance, funds transfer or availability
procedures or performance with respect to accounts or Lock Boxes of the bank
maintaining such accounts or Agent's liability under any tri-party blocked
account agreement with such bank is no longer acceptable in Agent's reasonable
judgment.
C-2
* Material has been omitted pursuant to a request for confidential treatment.
(e) The Lock Boxes, Borrower Accounts, Disbursement
Account and the Concentration Account shall be cash collateral accounts, with
all cash, checks and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which Borrower and each
Guarantor (other than Holdings) shall have granted a Lien to Agent, on behalf of
Co-Agents and Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall
be deemed received by Agent in accordance with Section 1.10 and shall be applied
(and allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Each of Borrower and each Guarantor (other than
Holdings) shall and shall cause its respective Affiliates (other than Holdings),
officers, employees, agents, directors or other Persons acting for or in concert
with Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of Co-Agents and Lenders, all checks, cash and other items of payment
received by Borrower, such Guarantor or any such other Related Person, and (ii)
within one Business Day after receipt by Borrower, such Guarantor or any such
other Related Person of any checks, cash or other items of payment, deposit the
same into a Borrower Account. Borrower, on behalf of itself, each Guarantor and
each other Related Person, acknowledges and agrees that all cash, checks or
other items of payment constituting proceeds of Collateral are the Collateral of
Agent and Lenders. All proceeds of the sale or other disposition of any
Collateral shall be deposited directly into Borrower Accounts.
C-3
APPENDIX I
WESTERN DIGITAL (UK) LIMITED WESTERN DIGITAL (IS) LIMITED
Fleet (BankBoston) Ulster Bank
39 Victoria Street 54 South Mall
London, England Cork, Ireland
STG payments **** Euro Payments ****
US$ receipts ****
Ulster Bank
Lloyds Bank PLC 33 College Green
64 High Street Dublin, Ireland
Epson, England
US$ receipts ****
STG payments ****
C-4
* Material has been omitted pursuant to a request for confidential treatment.
ANNEX D (SECTION 2.1(a))
TO
AMENDED AND RESTATED CREDIT AGREEMENT
SCHEDULE OF DOCUMENTS
[attached]
D-1
ANNEX E (SECTION 4.1(a))
TO
AMENDED AND RESTATED CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Each of Borrower and Holdings shall deliver or cause to be
delivered to Agent or to Co-Agents and Lenders, as indicated, the following:
(h) Monthly Financials. To Co-Agents and Lenders, within
30 days after the end of each Fiscal Month, financial information regarding
Borrower and its Subsidiaries on a consolidated and consolidating basis and
Holdings and its Subsidiaries on a consolidated basis consisting of: (i)
unaudited balance sheets as of the close of such Fiscal Month and the related
statements of income for that portion of the Fiscal Year ending as of the close
of such Fiscal Month; (ii) unaudited statements of income for such Fiscal Month,
prepared in accordance with GAAP (subject to normal quarterly and year-end
adjustments and consolidation adjustments made by Borrower in accordance with
past practices); and (iii) a summary of the outstanding balance of all
Intercompany Notes as of the last day of such Fiscal Month. Such financial
information shall be accompanied by a statement from the Chief Financial Officer
or Treasurer of Borrower that (A) such financial information presents fairly in
accordance with GAAP (subject to normal quarterly and year-end adjustments and
consolidation adjustments made by Borrower in accordance with past practices)
the financial position and results of operations of Borrower and its
Subsidiaries, on a consolidated basis, in each case as at the end of such Fiscal
Month and for that portion of the Fiscal Year ending as of the end of such
Fiscal Month, and (B) any other information presented is true, correct and
complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default.
