Exhibit 10.31
TERM LOAN AGREEMENT
This Term Loan Agreement ("Agreement") is entered into as of June 26, 1996
by and between Lam Research Co., Ltd., a Japanese corporation ("Borrower"), and
The Sakura Bank, Limited, a Japanese banking corporation ("Lender"). The
parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS, CONSTRUCTION AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have the
same meaning when used in the plural and vice versa):
"Affiliate" means, with respect to any Person (i) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of any class of Equity
Securities of such Person; (ii) each Person that controls, is controlled by or
is under common control with such Person or any Affiliate of such person; or
(iii) each of such Person's officers, directors, joint venturers and partners;
provided, however, that in no case shall Lender be deemed to be an Affiliate of
Borrower, Guarantor or any Guarantor Subsidiary for purposes of this Agreement.
For the purpose 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.
"Agreement" means this Term Loan Agreement, as amended, supplemented, or
modified from time to time.
"Business Day" means any day other than a Saturday, Sunday, or other day on
which commercial lenders in Tokyo, Japan, are authorized or required to close.
"Capital Asset" means, with respect to any Person, any tangible fixed or
capital asset owned or leased (in the case of a Capital Lease) by such Person,
or any expense incurred by such Person that is required by GAAP to be reported
as a non-current asset on such Person's balance sheet.
"Capital Expenditures means, with respect to any Person and any period, all
amounts expended and indebtedness incurred or assumed by such Person during such
period for the acquisition of Capital Assets (including all amounts expended and
indebtedness incurred or assumed in connection with Capital Leases).
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"Capital Leases" means any and all lease obligations that, in accordance
with GAAP, are required to be capitalized on the books of a lessee.
"Change of Control" means (i) the acquisition of beneficial ownership by
any "person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, of a direct or indirect interest in
more than thirty-three percent (33%) of the voting power of the then outstanding
capital stock of Guarantor; (ii) a merger or consolidation of Guarantor with any
other Person or the merger of any other Person into Guarantor or any other
transaction, as a result of which the stockholders of Guarantor immediately
prior to such transaction own, in the aggregate, less than a majority of the
voting power of the outstanding capital stock of the surviving or resulting
entity; or (iii) the first day on which a majority of the members of the Board
of Directors of Guarantor are not Continuing Directors. A "Continuing Director"
shall mean any director of the Board of Directors of Guarantor who is either (a)
a member of such Board of Directors on the Closing Date, or (b) nominated or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or elections.
"Closing Date" means June 28, 1996 or such other date as may be mutually
agreed to by Lender and Borrower.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and published interpretations thereof.
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with Guarantor within the meaning of Section
414(b) or 414(c) of the Code.
"Contingent Obligation" means, with respect to any Person, without
duplication (i) any Guaranty Obligation of that Person; and (ii) any direct or
indirect obligation or liability, contingent or otherwise, of that Person (a) in
respect of any letters of credit, acceptances, bank guaranties, surety bonds or
similar instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, (b) as a partner or
joint venturer in any partnership or joint venture, or (c) incurred pursuant to
any interest rate swap, currency swap, forward, cap, floor or other similar
contract that is not entered into in connection with a bona fide hedging
operation that provides offsetting benefits to such Person. The amount of any
Contingent Obligation shall (subject, in the case of Guaranty Obligations, to
the last sentence of the definition of "Guaranty Obligation") be deemed equal to
the maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" of any Person means, any indenture, note, lease,
loan agreement, security, deed of trust, mortgage, security agreement, guaranty,
instrument, contract, agreement or other form of contractual obligation or
undertaking to which such Person is a party or by which such Person or any of
its property is bound.
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"Default" means any of the events specified in Section 7.1, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Environmental Laws" means all Requirements of Law relating to the
protection of human health and the environment, including, without limitation,
all Requirements of Law, pertaining to reporting, licensing, permitting,
transportation, storage, disposal, investigation, and remediation of emissions,
discharges, releases, or threatened releases of Hazardous Materials, chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials or wastes, whether solid, liquid, or gaseous in nature, into the air,
surface water, groundwater, or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
chemical substances, pollutants, contaminants, or hazardous or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature.
"Equity Securities" means (i) all common stock, preferred stock,
participations, shares, partnership interests or other equity interests in and
of such Person (regardless of how designated and whether or not voting or non-
voting); and (ii) all warrants, options and other rights to acquire any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"Event of Default" means any of the events specified in Section 7.1,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Financial Statements" mean, with respect to any accounting period for any
Person, statements of income, shareholders' equity and cash flows of such Person
for such period, and a balance sheet of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.
"Fixed Rate" means three and one-one hundredth percent (3.01%) per annum.
"Funded Debt" of any Person means, without duplication, all Indebtedness of
such Person as described in clauses (i) -(iv) of the definition of Indebtedness.
"GAAP" means generally accepted accounting principles in the United States;
provided, however, with respect to Borrower "GAAP" means generally accepted
accounting principles in Japan.
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"Governmental Authority" means any domestic or foreign national, state or
local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any central bank or
comparable authority.
"Governmental Charges" means, with respect to any Person, all levies.
assessments, fees, claims or other charges imposed by any Governmental Authority
upon such Person or any of its property or otherwise payable by such Person.
"Governmental Rule" means any law, rule, regulation, ordinance, order, code
interpretation, judgment, decree, directive, guidelines, policy or similar form
of decision of any Governmental Authority.
"Guarantor" means Lam Research Corporation, a Delaware corporation.
"Guarantor Subsidiary" means any Subsidiary of Guarantor; provided,
however, for purposes of this definition only, Borrower shall not be included
within the definition of Guarantor Subsidiary but Borrower's Subsidiaries shall
be included within such definition.
"Guaranty" means that certain Continuing Guaranty dated as June 26, 1996
executed by Guarantor for the benefit of Lender, as amended from time to time in
accordance with its terms, which shall be satisfactory to Lender in all
respects.
"Guaranty Obligation" means, with respect to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person, whether or not
contingent (i) to purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect security therefor;
(ii) to advance or provide funds (a) for the payment or discharge of any such
primary obligation, or (b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor; or (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any primary obligation of the ability of the
primary obligor to make payment of such primary obligation; or (iv) otherwise to
assure or hold harmless the holder of any such primary obligation against loss
in respect thereof. The amount of any Guaranty Obligation shall be deemed equal
to the stated or determinable amount of the primary obligation in respect of
which such Guaranty Obligation is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect thereof.
"Indebtedness" of any Person means, without duplication:
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(i) All obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments and all other
obligations of such Person for borrowed money;
(ii) All obligations of such Person for the deferred
purchase price of property or services (including obligations under
credit facilities which secure or finance such purchase price and
obligations under synthetic leases), other than trade payables
incurred by such Person in the ordinary course of its business on
ordinary terms;
(iii) All obligations of such Person under conditional sale or
other title retention agreements with respect to property acquired by
such Person (to the extent of the value of such property if the rights
and remedies of the seller or lender under such agreement in the event
of default are limited solely to repossession or sale of such
property);
(iv) All obligations of such Person as lessee under or with
respect to Capital Leases;
(v) All obligations of such Person with respect to accounts
receivable and related rights and property sold, assigned or
transferred by such Person with recourse to such Person;
(vi) All Contingent Obligations of such Person; and
(vii) All Indebtedness of other Persons of the types described
in clauses (i) - (vi) above to the extent secured by (or for which any
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien in any property (including
accounts and contract rights) of such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness.
"Interest Payment Date" means the 28th day of June, September, December and
March commencing with the 28th day of September, 1996; provided, however, if any
Interest Payment Date would end on a day other than a Business Day, such
Interest Payment Date shall be extended to the succeeding Business Day.
"Interest Rate Funding Costs" means, with respect to any prepayment of the
Loan pursuant to Section 2.5, the amount (if any) by which (i) the interest
that would have been payable on the principal amount prepaid had it not been
paid until the applicable Principal Payment Date(s) determined in accordance
with Section 2.5(b) (computing such interest at a rate equal to the Fixed Rate
less seven tenths of one percent per annum); exceeds (ii) the interest that
would have been recoverable by Lender by placing the principal amount prepaid on
deposit in the certificate of deposit market or such other investment market on
which the Fixed Rate was originally determined by Lender (or any comparable
market if such certificate of deposit market or other investment market is no
longer available to Lender), for a period starting on the
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date on which the principal amount was prepaid and ending on the applicable
Principal Payment Date(s) determined in accordance with Section 2.5(b).
"Japan Development Bank Indebtedness" has the meaning set forth in Section
2.8.
"Lending Office" means the Principal Office of Lender or such other office
of Lender (or of an affiliate of Lender) as Lender may from time to time specify
to Borrower as the office at which the Loan is to be made and maintained.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"Loan" has the meaning set forth in Section 2.1 of this Agreement.
"Loan Document(s)" means this Agreement, the Note, the Guaranty and all
other documents, agreements or instruments executed by Borrower or Guarantor in
connection with this Agreement, the Note or the Loan.
"Loan Fee" has the meaning set forth in Section 2.6 of this Agreement.
"Loan Maturity Date" means June 28, 2001, or if June 28, 2001 is not a
Business Day, the preceding Business Day.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations or financial condition of Borrower and Guarantor
(determined on a consolidated basis); (ii) the ability of Borrower or Guarantor
to pay or perform any of its obligations under any of the Loan Documents to
which it is a party; or (iii) the rights and remedies of Lender under this
Agreement or any of the other Loan Documents.
