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EXHIBIT 10.38.3
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THIRD AMENDMENT
TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
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Third Amendment dated as of July 30, 1999 to Revolving Credit and Term
Loan Agreement (the "Third Amendment"), by and among WESTERN DIGITAL
CORPORATION, a Delaware corporation (the "Borrower") and BANKBOSTON, N.A. and
the other lending institutions listed on Schedule 1 to the Credit Agreement (as
hereinafter defined) (the "Banks"), amending certain provisions of the Revolving
Credit and Term Loan Agreement dated as of November 4, 1998 (as amended and in
effect from time to time, the "Credit Agreement") by and among the Borrower, the
Banks, BankBoston, N.A. as agent for the Banks (in such capacity, the "Agent")
and The CIT Group/Business Credit, Inc. as co-agent for the Banks. Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, the Borrower and the Banks have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this Third
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. AMENDMENT TO SECTION 1 OF THE CREDIT AGREEMENT. Section 1.1
of the Credit Agreement is hereby amended by inserting the following definition
in the appropriate alphabetical order:
Irvine Property Disposition. The sale by the Borrower pursuant
to and in compliance with Section 10.5.2 hereof of that portion of its
real estate located in Irvine, California to The Irvine Company or any
of its affiliates pursuant to an Agreement for the Conveyance of
Property dated as of August 3, 1999 between the Borrower and The Irvine
Company, which Agreement for the Conveyance of Property shall be in
form and substance reasonably satisfactory to the Agent, for a cash
purchase price of approximately $26,500,000.
SECTION 2. AMENDMENT TO SECTION 4 OF THE CREDIT AGREEMENT. Section 4 of
the Credit Agreement is hereby amended by deleting Section 4.6.2 in its entirety
and restating it as follows:
Section 4.6.2. Proceeds of Asset Sales and Equity Issuances.
In the event the Borrower or any of its Subsidiaries receives any (a)
Net Cash Sale Proceeds from any Asset Sale permitted by Section 10.5.2
or otherwise consented to in writing by the Agent and the Majority
Banks (or, in the event such a sale constitutes a sale of all or
substantially all of the Collateral, then all the Banks) (other than
(i) Net Cash Sale Proceeds from the sale of equipment or inventory
which are to be reinvested by the Borrower or such Subsidiary within
ninety (90) days of receipt thereof in replacement assets for those
assets sold; (ii) Net Cash Sale Proceeds from any Komag Stock Sale
and/or the proceeds received by the Borrower as a result of the
repayment by Komag, Incorporated of any amounts
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owing the Borrower under the promissory note delivered by Komag,
Incorporated to the Borrower in connection with the Komag Disposition
(the "Komag Note"), provided that immediately after giving effect to
any such Komag Stock Sale or the receipt of proceeds on the Komag Note,
as the case may be, the Borrower's Excess Availability is not less than
$75,000,000; and (iii) Net Cash Sale Proceeds from the Irvine Property
Disposition) and the aggregate amount of all Net Cash Sale Proceeds
exceeds $2,500,000 or (b) Net Cash Proceeds from any Equity Issuances
by the Borrower or any of its Subsidiaries after the Closing Date
(other than Net Cash Proceeds from any Equity Issuance by the Borrower
so long as (i) no Default or Event of Default has occurred and is
continuing; (ii) immediately after giving effect to any such Equity
Issuance, the Borrower's Excess Availability is not less than
$75,000,000 and (iii) the aggregate amount of all such Net Cash
Proceeds received by the Borrower which are not used to prepay the Term
Loan does not exceed $150,000,000), the Borrower shall, immediately
upon receipt thereof, or, in the case of Net Cash Sale Proceeds which
are to be reinvested in replacement assets, ninety (90) days after
receipt thereof if such proceeds are not so reinvested within such 90
days, make a prepayment of principal on the Term Loan in the amount of
such proceeds (or, in the case of Net Cash Sale Proceeds required to be
repaid, in the amount which exceeds $2,500,000), with such payment
being applied against the scheduled installments of principal due on
the Term Loan in the inverse order of maturity.
SECTION 3. AMENDMENT TO SECTION 10 OF THE CREDIT AGREEMENT. Section
10.5.2 of the Credit Agreement is hereby amended by deleting Section 10.5.2 in
its entirety and restating it as follows:
Section 10.5.2. Disposition of Assets. The Borrower will not,
and will not permit any of its Subsidiaries to, become a party to or
agree to or effect any disposition of assets, other than the
disposition of assets in the ordinary course of business, consistent
with past practices; provided, however, so long as no Default or Event
of Default shall have occurred and is continuing or would exist after
giving effect thereto, (a) the Borrower shall be permitted to (i) enter
into a sale and leaseback arrangement in respect of the real property
located in Rochester, Minnesota in an arms-length transaction for fair
and reasonable value; (ii) consummate the Irvine Property Disposition,
provided, the Net Cash Sale Proceeds received by the Borrower on the
date of the consummation of such disposition is not less than
$25,000,000 in the aggregate; (iii) consummate the Komag Disposition;
and (iv) consummate any Komag Stock Sale, provided, in the case of any
Komag Stock Sale, the total amount of the consideration received by the
Borrower for each share of the Komag, Incorporated capital stock sold
by the Borrower equals such capital stock's fair market value as
determined as of the date of such sale; and (b) each Subsidiary shall
be permitted, as the transferor, to enter into any disposition with any
other Subsidiary which is expressly permitted by Section 10.5.1(b)(ii)
and (iii).