(i) Quarterly Financials. To Co-Agents and Lenders,
within 45 days after the end of each Fiscal Quarter, consolidated financial
information regarding Borrower and its Subsidiaries and Holdings and its
Subsidiaries, including (i) unaudited balance sheets as of the close of such
Fiscal Quarter and the related statements of cash flows (solely with respect to
Holdings and its Subsidiaries) and income for that portion of the Fiscal Year
ending as of the close of such Fiscal Quarter and (ii) unaudited statements of
cash flows (solely with respect to Holdings and its Subsidiaries) and income for
such Fiscal Quarter, in each case setting forth in comparative form the figures
for the corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments and consolidation adjustments made by Borrower in
accordance with past practices). Such financial information shall be accompanied
by (A) a statement in reasonable detail (each, a "Compliance Certificate")
showing the calculations used in determining compliance with each of the
financial covenants set forth in Annex G that is tested on a quarterly basis
(regardless of whether such covenants are being tested in accordance with the
terms of Section 6.10), and (B) a statement prepared in reasonable detail from
the Chief Financial Officer or Treasurer of Borrower that (1) such financial
information presents fairly in accordance with GAAP (subject to normal year-end
adjustments and consolidation adjustments
E-1
made by Borrower in accordance with past practices) the financial position and
results of operations of Borrower and its Subsidiaries, on a consolidated basis,
as at the end of such Fiscal Quarter and for that portion of the Fiscal Year
ending as of the end of such Fiscal Quarter, and (2) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrower shall deliver to Agent and Lenders, within 45 days after the
end of each Fiscal Quarter, a management discussion and analysis that includes a
comparison to budget for that Fiscal Quarter and a comparison of performance for
that Fiscal Quarter to the corresponding period in the prior year.
(j) Operating Plan. To Co-Agents and Lenders, as soon as
available, but not later than 30 days after the end of each Fiscal Year, an
annual operating plan for Borrower, approved by the Board of Directors of
Borrower, for the following year, which will (i) include a statement of all of
the material assumptions on which such plan is based, (ii) include quarterly
balance sheets and a quarterly budget for the following Fiscal Year and (iii)
integrate sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections, all prepared on the same
basis and in similar detail as that on which operating results are reported (and
in the case of cash flow projections, representing management's good faith
estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities.
(k) Annual Audited Financials. To Co-Agents and Lenders,
within 90 days after the end of each Fiscal Year, audited Financial Statements
for Holdings and its Subsidiaries on a consolidated basis, consisting of balance
sheets and statements of income and retained earnings and cash flows, setting
forth in comparative form in each case the figures for the previous Fiscal Year,
which Financial Statements shall be prepared in accordance with GAAP and audited
without qualification by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) a report from such accounting firm to the effect
that, in connection with their audit examination, nothing has come to their
attention to cause them to believe that a Default or Event of Default has
occurred with respect to the Financial Covenants (or specifying those Defaults
and Events of Default that they became aware of), it being understood that such
audit examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (ii) the annual letters from Holdings and its agents and
representatives to such accountants in connection with such audit examination
detailing contingent liabilities and material litigation matters, and (iii) the
statement from the Chief Executive Officer or Chief Financial Officer of
Holdings that all such Financial Statements present fairly in accordance with
GAAP the financial position and results of operations of Holdings and its
Subsidiaries on a consolidated basis, as at the end of such Fiscal Year and for
the period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default.
(l) Management Letters. To Co-Agents and Lenders, within
five Business Days after receipt thereof by any Credit Party, and subject to the
approval of such Credit Party's independent certified public accounts (which
approval such Credit Party shall use its best efforts
E-2
to obtain), copies of all management letters, exception reports or similar
letters or reports received by such Credit Party from such independent certified
public accountants.
(m) Default Notices. To Co-Agents and Lenders, as soon as
practicable, and in any event within five Business Days after an executive
officer of Borrower has actual knowledge of the existence of any Default, Event
of Default or other event that has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day.
(n) SEC Filings and Press Releases. To Co-Agents and
Lenders, promptly upon their becoming available, copies of: (i) all Financial
Statements, reports, notices and proxy statements made publicly available by any
Credit Party to its security holders; (ii) all regular and periodic reports and
all registration statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority; and (iii) all press releases
and other statements made available by any Credit Party to the public concerning
material adverse changes or developments in the business of any such Person.
(o) Subordinated Debt and Equity Notices. To Agent, as
soon as practicable, copies of all material written notices given or received by
any Credit Party with respect to any Subordinated Debt or Stock of such Person,
and, within two Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Subordinated Debt,
notice of such event of default.
(p) Supplemental Schedules. To Agent, supplemental
disclosures, if any, required by Section 5.6.
(q) Litigation. To Agent in writing, promptly upon
learning thereof, notice of any Litigation commenced or threatened against any
Credit Party or any Subsidiary of any Credit Party that (i) seeks damages in
excess of $2,500,000, (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or against any Credit
Party or ERISA Affiliate in connection with any Plan, (iv) alleges criminal
misconduct by any Credit Party or any Subsidiary of any Credit Party, (v)
alleges the violation of any law regarding, or seeks remedies in connection
with, any Environmental Liabilities, or (vi) involves any product recall.