"Material Subsidiary" means any Guarantor Subsidiary whose (i) total assets
exceed ten percent (10%) of the consolidated total assets of Guarantor, Borrower
and the Guarantor Subsidiaries at any time; or (ii) gross revenues exceed five
percent (5%) of the consolidated gross revenues of Guarantor, Borrower and the
Guarantor Subsidiaries at any time.
"Multiemployer Plan" means any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by Guarantor or any Commonly
Controlled Entity.
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"Note" means that certain Promissory Note in the principal amount of
Y2,300,000,000 dated June 26, 1996 made by Borrower and payable to the order of
Lender, as amended from time to time in accordance with its terms, which shall
be satisfactory to Lender in all respects.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
Permitted Indebtedness" has the meaning set forth in Section 6.1.
"Permitted Lien" has the meaning set forth in Section 6.2.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
"Plan" means any employee benefit plan within the meaning of Section 3(3)
of ERISA maintained or contributed to by Guarantor or any Commonly Controlled
Entity, other than a Multiemployer Plan.
"Prime Rate" means that floating rate per annum of interest announced by
Lender from time to time and designated by Lender as its "prime" or "reference"
rate of interest for loans made from its San Francisco, California, Agency. The
Prime Rate is determined by Lender from time to time as a means of pricing
credit extensions to some customers and is neither tied to any external rate of
interest or index nor necessarily the lowest rate of interest charged by Lender
at any given time for any particular class of customers or credit extensions.
"Principal Office" means Lender's office at 1-2 Yurakucho, 1-chome,
Chiyoda-ku, Tokyo, 100, Japan.
"Principal Payment Date" means the 28th day of June, September, December
and March commencing with the 28th day of September, 1997; provided, however, if
any Principal Payment Date would end on a day other than a Business Day, such
Principal Payment Date shall be extended to the succeeding Business Day.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code.
"Requirement of Law" applicable to any Person means (i) the Articles or
Certificate of Incorporation and By-laws, Partnership Agreement or other
organizational or governing documents of such Person; (ii) any Governmental Rule
applicable to such Person; (iii) any license, permit, approval, or other
authorization granted by any Governmental Authority to or for the benefit of
such Person; or (iv) any judgment, decision or determination of any Governmental
Authority or arbitrator, in each case applicable to or binding upon such person
or any of its property or to which such Person or any of its property is subject
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"Senior Funded Debt" of any Person means any Funded Debt which is not
Subordinated Debt.
"Senior Indebtedness" of any Person means, without duplication:
(i) all Senior Funded Debt of such Person;
(ii) all Contingent Obligations of such Person;
(iii) all obligations of such Person with respect to any synthetic
leases; and
(iv) all obligations of such Person with respect to any sale,
transfer or assignment of accounts receivable and related rights and
property by such Person with recourse to such Person.
"Subordinated Debt" means any subordinated debt permitted by Section
6.1(xi).
"Subsidiary" of any Person means (i) any corporation of which more than
50% of the issued and outstanding Equity Securities having ordinary voting power
to elect a majority of the Board of Directors of such corporation (irrespective
of whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries; (ii) any partnership, joint venture,
or other association of which more than 50% of the equity interest having the
power to vote, direct or control the management of such partnership, joint
venture or other association is at the time owned and controlled by such Person,
by such Person and one or more of the other Subsidiaries or by one or more of
such Person's other Subsidiaries; or (iii) any other Person included in the
Financial Statements of such Person on a consolidated basis.
"Yen" and the sign "Y" mean lawful money of Japan.
"1995 Guarantor Credit Agreement" means that certain Credit Agreement dated
as of December 20, 1995, by and between Guarantor, the lenders named therein and
ABN AMRO Bank N.V., San Francisco International Branch, as agent for such
lenders, as amended from time to time in accordance with its terms.
SECTION 1.2. CONSTRUCTION. Unless the context of this Agreement or the
other Loan Documents otherwise clearly require, references to the plural include
the singular and the singular the plural. The words "hereof," "herein,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Article, Section
and Subsection references are to this Agreement unless otherwise specified.
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SECTION 1.3. ACCOUNTING TERMS AND CLASSIFICATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting classifications and determinations hereunder shall be made, all
amounts relevant in determining whether Borrower is complying with the covenants
contained herein shall be calculated, and all financial statements delivered to
Lender hereunder shall be prepared in accordance with GAAP as applied to
corporate accounting. If GAAP changes during the term of this Agreement such
that any covenants contained herein or in the Guaranty would then be calculated
in a different manner or with different components, Borrower, on behalf of
itself and the Guarantor, and Lender agree to negotiate in good faith to amend
this Agreement and the Guaranty in such respects as are necessary to conform
those covenants as criteria for evaluating Borrower's and Guarantor's financial
condition to substantially the same criteria as were effective prior to such
change in GAAP; provided, however, until Borrower, Guarantor and Lender amend
this Agreement and the Guaranty, all such covenants shall be calculated in
accordance with GAAP as in effect immediately prior to such change.
ARTICLE 2.
AMOUNT AND TERMS OF LOAN
SECTION 2.1. TERM LOAN. Subject to the terms and conditions contained in
this Agreement, on the Closing Date Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender the sum of Two Billion Three Hundred
Million Yen (Y2,300,000,000) ("Loan"). Borrower's obligation to repay the Loan
shall be evidenced by the Note. Lender is hereby authorized by Borrower to (i)
endorse on the Note the amount of each payment by Borrower of principal and
interest; or (ii) enter the amount of such payment in Lender's records,
including, if applicable, Lender's computer records, which endorsement or entry
shall, in the absence of manifest error, be prima facie evidence of the
outstanding balance of the Loan; provided, however, that the failure to make
such endorsement or entry with respect to any payment shall not limit or
otherwise affect the obligations of Borrower under this Agreement or the Note.
SECTION 2.2. INTEREST; DEFAULT RATE. The Loan shall bear interest on
the unpaid principal amount thereof from the Closing Date through maturity
(whether by acceleration or otherwise) at the Fixed Rate. Any amounts not paid
by Borrower when due hereunder, including without limitation, any principal and,
to the extent allowed by applicable law, interest (including principal and
interest coming due by reason of acceleration pursuant to Section 7.2), shall
bear interest from the date on which such payment was due until paid, at a rate
per annum equal to the greater of (i) the Fixed Rate plus two percent (2%); or
(ii) the Prime Rate plus two percent (2%) ("Default Rate"). Interest payable at
the Default Rate shall be immediately due and payable by Borrower without any
notice or demand by Lender. All computations of interest and fees under any
Loan Document shall be calculated by Lender on the basis of a year consisting of
365 days, upon actual days elapsed.
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SECTION 2.3. PAYMENT OF INTEREST. Subject to the provisions of this
Agreement to the contrary, interest shall be due and payable by Borrower on each
Interest Payment Date following the Closing Date until the principal amount of
the Loan is repaid in full.
SECTION 2.4. PAYMENT OF PRINCIPAL.
(a) MANDATORY INSTALLMENT PRINCIPAL PAYMENTS. Installments of
principal in an amount equal to One Hundred Forty Three Million Seven
Hundred Fifty Thousand Yen (Y143,750,000) shall be due and payable by
Borrower on each Principal Payment Date.
(b) LOAN MATURITY PAYMENT. Borrower shall repay the outstanding
principal amount of the Loan together with all accrued but unpaid interest
on the Loan Maturity Date.
SECTION 2.5. PREPAYMENTS.
(a) OPTIONAL PREPAYMENT. Borrower may prepay all or any portion of
the Note; provided, however that any such prepayment of the Note (i) shall
be in a principal amount of not less than Fifty Million Yen (Y50,000,000);
(ii) shall include payment of accrued interest on such prepaid principal;
(iii) shall be made only upon at least ten (10) Business Days prior written
notice to Lender; and (iv) shall include payment by Borrower of any
Interest Rate Funding Costs. Additionally, no partial prepayments shall be
permitted if an Event of Default shall have occurred and be continuing.
Not later than eight (8) Business Days after receipt of Borrower's notice
as required by clause (iii) above, Lender shall deliver to Borrower a
certificate setting forth the amount owed as Interest Rate Funding Costs.
Such certificate shall be accompanied by or include a statement of a
responsible officer of Lender describing in reasonable detail the
calculation thereof and which shall be conclusive and binding upon Borrower
absent manifest error and so long as Lender has acted in good faith.
Borrower shall pay to Lender the amount shown as Interest Rate Funding
Costs on the certificate at the time of its prepayment hereunder, and in
any event, no later than ten (10) days after its receipt of same.
IN CONNECTION WITH THE PRECEDING PARAGRAPH, BORROWER AGREES THAT
FOLLOWING AN EVENT OF DEFAULT BY BORROWER HEREUNDER AND THE ACCELERATION OF
THE MATURITY OF THE LOAN BY LENDER, A TENDER OF PAYMENT OF THE AMOUNT
NECESSARY TO SATISFY THE ENTIRE INDEBTEDNESS OF THE LOAN MADE AT ANY TIME
BY BORROWER OR BY ANYONE ON BEHALF OF BORROWER SHALL BE DEEMED A VOLUNTARY
PREPAYMENT. BORROWER HEREBY EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT
BORROWER SHALL BE LIABLE FOR PAYMENT OF INTEREST RATE FUNDING COSTS SET
FORTH IN THE PRECEDING PARAGRAPH UPON ACCELERATION OF
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THE MATURITY OF THE LOAN, WHETHER SUCH ACCELERATION SHALL BE DUE TO
BORROWER'S DEFAULT OR OTHERWISE.
