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Exhibit 10.46*
CREDIT AGREEMENT
Dated as of September 20, 2000
among
WESTERN DIGITAL CORPORATION,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, and
BANK OF AMERICA, N.A.,
as Documentation Agent
* Portions of this document have been omitted pursuant to a confidential
treatment request filed with the Securities and Exchange Commission. Such
portions have been provided separately to the Securities and Exchange
Commission.
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TABLE OF CONTENTS
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1. AMOUNT AND TERMS OF CREDIT ..................................................... 1
1.1 Credit Facilities ....................................................... 1
1.2 Letters of Credit ....................................................... 4
1.3 Prepayments ............................................................. 4
1.4 Use of Proceeds ......................................................... 6
1.5 Interest and Applicable Margins ......................................... 6
1.6 Eligible Accounts ....................................................... 8
1.7 [intentionally omitted] ................................................. 10
1.8 Cash Management System .................................................. 10
1.9 Fees .................................................................... 10
1.10 Receipt of Payments ..................................................... 11
1.11 Application and Allocation of Payments .................................. 11
1.12 Loan Account and Accounting ............................................. 12
1.13 Indemnity ............................................................... 12
1.14 Access .................................................................. 13
1.15 Taxes ................................................................... 14
1.16 Capital Adequacy; Increased Costs; Illegality ........................... 14
1.17 Single Loan ............................................................. 16
1.18 WD UK and WD IS ......................................................... 16
1.19 Bank Products ........................................................... 16
2. CONDITIONS PRECEDENT ........................................................... 16
2.1 Conditions to the Initial Loans ......................................... 16
2.2 Further Conditions to Each Loan ......................................... 18
3. REPRESENTATIONS AND WARRANTIES ................................................. 18
3.1 Corporate Existence; Compliance with Law ................................ 18
3.2 Executive Offices; Collateral Locations; FEIN ........................... 19
3.3 Corporate Power, Authorization, Enforceable Obligations ................. 19
3.4 Financial Statements and Projections .................................... 19
3.5 Material Adverse Effect ................................................. 20
3.6 Ownership of Property; Liens ............................................ 20
3.7 Labor Matters ........................................................... 21
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness ............................................................ 21
3.9 Government Regulation ................................................... 21
3.10 Margin Regulations ...................................................... 22
3.11 Taxes ................................................................... 22
3.12 ERISA ................................................................... 22
3.13 No Litigation ........................................................... 23
3.14 Brokers ................................................................. 23
3.15 Intellectual Property ................................................... 23
3.16 Full Disclosure ......................................................... 24
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3.17 Environmental Matters ................................................... 24
3.18 Insurance ............................................................... 25
3.19 Deposit and Disbursement Accounts ....................................... 25
3.20 Government Contracts .................................................... 25
3.21 Customer and Trade Relations ............................................ 25
3.22 Agreements and Other Documents .......................................... 25
3.23 Solvency ................................................................ 25
3.24 Subordinated Debt ....................................................... 25
4. FINANCIAL STATEMENTS AND INFORMATION 26
4.1 Reports and Notices ..................................................... 26
4.2 Communication with Accountants .......................................... 26
5. AFFIRMATIVE COVENANTS .......................................................... 26
5.1 Maintenance of Existence and Conduct of Business ........................ 27
5.2 Payment of Obligations .................................................. 27
5.3 Books and Records ....................................................... 27
5.4 Insurance; Damage to or Destruction of Collateral; Condemnation ......... 28
5.5 Compliance with Laws .................................................... 30
5.6 Supplemental Disclosure ................................................. 30
5.7 Intellectual Property ................................................... 30
5.8 Environmental Matters ................................................... 30
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters .......... 31
5.10 Further Assurances ...................................................... 31
6. NEGATIVE COVENANTS ............................................................. 31
6.1 Mergers, Subsidiaries, Etc .............................................. 31
6.2 Investments; Loans and Advances ......................................... 34
6.3 Indebtedness ............................................................ 34
6.4 Employee Loans and Affiliate Transactions ............................... 35
6.5 Capital Structure and Business .......................................... 35
6.6 Guaranteed Indebtedness ................................................. 36
6.7 Liens ................................................................... 36
6.8 Sale of Stock and Assets ................................................ 36
6.9 ERISA ................................................................... 37
6.10 Financial Covenants ..................................................... 37
6.11 Hazardous Materials ..................................................... 37
6.12 Sale-Leasebacks ......................................................... 37
6.13 Cancellation of Indebtedness ............................................ 37
6.14 Restricted Payments ..................................................... 37
6.15 Change of Corporate Name or Location; Change of Fiscal Year ............. 38
6.16 No Impairment of Intercompany Transfers ................................. 38
6.17 No Speculative Transactions ............................................. 38
6.18 Leases .................................................................. 38
6.19 Changes Relating to Subordinated Debt ................................... 38
6.20 Inactive Subsidiaries ................................................... 39
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7. TERM ........................................................................... 39
7.1 Termination ............................................................. 39
7.2 Survival of Obligations Upon Termination of Financing Arrangements ...... 39
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ......................................... 39
8.1 Events of Default ....................................................... 39
8.2 Remedies ................................................................ 41
8.3 Waivers by Credit Parties ............................................... 42
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF CO-AGENTS ........................ 42
9.1 Assignment and Participations ........................................... 42
9.2 Appointment of Co-Agents ................................................ 44
9.3 Co-Agents' Reliance, Etc ................................................ 45
9.4 GE Capital, Bank of America and their Affiliates ........................ 45
9.5 Lender Credit Decision .................................................. 45
9.6 Indemnification ......................................................... 46
9.7 Successor Co-Agents ..................................................... 46
9.8 Setoff and Sharing of Payments .......................................... 47
9.9 Advances; Non-Funding Lenders; Information; Actions in Concert .......... 47
9.10 Relationship Between Co-Agents .......................................... 49
10. SUCCESSORS AND ASSIGNS ........................................................ 49
11. MISCELLANEOUS ................................................................. 50
11.1 Complete Agreement; Modification of Agreement .......................... 50
11.2 Amendments and Waivers ................................................. 50
11.3 Fees and Expenses ...................................................... 52
11.4 No Waiver .............................................................. 53
11.5 Remedies ............................................................... 53
11.6 Severability ........................................................... 53
11.7 Conflict of Terms ...................................................... 53
11.8 Confidentiality ........................................................ 54
11.9 GOVERNING LAW .......................................................... 54
11.10 Notices ................................................................ 55
11.11 Section Titles ......................................................... 55
11.12 Counterparts ........................................................... 55
11.13 WAIVER OF JURY TRIAL ................................................... 55
11.14 Press Releases ......................................................... 56
11.15 Reinstatement .......................................................... 56
11.16 Advice of Counsel ...................................................... 56
11.17 No Strict Construction ................................................. 56
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INDEX OF APPENDICES
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Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (Annex A) - Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule (1.1) - Agent Representative
Disclosure Schedule (3.2) - Executive Offices; Collateral Locations; FEIN
Disclosure Schedule (3.4(a)) - Financial Statements
Disclosure Schedule (3.4(b)) - Projections
Disclosure Schedule (3.6) - Real Estate and Leases
Disclosure Schedule (3.7) - Labor Matters
Disclosure Schedule (3.8) - Ventures and Affiliates; Stock
Disclosure Schedule (3.11) - Tax Matters
Disclosure Schedule (3.12) - ERISA Plans
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.15) - Intellectual Property
Disclosure Schedule (3.17) - Hazardous Materials
Disclosure Schedule (3.18) - Insurance
Disclosure Schedule (3.19) - Deposit and Disbursement Accounts
Disclosure Schedule (3.20) - Government Contracts
Disclosure Schedule (3.22) - Material Agreements
Disclosure Schedule (5.1) - Trade Names
Disclosure Schedule (6.3) - Indebtedness
Disclosure Schedule (6.5) - ***
Disclosure Schedule (6.6) - Guaranteed Indebtedness
Disclosure Schedule (6.7) - Existing Liens
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THIS CREDIT AGREEMENT ("Agreement") is entered into as of September
20, 2000, by and among WESTERN DIGITAL CORPORATION, a Delaware corporation
("Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself as a Lender, and as Administrative Agent for Lenders and,
as the context may require, Security Trustee for Beneficiaries (in such
capacity, "Agent"), BANK OF AMERICA, N.A. (in its individual capacity, "Bank of
America"), for itself as a Lender, and as documentation agent for Lenders (in
such capacity, "Documentation Agent"; Administrative Agent, Documentation Agent
and, as the context may require, Security Trustee, are collectively referred to
as "Co-Agents" and each, a "Co-Agent"), and the other Lenders signatory hereto
from time to time.
RECITALS
A. Borrower has requested that Lenders extend a revolving credit
facility to Borrower of up to One Hundred and Twenty-Five Million Dollars
($125,000,000) in the aggregate for the purpose of providing funds for (i)
refinancing certain indebtedness of Borrower, (ii) working capital financing for
Borrower and its Subsidiaries, (iii) other general corporate purposes of
Borrower and its Subsidiaries, and (iv) certain fees and expenses in connection
with the financing transactions contemplated herein; and Lenders are willing to
make certain loans and other extensions of credit to Borrower of up to such
amount upon the terms and conditions set forth herein.
B. Borrower desires to secure all of its obligations under the Loan
Documents by granting to Agent, for the benefit of Co-Agents and Lenders, a
security interest in and lien upon all of its existing and after-acquired
personal and real property as set forth herein and the other Loan Documents.
C. Capitalized terms used in this Agreement shall have the meanings
ascribed to them in Annex A and, for purposes of this Agreement and the other
Loan Documents, the rules of construction set forth in Annex A shall govern. All
exhibits, schedules, annexes and other attachments (collectively, "Appendices")
hereto, or expressly identified to this Agreement, are incorporated herein by
reference and, taken together with this Agreement, shall constitute but a single
agreement. These Recitals shall be construed as part of the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities
(a) Revolving Credit Facility.
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(i) Subject to the terms and conditions hereof, each Lender
agrees to make available to Borrower from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "Revolving Credit
Advance"). The Pro Rata Share of the Revolving Loan of any Lender shall not at
any time exceed its separate Revolving Loan Commitment. The obligations of each
Lender hereunder shall be several and not joint. Except to the extent otherwise
provided in Section 1.1(a)(iii), the aggregate amount of Revolving Credit
Advances outstanding shall not exceed at any time the lesser of (A) the Maximum
Amount and (B) the Borrowing Base, in each case less the sum of the Letter of
Credit Obligations and the Swing Line Loan outstanding at such time ("Borrowing
Availability"). Until the Commitment Termination Date, Borrower may from time to
time borrow, repay and reborrow under this Section 1.1(a). Each Revolving Credit
Advance shall be made on notice by Borrower to the representative of Agent
identified in Schedule (1.1) at the address specified therein. Any such notice
must be given no later than (1) 10:30 a.m. (California time) on the Business Day
of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or
(2) 10:30 a.m. (California time) on the date that is three Business Days prior
to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") shall be given in writing (by
telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),
and shall include the information required in such Exhibit and such other
information as may be required by any Co-Agent. If Borrower desires to have the
Revolving Credit Advances bear interest by reference to a LIBOR Rate, it must
comply with Section 1.5(e).
(ii) Borrower shall execute and deliver to each Lender a note
to evidence the Revolving Loan Commitment of such Lender, which note shall be
(A) in the principal amount of the Revolving Loan Commitment of such Lender, (B)
dated the Closing Date and (C) substantially in the form of Exhibit 1.1(a)(ii)
(each a "Revolving Note" and collectively the "Revolving Notes"). Each Revolving
Note shall represent the obligation of Borrower to pay the amount of each
Lender's Revolving Loan Commitment or, if less, such Lender's Pro Rata Share of
the aggregate unpaid principal amount of all Revolving Credit Advances made to
Borrower together with interest thereon as prescribed in Section 1.5. The entire
unpaid balance of the Revolving Loan and all other noncontingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date.
(iii) At the request of Borrower, Agent may (but shall have
absolutely no obligation to), in its discretion, make Revolving Credit Advances
to Borrower on behalf of Lenders in amounts that cause the outstanding balance
of the aggregate Revolving Loan to exceed the Borrowing Base (less the Swing
Line Loan) (any such excess Revolving Credit Advances are herein referred to
collectively as "Overadvances"); provided, that (A) no such event or occurrence
shall cause or constitute a waiver of Agent's, Co-Agents', the Swing Line
Lender's or Lenders' right to refuse to make any further Overadvances, Swing
Line Advances or Revolving Credit Advances, or incur any Letter of Credit
Obligations, as the case may be, at any time that an Overadvance exists or would
result therefrom, and (B) any Overadvances shall not constitute a Default or
Event of Default due to Borrower's failure to comply with Section 1.3(b)(i) for
so long as Agent permits such Overadvance to be outstanding. In addition,
Overadvances may be made even if the conditions to lending set forth in Section
2.2 have not been met. All Overadvances shall constitute Index Rate Loans, shall
bear interest at the Default Rate and shall be payable on demand. Except as
otherwise provided in Section 1.11(b), the
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authority of Agent to make Overadvances (1) is limited to an aggregate amount
not to exceed $1,000,000 at any time, (2) shall not cause the Revolving Loan to
exceed the Maximum Amount, and (3) may be revoked prospectively by a written
notice to Agent signed by any Co-Agent or by Lenders holding fifty percent (50%)
or more of the Revolving Loan Commitments.
(b) Swing Line Facility.
(i) Swing Line Advances. Agent shall notify the Swing Line
Lender upon Agent's receipt of any Notice of Revolving Credit Advance. Subject
to the terms and conditions hereof, the Swing Line Lender may, in its
discretion, make available from time to time until the Commitment Termination
Date advances (each, a "Swing Line Advance") in accordance with any such notice.
The aggregate amount of Swing Line Advances outstanding shall not exceed at any
time the lesser of (A) the Swing Line Commitment and (B) the lesser of (1) the
Maximum Amount and (2) (except for Overadvances) the Borrowing Base, in each
case less the outstanding balance of the Revolving Loan at such time ("Swing
Line Availability"). Until the Commitment Termination Date, Borrower may from
time to time borrow, repay and reborrow under this Section 1.1(b). Each Swing
Line Advance shall be made pursuant to a Notice of Revolving Credit Advance
delivered by Borrower to Agent in accordance with Section 1.1(a). Any such
notice must be given no later than 10:30 a.m. (California time) on the Business
Day of the proposed Swing Line Advance. Notwithstanding any other provision of
this Agreement or the other Loan Documents, the Swing Line Loan shall constitute
an Index Rate Loan. Unless the Swing Line Lender has received at least one
Business Day's prior written notice from any Co-Agent or Requisite Lenders
instructing it not to make any Swing Line Advance, the Swing Line Lender shall,
notwithstanding the failure of any condition precedent set forth in Section 2.2
(other than the condition precedent set forth in Section 2.2(e)) be entitled to
fund such Swing Line Advance and, in connection with such Swing Line Advance, to
have each Lender make Revolving Credit Advances in accordance with Section
1.1(b)(iii) and to purchase participating interests in accordance with Section
1.1(b)(iv). Borrower shall repay the aggregate outstanding principal amount of
the Swing Line Loan upon demand therefor by Agent.