(r) Insurance Notices. To Agent, disclosure of losses or
casualties required by Section 5.4.
(s) Lease Default Notices. To Agent, within five Business
Days after Agent's request, copies of (i) any and all default notices received
under or with respect to any leased location or public warehouse where
Collateral is located in the United States, (ii) monthly within three Business
Days after payment thereof, evidence of payment of lease or rental payments as
to each leased or rented location for which a landlord or bailee waiver has not
been obtained, and (iii) such other notices or documents as Agent may request in
its reasonable discretion.
(t) Lease Amendments. To Agent, within five Business Days
after receipt thereof by any Credit Party, copies of all material amendments to
real estate leases.
E-3
(u) Hedging Agreements. To Agent within five Business
Days after Agent's request, copies of all interest rate, commodity or currency
hedging agreements or amendments thereto.
(v) Other Documents. To Co-Agents and Lenders, such other
financial and other information respecting any Credit Party's or any Subsidiary
of any Credit Party's business or financial condition as any Co-Agent or any
Lender shall, from time to time, reasonably request.
E-4
ANNEX F (SECTION 4.1(b))
TO
AMENDED AND RESTATED CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(w) Upon the request of Agent and in any event no later
than the tenth Business Day of each Fiscal Month (together with a copy of all or
any part of the following reports requested by any Lender in writing after the
Closing Date), each of which shall be prepared by Borrower as of the last day of
the immediately preceding Fiscal Month or such other period as may be requested
by Agent:
(i) a Borrowing Base Certificate with respect to
each Credit Party, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion;
(ii) with respect to each Credit Party, a summary
of Inventory by location and type with a supporting perpetual Inventory
report, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion;
(iii) with respect to each Credit Party, a monthly
trial balance showing Accounts outstanding aged from invoice due date
as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or
more, accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion; and
(iv) reports with respect to the roll-forward of
each Credit Party's Accounts, including all additions and reductions
(cash and non-cash) with respect thereto, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent
in its reasonable discretion.
(x) To Agent, at the time of delivery of each of the
quarterly Financial Statements delivered pursuant to Annex E, a reconciliation
of the Accounts trial balance and month-end Inventory reports of Borrower to
Borrower's general ledger and monthly Financial Statements delivered pursuant to
Annex E, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(y) To Agent, at the time of delivery of each of the
quarterly or annual Financial Statements delivered pursuant to Annex E, a
listing of government contracts of Borrower subject to the Federal Assignment of
Claims Act of 1940;
(z) To Agent, at the time of delivery of the Financial
Statements delivered at the end of (i) each Fiscal Year and (ii) the second
Fiscal Quarter of each Fiscal Year, a list of any applications for the
registration of any Patent, Trademark or Copyright filed by any Credit Party
F-1
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in the prior Fiscal Quarter;
(aa) Borrower, at its own expense, shall deliver to Agent
the results of each physical verification, if any, that Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default shall have occurred and be continuing, Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(bb) Borrower, at its own expense, shall deliver to Agent
such appraisals of its assets as Agent may request at any time after the
occurrence and during the continuance of a Default or an Event of Default, such
appraisals to be conducted by an appraiser, and in form and substance,
satisfactory to Agent; and
(cc) Such other reports, statements and reconciliations
with respect to the Borrowing Base or Collateral of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion.