Notwithstanding anything to the contrary contained in this
Section 10.5.2, (a) the Borrower and its Subsidiaries shall not be
permitted to dispose of any assets or take (or omit to take) any action
in connection with any asset sale or other disposition or engage in any
other transaction which action (or omission) would require any
repayment, repurchase or redemption (or any mandatory offer to repay,
repurchase or redeem) by the Borrower or any of its Subsidiaries of the
Subordinated Notes or any other Subordinated Debt pursuant to the
Subordinated Indenture or any other Subordinated Debt Document prior to
the
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repayment in full in cash of all the Obligations and the termination in
full of the Total Commitment, or would violate the provisions of the
Subordinated Indenture or similar agreement; (b) the Borrower shall not
directly or indirectly sell or otherwise dispose of all or
substantially all of its assets; and (c) except as expressly permitted
in this Section 10.5.2, neither the Borrower nor its Subsidiaries shall
sell or otherwise dispose of all or substantially all of the capital
stock of any Person which is a Guarantor or is an entity the capital
stock of which is pledged under the Loan Documents by the Borrower or
any Guarantor, except for transfers to the Borrower or another
Guarantor (with each such transfer to the Borrower or another Guarantor
to be subject to the Agent's security interest therein for the benefit
of the Agent and the Banks).
SECTION 4. CONDITIONS TO EFFECTIVENESS. This Third Amendment shall not
become effective until the Agent receives a counterpart of this Third Amendment,
executed by the Borrower, the Guarantors and the Banks.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby repeats,
on and as of the date hereof, each of the representations and warranties made by
it in Section 8 of the Credit Agreement, and such representations and warranties
remain true as of the date hereof (except to the extent of changes resulting
from transactions contemplated or permitted by the Credit Agreement and the
other Loan Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse, and to the extent
that such representations and warranties relate expressly to an earlier date),
provided, that all references therein to the Credit Agreement shall refer to
such Credit Agreement as amended hereby. In addition, the Borrower hereby
represents and warrants that the execution and delivery by the Borrower and its
Subsidiaries of this Third Amendment and the performance by the Borrower and its
Subsidiaries of all of its agreements and obligations under the Credit Agreement
as amended hereby and the other Loan Documents are within the corporate
authority of each the Borrower and its Subsidiaries and has been duly authorized
by all necessary corporate action on the part of the Borrower and its
Subsidiaries.
SECTION 6. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement, the Security Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. The Credit Agreement and this Third
Amendment shall be read and construed as a single agreement. All references in
the Credit Agreement or any related agreement or instrument to the Credit
Agreement shall hereafter refer to the Credit Agreement as amended hereby.
SECTION 7. NO WAIVER. Nothing contained herein shall constitute a
waiver of, impair or otherwise affect any Obligations, any other obligation of
the Borrower or any rights of the Bank Agents or the Banks consequent thereon.
SECTION 8. COUNTERPARTS. This Third Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
SECTION 9. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
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IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as a document under seal as of the date first above written.
WESTERN DIGITAL CORPORATION
By: /s/ STEVEN M. SLAVIN
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Title: Vice President, Taxes and Treasurer
BANKBOSTON, N.A.
By:
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Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
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Title:
HELLER FINANCIAL, INC.
By:
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Title:
FLEET CAPITAL CORPORATION
By:
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Title:
FINOVA CAPITAL CORPORATION
By:
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Title:
LASALLE BUSINESS CREDIT, INC.
By:
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Title:
FREMONT FINANCIAL CORPORATION
By: /s/ CHERI BUCKINGHAM
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Cheri Buckingham
Title: Vice President
FLEET BUSINESS CREDIT CORPORATION
(f/k/a SANWA BUSINESS CREDIT CORP.)
By:
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Title:
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RATIFICATION OF GUARANTY
The undersigned guarantors hereby acknowledges and consents to the
foregoing Third Amendment as of July 30, 1999, and agrees that the Guarantee
dated as of November 4, 1998 from WD UK and the Guaranty dated as of February
12, 1999 from Connex, Inc. in favor of the Agent and each of the Banks remains
in full force and effect, and each Guarantor confirms and ratifies all of its
obligations thereunder.
CONNEX, INC.
By: /s/ A. KEITH PLANT
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A. Keith Plant
Title: President
WESTERN DIGITAL (U.K.) LIMITED
By: /s/ MICHAEL A. CORNELIUS
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Michael A. Cornelius
Title: Assistant Secretary
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