(ii) Swing Line Note. Borrower shall execute and deliver to the
Swing Line Lender a promissory note to evidence the Swing Line Commitment. Such
note shall be (A) in the principal amount of the Swing Line Commitment, (B)
dated the Closing Date, and (C) substantially in the form of Exhibit 1.1(b)(ii)
(the "Swing Line Note"). The Swing Line Note shall represent the obligation of
Borrower to pay the amount of the Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all Swing Line Advances made to Borrower
together with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the Swing Line Loan and all other noncontingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at
any time and from time to time in its sole and absolute discretion, but no less
frequently than once weekly, shall on behalf of Borrower (and Borrower hereby
irrevocably authorizes the Swing Line Lender to so act on its behalf) request
each Lender (including the Swing Line Lender) to make a Revolving Credit Advance
to Borrower (which shall be an Index Rate Loan) in an amount equal to such
Lender's Pro Rata Share of the principal amount of the Swing Line Loan
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(the "Refunded Swing Line Loan") outstanding on the date such notice is given.
Unless any of the events described in Sections 8.1(h) or 8.1(i) shall have
occurred (in which event the procedures of Section 1.1(b)(iv) shall apply) and
regardless of whether the conditions precedent set forth in this Agreement to
the making of a Revolving Credit Advance are then satisfied, each Lender shall
disburse directly to Agent its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line Lender prior to 12:00 noon (California time) in
immediately available funds on the Business Day next succeeding the date such
notice is given. The proceeds of such Revolving Credit Advances shall be
immediately paid to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding
a Swing Line Loan with a Revolving Credit Advance pursuant to Section
1.1(b)(iii), one of the events described in Sections 8.1(h) or 8.1(i) shall have
occurred, then, subject to the provisions of Section 1.1(b)(v) below, each
Lender shall, on the date such Revolving Credit Advance was to have been made
for the benefit of Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount equal to its Pro Rata
Share of such Swing Line Loan. Upon request, each Lender shall promptly transfer
to the Swing Line Lender, in immediately available funds, the amount of its
participation interest.
(v) Lenders' Obligations Unconditional. Each Lender's
obligation to make Revolving Credit Advances in accordance with Section
1.1(b)(iii) and to purchase participating interests in accordance with Section
1.1(b)(iv) shall be absolute and unconditional and shall not be affected by any
circumstance, including: (A) any setoff, counterclaim, recoupment, defense or
other right that such Lender may have against the Swing Line Lender, Borrower or
any other Person for any reason whatsoever; (B) the occurrence or continuance of
any Default or Event of Default; (C) any inability of Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement on the date upon
which such participating interest is to be purchased; or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections 1.1(b)(iii) or
1.1(b)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Lender, together with interest thereon
for each day from the date of non-payment until such amount is paid in full at
the Federal Funds Rate for the first two Business Days and at the Index Rate
thereafter.
(c) Reliance on Notices. Each Co-Agent shall be entitled to rely
upon, and shall be fully protected in relying upon, any Notice of Revolving
Credit Advance, Notice of Conversion/Continuation or similar notice believed by
such Co-Agent to be genuine. Each Co-Agent may assume that each Person executing
and delivering any such notice was duly authorized, unless the responsible
individual acting thereon for such Co-Agent has actual knowledge to the
contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower shall have the right to
request, and Lenders agree to incur, or purchase participations in, Letter of
Credit Obligations in respect of Borrower.
1.3 Prepayments.
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(a) Voluntary Prepayments. Borrower may at any time on at least
five days' prior written notice to each Co-Agent, voluntarily prepay all or part
of the Revolving Loan and permanently reduce (but not terminate) the Revolving
Loan Commitment; provided, that (i) any such prepayments or reductions shall be
in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess
of such amount and (ii) the Revolving Loan Commitment shall not be reduced to an
amount less than the greater of (A) $75,000,000 and (B) the L/C Sublimit.
Borrower may at any time on at least ten days' prior written notice to Co-Agents
terminate the Revolving Loan Commitment; provided, that upon such termination
all Loans and other Obligations shall be immediately due and payable in full and
Borrower shall make arrangements, in accordance with the terms and conditions of
Annex B, for the satisfaction of any outstanding Letter of Credit Obligations.
Any such voluntary prepayment and any such reduction or termination of the
Revolving Loan Commitment must be accompanied by payment of the Fee required by
Section 1.9(c), if any, each Co-Agent's and each Lender's out-of-pocket
expenses, and payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b). Upon any such prepayment and reduction or termination of the
Revolving Loan Commitment, Borrower's right to request Revolving Credit
Advances, or request that Letter of Credit Obligations be incurred on its
behalf, or request Swing Line Advances, shall simultaneously be permanently
reduced or terminated, as the case may be; provided, that a permanent reduction
of the Revolving Loan Commitment shall require a corresponding pro rata
reduction in the L/C Sublimit.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of the Revolving
Loan exceeds the lesser of (A) the Maximum Amount and (B) the Borrowing Base, in
each case less the outstanding Swing Line Loan at such time, then Borrower shall
immediately repay the aggregate outstanding Revolving Credit Advances to the
extent required to eliminate such excess. If any such excess remains after
repayment in full of the aggregate outstanding Revolving Credit Advances,
Borrower shall provide cash collateral for the Letter of Credit Obligations in
the manner set forth in Annex B to the extent required to eliminate such excess.
Notwithstanding the foregoing, any Overadvance made pursuant to Section
1.1(a)(iii) shall be repaid only on demand.
(ii) Except as provided below, immediately upon receipt by any
Credit Party of proceeds of any disposition of any of its assets (other than a
pledge of (A) any Stock of any Excluded Subsidiary or (B) any Excluded
Investment) or any sale of Stock of any Subsidiary of any Credit Party, Borrower
shall cause the Loans to be prepaid in an amount equal to all such proceeds, net
of (I) commissions and other reasonable and customary transaction costs, fees
and expenses properly attributable to such transaction and payable by Borrower
in connection therewith (in each case, paid to non-Affiliates), (II) transfer
taxes, (III) amounts payable to holders of senior Liens (to the extent such
Liens constitute Permitted Encumbrances hereunder), if any, and (A) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith. Any such prepayment shall be applied in accordance with Section
1.3(c). Notwithstanding the generality of the foregoing, Borrower shall not be
required to prepay the Loans from the proceeds of (x) asset dispositions
permitted by Section 6.8(a), (y) the sale of the Stock of any Excluded
Subsidiary, or (z) asset dispositions permitted by Sections 6.8(b) through (d)
at any time that no Default or Event of Default has occurred and is continuing
in an amount
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not to exceed (1) $250,000 in any single transaction or series of related
transactions or (2) $1,000,000 in the aggregate for all such transactions.
(iii) If Borrower issues Stock (excluding issuances under the
Equity Drawdown Facility), no later than the Business Day following the date of
receipt of the cash proceeds thereof, Borrower shall prepay the Loans in an
amount equal to all such cash proceeds, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in connection
therewith. Any such prepayment shall be applied in accordance with Section
1.3(c).
(c) Application of Certain Mandatory Prepayments. Any prepayments
made by Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) shall be applied as
follows: first, to Fees and reimbursable expenses of each Co-Agent then due and
payable pursuant to any of the Loan Documents (other than amounts relating to
Bank Products); second, to interest then due and payable on the Swing Line Loan;
third, to the principal balance of the Swing Line Loan until the same shall have
been repaid in full; fourth, to interest then due and payable on the Revolving
Credit Advances; fifth, to the outstanding principal balance of Revolving Credit
Advances until the same shall have been paid in full; sixth, in the event that
Agent has delivered an Activation Notice at any time prior to any such
prepayment, to any Letter of Credit Obligations, to provide cash collateral
therefor in the manner set forth in Annex B, until all such Letter of Credit
Obligations have been fully cash collateralized in the manner set forth in Annex
B; and seventh, to the payment to Bank of America of any reimbursable amounts
relating to Bank Products. Neither the Revolving Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Sections 5.4(c) or 5.4(d), respectively, shall be applied first, to the Swing
Line Loans and second to the Revolving Credit Advances. Neither the Revolving
Loan Commitment nor the Swing Line Loan Commitment shall be permanently reduced
by the amount of any such prepayments.
(e) No Consent to Prohibited Transactions. Nothing in this Section
1.3 shall be construed to constitute any Co-Agent's or any Lender's consent to
any transaction that is not permitted by other provisions of this Agreement or
the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the
Revolving Loan and the Swing Line Loan solely for the financing of Borrower's
ordinary working capital and general corporate needs (but excluding in any event
the making of any Restricted Payment not specifically permitted by Section
6.14).
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit
of Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based
on the aggregate Revolving Credit Advances and Swing Line Loan outstanding from
time to time; as the case may be.
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<PAGE> 12
The Applicable Revolver Index Margin, Applicable Revolver LIBOR
Margin, Applicable L/C Margin, and Applicable Unused Line Fee Margin shall be
0.75%, 2.25%, 1.50%, and 0.50% per annum, respectively, as of the Closing Date.
The Applicable Revolver Index Margin and Applicable Revolver LIBOR Margin shall
be adjusted (up or down) prospectively on a monthly basis as determined by
Borrower's Average Borrowing Availability for the immediately preceding month,
commencing with the first day of the calendar month immediately following the
first full calendar month after the Closing Date, and shall be determined by
reference to the following grid:
<TABLE>
<CAPTION>
Average Borrowing Applicable Revolver Applicable Revolver
Availability LIBOR Margin Index Margin
-----------------------------------------------------------------------------------------
<S> <C> <C>
> $80,000,000 2.25% 0.75%
-----------------------------------------------------------------------------------------
> $60,000,000, but
< or = to $80,000,000 2.50% 1.00%
-----------------------------------------------------------------------------------------
< or = $60,000,000 3.00% 1.50%
</TABLE>
All adjustments in the Applicable Revolver Index Margin and
Applicable Revolver LIBOR Margin shall be implemented on the first day of each
calendar month following a calendar month for which the Average Borrowing
Availability, as determined by Agent, necessitates such an adjustment. If a
Default or an Event of Default shall have occurred and be continuing at the time
any reduction is to be implemented, that reduction shall be deferred until the
first day of the first calendar month following the date on which such Default
or Event of Default is waived or cured.
(b) If any payment of any of the Obligations becomes due and
payable on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such Fees or
interest are payable. Each determination by Agent of an interest rate and Fees
hereunder shall be final, binding and conclusive on Borrower (absent manifest
error).
(d) So long as an Event of Default shall have occurred and be
continuing under Section 8.1(a), 8.1(h) or 8.1(i), or so long as any other
Default or Event of Default shall have occurred and be continuing and at the
election of Co-Agents (or upon the written request of
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<PAGE> 13
Requisite Lenders) confirmed by written notice from Co-Agents to Borrower, the
interest rates applicable to the Loans and the Letter of Credit Fees shall be
increased by two percentage points (2.0%) per annum above the rates of interest
or the rate of such Fees otherwise applicable hereunder (the "Default Rate"),
and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Default or Event of
Default until that Default or Event of Default is cured or waived and shall be
payable upon demand.
(e) Subject to the conditions precedent set forth in Section 2.2,
Borrower shall have the option to (i) request that any Revolving Credit Advance
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans,
(iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$5,000,000 and integral multiples of $500,000 in excess of such amount. Any such
election must be made by 10:30 a.m. (California time) on the third Business Day
prior to (A) the date of any proposed Advance that is to bear interest at the
LIBOR Rate, (B) the end of each LIBOR Period with respect to any LIBOR Loans to
be continued as such, or (C) the date on which Borrower wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in
such election. If no election is received with respect to a LIBOR Loan by 10:30
a.m. (California time) on the third Business Day prior to the end of the LIBOR
Period with respect thereto (or if a Default or an Event of Default shall have
occurred and be continuing or the additional conditions precedent set forth in
Section 2.2 shall not have been satisfied), that LIBOR Loan shall be converted
to an Index Rate Loan at the end of its LIBOR Period. Borrower must make such
election by notice to Agent in writing, by telecopy or overnight courier. In the
case of any conversion or continuation, such election must be made pursuant to a
written notice (a "Notice of Conversion/Continuation") in the form of Exhibit
1.5(e).
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, that if at any time thereafter
the rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent, on behalf of Lenders,
is equal to the total interest that would have been received had the interest
rate payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that
8
<PAGE> 14
such Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. Based on the most recent Borrowing Base
Certificate delivered by Borrower to each Co-Agent and on any other information
available to Co-Agents, Co-Agents shall in their reasonable credit judgment
determine which Accounts of Borrower shall be "Eligible Accounts" for purposes
of this Agreement. In determining whether a particular Account constitutes an
Eligible Account, Co-Agents shall not include any such Account to which any of
the exclusionary criteria set forth below applies. Agent reserves the right,
after consultation among Co-Agents, at any time and from time to time after the
Closing Date in its reasonable credit judgment, to adjust any such criteria, to
adjust advance rates, to establish Reserves, and to modify Reserves with respect
to Eligible Accounts, subject to the approval of Supermajority Lenders in the
event any such adjustments or the establishment of such new criteria or Reserves
have the effect of making more credit available. Eligible Accounts shall not
include any Account of Borrower:
(a) that does not arise from the sale of goods or the performance
of services by Borrower in the ordinary course of its business;
(b) upon which Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (i) as to
which Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process, or (ii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor's
obligation to pay that invoice is subject to Borrower's completion of further
performance under such contract or is subject to the equitable lien of a surety
bond issuer;
(c) to the extent that any defense, counterclaim, setoff or dispute
is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in form
and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject to any
right, claim, security interest or other interest of any other Person, other
than Liens in favor of Agent, on behalf of Co-Agents and Lenders;
9
<PAGE> 15
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party or any Subsidiary of any Credit Party,
or to any entity that has any common officer or director with any such Credit
Party or Subsidiary;
(h) that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless Agent,
after consultation among Co-Agents, in its sole discretion has agreed to the
contrary in writing and Borrower, if necessary or desirable, has complied with
respect to such obligation with the Federal Assignment of Claims Act of 1940 or
any applicable state statute, county or municipal law restricting assignment
thereof;
(i) except as otherwise set forth in clause (b) or (c) of the
definition of "Borrowing Base" set forth in Annex A, that is the obligation of
an Account Debtor located in a foreign country other than Canada (excluding the
provinces of Quebec and Newfoundland and the Northwest Territories);
(j) to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to Borrower or
any Subsidiary thereof but only to the extent of the potential offset;
(k) that arises with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) such Account is not paid within the earlier of 60 days
following its due date or 90 days following its original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or
fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors;
(m) that is an obligation of an Account Debtor with respect to
which fifty percent (50%) or more of the Dollar amount of all Accounts owing by
such Account Debtor are ineligible under the other criteria set forth in this
Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of Co-Agents and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties pertaining
to such Account in the Loan Documents is untrue;
10
<PAGE> 16
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit established
by Agent, after consultation among Co-Agents, in its reasonable credit judgment,
following prior notice of such limit by Agent to Borrower;
(r) to the extent that (i) such Account, together with all other
Accounts owing by such Account Debtor (other than a Qualified Account Debtor)
and its Affiliates as of any date of determination exceed fifteen percent (15%)
of all Eligible Accounts, or (ii) if the Account Debtor is a Qualified Account
Debtor, such Account, together with all other Accounts owing by such Account
Debtor and its Affiliates as of any date of determination exceed 25% of all
Eligible Accounts;
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent, after consultation
among Co-Agents, in its reasonable credit judgment.