F-2
ANNEX G (SECTION 6.10)
TO
AMENDED AND RESTATED CREDIT AGREEMENT
FINANCIAL COVENANTS
So long as (a) there are any outstanding Revolving Credit
Advances or Letter of Credit Obligations (excluding Letters of Credit (i) for
bank guarantees issued on behalf of WD UK, (ii) to support Borrower's
replacement real estate lease for its headquarters location, (iii) posted in the
approximate amount of $25,200,000 in satisfaction of the writs of attachment
obtained by Cirrus Logic, Inc. against Borrower and WD Malaysia, and (iv) to
support other corporate purposes acceptable to Co-Agents in an aggregate
outstanding amount not to exceed $****), (b) (i) as of the end of September
2003, Borrower and its Subsidiaries (other than Excluded Subsidiaries) shall
have Available Liquidity of less than $****, or (ii) as of the end of any March,
June, September or December of each year (other than September 2003), Borrower
and its Subsidiaries (other than Excluded Subsidiaries) shall have Available
Liquidity of less than $****, or (c) as of the end of any month other than
March, June, September or December of each year, Borrower and its Subsidiaries
(other than Excluded Subsidiaries) shall have Available Liquidity of less than
$****, then Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower and its
Subsidiaries (other than the Excluded Subsidiaries) on a consolidated basis
shall not make aggregate Capital Expenditures, at the end of each Fiscal Quarter
set forth below for the 12-month period then ended (or with respect to the
Fiscal Quarters ending on or before July 2, 2004, for the period commencing on
June 28, 2003, and ending on the last day of such Fiscal Quarter) that exceed
the respective amounts set forth opposite such periods:
Maximum Capital
Period Ending On Expenditures
- ---------------- ---------------
September 26, 2003 $****
December 26, 2003 $****
March 26, 2004 $****
July 2, 2004 $****
September 24, 2004 $****
December 24, 2004, and the end of each
Fiscal Quarter thereafter $****
provided; that, beginning with 12-month period ending as of the end of the 2004
Fiscal Year (i.e., July 2, 2004), and for each 12-month period that ends as of
the end of a subsequent Fiscal Year, to the extent that the maximum capital
expenditure amount identified above (the "Maximum Capital Expenditure") for any
such Fiscal Year (i.e., Year 1) exceeds the amount of Capital Expenditures
actually made by Borrower and such Subsidiaries during such Fiscal Year (such
excess being the "Excess Amount"), then the amount of permitted Capital
Expenditures for each period above that ends during the immediately succeeding
Fiscal Year (i.e., Year 2) will be
G-1
* Material has been omitted pursuant to a request for confidential treatment.
increased by the positive amount (the "Carry Over Amount") equal to (i) the
lesser of (A) the Excess Amount and (B) 25% of the amount of the Maximum Capital
Expenditure for such Fiscal Year (i.e., Year 1), minus (ii) that portion of the
Excess Amount, if any, expended during a previous period during such succeeding
Fiscal Year. For purposes of measuring compliance herewith, the Carry Over
Amount shall be deemed to be the last amount spent on Capital Expenditures in
any Fiscal Quarter.
(b) Minimum EBITDA. Borrower and its Subsidiaries (other
than the Excluded Subsidiaries) on a consolidated basis shall have, at the end
of each Fiscal Quarter set forth below, EBITDA for the 12-month period then
ended (or with respect to the Fiscal Quarters ending on or before July 2, 2004,
for the period commencing on June 28, 2003, and ending on the last day of such
Fiscal Quarter) of not less than the following:
Period Ending On EBITDA
- ---------------- ------
September 26, 2003 $****
December 26, 2003 $****
March 26, 2004 $****
July 2, 2004 $****
September 24, 2004 $****
December 24, 2004, and the end of each
Fiscal Quarter thereafter $****
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, that the agreement of Requisite Lenders to any required amendments of
such provisions shall be sufficient to bind all Lenders. "Accounting Changes"
means (i) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion of the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or any
successor thereto or any agency with similar functions); (ii) changes in
accounting principles concurred in by Borrower's certified public accountants;
(iii) purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and
the application of the accounting principles set forth in FASB 109, including
the establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (iv) the reversal of any reserves
established as a result of purchase accounting adjustments. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period. If Agent, Borrower
and
G-2
* Material has been omitted pursuant to a request for confidential treatment.
Requisite Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP consistently applied after giving effect to the
implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.
G-3
ANNEX H (SECTION 9.9(a)(i))
TO
AMENDED AND RESTATED CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
If to GE Capital, at:
Bank Name: ****
Location: ****
Account Name: *****
Account Number: *****
ABA Number: *****
Reference: ****
If to Bank of America, at:
Bank Name: ****
Location: ****
Account Name: *****
Account Number: *****
ABA Number: *****
Reference: ****
If to The CIT Group/Business Credit, Inc., at:
Bank Name: ****
Location: ****
Account Name: *****
Account Number: *****
ABA Number: *****
Reference: ****
H-1
* Material has been omitted pursuant to a request for confidential treatment.
List of Omitted Annexes, Exhibits and Schedules
The following additional annexes, exhibits and schedules to the Credit Agreement
have been omitted and will be furnished to the Commission upon request:
<Table>
Annex I - Notice Addresses
Annex J - Commitments as of the Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Agent Representative
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Officers; Collateral Locations; FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Material Agreements
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.6 - Guaranteed Indebtedness
Disclosure Schedule 6.7 - Existing Liens