(b) APPLICATION OF PREPAYMENTS. In the event of any partial
prepayment of the Note, such partial prepayment shall be applied first to
the unamortized portion of the principal due and payable on the Loan
Maturity Date and then to the amortized portion of principal due and
payable in installments as provided herein in reverse chronological order.
SECTION 2.6. LOAN FEE. Borrower shall pay to Lender, on or prior to the
Closing Date, a non-refundable Loan Fee in the amount of Two Million Three
Hundred Thousand Yen (Y2,300,000).
SECTION 2.7. METHOD OF PAYMENT. Borrower shall make each payment under
this Agreement and under the Note not later than 11:00 A.M. (Tokyo time) on the
date when due in lawful money of Japan to Lender at its Principal Office for the
account of the Lending Office in immediately available funds. Borrower hereby
authorizes Lender, if and to the extent payment is not made when due under this
Agreement or under the Note, to charge from time to time against any account of
Borrower with Lender any amount so due.
SECTION 2.8. USE OF PROCEEDS. The proceeds of the Loan shall be used by
Borrower (i) to repay all of the existing indebtedness of Borrower to the Japan
Development Bank ("Japan Development Bank Indebtedness"); (ii) to fund leasehold
improvements to Borrower's facilities; and (iii) for general corporate purposes.
Borrower will not, directly or indirectly, use any part of such proceeds for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or to
extend credit to any Person for the purpose of purchasing or carrying any such
margin stock, or for any purpose which violates, or is inconsistent with,
Regulation X of such Board of Governors.
SECTION 2.9. CHANGE OF LAW. Notwithstanding any other provision herein,
if after the date of this Agreement any change in any applicable Governmental
Rule shall change the basis of taxation (including without limitation the
imposition of any stamp tax or transaction tax) of payments to Lender of the
principal of or interest on the Loan made or any fees or other amounts payable
hereunder (other than changes in respect of taxes imposed on the income of
Lender by the jurisdiction in which Lender is organized or has its principal
office or is operating or doing business or, in either case, by any political
subdivision or taxing authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by Lender or shall
impose on Lender or the interbank Euroyen or Eurodollar market any other
condition affecting this Agreement or the Loan, and the result of any of the
foregoing shall be to increase the cost to Lender of making or maintaining the
Loan or to reduce the amount of any sum received or receivable by Lender
hereunder (whether of principal, interest or otherwise) by an amount deemed by
Lender to be material, then Borrower will pay to Lender such
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additional amount or amounts as will compensate Lender for such additional costs
incurred or reduction suffered. Lender will notify Borrower that Lender is
entitled to compensation pursuant to this Section as promptly as practicable
after it determines to request such compensation; provided, however, any request
for compensation shall be made by Lender within 90 days of the later of (i) the
date any of the foregoing changes or events becomes effective; or (ii) the date
Lender knew or reasonably should have learned of such change or event.
SECTION 2.10. CAPITAL ADEQUACY. If Lender shall have determined that the
applicability of any Governmental Rule adopted pursuant to or arising out of the
July 1988 report of the Basel Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards," or the adoption after the date hereof of any Governmental Rule
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority charged with the interpretation or administration thereof, or
compliance by Lender (or any Lending Office of Lender) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, has or would have the effect of reducing the
rate of return on Lender's capital as a direct consequence of this Agreement or
the Loan to a level below that which Lender could have achieved but for such
adoption, change or compliance by an amount deemed by Lender to be material,
then from time to time Borrower shall pay to Lender such additional amount or
amounts as will compensate Lender for any such reduction suffered. Allocations
by Lender for purposes of this Section shall be conclusive; provided, that the
principles on which such allocations are made are reasonable and non-
discriminatory, the calculations employed to apply such allocations are
mathematically accurate and Lender has acted in good faith. Lender will notify
Borrower that Lender is entitled to compensation pursuant to this Section as
promptly as practicable after it determines to request such compensation;
provided, however, any request for compensation shall be made by Lender within
90 days of the later of (i) the date any of the foregoing changes or events
becomes effective; or (ii) the date Lender knew or reasonably should have
learned of such change or event.
SECTION 2.11. LENDER'S CERTIFICATE. A certificate of Lender setting forth
such amount or amounts as shall be necessary to compensate Lender as specified
in Sections 2.09 or 2.10 above, as the case may be, shall be delivered to
Borrower and shall be conclusive and binding upon Borrower absent manifest error
and so long as Lender has acted in good faith. Any such certificate shall be
accompanied by or include a statement of a responsible officer of Lender
describing in reasonable detail the calculation thereof and certifying that such
request for compensation is consistent with Lender's treatment generally of
customers similar to Borrower having similar provisions in their agreements with
Lender. Borrower shall pay Lender the amount shown as due on any such
certificate delivered by Lender within ten (10) days after its receipt of the
same. In the event that Lender recovers any such amount from third parties, it
shall refund the same to Borrower. Failure on the part of Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or
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reduction in return on capital with respect to any period shall not constitute a
waiver of Lender's right to demand compensation with respect to such period or
any other period. The protection of this Section shall be available to Lender
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
ARTICLE 3.
CONDITIONS PRECEDENT
Lender's obligation to make the Loan and all other obligations of Lender
hereunder are conditioned upon the satisfaction by Borrower of all of the
following conditions:
SECTION 3.1. CLOSING DOCUMENTS. On or before the Closing Date, Lender
shall have received and approved the following documents or materials, each of
which shall be in the form and substance satisfactory to Lender and, where
appropriate, duly executed (and acknowledged where necessary) and delivered by
the appropriate parties thereto:
(a) this Agreement, the Note and the Guaranty;
(b) opinions of counsel for Borrower and Guarantor dated as of
the Closing Date, and addressed to Lender;
(c) a certificate of the President of Borrower certifying (i) a copy
of the Articles of Incorporation and Bylaws of Borrower (or similar
corporate charter documents of Borrower under the laws of Japan), including
any amendments or addendum; (ii) resolutions of the board of directors of
Borrower authorizing the execution, delivery, and performance of this
Agreement and the Note by Borrower; and (iii) the names, corporate office
and true signatures of the officers or directors of Borrower authorized to
sign this Agreement and the Note on behalf of Borrower;
(d) a certificate of the President or Secretary of Guarantor
certifying (i) a copy of the Articles of Incorporation and Bylaws of
Guarantor, including any amendments or addendum thereto, together with a
certificate of status issued by the Delaware Secretary of State with
respect to Guarantor as a domestic Delaware corporation and a certificate
of status issued by the California Secretary of State with respect to
Guarantor as a foreign corporation doing business in California; (ii)
resolutions of Guarantor's board of directors authorizing the execution,
delivery, and performance of the Guaranty by Guarantor; and (iii) the
names, corporate office and true signatures of the officers of Guarantor
authorized to sign the Guaranty on behalf of Guarantor;
(e) the Loan Fee; and
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(f) such other documents, agreements, instruments, certificates
and opinions as Lender may reasonably require.
SECTION 3.2. REPRESENTATIONS CORRECT; NO DEFAULT. On and as of the
Closing Date:
(a) the representations and warranties contained herein and in
each written document executed and delivered by Borrower to Lender in
connection with this Agreement shall be true and correct in all
material respects on and as of the Closing Date to the same extent as
though made on and as of such date; and
(b) no Default or Event of Default shall have occurred and be
continuing.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
SECTION 4.1. INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION.
Borrower is a corporation duly incorporated, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged in; and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.
SECTION 4.2. CORPORATE POWER AND AUTHORITY. The execution, delivery, and
performance by Borrower and Guarantor of the Loan Documents to which each is a
party have been duly authorized by all necessary corporate action and do not and
will not (i) require any consent or approval of the stockholders of such
corporation; (ii) contravene such corporation's charter or bylaws; (iii) violate
any provision of any Requirement of Law presently in effect having applicability
to such corporation; (iv) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement, lease, or
instrument to which such corporation is a party or by which it or its properties
may be bound or affected; (v) result in, or require, the creation or imposition
of any Lien, upon or with respect to any of the properties now owned or
hereafter acquired by such corporation; and (vi) cause such corporation to be in
default under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award or any such indenture, agreement, lease, or
instrument.
SECTION 4.3. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each
of the other Loan Documents (other than the Guaranty) when delivered under this
Agreement will be, legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, except to the extent
that such enforcement may be limited by applicable bankruptcy, insolvency, and
other similar laws affecting creditors' rights generally. The Guaranty, when
delivered by Guarantor to Lender, will be, legal, valid, and binding
obligations of Guarantor enforceable against Guarantor in accordance with its
respective terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights generally.