1.7 [intentionally omitted]
1.8 Cash Management System. On or prior to the Closing Date, Borrower
will establish and will maintain until the Termination Date, the cash management
system described in Annex C (the "Cash Management System").
1.9 Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in the Fee Letter, at the times specified for payment therein.
(b) As additional compensation for the Lenders, Borrower shall pay
to Agent, for the ratable benefit of such Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a Fee for Borrower's non-use of available funds in
an amount equal to (i) the Applicable Unused Line Fee Margin (calculated on the
basis of a 360 day year for actual days elapsed) multiplied by (ii) (A) the
Maximum Amount (as it may be reduced from time to time) minus (B) the average
for the period of the daily closing balances of the Revolving Loan and the Swing
Line Loan outstanding during the period for which such Fee is due.
(c) If (i) Borrower voluntarily prepays the Revolving Loan and
terminates the Revolving Loan Commitment, or voluntarily prepays the Revolving
Loan and reduces the Revolving Loan Commitment below $75,000,000, in each case
whether before or after acceleration of the Obligations, or (ii) the Revolving
Loan Commitment is otherwise terminated as a result of the occurrence of an
Event of Default under Section 8.1(h) or (i), then Borrower shall pay to Agent,
for the benefit of Lenders as liquidated damages and compensation for the costs
of being prepared to make funds available hereunder an amount equal to (A) the
Applicable Percentage multiplied by (B) the amount of the reduction of the
Revolving Loan Commitment or, if terminated, the amount of the Revolving Loan
Commitment at such time. As used herein,
11
<PAGE> 17
the term "Applicable Percentage" shall mean one percent (1.0%), in the case of a
prepayment on or prior to the first anniversary of the Closing Date.
Notwithstanding the foregoing, no prepayment fee shall be payable by Borrower
upon a mandatory prepayment made pursuant to Sections 1.3(b) or 1.16(c);
provided, that Borrower does not permanently reduce the Revolving Loan
Commitment upon any such prepayment and, in the case of prepayments made
pursuant to Sections 1.3(b)(ii) or (b)(iii), the transaction giving rise to the
applicable prepayment is expressly permitted under Section 6.
(d) Borrower shall pay to Agent, for the ratable benefit of
Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrower shall make each payment under this
Agreement not later than 11:00 a.m. (California time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability or Net
Borrowing Availability as of any date, all payments shall be deemed received on
the Business Day of receipt of immediately available funds therefor in the
Collection Account prior to 11:00 a.m. (California time). Payments received
after 11:00 a.m. (California time) on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.
1.11 Application and Allocation of Payments.
(a) So long as no Default or Event of Default shall have occurred
and be continuing: (i) payments consisting of proceeds of Accounts received in
the ordinary course of business shall be applied first to the Swing Line Loan
and second to the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments; (iii) voluntary
prepayments shall be applied as determined by Borrower, subject to the
provisions of Section 1.3(a); and (iv) mandatory prepayments shall be applied as
set forth in Section 1.3(c) and 1.3(d). All payments and prepayments applied to
a particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to each other payment, and as to
all payments made when a Default or Event or Default shall have occurred and be
continuing or following the Commitment Termination Date, Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply any and all such
payments against the Obligations as Agent may deem advisable notwithstanding any
previous entry by Agent in the Loan Account or any other books and records. In
the absence of a specific determination by Agent with respect thereto, payments
shall be applied to amounts then due and payable in the following order: (A) to
Fees and each Co-Agent's expenses reimbursable hereunder (other than amounts
relating to Bank Products); (B) to interest on the Swing Line Loan; (C) to
principal payments on the Swing Line Loan; (D) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (E) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; (F) to all other Obligations, including expenses of Lenders to the
extent reimbursable under Section 11.3; and (G) to the payment to Bank of
America of any reimbursable amounts relating to Bank Products.
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<PAGE> 18
(b) Agent is authorized to, and at its sole election may, charge to
the Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if such charges would cause the aggregate amount of
Revolving Credit Advances and Swing Line Advances outstanding after giving
effect to such charges to exceed Borrowing Availability. At Agent's option and
to the extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: (a) all Advances; (b) all payments
made by Borrower; and (c) all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent's most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Co-Agents and Lenders by Borrower; provided, that any failure to so record or
any error in so recording shall not limit or otherwise affect Borrower's duty to
pay the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account for the immediately preceding month. Unless Borrower notifies Agent in
writing of any objection to any such accounting (specifically describing the
basis for such objection), within 30 days after the date thereof, each and every
such accounting shall be deemed final, binding and conclusive on Borrower
(absent manifest error) in all respects as to all matters reflected therein.
Only those items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Notwithstanding any provision herein contained to the
contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
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<PAGE> 19
1.13 Indemnity.
(a) Each Credit Party shall jointly and severally indemnify and
hold harmless each Co-Agent, each Lender, and their respective Affiliates, and
each such Person's respective officers, directors, employees, attorneys, agents
and representatives (each, an "Indemnified Person"), from and against any and
all suits, actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) that may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents and the administration of such credit,
and in connection with or arising out of the transactions contemplated hereunder
and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Loan Documents (collectively, "Indemnified Liabilities");
provided, that: (i) the liability of WD UK or WS IS, as the case may be, under
this Section 1.13 shall be limited to the net book value of such Credit Party's
assets; and (ii) no such Credit Party shall be liable for any indemnification to
an Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability or expense results solely from (A) such
Indemnified Person's gross negligence or willful misconduct, as finally
determined by a court of competent jurisdiction, or (B) disputes among Co-Agents
and Lenders that are not caused by any action or inaction of any Credit Party or
any Subsidiary of any Credit Party. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE
OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if: (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether such repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall default in making any borrowing of, conversion
into or continuation of LIBOR Loans after Borrower has given notice requesting
the same in accordance herewith; or (iv) Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower has given a notice thereof in
accordance herewith, then Borrower shall indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising from
any of the foregoing. Such indemnification shall include any loss (including
loss of margin) or expense arising from the reemployment of funds obtained by it
or from fees payable to terminate deposits from which such funds were obtained.
For the purpose of calculating amounts payable to a Lender under this
subsection, each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate
in an amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant LIBOR Period; provided, that each Lender may fund
each of
14
<PAGE> 20
its LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this subsection. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder. As promptly as practicable under
the circumstances, each Lender shall provide Borrower with its written
calculation of all amounts payable pursuant to this Section 1.13(b), and such
calculation shall be binding on the parties hereto unless Borrower shall object
in writing within ten Business Days of receipt thereof, specifying the basis for
such objection in detail.
1.14 Access. Each Credit Party shall, during normal business hours,
from time to time upon one Business Day's prior notice as frequently as
Co-Agents reasonably determine to be appropriate: (a) provide each Co-Agent and
any of its officers, employees and agents reasonable access to (i) the
properties, facilities, advisors and employees (including officers) of each
Credit Party, (ii) subject to the requirements of any applicable confidentiality
agreement, each Subsidiary of each Credit Party (provided that such Credit Party
shall use commercially reasonable efforts to obtain the consent from the Person
enforcing the confidentiality provisions of any such agreement), and (iii) the
Collateral; (b) permit each Co-Agent and any of its officers, employees and
agents to inspect, audit and make extracts from the books and records of any
Credit Party or any Subsidiary of any Credit Party; and (c) permit each Co-Agent
and its officers, employees and agents to inspect, review, evaluate and make
test verifications and counts of the Accounts, Inventory and other Collateral of
any Credit Party; provided, that so long as either (i) no Event of Default shall
have occurred and be continuing, or (ii) Agent shall not have delivered an
Activation Notice, then Co-Agents shall be entitled to be reimbursed for only
two field examinations in any calendar year. If a Default or Event of Default
shall have occurred and be continuing or if access is necessary to preserve or
protect the Collateral as determined by any Co-Agent, each such Credit Party
shall provide such access to each Co-Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default shall have
occurred and be continuing, each Credit Party shall use commercially reasonable
efforts to provide each Co-Agent and each Lender with access to such Credit
Party's suppliers and customers. Each Credit Party shall make available to each
Co-Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that any Co-Agent may reasonably
request. Each Credit Party shall deliver any document or instrument necessary
for Co-Agents, as they may from time to time request, to obtain records from any
service bureau or other Person that maintains records for such Credit Party, and
shall maintain duplicate records or supporting documentation on media, including
computer tapes and discs owned by such Credit Party. Agent will give Lenders at
least ten days' prior written notice of regularly scheduled audits.
Representatives of each Co-Agent and each Lender may accompany Agent's
representatives on regularly scheduled audits at no charge to Borrower.
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<PAGE> 21
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.15, free and clear of and
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) the sum payable shall be increased as much as
shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.15)
Co-Agents or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within 30
days after the date of any payment of the Taxes referred to in this Section
1.15(a), Borrower shall furnish to each Co-Agent the original or a certified
copy of a receipt evidencing payment thereof.
(b) Each Credit Party shall indemnify and, within ten days of
demand therefor, pay each Co-Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this
Section 1.15) paid by such Co-Agent or Lender, as appropriate, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower and each
Co-Agent a properly completed and executed IRS Forms 4224 (or IRS Forms W-8ECI)
or IRS Forms 1001 (or IRS Forms W-8BEN), or other applicable form, certificate
or document prescribed by the IRS or the United States certifying as to such
Foreign Lender's entitlement to such exemption (a "Certificate of Exemption").
Any foreign Person that seeks to become a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower and each Co-Agent prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if
such Person is unable to deliver a Certificate of Exemption.
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<PAGE> 22
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that the adoption after the
date hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law) from any central bank or
other Governmental Authority increases or would have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such Lender to
Borrower and to each Co-Agent shall be final, binding and conclusive on Borrower
(absent manifest error) for all purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall, from time to time upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and
to each Co-Agent by such Lender, shall be final, binding and conclusive on
Borrower (absent manifest error) for all purposes. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above that would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate, and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing to such Lender, together with
interest accrued thereon, unless Borrower, within five Business Days after the
delivery of such notice and demand, converts all such LIBOR Loans into Index
Rate Loans.
(d) Within 15 days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
or increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b), Borrower
may, at its option, notify Agent and
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such Affected Lender of its intention to replace the Affected Lender. So long as
no Default or Event of Default shall have occurred and be continuing, Borrower,
with the consent of each Co-Agent, may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be satisfactory to Co-Agents. If Borrower obtains a
Replacement Lender within 90 days following notice of its intention to do so,
the Affected Lender must sell and assign its Loans and Revolving Loan Commitment
to such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale; provided, that Borrower shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment. Notwithstanding the foregoing, Borrower shall not have the
right to obtain a Replacement Lender if the Affected Lender rescinds its demand
for increased costs or additional amounts within 15 days following its receipt
of Borrower's notice of intention to replace such Affected Lender. Furthermore,
if Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within 90 days thereafter, Borrower's rights under this Section
1.16(d) shall terminate and Borrower shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to Sections
1.15(a), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
1.18 WD UK and WD IS.
(a) If at any time the Revolving Loan (excluding the least of (i)
the face amount of Letters of Credit issued to support (A) bank guarantees
issued on behalf of WD UK, (B) Borrower's replacement real estate lease for its
headquarters location, and (C) other corporate purposes acceptable to Co-Agents,
(ii) $20,000,000 and (iii) 33% of the value of all Collateral included in
clauses (a) and (b) of the definition of "Borrowing Base") exceeds the lesser of
(x) $50,000,000 and (y) 50% of the value of all Collateral included in clauses
(a) and (b) of the definition of "Borrowing Base," then the Collateral set forth
in clause (c) of the definition of "Borrowing Base" shall be excluded from the
calculation of Borrowing Availability and Net Borrowing Availability as of such
time, and WD UK and WD IS will enter into a separate credit agreement and any
related loan documents (A) deemed necessary by Co-Agents and their counsel and
(B) containing terms and conditions satisfactory to each Co-Agent and WD UK and
WD IS and their respective counsel, prior to receiving the proceeds of any
additional Revolving Credit Advances from Lenders with respect to such excluded
Collateral.
(b) The liability of WD IS and WD UK under this Agreement and their
respective Guaranties shall be limited to the net book value of the assets of WD
IS or WD UK, as applicable.
1.19 Bank Products. Borrower may request and Bank of America may, in
its sole discretion, arrange for Borrower to obtain from Bank of America or one
of its Affiliates Bank Products although Borrower is not required to do so.
Borrower agrees to indemnify and hold Bank of America, each Co-Agent and each
Lender harmless from any and all costs and
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obligations now or hereafter incurred by or owing to any other Person by Bank of
America, any Co-Agent, or any Lender or Bank of America's Affiliates arising
from or related to such Bank Products; provided, that nothing contained herein
is intended to limit Borrower's rights, if any, that arise as a result of the
execution of documents by and between Borrower and Bank of America that relate
to Bank Products. The agreement contained in this Section shall survive
termination of this Agreement. Borrower acknowledges and agrees that the
obtaining of Bank Products from Bank of America or its Affiliates (a) is in the
sole discretion of Bank of America or such Affiliates, and (b) is subject to all
rules and regulations of Bank of America or such Affiliates.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make the initial Loan or incur the initial Letter of Credit Obligations, or to
take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to each
Co-Agent, or waived in writing by Co-Agents and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by and delivered to Borrower,
each other Credit Party a party thereto, each Co-Agent and Lenders, and Agent
shall have received such documents, instruments, agreements and legal opinions
as any Co-Agent shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all those
listed in the Schedule of Documents, each in form and substance satisfactory to
each Co-Agent.
(b) WD UK Documentation. Agent shall have received originals of (i)
the UK Guarantee and Debenture and any other documents entered into in
connection therewith and (ii) a deed of priority and other documents that are
required by Lloyds TSB Bank Plc in connection therewith (collectively, the
"Lloyds Priority Documents") so long as (A) any liabilities, whether actual or
contingent, are outstanding under the Lloyds Guarantee and (B) the encumbrance
securing payment of such liabilities has not been unconditionally released in
full, in each case duly executed by WD UK and the other parties thereto and
containing terms and conditions acceptable to each Co-Agent in its sole
discretion; provided, that if Borrower and WD UK have not delivered the Lloyds
Priority Documents, in form and substance acceptable to each Co-Agent in its
sole discretion, to Co-Agents on or before September 29, 2000, then Borrower and
WD UK shall immediately commence efforts to replace the Lloyds Guarantee with a
new letter of credit issued by Bank of America or any other financial
institution acceptable to HM Customs & Excise.
(c) Approvals. Co-Agents shall have received as of the Closing Date
(i) satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons, including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the Related Transactions; or
(ii) an officer's certificate in form and substance satisfactory to each
Co-Agent affirming that no such consents or approvals are required.