SECTION 4.4. FINANCIAL STATEMENTS. The Financial Statements of
Guarantor, Borrower and the Guarantor Subsidiaries which have been delivered to
Lender (i) are in accordance with the books and records of Guarantor, Borrower
and Guarantor Subsidiaries, which have been maintained in accordance with good
business practice; (ii) have been prepared in conformity with GAAP; and (iii)
fairly present the financial conditions and results of operations of Guarantor,
Borrower and the Guarantor Subsidiaries as of the date thereof and for the
period covered thereby. Neither Borrower, Guarantor nor any Guarantor
Subsidiary has any contingent obligations, liability for taxes or other
outstanding obligations which are material in the aggregate,
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except as disclosed in the audited Financial Statements of Guarantor, Borrower
and the Guarantor Subsidiaries for the fiscal year ending June 30, 1995, and the
unaudited Financial Statements of Guarantor, Borrower and the Guarantor
Subsidiaries for the fiscal quarter ending March 31, 1996, furnished by Borrower
to Lender prior to the date hereof
SECTION 4.5. OWNERSHIP OF BORROWER. Guarantor directly owns and controls,
free and clear of all Liens, one hundred percent (100%) of the Equity Securities
of Borrower.
SECTION 4.6. LITIGATION. There is no pending or threatened in writing
action or proceeding against or affecting Borrower, Guarantor or any Guarantor
Subsidiaries before any court, governmental agency, arbitrator or other
Governmental Authority which is reasonably likely, in any one case or in the
aggregate, to have a Material Adverse Effect.
SECTION 4.7. NO VIOLATION OR DEFAULT. Neither Borrower, Guarantor nor any
Guarantor Subsidiary is in violation of or in default with respect to (i) any
Requirement of Law applicable to such Person; or (ii) any Contractual Obligation
of such Person, including without limitation, Contractual Obligations arising
from or relating to the 1995 Guarantor Credit Agreement (nor is there any
waiver in effect which, if not in effect, would result in such a violation or
default), which violation or default is reasonably likely to have a Material
Adverse Effect. Without limiting the generality of the foregoing, neither
Borrower, Guarantor nor any Guarantor Subsidiary (i) has violated any
Environmental Laws; (ii) has any liability under any Environmental Laws; or
(iii) has received notice or other communication of an investigation or is under
by any Governmental Authority having authority to enforce Environmental Laws,
where such violation, liability or investigation is reasonably likely to have a
Material Adverse Effect.
SECTION 4.8. TITLE; POSSESSION UNDER LEASES. Borrower, Guarantor and each
Guarantor Subsidiary (i) own and have good and marketable title (without regard
to minor defects of title) to the real property owned by Borrower, Guarantor
and each Guarantor Subsidiary, as reflected in the most recent Financial
Statements of Guarantor delivered to Lender (except those assets and properties
disposed of since the date of such Financial Statements in compliance with the
1995 Guarantor Credit Agreement); (ii) have valid leasehold interests in all
real property leased by Borrower, Guarantor and each Guarantor Subsidiary;
(iii) own and have good title (without regard to minor defects of title) to all
their other respective properties and assets which are material to the business
of Borrower, Guarantor and each Guarantor Subsidiary, as reflected in the most
recent Financial Statements of Guarantor delivered to Lender (except those
assets and properties disposed of since the date of such Financial Statements in
compliance with the 1995 Guarantor Credit Agreement); and (iv) own and have good
title (without regard to minor defects of title) to all respective properties
and assets acquired by Borrower and its Subsidiaries since such date which are
material to the business of Borrower, Guarantor and each Guarantor Subsidiary
(except those assets and properties disposed of in compliance with the 1995
Guarantor Credit Agreement). Such assets and properties are subject to no Lien,
except for Permitted
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Liens. Each of Borrower, Guarantor and the Guarantors Subsidiaries enjoys
peaceful and undisturbed possession under all leases, except for any failure to
enjoy such possession which (alone or in the aggregate with any other such
failures) is not reasonably likely to have a Material Adverse Effect.
SECTION 4.9. NO AGREEMENTS TO SELL ASSETS. Neither Borrower, Guarantor
nor any Guarantor Subsidiary has any legal obligation, absolute or contingent,
to any Person to sell the assets of Borrower, Guarantor or any Guarantor
Subsidiary (other than sales in the ordinary course of business), or to effect
any merger, consolidation or other reorganization of Borrower, Guarantor or any
Guarantor Subsidiary or to enter into any agreement with respect thereto.
SECTION 4.10. PATENT AND OTHER RIGHTS. Borrower, Guarantor and each
Guarantor Subsidiary own or license under validly existing agreements, and have
the full right to license without the consent of any other Person, all patents,
licenses, trademarks, trade names, trade secrets, service marks, copyrights and
all rights with respect thereto, which are required to conduct their businesses
as now conducted.
SECTION 4.11. GOVERNMENTAL CHARGES AND OTHER INDEBTEDNESS. Borrower,
Guarantor and each Guarantor Subsidiary have filed or caused to be filed all tax
returns which are required to be filed by them. Borrower, Guarantor and each
Guarantor Subsidiary have paid, or made provision for the payment of, all taxes
and other Governmental Charges which have or may have become due pursuant to
said returns or otherwise and all other indebtedness, except such Governmental
Charges or indebtedness, if any, which are being contested in good faith and as
to which adequate reserves (determined in accordance with GAAP) have been
provided or which are not reasonably likely to have a Material Adverse Effect if
unpaid.
SECTION 4.12. ERISA. Guarantor and each Commonly Controlled Entity are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan; no notice of intent to terminate a Plan has
been filed nor has any Plan been terminated; no circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; neither Guarantor nor any Commonly Controlled Entity contributes to
or has any material contingent liabilities to a Multiemployer Plan; neither
Guarantor nor any Commonly Controlled Entity has incurred any material liability
(including secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan; Guarantor and each
Commonly Controlled Entity have met their minimum funding requirements under
ERISA with respect to all of their Plans and the present value of all vested
benefits under each Plan does not exceed the fair market value of all Plan
assets allocable to such benefits, as determined on the most recent valuation
date of the Plan and in accordance with the provisions of ERISA; and neither
Guarantor nor any Commonly Controlled Entity has incurred any liability to the
PBGC under ERISA.
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SECTION 4.13. ACCURACY OF INFORMATION FURNISHED. None of the Loan
Documents and none of the other certificates, statements or information
furnished to Lender by or on behalf of Borrower, Guarantor or any Guarantor
Subsidiary in connection with the Loan Documents or the transactions
contemplated thereby 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 therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE 5.
AFFIRMATIVE COVENANTS
Borrower covenants that, unless otherwise consented to in writing by
Lender, until payment in full of all amounts outstanding under the Loan
Documents and satisfaction of all other obligations of Borrower under the Loan
Documents, Borrower shall comply with, or cause compliance with, each of the
following covenants:
SECTION 5.1. REPORTING REQUIREMENTS. Borrower shall furnish or cause to
be furnished to Lender the following, each in such form and such detail as
Lender shall reasonably request:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in no
event later than fifty (50) days after the last day of each fiscal quarter
of Guarantor, a copy of the Financial Statements of Guarantor, Borrower and
each of the Guarantor Subsidiaries (prepared on a consolidated basis) for
such quarter and for the fiscal year to date, certified by the president or
chief financial officer of Guarantor to present fairly the financial
condition, results of operations and other information reflected therein
and to have been prepared in accordance with GAAP (subject to normal year-
end audit adjustments).
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in no event
later than one hundred (100) days after the close of each fiscal year of
Guarantor, (i) copies of the audited Financial Statements of Guarantor,
Borrower and each of the Guarantor Subsidiaries (prepared on a consolidated
basis) for such year, prepared by independent certified public accountants
of recognized national standing acceptable to Lender; and (ii) copies of
the unqualified opinions (or qualified opinions reasonably acceptable to
Lender) and management letters delivered by such accountants in connection
with all such Financial Statements. Additionally, Borrower shall deliver
to Lender not later than 100 days after the close of each fiscal year of
Borrower, a balance sheet and statement of income for Borrower calculated
on a stand alone basis (which items may be prepared internally by
Borrower), certified by the president or chief financial officer of
Borrower to present fairly the financial condition, results of operations
and other information reflected therein.
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(c) COMPLIANCE CERTIFICATES. Contemporaneously with the quarterly and
year-end Financial Statements required by Sections 5.1(a) and (b): (i) a
compliance certificate of the President of Borrower which states that no
Event of Default and no Default has occurred and is continuing, or, if any
such Event of Default or Default has occurred and is continuing, a
statement as to the nature thereof and what action Borrower proposes to
take with respect thereto; and (ii) a compliance certificate of the
President or Chief Financial Officer of Guarantor which states that (a) no
event of default has occurred and is continuing under the 1995 Guarantor
Credit Agreement or, if any such event of default has occurred and is
continuing, a statement as to the nature thereof and what action Guarantor
proposes to take with respect thereto, and (b) for the quarter or year
covered by such Financial Statements or as of the last day of such quarter
or year (as the case may be), the calculation of the financial ratios and
tests provided in Section 3.1 of the Guaranty.
(d) NOTICE OF LITIGATION, EVENT OF DEFAULT. As soon as possible and in
no event later than five (5) Business Days after any officer or director of
Borrower or Guarantor knows of the occurrence or existence of: (i) any
actual litigation or threatened litigation which has a reasonable
likelihood of leading to actual litigation, suits, claims or disputes
against Guarantor, Borrower or any of the Guarantor Subsidiaries involving
potential monetary damages payable by Guarantor, Borrower or any of the
Guarantor Subsidiaries of $5,000,000 or more alone and/or $10,000,000 or
more in the aggregate; (ii) any other event or condition which is
reasonably likely to have a Material Adverse Effect; or (iii) any Default
or Event of Default; the statement of the president or chief financial
officer of Borrower setting forth details of such event, condition, Default
or Event of Default and the action which Borrower proposes to take with
respect thereto.