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(d) Opening Available Liquidity. The Eligible Accounts supporting
the initial Revolving Credit Advance and the initial Letter of Credit
Obligations incurred and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by Co-Agents, to
provide Borrower and its Subsidiaries (other than the Excluded Subsidiaries)
with Available Liquidity, after giving effect to the incurrence of any initial
Letter of Credit Obligations and the consummation of the Related Transactions
(on a pro forma basis, with trade payables being paid currently, and expenses
and liabilities being paid in the ordinary course of business and without
acceleration of sales) of at least $225,000,000.
(e) Payment of Fees. Borrower shall have paid the Fees required to
be paid on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the Fee Letter), and shall have reimbursed
Co-Agents for all fees, costs and expenses of closing presented as of the
Closing Date.
(f) Capital Structure; Other Indebtedness. The capital structure of
each Credit Party and each Subsidiary of each Credit Party (other than the
Excluded Subsidiaries), and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to each Co-Agent in its sole discretion as of
the Closing Date.
(g) Due Diligence. Co-Agents shall have completed their business
and legal due diligence, including a roll forward of its previous Collateral
audit, with results satisfactory to each Co-Agent as of the Closing Date.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Loan, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any other Loan Document shall be untrue or incorrect as of such
date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement; and Co-Agents or Requisite Lenders
shall have determined not to make any Loan or incur any Letter of Credit
Obligation so long as such representation or warranty continues to be untrue or
incorrect;
(b) any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof as determined by the Requisite
Lenders;
(c) any Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan or the incurrence of
any Letter of Credit Obligation, and Co-Agents or Requisite Lenders shall have
determined not to make any Loan or incur any Letter of Credit Obligation so long
as such Default or Event of Default is continuing;
(d) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), the outstanding principal amount of the Revolving
Loan would exceed the lesser of the Borrowing Base and the Maximum Amount, in
each case less the then outstanding principal amount of the Swing Line Loan; or
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(e) after giving effect to any Swing Line Advance, the outstanding
principal amount of the Swing Line Loan would exceed Swing Line Availability.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request, acceptance or incurrence, (i) a
representation and warranty by Borrower that the conditions in this Section 2.2
have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of Co-Agents and Lenders, pursuant to
the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make Revolving Credit Advances, Swing Line
Advances and to incur Letter of Credit Obligations, each Credit Party makes the
following representations and warranties to each Co-Agent and each Lender with
respect to such Credit Party and its Subsidiaries, each and all of which shall
survive the execution and delivery of this Agreement:
3.1 Corporate Existence; Compliance with Law. Such Credit Party and
each Subsidiary of such Credit Party: (a) is a corporation or other entity duly
organized, validly existing and, if applicable, in good standing under the laws
of its jurisdiction of incorporation or organization; (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not result in
exposure to losses, damages or liabilities in excess of $100,000; (c) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws, has all licenses, permits, consents or approvals from or by,
and has made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (e) is in compliance with its charter, bylaws, memorandum
of association and articles of association, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices; Collateral Locations; FEIN. As of the Closing
Date, the current location of such Credit Party's chief executive office and the
warehouses and premises within which any Collateral is stored or located are set
forth in Disclosure Schedule (3.2), and except as set forth in such Disclosure
Schedule, none of such locations has changed within the 12 months preceding the
Closing Date. In addition, Disclosure Schedule (3.2) lists the federal employer
identification number and organizational identification number of such Credit
Party, if any.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by such Credit Party of the Loan Documents
to which it is a party and
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the creation of all Liens provided for therein: (a) are within such Credit
Party's corporate power; (b) have been duly authorized by all necessary or
proper corporate and shareholder action; (c) do not contravene any provision of
such Credit Party's charter or bylaws, or memorandum of association and articles
of association, as the case may be; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Credit Party is a party or by which such Credit Party or any of its
property is bound; (f) do not result in the creation or imposition of any Lien
upon any of the property of such Credit Party other than those in favor of
Agent, on behalf of Co-Agents and Lenders, pursuant to the Loan Documents; and
(g) do not require the consent or approval of any Governmental Authority or any
other Person, except those referred to in Section 2.1(c), all of which will have
been duly obtained, made or complied with prior to the Closing Date. On or prior
to the Closing Date, each of the Loan Documents to which such Credit Party is a
party shall have been duly executed and delivered by such Credit Party and each
such Loan Document shall then constitute a legal, valid and binding obligation
of such Credit Party enforceable against it in accordance with its terms.
3.4 Financial Statements and Projections. Except for the Projections,
all Financial Statements concerning Borrower and its Subsidiaries that are
referenced below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and
normal quarterly and year-end adjustments) and present fairly in all material
respects the financial position of the Persons covered thereby as at the dates
thereof and the results of their operations and cash flows for the periods then
ended.
(a) Financial Statements. The following Financial Statements
attached hereto as Disclosure Schedule (3.4(a)) have been delivered on the date
hereof:
(i) The audited consolidated balance sheets at July 3, 1999,
and June 27, 1998, and the related statements of income and cash flows
of Borrower and its Subsidiaries for the Fiscal Years then ended,
audited by KPMG LLP.
(ii) The unaudited consolidated and consolidating balance
sheet at June 30, 2000, and the related statement of income and cash
flows of Borrower and its Subsidiaries for the four Fiscal Quarters
then ended.
(b) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(b)) have been prepared by Borrower
in light of the past operations of its businesses, but including future payments
of known contingent liabilities reflected in the Projections, and reflect
projections for the four-year period beginning on July 4, 1999, on a
quarter-by-quarter basis. The Projections are based upon estimates and
assumptions stated therein, all of which Borrower believes to be reasonable and
fair in light of current conditions and current facts known to Borrower and, as
of the Closing Date, reflect Borrower's good faith and reasonable estimates of
the future financial performance of Borrower and of the other information
projected therein for the period set forth therein.
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3.5 Material Adverse Effect. Between July 3, 1999, and the Closing
Date: (a) neither such Credit Party nor any Subsidiary of such Credit Party has
incurred any obligations, contingent or noncontingent liabilities, liabilities
for Charges, long-term leases or unusual forward or long-term commitments that
are not reflected in the Projections and that, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; (b) no contract, lease
or other agreement or instrument has been entered into by such Credit Party or
any Subsidiary of such Credit Party has become binding upon such Credit Party's
or any such Subsidiary's assets, and no law or regulation applicable to such
Credit Party or any Subsidiary of such Credit Party has been adopted that has
had or could reasonably be expected to have a Material Adverse Effect; and (c)
neither such Credit Party nor any Subsidiary of such Credit Party is in default
and, to the best of such Credit Party's knowledge, no third party is in default
under any material contract, lease or other agreement or instrument to which
such Credit Party or Subsidiary is a party that alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Between July 3, 1999,
and the Closing Date, no event has occurred that alone or together with other
events could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by such Credit Party. Such
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid leasehold interests in all of its leased Real Estate, all as
described in Disclosure Schedule (3.6), and copies of all such leases or a
summary of terms thereof satisfactory to each Co-Agent have been delivered to
Co-Agents. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which such Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Such Credit Party also has good title to, or valid leasehold
interests in, all of its personal property and assets. As of the Closing Date,
none of the personal property assets of such Credit Party are subject to any
Liens other than Permitted Encumbrances, and there are no facts, circumstances
or conditions known to such Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Permitted Encumbrances. Such
Credit Party has received all deeds, assignments, waivers, consents,
nondisturbance and attornment or similar agreements, bills of sale and other
documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title and
interest in and to all its owned Real Estate. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any owned Real Estate. As of the Closing Date,
no portion of such Credit Party's Real Estate has suffered any material damage
by fire or other casualty loss that has not heretofore been repaired and
restored in all material respects to its original condition or otherwise
remedied. As of the Closing Date, all material permits required to have been
issued or appropriate to enable the Real Estate to be lawfully occupied and used
for all of the purposes for which it is currently occupied and used have been
lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date: (a) no strikes or other
material labor disputes against such Credit Party or any Subsidiary of such
Credit Party are pending or, to such Credit Party's knowledge, threatened; (b)
hours worked by and payment made to employees of such Credit Party and each
Subsidiary of such Credit Party comply with the Fair Labor Standards Act and
each other federal, state, local or foreign law applicable to such matters; (c)
all payments
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due from such Credit Party and any Subsidiary of such Credit Party for employee
health and welfare insurance have been paid or accrued as a liability on the
books of such Credit Party or Subsidiary; (d) except as set forth in Disclosure
Schedule (3.7), such Credit Party is not a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement with an
Affiliate of such Credit Party, employment agreement, bonus plan or agreement or
stock option, restricted stock, stock appreciation right or any similar plan,
agreement or arrangement (and true and complete copies of any agreements
described in Disclosure Schedule (3.7) have been delivered to Co-Agents); (e)
there is no organizing activity involving such Credit Party or any Subsidiary of
such Credit Party pending or, to such Credit Party's knowledge, threatened by
any labor union or group of employees; (f) there are no representation
proceedings pending or, to such Credit Party's knowledge, threatened with the
National Labor Relations Board, and no labor organization or group of employees
of such Credit Party or any Subsidiary of such Credit Party has made a pending
demand for recognition; and (g) except as set forth in Disclosure Schedule
(3.7), there are no complaints or charges against such Credit Party or any
Subsidiary of such Credit Party pending or, to the knowledge of such Credit
Party, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by such Credit Party or any Subsidiary
of such Credit Party of any individual, that seeks damages in excess of
$1,000,000.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8) and, after the
***, as set forth in Disclosure Schedule (6.5), neither such Credit Party nor
any Subsidiary of such Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. Except with respect to Borrower for so long as Borrower is a
publicly owned New York Stock Exchange corporation, all of the issued and
outstanding Stock of such Credit Party and each Subsidiary of such Credit Party
is owned by each of the Stockholders and in the amounts set forth in Disclosure
Schedule (3.8). Except as set forth in Disclosure Schedules (3.7) and (3.8),
there are no outstanding rights to purchase, options, warrants or similar rights
or agreements pursuant to which such Credit Party or any Subsidiary of such
Credit Party may be required to issue, sell, repurchase or redeem any of its
Stock or other equity securities or any Stock or other equity securities of its
Subsidiaries (other than the Excluded Subsidiaries). All outstanding
Indebtedness and Guaranteed Indebtedness (except for the Obligations) of such
Credit Party and each Subsidiary of such Credit Party (other than the Excluded
Subsidiaries) as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule (6.3)). Except as described in Disclosure Schedules (6.3)
and (6.6), such Credit Party has no Indebtedness or Guaranteed Indebtedness
(except the Obligations).
3.9 Government Regulation. Such Credit Party is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. Such Credit Party is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, or any other
federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrower, the incurrence of the Letter of Credit Obligations on
behalf of Borrower, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will
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not violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.
3.10 Margin Regulations. Such Credit Party is not engaged, and will not
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). Such Credit Party does not own any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock
or for any other purpose that might cause any of the Loans or other extensions
of credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulations T, U or X of the Federal Reserve Board. such Credit Party
will not take or permit to be taken any action that might cause any Loan
Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by such
Credit Party and any Subsidiary of such Credit Party have been filed with the
appropriate Governmental Authority, and all Charges reflected on such returns,
reports and statements have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
Charges or other amounts being contested in accordance with Section 5.2(b).
Proper and accurate amounts have been withheld by such Credit Party and each
Subsidiary of such Credit Party from its respective employees for all periods in
full and complete compliance with all applicable federal, state, local and
foreign laws and such withholdings have been timely paid to the respective
Governmental Authorities. Disclosure Schedule (3.11) sets forth as of the
Closing Date those taxable years for which such Credit Party's or any Subsidiary
of such Credit Party's tax returns are currently being audited by the IRS or any
other applicable Governmental Authority, and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.
Except as described in Disclosure Schedule (3.11), neither such Credit Party nor
any Subsidiary of such Credit Party has executed or filed with the IRS or any
other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges. Neither such Credit Party nor any Subsidiary of such Credit Party, nor
their respective predecessors, is liable for any Charges: (a) under any
agreement (including any tax sharing agreements); or (b) to such Credit Party's
knowledge, as a transferee. As of the Closing Date, neither such Credit Party
nor any Subsidiary of such Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, that would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates and
(ii) all Plans and separately identifies all Pension Plans (including all Title
IV Plans, Multiemployer Plans, and ESOPs) and Welfare Plans, including all
Retiree Welfare Plans. Copies of all such listed Plans, together with a copy of
the latest IRS/DOL 5500-series form for each such Plan, have
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been delivered to Co-Agents. Each Qualified Plan has been determined by the IRS
to qualify under Section 401 of the IRC, the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC,
and nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Except as would not have a Material Adverse Effect: (i) each
Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23; (ii) neither any
Credit Party nor any ERISA Affiliate has failed to make any contribution or pay
any amount due as required by either Section 412 of the IRC or Section 302 of
ERISA or the terms of any such Plan; (iii) neither any Credit Party nor any
ERISA Affiliate has engaged in a "prohibited transaction," as defined in Section
406 of ERISA and Section 4975 of the IRC, in connection with any Plan, that
would subject any Credit Party to a tax on prohibited transactions imposed by
Section 502(i) of ERISA or Section 4975 of the IRC; and (iv) each Credit Party
and each ERISA Affiliate has performed all of its respective obligations under
all Plans. Borrower's Executive Bonus Plan effective as of May 16, 1994 is not
an "employee benefit plan" within the meaning of Section 3(3) of ERISA for
purposes of Titles I and IV thereof.