(e) ERISA REPORTS. As soon as possible, and in any event within 30
days after Borrower or Guarantor knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to institute
proceedings to terminate a Plan or Multiemployer Plan subject to ERISA with
respect to Guarantor or any Commonly Controlled Entity, and promptly but in
any event within two Business Days of receipt by Borrower, Guarantor or any
Commonly Controlled Entity of notice that the PBGC intends to terminate a
Plan or Multiemployer Plan or appoint a trustee to administer the same, and
promptly but in any event within five Business Days of the receipt of
notice concerning the imposition of withdrawal liability with respect to
Guarantor or any Commonly Controlled Entity, Borrower or Guarantor will
deliver to the Bank a certificate of the chief financial officer of
Guarantor setting forth all relevant details and the action which Guarantor
proposes to take with respect thereto.
(f) REGISTRATION STATEMENTS. As soon as available and in no event
later than five (5) Business Days after they are sent, made available or
filed, copies of (i) all registration statements and reports filed by
Borrower, Guarantor or any of the Guarantor Subsidiaries with any
securities exchange or the Securities and
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Exchange Commission (including, without limitation, all 10-Q, 10-K and 8-Q
reports); (ii) all reports, proxy statements and financial statements sent
or made available by Borrower, Guarantor or any of the Guarantor
Subsidiaries to its security holders; and (C) all press releases and other
similar public concerning any material developments in the business of
Borrower, Guarantor or any of the Guarantor Subsidiaries made available by
Borrower, Guarantor or any of the Guarantor Subsidiaries to the public
generally.
(g) OTHER INFORMATION. Such other instruments, agreements,
certificates, opinions, statements, documents and information relating to
the operations or condition (financial or otherwise) of Borrower, Guarantor
or any of the Guarantor Subsidiaries, and compliance by Borrower and
Guarantor with the terms of the Loan Documents as Lender may from time to
time reasonably request.
SECTION 5.2. BOOKS AND RECORDS. Borrower, Guarantor and each of the
Guarantor Subsidiaries shall at all times keep proper books of record and
account in which full, true and correct entries will be made of their
transactions in accordance with GAAP, or if, with respect to Borrower or any
Guarantor Subsidiary for which United States accounting principles are
inapplicable, generally accepted accounting principles in the jurisdiction in
which Borrower or such Guarantor Subsidiary is organized, as the case may be.
SECTION 5.3. INSPECTIONS. Borrower, Guarantor and each of the Guarantor
Subsidiaries shall permit any Person designated by Lender, upon reasonable
notice and during normal business hours, to visit and inspect any of the
properties and offices of Borrower, Guarantor and any of the Guarantor
Subsidiaries, to examine the books and records of Borrower, Guarantor and the
Guarantor Subsidiaries and make copies thereof and to discuss the affairs,
finances and accounts of Borrower, Guarantor and the Guarantor Subsidiaries
with, and to be advised as to the same by, their officers, auditors and
accountants, all at such times and intervals as Lender may reasonably request.
SECTION 5.4. INSURANCE. Borrower, Guarantor and each of the Guarantor
Subsidiaries shall (i) carry and maintain insurance of the types and in the
amounts customarily carried from time to time during the term of this Agreement
by others engaged in substantially the same business as such Person and
operating in the same geographic area as such Person, including, but not limited
to, fire, public liability, property damage and workers' compensation; and (ii)
deliver to Lender from time to time, as Lender may request, schedules setting
forth all insurance then in effect.
SECTION 5.5. GOVERNMENTAL CHARGES AND OTHER INDEBTEDNESS. Borrower,
Guarantor, and each of the Guarantor Subsidiaries shall promptly pay and
discharge when due (i) all taxes and other Governmental Charges prior to the
date upon which penalties accrue thereon; (ii) all indebtedness which, if
unpaid, could become a Lien upon the property of Borrower, Guarantor or any
Guarantor Subsidiary; and (iii) all other Indebtedness which, if unpaid, is
reasonably likely to have a Material Adverse
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Effect, except such taxes and Indebtedness as may in good faith be contested or
disputed, or for which arrangements for deferred payment have been made,
provided that in each such case appropriate reserves are maintained to the
reasonable satisfaction of Lender.
SECTION 5.6. GENERAL BUSINESS OPERATIONS. Except as permitted in Section
6.4, each of Borrower, Guarantor and each of the Guarantor Subsidiaries shall
(i) preserve and maintain its corporate existence and all of its rights,
privileges and franchises reasonably necessary to the conduct of its business;
provided, however, that from time to time, Guarantor may, in the ordinary course
of business, dissolve any Guarantor Subsidiary which is not a Material
Subsidiary or a Subsidiary of Borrower, so long as both immediately before and
after giving effect to such dissolution, no Default or Event of Default shall
have occurred and be continuing; (ii) conduct its business activities in
compliance with all Requirements of Law and Contractual Obligations applicable
to such Person, the violation of which is reasonably likely to have a Material
Adverse Effect, and (iii) keep all property useful and necessary in its business
in good working order and condition, ordinary wear and tear excepted. Guarantor
shall maintain its chief executive office and principal place of business in the
United States.
SECTION 5.7. MAINTENANCE OF OWNERSHIP OF BORROWER. At all times Guarantor
shall directly own and control, free and clear of all Liens, one hundred percent
(100%) of the Equity Securities of Borrower.
SECTION 5.8. PARI PASSU RANKING. Borrower shall take, or cause to be
taken, all actions necessary to ensure that the obligations of Borrower under
the Loan Documents are and continue to rank at least PARI PASSU in right of
payment with all other unsecured Senior Indebtedness of Borrower.
ARTICLE 6.
NEGATIVE COVENANTS
Borrower covenants that, unless otherwise consented to in writing by
Lender, until payment in full of all amounts outstanding under the Loan
Documents and satisfaction of all other obligations of Borrower under the Loan
Documents, Borrower shall comply with, or cause compliance with, each of the
following covenants:
SECTION 6.1. INDEBTEDNESS. Neither Borrower, Guarantor nor any
Guarantor Subsidiaries shall create, incur, assume or permit to exist any
indebtedness except for the following ("Permitted Indebtedness"):
(i) the obligations of Borrower with respect to the Loan Documents and
the obligations of Guarantor with respect to the 1995 Guarantor Credit
Agreement and related documents;
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(ii) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries listed in Schedule 6.1 attached hereto and existing as of the
date of this Agreement;
(iii) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries arising from the endorsement of instruments for collection in
the ordinary course of Borrower's, Guarantor's or a Guarantor Subsidiary's
business;
(iv) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries for trade accounts payable, provided that (a) such accounts
arise in the ordinary course of business, and (b) no material part of such
account is more than ninety (90) days past due (unless subject to a bona
fide dispute and for which adequate reserves have been established);
(v) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries under interest rate protection, currency swap and foreign
exchange arrangements, provided that all such arrangements are entered into
in connection with bona fide hedging operations and not for speculation;
(vi) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries under purchase money loans (including any synthetic leases)
and Capital Leases incurred by Borrower, Guarantor or any Guarantor
Subsidiaries to finance the acquisition by such Person of real property,
fixtures or equipment provided that in each case (a) such Indebtedness is
incurred by such Person at the time of, or not later than ninety (90) days
after, the acquisition by such Person of the property so financed, and (b)
such Indebtedness does not exceed the purchase price of the property so
financed;
(vii) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries under initial or successive refinancings of any Indebtedness
permitted by clause (i) or (ii) above, provided that (a) the principal
amount of any such refinancing does not exceed the principal amount of the
Indebtedness being refinanced, and (b) the material terms and provisions of
any such refinancing (including maturity, interest rate, redemption,
covenants, events of default and subordination provisions) are no less
favorable to the lenders thereunder than the Indebtedness being refinanced;
(viii) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries with respect to surety, appeal, indemnity, performance or
other similar bonds in the ordinary course of business;
(ix) Guaranty Obligations of Guarantor in respect of Permitted
Indebtedness of Borrower and the Guarantor Subsidiaries;
(x) Indebtedness of Guarantor to Borrower or any Guarantor
Subsidiaries, Indebtedness of Borrower or any Guarantor Subsidiaries to
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Guarantor or Indebtedness of Borrower or any Guarantor Subsidiaries to each
other, provided that any Indebtedness of Guarantor to Borrower or any
Guarantor Subsidiaries and any Indebtedness of Borrower or any Guarantor
Subsidiaries to Guarantor shall be subject to the other provisions of this
Article 6;
(xi) Unsecured Indebtedness of Guarantor which is subordinated to the
obligations of Guarantor under the 1995 Guarantor Credit Agreement,
provided that the payment terms, interest rate and subordination provisions
of such Indebtedness are reasonably acceptable to the Required Lenders (as
defined in the 1995 Guarantor Credit Agreement);
(xii) Indebtedness of Borrower, Guarantor and the Guarantor
Subsidiaries with respect to the sale, transfer of assignment of accounts
receivable of Borrower, Guarantor and the Guarantor Subsidiaries and
certain rights and property related to the collection of or constituting
proceeds of such accounts receivable, provided that such sale, assignment
or transfer is (a) in the ordinary course of business, (b) for cash, (c)
with recourse to Borrower, Guarantor or such Guarantor Subsidiary in an
amount not to exceed the aggregate face amount of the accounts receivable
sold and certain additional interest charges with respect to such
Indebtedness, (d) otherwise permitted under Section 6.3(vii), and (e) both
immediately before and after giving effect to such Indebtedness, no Default
or Event of Default shall have occurred and be continuing; and
(xiii) Other unsecured Senior Indebtedness of Borrower, Guarantor and
the Guarantor Subsidiaries in addition to that otherwise permitted above,
provided that both immediately before incurring and after giving effect to
such unsecured Senior Indebtedness, Guarantor shall be in compliance with
the financial covenants set forth in Section 3.1 of the Guaranty and no
other Default or Event of Default shall have occurred and be continuing.