(b) Neither any Credit Party nor any ERISA Affiliate has ever
maintained, contributed to, or had an obligation to contribute to, a Title IV
Plan, a Multiemployer Plan, or an ESOP, and except as set forth in Disclosure
Schedule (3.12): (i) there are no pending, or to the knowledge of any Credit
Party, threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan except as would not have a Material
Adverse Effect; and (ii) Stock of all Credit Parties and their ERISA Affiliates
makes up, in the aggregate, no more than 10% of the assets of any Plan, measured
on the basis of fair market value as of the latest valuation date of any Plan.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of such Credit Party, threatened
against such Credit Party or any Subsidiary of such Credit Party before any
Governmental Authority or before any arbitrator or panel of arbitrators
(collectively, "Litigation") that (a) challenges such Credit Party's right or
power to enter into or perform any of its obligations under the Loan Documents
to which it is a party, or the validity or enforceability of any Loan Document
or any action taken thereunder, or (b) has a reasonable risk of being determined
adversely to such Credit Party or any Subsidiary of such Credit Party and that,
if so determined, could have a Material Adverse Effect. Except as set forth in
Disclosure Schedule (3.13), as of the Closing Date there is no Litigation
pending or threatened that seeks damages in excess of $1,000,000 or injunctive
relief against, or alleges criminal misconduct by, such Credit Party or any
Subsidiary of such Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Person
brought about the obtaining, making or closing of the Loans or the Related
Transactions, and such Credit Party has no obligation to any Person in respect
of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, such Credit Party
and each Subsidiary of such Credit Party owns or has rights to use all
Intellectual Property necessary to continue to conduct its business as now or
heretofore conducted by it or proposed to be conducted by it, and each Patent,
Trademark, Copyright and License is listed, together with
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application or registration numbers, as applicable, in Disclosure Schedule
(3.15). Except as set forth in Disclosure Schedule (3.13), such Credit Party is
not aware of any infringement or claim of infringement by others of any
Intellectual Property Collateral.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time prepared by any Credit Party and
delivered hereunder or any written statement furnished by or on behalf of such
Credit Party to any Co-Agent or any Lender pursuant to the terms of this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of Co-Agents and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
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3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), to the best
knowledge of such Credit Party (based solely upon the review of its existing
books and records), as of the Closing Date: (i) the Real Estate is free of
contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and
that would not result in Environmental Liabilities that could reasonably be
expected to exceed $250,000; (ii) neither such Credit Party nor any Subsidiary
of such Credit Party has caused or suffered to occur any Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) such Credit Party and its Subsidiaries are and have been in compliance
with all Environmental Laws, except for such noncompliance that would not result
in Environmental Liabilities that could reasonably be expected to exceed
$250,000; (iv) such Credit Party and its Subsidiaries have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities that
could reasonably be expected to exceed $250,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) neither such Credit
Party nor any Subsidiary of such Credit Party is involved in operations or knows
of any facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party or Subsidiary that could reasonably be expected to exceed $250,000,
and neither such Credit Party nor any Subsidiary of such Credit Party has
permitted any of its current or former tenants or occupants of the Real Estate
to engage in any such operations; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material
that seeks damages, penalties, fines, costs or expenses in excess of $100,000 or
injunctive relief against, or that alleges criminal misconduct by, such Credit
Party or any Subsidiary of such Credit Party ; (vii) no notice has been received
by such Credit Party or any Subsidiary of such Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of such Credit Party, there are
no facts, circumstances or conditions that may result in such Credit Party or
any Subsidiary of such Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (viii) such
Credit Party has provided to Co-Agents copies of all existing environmental
reports, reviews and audits and all written information prepared by or provided
to such Credit Party pertaining to actual or potential Environmental
Liabilities, in each case relating to such Credit Party and any Subsidiary of
such Credit Party.
(b) Such Credit Party hereby acknowledges and agrees that neither
Co-Agent (i) is now, or has ever been, in control of any of the Real Estate or
the affairs of such Credit Party or any Subsidiary of such Credit Party, and
(ii) has the capacity through the provisions of the Loan Documents or otherwise
to influence the conduct of such Credit Party or any Subsidiary of such Credit
Party with respect to the ownership, operation or management of any of its Real
Estate or compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
of any nature maintained, as of the Closing Date, for current occurrences by
such Credit Party, as well as a summary of the terms of each such policy.
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3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which such Credit Party
maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, such Credit Party is not a party to any contract
or agreement with any Governmental Authority and such Credit Party's Accounts
are not subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727)
or any similar state or local law.
3.21 Customer and Trade Relations. As of the Closing Date, there exists
no actual or, to the knowledge of such Credit Party, threatened termination or
cancellation of, or any modification or change that could reasonably be expected
to have a Material Adverse Effect in: (a) the business relationship of such
Credit Party or any Subsidiary of such Credit Party with any customer or group
of customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party or Subsidiary; or
(b) the business relationship of such Credit Party or any Subsidiary of such
Credit Party with any supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, such
Credit Party has provided to each Co-Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which any of them are subject, each of which is listed in
Disclosure Schedule (3.22): (a) supply agreements and purchase agreements not
terminable by such Credit Party or any Subsidiary of such Credit Party within 60
days following written notice issued by such Credit Party or Subsidiary and
involving transactions in excess of $1,000,000 per annum; (b) leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $500,000 per annum; (c) licenses and
permits held by such Credit Party and its Subsidiaries, the absence of which
could be reasonably likely to have a Material Adverse Effect; and (d)
instruments and documents evidencing any Indebtedness or Guaranteed Indebtedness
of such Credit Party or any Subsidiary of such Credit Party and any Lien granted
by such Credit Party or Subsidiary with respect thereto.
3.23 Solvency. Both before and after giving effect to: (a) the Loans
and Letter of Credit Obligations to be made or incurred on the Closing Date or
such other date as Loans and Letter of Credit Obligations requested hereunder
are made or incurred; (b) the disbursement of the proceeds of such Loans
pursuant to the instructions of Borrower; (c) the consummation of the Related
Transactions; and (d) the payment and accrual of all transaction costs in
connection with the foregoing, such Credit Party and each Subsidiary of such
Credit Party is and will be Solvent.
3.24 Subordinated Debt. As of the Closing Date, Borrower has delivered
to Co-Agents a complete and correct copy of the Subordinated Notes (including
all schedules, exhibits, amendments, supplements, modifications, assignments and
all other documents delivered pursuant thereto or in connection therewith).
Borrower has the corporate power and authority to incur the Indebtedness
evidenced by the Subordinated Notes. The subordination provisions of
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the Subordinated Notes are enforceable against the holders of the Subordinated
Notes by Co-Agents and Lenders. All Obligations of any Credit Party, including
the Obligations to pay principal of and interest on the Loans, (a) constitute
"Superior Indebtedness," "Senior Indebtedness" or "Senior Debt" under the terms
of the Subordinated Debt Documents or any other instrument evidencing or
pursuant to which there is issued Indebtedness that purports to be Subordinated
Debt of such Credit Party and (b) are entitled to the benefits of the
subordination provisions contained in the Subordinated Notes. The principal of
and interest on the Notes, all Letter of Credit Obligations and all other
Obligations will constitute "senior debt" as that or any similar term is or may
be used in any other instrument evidencing or applicable to any other
Subordinated Debt. Borrower has not designated any Indebtedness of Borrower or
any of its Subsidiaries as, and has no, "Designated Senior Debt" (or the
analogous term used therein) for purposes of (and as defined in) the
Subordinated Indenture, other than the Obligations. Borrower has no obligations
pursuant to any of the Subordinated Debt Documents to make any mandatory
repurchases or redemptions of the Subordinated Notes prior to and until February
18, 2003, other than upon the occurrence of a Fundamental Change (as such term
is defined in the Subordinated Indenture) and the exercise by the holders of the
Subordinated Notes of resulting rights after such Fundamental Change to require
Borrower to repurchase all or any portion of the Subordinated Notes. Borrower
acknowledges that each Co-Agent and each Lender are entering into this Agreement
and are extending the Revolving Loan Commitments in reliance upon the
subordination provisions of the Subordinated Notes and this Section 3.24.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party hereby agrees that, from and after the
Closing Date and until the Termination Date, it shall deliver to Co-Agents or
Lenders, as required, the Financial Statements, notices, Projections and other
information at the times, to the Persons and in the manner set forth in Annex E.
(b) Each Credit Party hereby agrees that, from and after the
Closing Date and until the Termination Date, it shall deliver to Co-Agents or
Lenders, as required, the various Collateral Reports (including Borrowing Base
Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons and in
the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party authorizes each
Co-Agent and, so long as a Default or Event of Default shall have occurred and
be continuing, each Lender, to communicate directly with its independent
certified public accountants, including KPMG LLP, and authorizes and shall
request those accountants and advisors to disclose and make available to each
Co-Agent and each Lender any and all Financial Statements and other supporting
financial documents, schedules and information relating to any Credit Party or
any Subsidiary of any Credit Party (including copies of any issued management
letters) with respect to the business, financial condition and other affairs of
any such Credit Party or Subsidiary.
5. AFFIRMATIVE COVENANTS
Each Credit Party agrees as to itself and its Subsidiaries that from
and after the date hereof and until the Termination Date:
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5.1 Maintenance of Existence and Conduct of Business. (a) Such Credit
Party shall (and shall cause each of its Subsidiaries to) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises; (b) such Credit Party shall (and shall
cause each of its Subsidiaries (other than an Excluded Subsidiary) to) continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; (c) such Credit Party shall (and shall cause each of its Subsidiaries
to) at all times maintain, preserve and protect all of its assets and properties
used or useful in the conduct of its business, and keep the same in good repair,
working order and condition in all material respects (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made, all
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices; and (d) such Credit Party shall (and shall
cause each of its Subsidiaries (other than an Excluded Subsidiary) to) transact
business only in such corporate and trade names as are set forth in Disclosure
Schedule (5.1) or as otherwise permitted under Section 6.15. Without limiting
the generality of the foregoing, and unless otherwise consented to in writing by
Co-Agents, (i) Western Digital Canada Corporation, Western Digital Japan, Ltd.,
Western Digital Deutschland GmbH, Western Digital (France) SARL, Western Digital
Taiwan Co., Ltd., Western Digital Hong Kong, Limited, and Western Digital (S.E.
Asia) Pte., Ltd. shall only conduct business as a foreign sales organization,
(ii) ***, Pacifica shall only conduct business as an insurance company insuring
the risks of Borrower and its Subsidiaries, (iii) Western Digital Ireland, Ltd.
shall only conduct business as a holding company whose principal asset consists
of the capital Stock of Western Digital (Singapore) PTE., Ltd., and (iv) Western
Digital (Singapore) PTE., Ltd. shall only conduct business as a holding company
whose principal asset consists of the capital Stock of Western Digital
(Tuas-Singapore) PTE., Ltd.
5.2 Payment of Obligations.
(a) Subject to Section 5.2(b), such Credit Party shall (and shall
cause each of its Subsidiaries to) pay and discharge or cause to be paid and
discharged promptly (i) all Charges payable by it, including Charges imposed
upon it, its income and profits, or any of its property (real, personal or
mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, and (ii) lawful claims for labor,
materials, supplies and services or otherwise, in each case before any thereof
shall become past due.
(b) Such Credit Party and each Subsidiary of such Credit Party may
in good faith contest, by appropriate proceedings, the validity or amount of any
Charges, Taxes or claims described in Section 5.2(a); provided, that: (i)
adequate reserves with respect to such contest are maintained on the books of
such Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed on the
Collateral to secure payment of such Charges, Taxes or claims that is superior
to any of the Liens securing payment of the Obligations and such contest is
maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Charges or claims; (iii) none of the
Collateral becomes subject to forfeiture or loss as a result of such contest
(other than such Collateral consisting of cash used to pay such Charges, Taxes
or claims); and (iv) such Credit Party or such Subsidiary shall promptly pay or
discharge such contested Charges, Taxes or claims and all additional charges,
interest, penalties and expenses, if any, and shall deliver to Co-Agents
evidence acceptable to each Co-Agent of such compliance, payment or discharge,
if such contest is terminated or discontinued adversely to
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such Credit Party or Subsidiary or the conditions set forth in this Section
5.2(b) are no longer met.
5.3 Books and Records. Such Credit Party shall (and shall cause each of
its Subsidiaries to) keep adequate books and records with respect to its
business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements attached as Disclosure Schedule (3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral; Condemnation.
(a) Such Credit Party shall (and shall cause each of its
Subsidiaries to), at its sole cost and expense, maintain the policies of
insurance described in Disclosure Schedule (3.18) as in effect on the date
hereof or otherwise in form and in amounts and with insurers acceptable to each
Co-Agent. Such policies of insurance shall contain provisions pursuant to which
the insurer agrees to provide 30 days' prior written notice to Agent in the
event of any non-renewal, cancellation or amendment of any such insurance
policy. If such Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above, or to pay all
premiums relating thereto, any Co-Agent may at any time or times thereafter
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto that such Co-Agent deems advisable.
Neither Co-Agent shall have any obligation to obtain insurance for any Credit
Party or pay any premiums therefor. By doing so, no Co-Agent shall be deemed to
have waived any Default or Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by Borrower to Co-Agents and shall be
additional Obligations hereunder secured by the Collateral.
(b) Co-Agents reserve the right at any time upon any change in any
Credit Party's or any Subsidiary of any Credit Party's risk profile (including
any change in the product mix maintained by any such Credit Party or Subsidiary
or any laws affecting the potential liability of such Credit Party or
Subsidiary) to require additional forms and limits of insurance to, in
Co-Agents' reasonable opinion, adequately protect each Co-Agent's and each
Lender's interests in all or any portion of the Collateral and to ensure that
each Credit Party and each Subsidiary of each Credit Party is protected by
insurance in amounts and with coverage customary for its industry. If requested
by Co-Agents, such Credit Party shall deliver to Co-Agents from time to time a
report of a reputable insurance broker, satisfactory to each Co-Agent, with
respect to its and its Subsidiaries' insurance policies.
(c) Such Credit Party shall deliver to Co-Agents, in form and
substance satisfactory to each Co-Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of Co-Agents and
Lenders, as loss payee as its interests may appear, and (ii) all general
liability and other liability policies naming Agent, on behalf of Co-Agents and
Lenders, as additional insured. Such Credit Party irrevocably makes, constitutes
and appoints Agent (and all officers, employees or agents designated by Agent),
so long as any Default or Event of Default shall have occurred and be continuing
or the anticipated insurance proceeds payable to Borrower or such Guarantor
exceed $5,000,000, as such Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims
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under such "All Risk" policies of insurance, endorsing the name of such Credit
Party on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify each Co-Agent of any loss,
damage, or destruction to the Collateral (specifically excluding the real
property interest of any landlord of any leased Real Estate) in the amount of
$250,000 or more, whether or not covered by insurance. After deducting from such
proceeds the expenses, if any, incurred by Agent in the collection or handling
thereof, Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(d) (provided, that in the case of
insurance proceeds pertaining to any Guarantor, such insurance proceeds shall be
applied to the Loans owing by Borrower), or permit or require such Credit Party
to use such money, or any part thereof, to replace, repair, restore or rebuild
the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage
or destruction. Notwithstanding the foregoing, if the casualty giving rise to
such insurance proceeds could not reasonably be expected to have a Material
Adverse Effect and such insurance proceeds do not exceed $5,000,000 in the
aggregate, Co-Agents shall permit each Credit Party, as applicable, to replace,
restore, repair or rebuild the property; provided, that if such Credit Party has
not completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 240 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d); provided further, that in the case of insurance proceeds pertaining to
any Guarantor, such insurance proceeds shall be applied to the Loans owing by
Borrower. All insurance proceeds that are to be made available to Borrower to
replace, repair, restore or rebuild the Collateral (specifically excluding the
real property interest of any landlord of any leased Real Estate) shall be
applied by Agent to reduce the outstanding principal balance of the Revolving
Loan (which application shall not result in a permanent reduction of the
Revolving Loan Commitment) and upon such application, Agent shall establish a
Reserve against the Borrowing Base in an amount equal to the amount of such
proceeds so applied. All insurance proceeds made available to any Credit Party
that is not a Borrower to replace, repair, restore or rebuild Collateral shall
be deposited in a cash collateral account. Thereafter, such funds shall be made
available to each Credit Party to provide funds to replace, repair, restore or
rebuild the Collateral as follows: (A) Borrower shall request a Revolving Credit
Advance or release from the cash collateral account to be made to Borrower or
such each Guarantor in the amount requested to be released; (B) so long as the
conditions set forth in Section 2.2 have been met, Lenders shall make such
Revolving Credit Advance or Agent shall release funds from the cash collateral
account; and (C) in the case of insurance proceeds applied against the Revolving
Loan, the Reserve established with respect to such insurance proceeds shall be
reduced by the amount of such Revolving Credit Advance. To the extent not used
to replace, repair, restore or rebuild the Collateral, such insurance proceeds
shall be applied in accordance with Section 1.3(d); provided, that in the case
of insurance proceeds pertaining to any Guarantor, such insurance proceeds shall
be applied to the Loans owing by Borrower.