SECTION 6.2. LIENS. Neither Borrower, Guarantor nor any of the Guarantor
Subsidiaries shall create, incur, assume or permit to exist any Lien on or with
respect to any of its assets or property of any character, whether now owned or
hereafter acquired, except for the following ("Permitted Liens"):
(i) Liens in favor of the agent or any lender under the 1995
Guarantor Credit Agreement securing any of the obligations of Guarantor
under the 1995 Guarantor Credit Agreement; provided, however, no such Lien
shall be permitted with respect to the assets or property of Borrower or
any Subsidiaries of Borrower;
(ii) Liens listed in Schedule 5.02(b) of the 1995 Guarantor Credit
Agreement and existing on the date of such agreement;
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(iii) Liens for taxes or other Governmental Charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith, provided that adequate reserves for the payment thereof have been
established in accordance with GAAP;
(iv) Liens of carriers, warehousemen, mechanics, materialmen, vendors
and landlords and other similar Liens imposed by law incurred in the
ordinary course of business for sums not overdue or being contested in good
faith, provided that adequate reserves for the payment thereof have been
established in accordance with GAAP;
(v) Deposits under workers' compensation, unemployment insurance and
social security laws or to secure the performance of bids, tenders,
contracts (other than for the repayment of borrower money) or leases, or to
secure statutory obligations of surety or appeal bonds or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;
(vi) Zoning restrictions, easements, rights-of-way, title
irregularities and other similar encumbrances, which alone or in the
aggregate are not substantial in amount and do not materially detract from
the value of the property subject thereto or interfere with the ordinary
conduct of the business of Borrower, Guarantor or any of the Guarantor
Subsidiaries;
(vii) Banker's Liens and similar Liens (including set-off rights) in
respect of bank deposits;
(viii) Liens on property or assets of any corporation which becomes a
Guarantor Subsidiary after the date of this Agreement, provided that (a)
such Liens exist at the time the stock of such corporation is acquired by
Guarantor, and (b) such Liens were not created in contemplation of such
acquisition by Guarantor;
(ix) Judgement Liens, provided that such Liens do not have a value in
excess of $5,000,000 or such Liens are released, stayed, vacated or
otherwise dismissed within sixty (60) days after issue or levy and, if so
stayed, such stay is not thereafter removed;
(x) Rights of vendors or lessors under conditional sale agreements,
Capital Leases or other title retention agreements (including synthetic
leases), provided that, in each case (a) such rights secure or otherwise
relate to Permitted Indebtedness, (b) such rights do not extend to any
property other than property acquired with the proceeds of such Permitted
Indebtedness (other than cash pledged to secure obligations under
synthetic leases in an amount not to exceed, together with any amounts
pledged under clause (xiii), $70,000,000 in the aggregate during the term
of this Agreement provided that both immediately before and after giving
effect to any such cash collateralization, Guarantor shall
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be in compliance with the financial covenants set forth in Section 3.1 of
the Guaranty and no other Default or Event of Default shall have occurred
and be continuing), and (c) such rights do not secure any Indebtedness
other than such Permitted Indebtedness;
(xi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties and in connection with
the importation of goods in the ordinary course of Borrower's, Guarantor
and the Guarantor Subsidiaries' businesses;
(xii) Liens securing Indebtedness which constitutes Permitted
Indebtedness under clause (vi) of Section 6.1 provided that, in each case,
such Lien (a) covers only those assets, the acquisition of which was
financed by such Permitted Indebtedness, and (a) secures only such
Permitted Indebtedness;
(xiii) Liens securing Indebtedness which constitutes Permitted
Indebtedness under clause (xii) of Section 6.1 provided that, in each case,
such Lien (a) secures only such Permitted Indebtedness, and (b) such Liens
do not extend to any assets or property other than the assets or property
sold (other than cash pledged under certain circumstances to secure such
Permitted Indebtedness in an aggregate amount not to exceed, together with
any amounts pledged under clause (x), $70,000,000 in the aggregate during
the term of this Agreement, provided that both immediately before and after
given effect to any such cash collateralization, Guarantor shall be in
compliance with the financial covenants set forth in Section __ of the
Guaranty and no other Default or Event of Default shall have occurred and
be continuing);
(xiv) Liens on the property or assets of any Guarantor Subsidiary,
other than a Subsidiary of Borrower, in favor of Guarantor, Borrower, or
any Guarantor Subsidiary;
(xv) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by the Liens described in clause
(ii) or (xii) above, provided that any extension, renewal or replacement
Lien (a) is limited to the property covered by the existing Lien and (b)
secures Indebtedness which is no greater in amount and has material terms
no less favorable to lenders than the Indebtedness secured by the existing
Lien; and
(xvi) Liens on insurance proceeds in favor of insurance companies
with respect to the financing of insurance premiums.
SECTION 6.3. ASSET DISPOSITIONS. Neither Borrower, Guarantor nor any
Guarantor Subsidiaries shall sell, lease, transfer or otherwise dispose of any
of its assets or property, whether now owned or hereafter acquired, except for
the following:
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(i) Sales of inventory by Borrower, Guarantor and the Guarantor
Subsidiaries in the ordinary course of their businesses;
(ii) Sales of surplus, damaged, worn or obsolete equipment or
inventory for not less than fair market value;
(iii) Sales or other dispositions of Investments permitted by clause
(i) of Section 6.5 for not less than fair market value;
(iv) Sales or assignments of defaulted receivables to a collection
agency in the ordinary course of business;
(v) Licenses by Borrower, Guarantor or any Guarantor Subsidiaries of
its patents, copyrights, trademarks, trade names and service marks in the
ordinary course of its business;
(vi) Sales or other dispositions of assets and property by Guarantor
to Borrower or any Guarantor Subsidiaries or by Borrower or any Guarantor
Subsidiaries to each other or Guarantor, provided that the terms of any
such sales or other dispositions by or to such parties are terms which are
no less favorable to such parties then would prevail in the market for
similar transactions between unaffiliated parties dealing at arm's length;
(vii) Sales, for cash, in the ordinary course of business of (a)
accounts receivable of foreign Guarantor Subsidiaries (other than
Subsidiaries of Borrower) and certain rights and property of foreign
Guarantor Subsidiaries (other than Subsidiaries of Borrower) related to the
collection of or constituting proceeds of such accounts receivable, and (b)
accounts receivable of Guarantor and certain rights and property of
Guarantor related to the collection of or constituting proceeds of such
accounts receivable in an aggregate amount not to exceed at any time
fifteen percent (15%) of Guarantor's aggregate accounts receivable, as
measured at the end of each fiscal quarter of Guarantor, and in each case
with respect to the foregoing clauses (a) and (b), with or without
recourse, at a discount rate not to exceed twenty percent (20%); and
(viii) Other sales, leases, transfers and disposals of assets and
property by Guarantor or any Guarantor Subsidiary (other than sales,
leases, transfers and disposals of accounts receivable and related rights
and property which shall be permitted only as expressly set forth in clause
(vii) above), provided that the aggregate value of all such assets and
property (based upon the greater of the fair market or book value of such
assets and property) so sold, leased, transferred or otherwise disposed of
in any fiscal year on a rolling four quarter basis or does not exceed ten
percent (10%) of Guarantor's Tangible Net Worth (as defined in the
Guaranty) as measured at the end of each fiscal quarter of Guarantor.
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SECTION 6.4. MERGERS AND ACQUISITIONS. Neither Borrower, Guarantor nor
any Guarantor Subsidiaries shall consolidate with or merge into any other Person
or permit any other Person to merge into it, acquire or establish any subsidiary
or acquire all or substantially all of the assets of any other Person, except
for the following:
(i) any wholly owned Guarantor Subsidiary (other than a Subsidiary of
Borrower) may merge into any other wholly owner Guarantor Subsidiary;
(ii) (a) Borrower, Guarantor, or any wholly-owned Guarantor
Subsidiary may acquire all or substantially all of the assets of any
Person, (b) any Person may merge into Borrower, Guarantor or any wholly-
owned Guarantor Subsidiary, and (c) Borrower, Guarantor or any wholly-owned
Guarantor Subsidiary may establish or acquire Subsidiaries, provided that:
(1) in the event of any merger by any Person into Borrower,
Guarantor or any wholly-owned Guarantor Subsidiary, Borrower,
Guarantor or such wholly-owned Guarantor Subsidiary is the surviving
entity; and
(2) both immediately prior to and after giving effect to such
merger, acquisition or establishment of a Subsidiary (y) the aggregate
cost of any such merger, acquisition or establishment of a Subsidiary
shall not exceed the amounts permitted under Section 6.5(ii), and (z)
no Default of Event of Default shall have occurred and be continuing.