(d) Such Credit Party shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of its
property (specifically excluding the real property interest of any landlord of
any leased Real Estate) , notify each Co-Agent of the pendency of such
proceeding, and agrees that any Co-Agent may participate in any such proceeding,
and such Credit Party from time to time will deliver to each Co-Agent all
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instruments reasonably requested by such Co-Agent to permit such participation.
Agent is authorized to collect the proceeds of any condemnation claim or award
and apply them, at the direction of Required Lenders, to the reduction of the
Obligations; provided, that if the amount of any condemnation is less than
$1,000,000, Co-Agents shall permit such Credit Party to replace, restore, repair
or rebuild the property so long as no Default or Event of Default shall have
occurred and be continuing at the time of any requested release of funds. If the
condemned property is to be replaced, repaired, restored or rebuilt, such
replacement, repair, restoration or rebuilding shall be done with materials and
workmanship of substantially as good a quality as existed before such
condemnation or taking. Such Credit Party shall commence the work of
replacement, repair, restoration or rebuilding as soon as practicable and
proceed diligently with it until completion. Plans and specifications for any
such repair or restoration shall be reasonably satisfactory to each Co-Agent and
shall be submitted to Co-Agents prior to commencement of the work and shall be
subject to the reasonable approval of each Co-Agent.
5.5 Compliance with Laws. Such Credit Party shall (and shall cause each
of its Subsidiaries to) comply with all federal, state, local and foreign laws
and regulations applicable to it, including those relating to ERISA and labor
matters and Environmental Laws and Environmental Permits, except to the extent
that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be requested by
Co-Agents (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default or an Event of Default), the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or that is necessary to
correct any information in such Disclosure Schedule or representation that has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided, that (a) no such supplement to any
such Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters disclosed
therein, except as consented to by Co-Agents and Requisite Lenders in writing,
and (b) no supplement shall be required as to representations and warranties
that relate solely to the Closing Date.
5.7 Intellectual Property. Such Credit Party shall (and shall cause
each of its Subsidiaries to) conduct its business and affairs without
infringement of any Intellectual Property of any other Person, to the extent any
such infringement could reasonably be expected to have a Material Adverse
Effect.
5.8 Environmental Matters. Such Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
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Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify each Co-Agent promptly after such Credit Party becomes aware
of any violation of Environmental Laws or Environmental Permits or any Release
on, at, in, under, above, to, from or about any Real Estate that is reasonably
likely to result in Environmental Liabilities in excess of $100,000; and (d)
promptly forward to each Co-Agent a copy of any order, notice, request for
information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $250,000, in each
case whether or not the Environmental Protection Agency or any Governmental
Authority has taken or threatened any action in connection with any such
violation, Release or other matter. If Co-Agents at any time have a reasonable
basis to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then each Credit Party shall, upon
Co-Agent's written request (i) cause the performance of such environmental
audits including subsurface sampling of soil and groundwater, and preparation of
such environmental reports, in each case at Borrower's expense, as Co-Agents may
from time to time reasonably request, all of which shall be conducted by
reputable environmental consulting firms reasonably acceptable to each Co-Agent
and shall be in form and substance acceptable to each Co-Agent, and (ii) permit
each Co-Agent or its representatives to have access to all Real Estate for the
purpose of conducting such environmental audits and, to the extent not
prohibited by the terms of the lease of any such Real Estate, testing as such
Co-Agent deems appropriate, including subsurface sampling of soil and
groundwater. Borrower shall reimburse each Co-Agent for the costs of such audits
and tests and the same will constitute a part of the Obligations secured
hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
Each Credit Party shall use commercially reasonable efforts to obtain a
landlord's agreement, mortgagee agreement or bailee letter, as applicable, from
the lessor of each leased property, mortgagee of owned property or bailee with
respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be satisfactory in form and substance to each Co-Agent. Each Credit Party shall
timely and fully pay and perform its obligations under all leases and other
agreements with respect to each leased location or public warehouse where any
Collateral is or may be located.
5.10 Further Assurances. Each Credit Party agrees that it shall (and
shall cause each of its Subsidiaries to), at such Credit Party's expense and
upon request of any Co-Agent, duly execute and deliver, or cause to be duly
executed and delivered, to such Co-Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of such Co-Agent to carry out more effectively the provisions
and purposes of this Agreement or any other Loan Document.
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6. NEGATIVE COVENANTS
Each Credit Party agrees as to itself and its Subsidiaries that,
without the prior written consent of Co-Agents and the Requisite Lenders, from
and after the date hereof until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. Except as otherwise expressly permitted
by Section 6.5, such Credit Party shall not (and shall cause each Subsidiary of
such Credit Party not to) directly or indirectly, by operation of law or
otherwise, (a) form or acquire any Subsidiary, or (b) merge with, consolidate
with, acquire all or substantially all of the assets or capital Stock of, or
otherwise combine with or acquire, any Person. Notwithstanding the generality of
the foregoing, Borrower may form a direct and wholly-owned Subsidiary, or
acquire all of the capital Stock or all or substantially all of the assets of
any Person (such Subsidiary or Person being the "Target"), subject to the
satisfaction of each of the following conditions (such formation or acquisition
being a "Permitted Acquisition"):
(i) Co-Agents shall receive at least 30 days' prior
written notice of such proposed Permitted Acquisition, which notice
shall include a reasonably detailed description thereof;
(ii) the assets of the Target (A) shall either be (1)
located in the United States or such other jurisdiction under which
Agent, on behalf of Co-Agents and Lenders, will receive a first
priority perfected Lien thereon, or (2) not located in the United
States or such other jurisdiction described above and have a fair
market value at all times of less than $***, and (B) shall comprise a
business, or those assets of a business, of the types or similar to the
types engaged in by Borrower as of the Closing Date, and which business
would not subject any Co-Agent or Lender to regulatory or third party
approvals in connection with the exercise of its rights and remedies
under this Agreement or any other Loan Documents, other than approvals
applicable to the exercise of such rights and remedies with respect to
Borrower prior to such Permitted Acquisition;
(iii) with respect to an acquisition, such Permitted
Acquisition shall be consensual and shall have been approved by the
Target's board of directors;
(iv) no additional Indebtedness, Guaranteed
Indebtedness, contingent obligations or other liabilities shall be
incurred, assumed or otherwise be reflected on a consolidated balance
sheet of Borrower and Target after giving effect to such Permitted
Acquisition, except (A) Loans made hereunder and (B) ordinary course
trade payables, accrued expenses and unsecured Indebtedness of the
Target to the extent no Default or Event of Default shall have occurred
and be continuing or would result after giving effect to such Permitted
Acquisition;
(v) the sum of all amounts payable in connection with
(A) any one Permitted Acquisition (including all transaction costs and
all Indebtedness, liabilities and contingent obligations incurred or
assumed in connection therewith or otherwise reflected in a
consolidated balance sheet of Borrower and Target) shall not exceed
$*** and (B) all such Permitted Acquisitions during the term hereof
shall not exceed $***;
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(vi) the Target shall not have incurred an operating
loss of more than $*** for the trailing 12-month period preceding the
date of the Permitted Acquisition, as determined based upon the
Target's financial statements for its most recently completed fiscal
year and its most recent interim financial period completed within 60
days prior to the date of consummation of such Permitted Acquisition;
(vii) the business and assets acquired in such
Permitted Acquisition shall be free and clear of all Liens (other than
Permitted Encumbrances);
(viii) at the closing of any Permitted Acquisition,
either (A) the Target shall become a "Guarantor" and "Credit Party"
hereunder, Agent will be granted, for the benefit of Co-Agents and
Lenders, a first priority perfected Lien (subject to Permitted
Encumbrances) in the assets and capital Stock of the Target, and each
Credit Party and the Target shall have executed such documents and
taken such actions as may be required by Co-Agents in connection
therewith, or (B) with the written consent of each Co-Agent and
Supermajority Lenders, the Target shall become an "Excluded Subsidiary"
hereunder; provided, that any amounts payable in connection with such
Permitted Acquisition are permitted under Section 6.2 and under the
definition of "Permitted Excluded Subsidiary Transactions" set forth in
Annex A;
(ix) concurrently with delivery of the notice
referred to in clause (i) above, Borrower shall have delivered to
Co-Agents, in form and substance satisfactory to Co-Agents:
(A) a pro forma consolidated balance sheet
of Borrower and its Subsidiaries (the "Acquisition Pro
Forma"), based on recent financial data, which shall be
complete and shall accurately and fairly represent the assets,
liabilities, financial condition and results of operations of
Borrower and its Subsidiaries in accordance with GAAP
consistently applied, but taking into account such Permitted
Acquisition and the funding of all Loans in connection
therewith, and such Acquisition Pro Forma shall reflect that
(1) Available Liquidity for the 90-day period preceding the
consummation of such Permitted Acquisition would have exceeded
$150,000,000 on a pro forma basis (after giving effect to such
Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period) and the
Acquisition Projections (as hereinafter defined) shall reflect
that such Available Liquidity of $150,000,000 shall continue
for at least 90 days after the consummation of such Permitted
Acquisition, and (2) on a pro forma basis, no Event of Default
shall have occurred and be continuing or would result after
giving effect to such Permitted Acquisition, and Borrower
would have been in compliance with the financial covenants set
forth in Annex G that are required to be tested for the four
quarter period reflected in the Compliance Certificate most
recently delivered to Co-Agents pursuant to Annex E prior to
the consummation of such Permitted Acquisition (after giving
effect to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such
period, including for purposes of determining Available
Liquidity during such period);
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(B) for each Permitted Acquisition for which
total cash and non-cash consideration paid by Credit Parties
is in excess of $1,000,000, updated versions of the most
recently delivered Projections covering the one year period
commencing on the date of such Permitted Acquisition and
otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial
data of a recent date satisfactory to Co-Agents, taking into
account such Permitted Acquisition; and
(C) a statement of the chief financial
officer of Borrower to the effect that: (1) Borrower (after
taking into consideration all rights of contribution and
indemnity of Borrower) will be Solvent upon the consummation
of the Permitted Acquisition; (2) the Acquisition Pro Forma
fairly presents the financial condition of Borrower on a
consolidated basis as of the date thereof after giving effect
to the Permitted Acquisition; (3) the Acquisition Projections,
if any, are reasonable estimates of the future financial
performance of Borrower and its Subsidiaries subsequent to the
date thereof based upon the historical performance of
Borrower, its subsidiaries and the Target, and show (without
guaranty of) that Borrower shall continue to be in compliance
with the financial covenants set forth in Annex G for the
three year period thereafter; and (4) Borrower has completed
their due diligence investigation with respect to the Target
and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and
the results of which investigation were delivered to Co-Agents
and Lenders;
(x) on or prior to the date of such Permitted
Acquisition, Co-Agents shall have received, in form and substance
satisfactory to Co-Agents, all opinions, certificates, lien search
results and other documents reasonably requested by Co-Agents; and
(xi) at the time of such Permitted Acquisition and
after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing.
Notwithstanding the generality of the foregoing, Borrower may
acquire certain of the assets and assume certain of the liabilities of Magnetic
Data Technologies Pte Ltd. ("MDTS") pursuant to Article X, Section B and Article
XIII, Sections E and F of that certain Customer Service Center Outsourcing
Agreement dated April 15, 2000, by and between MDTS and Borrower (as in effect
on the Closing Date). In no event shall the Accounts of Target or MDTS be
included in Eligible Accounts without the prior written consent of each Co-Agent
and Requisite Lenders.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party (other than an Excluded Subsidiary) not to) make
or permit to exist any investment in, or make, accrue or permit to exist loans
or advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except that (without duplication):
(a) Borrower may hold investments comprised of notes payable, or stock or other
securities issued by Account Debtors to Borrower pursuant to negotiated
agreements with respect to
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settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrower does not
exceed $2,500,000; (b) each Credit Party and each Subsidiary of each Credit
Party may maintain its existing investments (without any increase thereto) in
its Subsidiaries as of the Closing Date; (c) Borrower may make investments
consisting of Permitted Excluded Subsidiary Transactions and Permitted Credit
Party Transactions; and (d) so long as no Default or Event of Default has
occurred and is continuing and there are no outstanding Revolving Credit
Advances, Borrower may make investments subject to Control Letters in favor of
Agent, for the benefit of Co-Agents and Lenders, or otherwise subject to a
perfected security interest in favor of Agent, for the benefit of Co-Agents and
Lenders, in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof maturing within
one year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Rating Group or Moody's
Investors Service, Inc., (iii) certificates of deposit maturing no more than one
year from the date of creation thereof issued by commercial banks incorporated
under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $300,000,000 and having a senior
unsecured rating of "A" or better by a nationally recognized rating agency (an
"A Rated Bank"), (iv) time deposits maturing no more than 30 days from the date
of creation thereof with A Rated Banks, and (v) mutual funds that invest solely
in one or more of the investments described in clauses (i) through (iv) above;
provided, that such investments may be maintained in one or more accounts at
Goldman Sachs & Co. without a Control Letter in favor of Agent, for the benefit
of Co-Agents and Lenders, so long as the aggregate amount of such investments is
not in excess of $15,000,000.
6.3 Indebtedness.
(a) Such Credit Party shall not (and shall cause each Subsidiary of
such Credit Party (other than an Excluded Subsidiary) not to) create, incur,
assume or permit to exist any Indebtedness, except (without duplication) (i)
Indebtedness secured by purchase money security interests and Capital Leases
permitted in clause (k) of the definition of Permitted Encumbrances, (ii) the
Loans and the other Obligations, (iii) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, (iv) existing Indebtedness described in
Disclosure Schedule (6.3) and refinancings thereof or amendments or
modifications thereof that do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to any
Credit Party, any Co-Agent or any Lender, as determined by Co-Agents, than the
terms of the Indebtedness being refinanced, amended or modified, (v)
Indebtedness specifically permitted under Section 6.17, and (vi) Indebtedness
consisting of Permitted Excluded Subsidiary Transactions and Permitted Credit
Party Transactions.
(b) Such Credit Party shall not (and shall cause each Subsidiary of
such Credit Party not to), directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness, other than: (i) the Obligations; and
(ii) Indebtedness secured by a Permitted Encumbrance if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Sections
6.8(b) or (c); (iii) the conversion of Subordinated Debt into common Stock or
preferred Stock to
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the extent permitted in Section 6.5; and (iv) the repayment of the *** Loan
solely from the cash proceeds received by Borrower from the sale of the Vixel
Stock.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6 with
respect to Affiliates, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof, except for the
following to the extent arising in the ordinary course of business: (i) sales of
Inventory and related commission obligations between Credit Parties and their
Subsidiaries; (ii) the purchase of insurance from Pacifica; (iii) the
administration of Borrower's information services by SageTree; and (iv) the
provision of administrative services by Borrower to SageTree.