SECTION 6.5. INVESTMENTS. Neither Borrower, Guarantor nor any of the
Guarantor Subsidiaries shall make any Investment (as defined in the 1995
Guarantor Credit Agreement) except for Investments in the following:
(i) Investments in accordance with the terms of Borrower's Cash
Investment Guidelines (as defined in the 1995 Guarantor Credit Agreement)
as in effect on the closing date of the transaction contemplated under the
1995 Guarantor Credit Agreement; and
(ii) Other Investments, provided that the aggregate amount of such
other Investments plus the aggregate cost of assets acquired, mergers
consummated and Subsidiaries established or acquired by Borrower, Guarantor
and the Guarantor Subsidiaries pursuant to Section 6.4 does not exceed in
any fiscal year (a) $50,000,000 for any amounts paid in cash, and (b)
$100,000,000 for any amounts paid with shares of common stock of Guarantor
(as determined according to the stock price of such shares on the date of
transfer).
SECTION 6.5. DIVIDENDS AND REDEMPTIONS. Neither Borrower, Guarantor nor
any Guarantor Subsidiaries shall pay any dividends or make any distributions on
its Equity Securities; purchase, redeem, retire, defease or otherwise acquire
for value of any of its Equity Securities; return any capital to any holder of
its Equity Securities as
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such; make any distribution of assets, Equity Securities, obligations or
securities to any holder of its Equity Securities as such; or set apart any sum
for any such purpose; except Borrower may repurchase its Equity Securities from
management pursuant to valid stock repurchase arrangements, provided that the
aggregate amount of such repurchases does not exceed $10,000,000 in any fiscal
year.
SECTION 6.6. CHANGE IN BUSINESS. Neither Borrower, Guarantor nor any
Guarantor Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any business substantially different from its present business;
provided, however, that Guarantor Subsidiaries which are not Material
Subsidiaries may operate as holding companies or special tax purpose entities as
may be necessary for the overall operation of the business of Borrower,
Guarantor and the Guarantor Subsidiaries, so long as the terms of this Agreement
and the other Loan Documents would not otherwise be violated.
SECTION 6.7. INDEBTEDNESS PAYMENTS. Neither Borrower, Guarantor nor any
Guarantor Subsidiaries shall amend, modify or otherwise change any of the
subordination or other provisions of any document, instrument or agreement
evidencing Subordinated Debt in a manner which adversely affects the material
rights of Lender. Neither Borrower, Guarantor nor any Guarantor Subsidiary
shall purchase, redeem or prepay any Subordinated Debt, now or hereafter
outstanding, except for any de minimis redemption required in connection with
the conversion of any class of Subordinated Debt into equity.
SECTION 6.8. ERISA. Neither Guarantor nor any Commonly Controlled Entity
shall (i) adopt or institute any Plan that is an employee pension benefit plan
within the meaning of Section 3(2) of ERISA; (ii) take any action which will
result in the partial or complete withdrawal, within the meanings of sections
4203 and 4205 of ERISA, from a Multiemployer Plan; (iii) engage or permit any
Person to engage in any transaction prohibited by section 406 of ERISA or
section 4975 of the Code involving any Plan or Multiemployer Plan which would
subject either borrower or any ERISA Affiliate to any tax, penalty or other
liability including a liability to indemnify; (iv) incur or allow to exist any
accumulated funding deficiency (within the meaning of section 412 of the Code or
section 302 of ERISA), (v) fail to make full payment when due of all amounts due
as contributions to any Plan or Multiemployer Plan; (vi) fail to comply with the
requirements of section 4980B of the Code or Part 6 of Title I(B) of ERISA; or
(vii) adopt any amendment to any Plan which would require the posting of
security pursuant to section 401(a)(29) of the Code, where singly or
cumulatively, the above would have a Material Adverse Effect.
SECTION 6.9. TRANSACTIONS WITH AFFILIATES. Neither Borrower, Guarantor
nor any Guarantor Subsidiaries shall enter into any Contractual Obligation with
any Affiliate or engage in any other transaction with any Affiliate except upon
terms at least as favorable to Borrower, Guarantor or such Guarantor Subsidiary
as an arms-length transaction with unaffiliated Persons.
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SECTION 6.10. ACCOUNTING CHANGES. Neither Borrower, Guarantor nor any
Guarantor Subsidiaries shall change (i) its fiscal year (currently July 1
through June 30); or (ii) its accounting practices except as required by GAAP.
ARTICLE 7.
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any of the following
events or conditions shall constitute an Events of Default under this Agreement
and any other Loan Documents:
(a) Borrower (i) shall fail to pay when due any principal or interest
on the Loan and such failure shall continue for three (3) Business Days
after such payment was due; or (ii) shall fail to pay when due any other
payment required under the terms of this Agreement or any of the other Loan
Documents and such failure shall continue for five (5) Business Days after
such other payment was due; or
(b) Borrower, Guarantor or any Guarantor Subsidiaries shall fail to
observe or perform any covenant, obligation, condition or agreement set
forth in Section 5.7 or Article 6 hereof or in Section 3.1 of the Guaranty;
or
(c) Borrower, Guarantor or any Guarantor Subsidiaries shall fail to
observe or perform any other covenant, obligation, condition or agreement
contained in this Agreement or the other Loan Documents and such failure
shall continue for fifteen (15) days or, provided that Borrower, Guarantor
or such Guarantor Subsidiary is making good faith efforts to cure such
failure and such failure can be cured within thirty (30) days, such failure
shall continue for thirty (30) days; or
(d) Any representation, warranty, certificate, information or other
statement (financial or otherwise) made or furnished by or on behalf of
Borrower, Guarantor or any Guarantor Subsidiaries to Lender in or in
connection with this Agreement or any of the other Loan Documents, or as an
inducement to Lender to enter into this Agreement, shall be false,
incorrect, incomplete or misleading in any material respect when made or
furnished; or
(e) Borrower, Guarantor or any Guarantor Subsidiaries (i) shall fail
to make any payment when due under the terms of any bond, debenture, note
or other evidence of Indebtedness in an amount of $10,000,000 or more to be
paid by such Person (excluding this Agreement and the other Loan Documents
but including any other evidence of Indebtedness of Guarantor, Borrower of
any Guarantor Subsidiaries to Lender) and such failure shall continue
beyond any period of grace provided with respect thereto, or shall default
in the observance or performance of any other agreement, term or condition
contained in any such
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bond, debenture, note or other evidence of Indebtedness, and the effect of
such failure or default is to cause, or permit the holder or holders
thereof to cause such Indebtedness to become due prior to its stated date
of maturity; (ii) shall fail to pay on its stated date of maturity
Indebtedness in an amount of $10,000,000 or more under any such bond,
debenture, note or other evidence of Indebtedness and such failure shall
continue beyond any period of grace provided with respect thereto; or (iii)
there occurs any termination, liquidation, unwind or similar event under
any agreement or instrument relating to the purchase of receivables of
Borrower, Guarantor or any Guarantor Subsidiary and as a result Borrower,
Guarantor or such Guarantor Subsidiary is required to repurchase sold
receivables in an amount of $10,000,000 or more; or
(f) Borrower, Guarantor or any Guarantor Subsidiaries shall (i) apply
for or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property; (ii)
be unable, or admit in writing its inability, to pay its debts generally as
they mature; (iii) make a general assignment for the benefit of its or any
of its creditors; (iv) be dissolved or liquidated in full or in part; (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute); (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of
or taking possession of its property by any official in an involuntary case
or other proceeding commenced against it; or (vii) take any action for the
purpose of effecting any of the foregoing; or
(g) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of Borrower, Guarantor or any Guarantor
Subsidiaries or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Borrower, Guarantor or any Guarantor
Subsidiaries or the debts thereof under any bankruptcy, insolvency or other
similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged
within sixty (60) days of commencement; or
(h) (i) A final judgment or order for the payment of money in excess
of $10,000,000 (exclusive of amounts covered by insurance issued by an
insurer not an Affiliate of Guarantor and otherwise satisfying the
requirements set forth in Section 5.4 shall be rendered against Borrower,
Guarantor or any Guarantor Subsidiaries and the same shall remain
undischarged for a period of sixty (60) days during which execution shall
not be effectively stayed or (ii) any judgment, writ, assessment, warrant
of attachment, tax lien or execution or similar process shall be issued or
levied against a substantial part of the property of Borrower, Guarantor
or any Guarantor Subsidiaries and such judgment, writ, or similar process
shall not be released, stayed, vacated or otherwise dismissed within sixty
(60) days after issue or levy; or
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(i) Any Loan Document or any material term thereof shall cease to be,
or be asserted by Borrower, Guarantor or any Guarantor Subsidiaries not to
be, a legal, valid and binding obligation of Borrower, Guarantor or any
Guarantor Subsidiaries enforceable in accordance with its terms; or
(j) Any Reportable Event (as such term is used under ERISA) which
constitutes grounds for the termination of any Plan by the PBGC or for the
appointment of a trustee by the PBGC to administer any Plan shall occur, or
any Plan shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by the PBGC to administer any Plan; or
(k) A Change of Control shall occur; or
(l) An event of default, or event which with the giving of notice, the
passage of time or both, would become an event of default, shall have
occurred and be continuing under the 1995 Guarantor Credit Agreement; or
(m) Any event(s) or condition(s) which is(are) reasonably likely to
have a Material Adverse Effect shall occur or exist; or
(n) Prior to June 28, 1997, Borrower shall have failed to repay in
full all of the Japan Development Bank Indebtedness.