(b) Such Credit Party shall not (and shall cause each Subsidiary of
such Credit Party not to) enter into any lending or borrowing transaction with
any employees of any Credit Party, except loans to its employees on an arm's
length basis in the ordinary course of business consistent with past practices
for travel expenses, relocation costs and similar purposes and stock option
financing up to a maximum of $1,000,000 to any employee and up to a maximum of
$5,000,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business. (a) Such Credit Party shall not
(and shall cause each Subsidiary of such Credit Party not to) make any changes
in any of its business objectives, purposes or operations that could in any way
adversely affect the repayment of the Loans or any of the other Obligations or
could reasonably be expected to have or result in a Material Adverse Effect; (b)
such Credit Party shall not (and shall cause each Subsidiary of such Credit
Party (other than the Excluded Subsidiaries) not to) make any change (other than
with respect to the Equity Drawdown Facility) in its capital structure as
described in Disclosure Schedule (3.8), including the issuance of any shares of
Stock, warrants or other securities convertible into Stock or any revision of
the terms of its outstanding Stock; provided, that: (i) Borrower may make a
Public Offering or Private Offering of its common Stock so long as (A) the
proceeds thereof are applied in prepayment of the Obligations as required by
Section 1.3(b)(iii), and (B) no Change of Control occurs after giving effect
thereto; (ii) Credit Parties and their respective Subsidiaries may enter into
the *** described in Disclosure Schedule (6.5) (the "***"); (iii) Borrower may
refinance the Subordinated Notes in accordance with Section 6.14; and (iv)
Borrower may repurchase the Subordinated Notes in a swap for Borrower's common
Stock or preferred Stock, pursuant to which such Stockholders would not have any
cash redemption rights or other potential cash outlay requirements or
entitlements to be paid directly or indirectly by Borrower in exchange for such
Subordinated Notes, all pursuant to terms and conditions for which Co-Agents
shall have given their prior written consent; or (c) such Credit Party shall not
(and shall cause each Subsidiary of such Credit Party not to) amend its charter
or bylaws, or memorandum of association or articles of association, as the case
may be, in a manner that would adversely affect Co-Agents or Lenders or such
Credit Party's duty or ability to repay the Obligations. Such Credit Party shall
not (and shall cause each Subsidiary of such Credit Party not to) engage in any
business other than the same or similar lines of businesses currently engaged in
by it.
6.6 Guaranteed Indebtedness. Except as otherwise set forth in
Disclosure Schedule (6.6), Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party
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not to) create, incur, assume or permit to exist any Guaranteed Indebtedness
except (a) by endorsement of instruments or items of payment for deposit to the
general account of such Credit Party, and (b) for Guaranteed Indebtedness
incurred for the benefit of any other Credit Party if the primary obligation is
expressly permitted by this Agreement.
6.7 Liens. Such Credit Party shall not (and shall cause each Subsidiary
of such Credit Party (other than an Excluded Subsidiary) not to) create, incur,
assume or permit to exist any Lien on or with respect to its Accounts or any of
its other properties or assets (whether now owned or hereafter acquired) except
for Liens in existence on the date hereof and summarized on Disclosure Schedule
(6.7) and other Permitted Encumbrances. In addition, such Credit Party shall not
become a party to any agreement, note, indenture or instrument or take any other
action that would prohibit the creation of a Lien on any of its properties or
other assets in favor of Agent, on behalf of Co-Agents and Lenders, as
additional Collateral for the Obligations, except operating leases, Capital
Leases or Licenses that prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. Such Credit Party shall not (and shall
cause each Subsidiary of such Credit Party not to) sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
the capital Stock of any of its Subsidiaries (other than the Excluded
Subsidiaries) and the Excluded Intellectual Property, whether in a public or a
private offering or otherwise, or any of its Accounts, other than: (a) the sale
of Inventory in the ordinary course of business; (b) the sale, transfer,
conveyance or other disposition of Equipment, Fixtures or Real Estate that is
obsolete or no longer used or useful in such Person's business and having a
value not exceeding $*** in any single transaction or $*** in the aggregate in
any Fiscal Year; (c) other Equipment and Fixtures having a value not exceeding
$*** in any single transaction or $*** in the aggregate in any Fiscal Year; (d)
the sale by Borrower of the Vixel Stock or the Komag Stock; and (e) the
transfers of the Excluded Intellectual Property by Borrower to an Excluded
Subsidiary set forth in Supplement A to Disclosure Schedule (3.15) . With
respect to any disposition of assets or other properties permitted pursuant to
clauses (b), (c) and (d) above, Agent agrees on reasonable prior written notice
to release its Lien on such assets or other properties in order to permit the
applicable Credit Party to effect such disposition and shall execute and deliver
to Borrower, at Borrower's expense, appropriate UCC-3 termination statements and
other releases as reasonably requested by Borrower. If Agent receives notice in
accordance with Section 11.10 that Borrower desires to sell any or all of the
Komag Stock or the Vixel Stock, in the event that Agent has acquired possession
of the Komag Stock or Vixel Stock, then Agent shall arrange for the delivery of
the Komag Stock or Vixel Stock, as applicable, to Borrower or to such broker as
Borrower shall designate in such notice within a reasonable period of time,
which delivery shall not be later than the close of business on the second
Business Day following the Business Day on which Agent has received such notice,
if such notice is received by Agent prior to 3:00 p.m. (California time) on a
Business Day; provided, that any such notice that is received by Agent on or
after 3:00 p.m. (California time) on a Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.
6.9 ERISA. Such Credit Party shall not (and shall cause each ERISA
Affiliate of such Credit Party not to) cause or permit to occur an event that
could result in the imposition of a Lien under Section 412 of the IRC or Section
302 or 4068 of ERISA or cause or permit to occur
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an ERISA Event to the extent such ERISA Event could reasonably be expected to
have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to comply
with any of the financial covenants set forth in Annex G (the "Financial
Covenants"); provided, that the Financial Covenants shall not be tested until
such time as (a) there are any outstanding Revolving Credit Advances or Letter
of Credit Obligations (excluding Letters of Credit (i) for bank guarantees
issued on behalf of WD UK, (ii) to support Borrower's replacement real estate
lease for its headquarters location, and (iii) to support other corporate
purposes acceptable to Co-Agents in an aggregate outstanding amount not to
exceed $20,000,000), (b) as of end of any March, June, September or December of
each year, Borrower and its Subsidiaries (other than Excluded Subsidiaries)
shall have Available Liquidity of less than $200,000,000, or (c) as of end of
any month other than March, June, September or December of each year, Borrower
and its Subsidiaries (other than Excluded Subsidiaries) shall have Available
Liquidity of less than $150,000,000.
6.11 Hazardous Materials. Such Credit Party shall not (and shall cause
each Subsidiary of such Credit Party not to) cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real
Estate where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental
Permits, or (b) otherwise adversely impact the value or marketability of any of
the Real Estate or any of the Collateral, other than such violations or
Environmental Liabilities that could not reasonably be expected to have a
Material Adverse Effect.
6.12 Sale-Leasebacks. Except (i) for the sale-leaseback of Western
Digital (Malaysia) SDN BHD's manufacturing plant on terms and conditions
consented to in writing by Co-Agents, and (ii) as otherwise specifically
provided in Section 6.8, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its assets.
6.13 Cancellation of Indebtedness. Except as otherwise expressly
provided in this Section 6, such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) cancel any claim or debt owing to it,
except for reasonable consideration negotiated on an arm's length basis and in
the ordinary course of its business consistent with past practices.
6.14 Restricted Payments. Such Credit Party shall not (and shall cause
each Subsidiary of such Credit Party not to) make any Restricted Payment,
except: (a) intercompany loans and advances between Borrower and Guarantors to
the extent permitted by Section 6.3; (b) dividends, distributions and other
payments by Subsidiaries of Borrower paid to Borrower; (c) employee loans
permitted under Section 6.4(b); (d) scheduled payments of interest with respect
to the Subordinated Debt; provided, that (i) no Default or Event of Default
shall have occurred and be continuing or would result after giving effect to any
payment pursuant to clause (d) above, (ii) Borrower and its Subsidiaries (other
than the Excluded Subsidiaries) shall have Available Liquidity of at least
$150,000,000 after giving effect to any payment pursuant to clause (d) above,
and (iii) the timing of the payments referred to in clause (d) above shall be
set at dates that permit the delivery of Financial Statements necessary to
determine current
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compliance by Borrower with the Financial Covenants prior to any such payment;
and (e) the refinancing of the Subordinated Debt that does not have the effect
of increasing the principal amount thereof or changing the amortization thereof
(other than to extend the same) and that is otherwise on terms and conditions no
less favorable to any Credit Party, Agent or any Lender, as reasonably
determined by Agent, than the terms of the Subordinated Debt being refinanced.
6.15 Change of Corporate Name or Location; Change of Fiscal Year.
Except as otherwise permitted in Section 6, such Credit Party shall not (and
shall cause each Subsidiary of such Credit Party (other than an Excluded
Subsidiary) not to): (a) change its corporate name; (b) add new trade names; or
(c) other than as disclosed in Disclosure Schedule (3.2), change its chief
executive office, principal place of business, registered office, corporate
offices or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in each case without at least
10 Business Days' prior written notice to each Co-Agent and after Borrower has
executed and delivered to Agent all UCC financing statements or other documents
deemed necessary by Agent to continue the perfection of any Liens in favor of
Agent, on behalf of Co-Agents and Lenders, in any Collateral, and provided that
any such new location (i) of Borrower shall be situated in the continental
United States of America, (ii) of WD IS shall be situated in Ireland, and (iii)
of WD UK, shall be situated in the United Kingdom. Without limiting the
generality of the foregoing, no Credit Party shall change its name, identity or
corporate structure in any manner that might make any financing or continuation
statement filed in connection herewith seriously misleading within the meaning
of Section 9402(7) of the Code or any other then applicable provision of the
Code except upon prior written notice to each Co-Agent and Lenders and after
Co-Agents' written acknowledgment that any reasonable action requested by
Co-Agents in connection therewith, including to continue the perfection of any
Liens in favor of Agent, on behalf of Co-Agents and Lenders, in any Collateral,
has been completed or taken. No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. Such Credit Party shall
not (and shall cause each Subsidiary of such Credit Party not to) directly or
indirectly enter into or become bound by any agreement, instrument, indenture or
other obligation (other than this Agreement and the other Loan Documents) that
could directly or indirectly restrict, prohibit or require the consent of any
Person with respect to the payment of dividends or distributions or the making
or repayment of intercompany loans by a Subsidiary of Borrower to Borrower.
6.17 No Speculative Transactions. Such Credit Party shall not (and
shall cause each Subsidiary of such Credit Party not to) engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Leases. Such Credit Party shall not (and shall cause each
Subsidiary of such Credit Party not to) enter into any operating lease for
Equipment or Real Estate if the aggregate amount of all rental payments under
such operating lease in any year for Borrower and its Subsidiaries on a
consolidated basis (excluding payments under existing leases and renewals
thereof) would exceed $***.
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6.19 Changes Relating to Subordinated Debt. Such Credit Party shall not
(and shall cause each Subsidiary of such Credit Party not to) change or amend
the terms of any Subordinated Debt (or any indenture or agreement in connection
therewith) if the effect of such amendment is to: (a) increase the interest rate
on such Subordinated Debt; (b) change the dates upon which payments of principal
or interest are due on such Subordinated Debt other than to extend such dates;
(c) change any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with respect to
such Subordinated Debt; (d) change the redemption or prepayment provisions of
such Subordinated Debt other than to extend the dates therefor or to reduce the
premiums payable in connection therewith; (e) grant any security or collateral
to secure payment of such Subordinated Debt; or (f) change or amend any other
term if such change or amendment would materially increase the obligations of
such Credit Party thereunder or confer additional material rights on the holder
of such Subordinated Debt in a manner adverse to any Credit Party, any Co-Agent
or any Lender.
6.20 Inactive Subsidiaries. Neither Western Digital Ireland, Ltd.,
Western Digital (Singapore) PTE., Ltd., or Western Digital (Tuas-Singapore)
PTE., Ltd. shall engage in any trade or business, or own any assets (other than
Stock of their Subsidiaries) or incur any Indebtedness or Guaranteed
Indebtedness (other than the Obligations).
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Co-Agents and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated, or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of each Co-Agent and each
Lender, all as contained in the Loan Documents, shall not terminate or expire,
but rather shall survive any such termination or cancellation and shall continue
in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower (i) shall fail to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans when due and payable, or
(ii) shall fail to pay or reimburse Co-Agents or Lenders for any expense
reimbursable hereunder or under any other
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Loan Document within ten days following Agent's demand for such reimbursement or
payment of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Borrower shall fail or neglect to perform, keep or observe any
of the provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for three days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for 30 days or more
following the earlier of (i) receipt by such Credit Party of written notice of
such failure and (ii) such Credit Party's knowledge of such failure.
(e) A default or breach shall occur (i) under any other agreement,
document or instrument to which any Credit Party is a party that is not cured
within any applicable grace period therefor, and such default or breach (A)
involves the failure to make any payment when due in respect of any Indebtedness
or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $500,000 in the aggregate, or (B) causes, or permits any holder of
such Indebtedness or a trustee to cause, Indebtedness or a portion thereof in
excess of $500,000 in the aggregate to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment, or such Guaranteed
Indebtedness to become payable or cash collateral in respect thereof to be
demanded, in each case regardless of whether such default is waived, or such
right is exercised, by such holder or trustee, or (ii) under any of the
Subordinated Debt Documents or under any of the documentation with respect to
the *** Loan, in each case that is not cured within any applicable grace period
therefor.
(f) (i) Any information contained in any Borrowing Base Certificate
shall be untrue or incorrect in any respect (other than for misstatements or
errors contained therein that, if corrected, would result in the actual Net
Borrowing Availability as of the date of such Borrowing Base Certificate to be
(A) more than zero and (B) less than $10,000 below the Net Borrowing
Availability as represented therein), or (ii) any representation or warranty
herein or in any Loan Document or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate) made or
delivered to Agent or any Lender by any Credit Party is untrue or incorrect in
any material respect as of the date when made or deemed made.
(g) Assets of any Credit Party or any Subsidiary of any Credit
Party with a fair market value of $2,500,000 or more shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, administrator, administrative receiver, trustee,
examiner, custodian or assignee for the benefit of creditors of any Credit Party
and such condition continues for 60 days or more.
(h) A case or proceeding shall have been commenced against any
Credit Party or any Subsidiary of any Credit Party seeking a decree or order in
respect of such Person (i) under the Bankruptcy Code or any other applicable
federal, state or foreign bankruptcy or
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other similar law, (ii) appointing a custodian, receiver, administrator,
administrative receiver, liquidator, assignee, trustee, examiner or sequestrator
(or similar official) for such Person or for any substantial part of such
Person's assets, or (iii) ordering the winding-up, liquidation, dissolution or
re-organization of the affairs of such Person, and such case or proceeding shall
remain undismissed or unstayed for 60 days or more or a decree or order granting
the relief sought in such case or proceeding shall be entered by a court of
competent jurisdiction over such case or proceeding.