SECTION 7.2. REMEDIES. Upon the occurrence of any Event of Default,
Lender may, at its option: (i) declare all sums of interest and principal
remaining outstanding on the Loan and all other sums outstanding under or in
respect of this Agreement or any other Loan Document to be immediately due and
payable, without notice of default, presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by Borrower; (ii)
exercise any additional right or remedy which Lender may have under this
Agreement or any other Loan Document; and (iii) exercise any additional right or
remedy which Lender may have at law or in equity. Notwithstanding anything to
the contrary in the preceding sentence, if an Event of Default described in
Section 7.1(f) or Section 7.1(g) above shall occur, all sums of interest and
principal remaining outstanding on the Loan and all other sums outstanding under
or in respect of any Loan Document shall be deemed automatically and immediately
due and payable, without any declaration or other determination by Lender and
without notice of default, presentment, demand, protest, or further notice of
any kind, all of which are hereby expressly waived by Borrower.
ARTICLE 8.
MISCELLANEOUS
SECTION 8.1. AMENDMENTS. No amendment, modification, termination, or
waiver of any provision of any Loan Document to which Borrower is a party, nor
consent to any departure by Borrower from any Loan Document to which it is a
party,
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shall in any event be effective unless the same shall be in writing and signed
by Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 8.2. NOTICES. All notices and other communications provided for
under this Agreement shall be in writing and shall be personally delivered or
sent by first class United States mail, by nationally recognized overnight
courier such as Federal Express or
DHL, or by telecopy or by other means of telecommunication, to the following
addresses:
to Borrower: Lam Research Co., Ltd.
1-1-10 Oyama, 2F
Sagamihara-shi, Kanagawa
229 Japan
Attention: Mr. Yasushi Matsunaga
Telephone: 011-81-427-70-0320
Facsimile: 011-81-427-70-0347
copy to: Lam Research Corporation
47300 Bayside Parkway
Fremont, California 94538-6516
Attention: Brian Boldt
Telephone: (510) 572-6910
Facsimile: (510) 572-1586
to Lender: The Sakura Bank, Limited
International Business Promotion Group
Tokyo Main Office, Div 1
1-2, Yurakucho, 1-chome
Chiyoda-ku, Tokyo
100 Japan
Telephone: 011-81-33-595-3781
Facsimile: 011-81-33-501-1219
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and communications shall be deemed received
(i) if personally delivered, upon delivery; (ii) if sent by first class mail,
following deposit in the mail with first class postage prepaid, upon receipt;
(iii) if sent by courier service with next Business Day delivery charges
prepaid, upon receipt; and (iv) if sent by telex, telecopy or similar form of
telecommunications, upon receipt. Notwithstanding anything to the contrary
contained herein, Lender shall endeavor to provide a copy of each notice sent
hereunder to the entity requested above by Borrower; provided, however, except
with respect to any notice provided by Lender under Section 7.2 hereof, any
failure by Lender to provide a copy of any notice to such entity shall not
affect the validity of any such notice given by Lender to Borrower as provided
herein.
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SECTION 8.3. NO WAIVER. No failure or delay on the part of Lender in
exercising any right, power, or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right power, or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy hereunder. The rights and remedies provided
herein are cumulative and are not exclusive of any other rights, powers,
privileges, or remedies, now or hereafter existing, at law or in equity or
otherwise.
SECTION 8.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights under any Loan Document without the prior written consent of Lender.
Lender may (i) without the consent of Borrower, grant participations in this
Agreement or in any of its rights under this Agreement; and (ii) with the
consent of Borrower, which consent shall not be unreasonably withheld,
negotiate, pledge or hypothecate this Agreement or in any of its rights under
this Agreement. Borrower shall accord full recognition to any such assignment,
and all rights and remedies of Lender in connection with the interest so
assigned shall be as fully enforceable by such assignee or participant as they
were by Lender before such assignment. In connection with any proposed
assignment or participation, Lender may disclose to the proposed assignee or
participant any information that Borrower is required to deliver to Lender
pursuant to this Agreement provided such disclosure is made subject to the same
confidentiality restrictions, if any, applicable to Lender.
SECTION 8.5. COSTS AND EXPENSES. Borrower agrees to pay promptly upon
demand therefore by Lender all costs and expenses (including, but not limited
to, reasonable attorneys' fees and costs of settlement) incurred by Lender in
enforcing any obligations of or in collecting any payments due from Borrower
under any Loan Document or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
"work-out" or of any insolvency or bankruptcy proceedings.
SECTION 8.6. INTEGRATION. This Agreement and the Loan Documents contain
the entire agreement between the parties relating to the subject matter hereof
and supersede all oral statements and prior writings with respect thereto.
SECTION 8.7. INDEMNIFICATION. Borrower shall indemnify, defend and hold
harmless Lender and each of its shareholders, directors, officers, employees,
successors and assigns (collectively, "Indemnitees") against any and all losses,
liabilities, obligations, damages, claims, assessments, judgments, costs and
expenses (collectively, "Losses") that may be imposed on, incurred by or
asserted against any Indemnitee, including without limitation in each such case,
any Interest Rate Funding Costs resulting from, arising out of or relating to:
(i) any default in payment or any prepayment of the principal
amount of the Loan or any part thereof or interest accrued thereon, as
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and when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise); or
(ii) the occurrence of any Event of Default;
provided, however, that Borrower shall not indemnify, defend and hold harmless
the Indemnitees for any Losses to the extent caused by the negligence or willful
misconduct of any Indemnitee. Any Indemnitee seeking indemnification pursuant
to this Section shall give notice to Borrower within a reasonable time of the
assertion of any claim which could result in a Loss. Borrower, at its expense,
shall have the right to assume the defense of such claim with counsel reasonably
satisfactory to the Indemnitee, including without limitation the right to
compromise or settle such claim so long as no liability is imposed on any
Indemnitee as a result thereof. If Borrower, within a reasonable time after
receipt of the notice of such claim, fails to defend the Indemnitee, then such
Indemnitee shall have the right to undertake the defense, compromise, or
settlement of such claim on its own behalf, and for the account and risk of
Borrower. This indemnity shall survive termination of this Agreement.
SECTION 8.8. APPLICABLE LAW; JURISDICTION. This Agreement shall be
governed by, and construed in accordance with the internal laws of the State of
California. Borrower hereby irrevocably submits to the jurisdiction of any
California state court located in Santa Clara County, or the Federal District
Court of the Northern District of California in any action or proceeding arising
out of or relating to this Agreement, and Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such California State or Federal court. Borrower hereby
irrevocably appoints Richard H. Lovgren (the "Process Agent"), with an office on
the date hereof c/o Lam Research Corporation, 47300 Bayside Parkway, Fremont,
California 94538-6516, United States, as its agent to receive, on its behalf of
it and its property, service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding. Such
service may be made by registered or certified mail, return receipt requested,
or by delivering a copy of such process to Borrower in care of the Process Agent
at the Process Agent's above address, and Borrower hereby irrevocably authorizes
and directs the Process Agent to accept such service on his behalf. As an
alternative method of service, Borrower also irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to Borrower at the address set forth in Section 8.2 above.
Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in any other jurisdictions by suit on the
judgment or in any other manner provided by law.
Nothing in this Section 8.8 shall affect the right of Lender to serve legal
process in any other manner permitted by law or affect the right of Lender to
bring any action or proceeding against Borrower or his property in the courts of
any other jurisdiction. To the extent that Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to
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itself or its property, Borrower hereby irrevocably waives such immunity in
respect of its obligations under this Agreement.
SECTION 8.9. SEVERABILITY OF PROVISIONS. Any provision of any Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 8.10. HEADINGS. Article and Section headings in the Loan
Documents are included in such Loan Documents for the convenience of reference
only and shall not constitute a part of the applicable Loan Documents for any
other purpose.
SECTION 8.11. JURY TRIAL WAIVER. LENDER AND BORROWER HEREBY WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT
OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR THE LOAN DOCUMENTS. NO OFFICER OF Lender HAS AUTHORITY TO WAIVE,
CONDITION, OR MODIFY THIS PROVISION.
SECTION 8.12. ASSISTANCE OF LENDER'S SAN FRANCISCO AGENCY; DELIVERY OF
LOAN DOCUMENTS. Lender and Borrower acknowledge and agree that (i) Lender's San
Francisco Agency was specifically responsible for the negotiation, documentation
and underwriting of the Loan; (ii) the Loan Agreement was executed and delivered
by Lender to Borrower in San Francisco, California; and (iii) the Loan Documents
were delivered by Borrower to Lender in San Francisco, California.
SECTION 8.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same document.
[SIGNATURES ARE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
LENDER:
The Sakura Bank, Limited,
a Japanese banking corporation
By:
-------------------------------
Name:
-----------------------------
Title:
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BORROWER:
Lam Research Co., Ltd.
a Japanese corporation
By:
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Yo Miyazaki, President
-36-
SCHEDULE 6.1 TO TERM LOAN AGREEMENT
(SECTION 6.1(ii) INDEBTEDNESS)
-37-