(i) Any Credit Party or any Subsidiary of any Credit Party shall
(i) file a petition seeking relief under the Bankruptcy Code or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
consent to or fail to contest in a timely and appropriate manner the institution
of proceedings thereunder or the filing of any such petition or the appointment
of or taking possession by a custodian, receiver, administrator, administrative
receiver, liquidator, assignee, trustee, examiner or sequestrator (or similar
official) for such Person or for any substantial part of such Person's assets,
(iii) make an assignment for the benefit of or composition with its creditors,
(iv) take any corporate action in furtherance of any of the foregoing, or (v)
admit in writing its inability to, or shall be generally unable to, pay its
debts as such debts become due.
(j) A final judgment or judgments for the payment of money in
excess of $2,500,000 in the aggregate at any time outstanding shall be rendered
against any Credit Party and the same shall not, within 30 days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay, except to the extent that such judgment or judgments are, subject to
applicable deductibles, fully covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage in writing.
(k) Any material provision of any Loan Document shall for any
reason cease to be valid, binding and enforceable in accordance with its terms
(or any Credit Party or any Subsidiary of any Credit Party) shall challenge the
enforceability of any Loan Document or shall assert in writing, or engage in any
action or inaction based on any such assertion, that any provision of any of the
Loan Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms), or any Lien created under any Loan
Document shall cease to be a valid and perfected first priority Lien (except as
otherwise permitted herein or therein) in any of the Collateral having an
aggregate value in excess of $100,000 purported to be covered thereby.
(l) Any Change of Control shall occur.
(m) Any event shall occur, whether or not insured or insurable, as
a result of which the revenue-producing activities cease or are reduced by more
than 75% (measured over the immediately preceding 12 months), in each case at
any facility of Borrower or any Subsidiary of Borrower generating more than 25%
of Borrower's revenues for the Fiscal Year preceding such event, and such
cessation or reduction continues for more than 30 days.
(n) Any default or breach by Borrower shall occur and be continuing
under any of the following agreements or any of the following agreements shall
be terminated prior to
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the expiration of its stated terms due to a breach by Borrower thereunder: (i)
the OEM Component Supply Agreement dated June 7, 1998, between Borrower and
International Business Machines Corporation; and (ii) the Volume Purchase
Agreement dated as of April 8, 1999, by and between Borrower and Komag,
Incorporated.
8.2 Remedies.
(a) If any Event of Default shall have occurred and be continuing,
or if any Default shall have occurred and be continuing and Co-Agents or
Requisite Lenders shall have determined not to make any Advances or incur any
Letter of Credit Obligations so long as such Default is continuing, then Agent
may (and at the written request of any Co-Agent or the Requisite Lenders shall),
without notice, suspend the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations, whereupon
any further Advances and the incurrence of further Letter of Credit Obligations
shall be made or incurred in the sole discretion of Co-Agents (or in the sole
discretion of the Requisite Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default shall have occurred and be continuing, Agent may
(and at the written request of any Co-Agent or Requisite Lenders shall), without
notice except as otherwise expressly provided herein, increase the rate of
interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of any Co-Agent or the Requisite Lenders
shall), without notice: (i) terminate the Revolving Loan facility with respect
to further Advances or the incurrence of further Letter of Credit Obligations,
(ii) declare all or any portion of the Obligations, including all or any portion
of any Loan, to be forthwith due and payable, and require that the Letter of
Credit Obligations be cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party, or (iii) exercise any
rights and remedies provided to Agent under the Loan Documents or at law or in
equity, including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(g), (h) or (i), the
Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the Revolving Loan, shall become immediately due and
payable without declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard;
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or Agent's replevy, attachment or levy upon, the Collateral or any
bond or security that might be required by any court prior to allowing Agent to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.
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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF CO-AGENTS
9.1 Assignment and Participations.
(a) Each Credit Party consents to any Lender's assignment of, or
sale of participations in, at any time or times, the Loan Documents, Loans,
Letter of Credit Obligations or any Revolving Loan Commitment or of any portion
thereof or interest therein, including any Lender's rights, title, interests,
remedies, powers or duties thereunder, whether evidenced by a writing or not.
Any assignment by a Lender shall: (i) require the consent of each Co-Agent and
Borrower (which shall not be unreasonably withheld or delayed and which consent
shall not be required so long as any Event of Default has occurred and is
continuing) and the execution of an assignment agreement (an "Assignment
Agreement") substantially in the form attached hereto as Exhibit 9.1(a) and
otherwise in form and substance satisfactory to, and acknowledged by, each
Co-Agent; (ii) be conditioned on such assignee Lender representing to the
assigning Lender and each Co-Agent that it is purchasing the applicable Loans to
be assigned to it for its own account, for investment purposes and not with a
view to the distribution thereof; (iii) if a partial assignment, be in an amount
at least equal to $5,000,000 and, after giving effect to any such partial
assignment, the assigning Lender shall have retained a Revolving Loan Commitment
in an amount at least equal to $5,000,000; (iv) include a payment to Agent of an
assignment fee of $3,500; (v) be subject to the terms of the Overseas Security
Documents and to the due execution of any amendment, variation, accession,
memorandum or any other supplemental agreement or deed as may be required by
Agent; and (vi) if an assignment by Bank of America or GE Capital, the
non-assigning Lender shall be offered the right of first refusal to purchase the
applicable Loans being assigned by such assigning Lender; provided, that the
non-assigning Lender shall provide written notice to such assigning Lender of
its acceptance or rejection of such offer within ten Business Days following
receipt by such non-assigning Lender of written notice of such assigning
Lender's offer of assignment. In the case of an assignment by a Lender under
this Section 9.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations of all other Lenders hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Revolving Loan Commitment or assigned portion thereof from and after the
date of such assignment. Borrower hereby acknowledges and agrees that any
assignment shall give rise to a direct obligation of Borrower to the assignee
and that the assignee shall be a "Lender." In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the Revolving Loan Commitment. In the
event any Co-Agent or any Lender assigns or otherwise transfers all or any part
of the Obligations, such Co-Agent or Lender shall so notify Borrower and
Borrower shall, upon the request of such Co-Agent or such Lender, execute new
Notes, if any, in exchange for the Notes being assigned. Notwithstanding the
foregoing provisions of this Section 9.1(a), any Lender may at any time pledge
the Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any Lender that is an
investment fund may assign the Obligations held by it and such Lender's rights
under this Agreement and the other Loan Documents to another investment fund
managed by the same investment advisor; provided, that no such pledge to a
Federal Reserve Bank shall release such Lender from such Lender's obligations
hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Revolving Loan Commitment shall be made with the understanding that all amounts
payable by Borrower
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hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrower to the participant and the participant shall be
considered to be a "Lender." Except as set forth in the preceding sentence
neither Borrower nor any other Credit Party shall have any obligation or duty to
any participant. Neither any Co-Agent nor any Lender (other than the Lender
selling a participation) shall have any duty to any participant and may continue
to deal solely with the Lender selling a participation as if no such sale had
occurred.
(c) Except as expressly provided in this Section 9.1, no Lender
shall, as between Borrower and that Lender, or any Co-Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably required to
enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and the
preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. Each Credit Party shall
certify the correctness, completeness and accuracy of all descriptions of the
Credit Parties and their respective affairs contained in any selling materials
provided by it and all other information provided by it and included in such
materials, except that any Projections delivered by Borrower shall only be
certified by Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4(b).
(e) Any Lender may furnish any information concerning Credit
Parties and the Subsidiaries of Credit Parties in the possession of such Lender
from time to time to assignees and participants (including prospective assignees
and participants); provided, that such Lender shall obtain from assignees or
participants confidentiality covenants substantially equivalent to those
contained in Section 11.8.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Revolving Loan Commitment to a potential Lender or participant if, as
of the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements under
Section 1.16(a), increased costs under Section 1.16(b), an inability to fund
LIBOR Loans under Section 1.16(c), or withholding taxes in accordance with
Section 1.15(a).
9.2 Appointment of Co-Agents.
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(a) GE Capital is hereby appointed to act on behalf of all Lenders
as Administrative Agent, and Bank of America is hereby appointed to act on
behalf of all Lenders as Documentation Agent, in each case under this Agreement
and the other Loan Documents. The provisions of this Section 9.2 are solely for
the benefit of Co-Agents and Lenders and no Credit Party nor any other Person
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and the
other Loan Documents, each Co-Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person. Each Co-Agent shall have no duties or responsibilities except for those
expressly set forth in this Agreement and the other Loan Documents. The duties
of each Co-Agent shall be mechanical and administrative in nature and neither
Co-Agent shall have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise, a fiduciary relationship in respect of any
Lender. Neither any Co-Agent nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives shall be
liable to any Lender for any action taken or omitted to be taken by it hereunder
or under any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.
(b) If any Co-Agent shall request instructions from Requisite
Lenders, Supermajority Lenders or all affected Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Loan Document, then such Co-Agent shall be entitled to refrain from such
act or taking such action unless and until such Co-Agent shall have received
instructions from Requisite Lenders, Supermajority Lenders, or all affected
Lenders, as the case may be, and neither Co-Agent shall incur liability to any
Person by reason of so refraining. Each Co-Agent shall be fully justified in
failing or refusing to take any action hereunder or under any other Loan
Document (i) if such action would, in the opinion of such Co-Agent, be contrary
to law or the terms of this Agreement or any other Loan Document, (ii) if such
action would, in the opinion of such Co-Agent, expose such Co-Agent to
Environmental Liabilities or (iii) if such Co-Agent shall not first be
indemnified to its satisfaction against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against any Co-Agent as a result of such Co-Agent acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of Requisite Lenders, Supermajority Lenders or all
affected Lenders, as applicable.
9.3 Co-Agents' Reliance, Etc. Neither any Co-Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages caused by its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, each Co-Agent, as applicable:
(a) may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Agent; (b) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan
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Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital, Bank of America and their Affiliates. With respect to
its Revolving Loan Commitment hereunder, each of GE Capital and Bank of America
shall have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not a
Co-Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include each of GE Capital and Bank of America in its individual
capacity. GE Capital, Bank of America and their respective Affiliates may lend
money to, invest in, and generally engage in any kind of business with, any
Credit Party, any of their Affiliates and any Person who may do business with or
own securities of any Credit Party or any such Affiliate, all as if GE Capital
or Bank of America were not a Co-Agent and without any duty to account therefor
to Lenders. GE Capital, Bank of America and their respective Affiliates may
accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders. Each Lender acknowledges the potential conflict of interest
between GE Capital and Bank of America, each as a Lender holding
disproportionate interests in the Loans, and GE Capital and Bank of America, as
a Co-Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon any Co-Agent or any other Lender and
based on the Financial Statements referred to in Section 3.4(a) and such other
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and the Subsidiaries of Credit Parties
and its own decision to enter into this Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon any Co-Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement. Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify each Co-Agent (to the
extent not reimbursed by Credit Parties and without limiting the obligations of
Borrower hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against such
Co-Agent in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted to be taken by such Co-Agent in
connection therewith; provided, that no Lender shall be liable for any portion
of such liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Co-Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse each Co-Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by such Co-Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that Agent is not reimbursed for such
expenses by Credit Parties.
9.7 Successor Co-Agents. Each Co-Agent may resign at any time by giving
not less than 30 days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor Co-Agent. If no successor Co-Agent shall have been so appointed by
the Requisite Lenders and shall have accepted such appointment within 30 days
after the resigning Co-Agent's giving notice of resignation, then the resigning
Co-Agent may, on behalf of Lenders, appoint a successor Co-Agent, which shall be
a Lender if a Lender is willing to accept such appointment, or otherwise shall
be a commercial bank or financial institution or a subsidiary of a commercial
bank or financial institution if such commercial bank or financial institution
is organized under the laws of the United States of America or of any State
thereof and has a combined capital and surplus of at least $300,000,000. If no
successor Co-Agent has been appointed pursuant to the foregoing within 30 days
after the date such notice of resignation was given by the resigning Co-Agent,
such resignation shall become effective and the Requisite Lenders shall
thereafter perform all the duties of such Co-Agent hereunder until such time, if
any, as the Requisite Lenders appoint a successor Co-Agent as provided above.
Any successor Co-Agent appointed by Requisite Lenders hereunder shall be subject
to the approval of Borrower, such approval not to be unreasonably withheld or
delayed; provided, that such approval shall not be required if a Default or an
Event of Default shall have occurred and be continuing. Upon the acceptance of
any appointment as a Co-Agent hereunder by a successor Co-Agent, such successor
Co-Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Co-Agent. Upon the earlier of the
acceptance of any appointment as Co-Agent hereunder by a successor Co-Agent or
the effective date of the resigning Co-Agent's resignation, the resigning
Co-Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Co-Agent shall continue. After any
resigning Co-Agent's resignation hereunder, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was acting as a Co-Agent under this Agreement and the other Loan
Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights and subject to the provisions of Section 9.9(f), upon the occurrence and
during the continuance of any Event of Default, each Lender and each holder of
any Note is hereby authorized at any time or from time to time, without notice
to any Credit Party or to any other Person, any such notice being hereby
expressly waived, to offset and to appropriate and to apply any and all balances
held by it at any of its offices for the account of Borrower or any Guarantor
(regardless of whether such balances are then due to Borrower or any Guarantor)
and any other properties or assets at any time held or owing by that Lender or
that holder to or for the credit or for the account of Borrower or any Guarantor
against and on account of any of the Obligations that are not paid when due. Any
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Lender or holder of any Note exercising a right to offset or otherwise receiving
any payment on account of the Obligations in excess of its Pro Rata Share
thereof shall purchase for cash (and the other Lenders or holders shall sell)
such participations in each such other Lender's or holder's Pro Rata Share of
the Obligations as would be necessary to cause such Lender to share the amount
so offset or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Sections 1.13, 1.15 or 1.16). Each Lender's obligation
under this Section 9.8 shall be in addition to and not in limitation of its
obligations to purchase a participation in an amount equal to its Pro Rata Share
of the Swing Line Loans under Section 1.1. Borrower and each Guarantor agrees,
to the fullest extent permitted by law, that (a) any Lender or holder may
exercise its right to offset with respect to amounts in excess of its Pro Rata
Share of the Obligations and may sell participations in such amounts so offset
to other Lenders and holders and (b) any Lender or holders so purchasing a
participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of setoff, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of the Loans and the other Obligations in the amount
of such participation. Notwithstanding the foregoing, if all or any portion of
the setoff amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of setoff, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without interest.
9.9 Advances; Non-Funding Lenders; Information; Actions in Concert.
(a) Advances; Payments.
(i) Lenders shall refund or participate in the Swing Line Loan
in accordance with clauses (iii) and (iv) of Section 1.1(b). If the Swing Line
Lender declines to make a Swing Line Loan or if Swing Line Availability is zero,
Agent shall notify Lenders promptly after receipt of a Notice of Revolving
Advance and in any event prior to 11:00 a.m. (California time) on the date such
Notice of Revolving Advance is received, by telecopy, telephone or other similar
form of transmission. Each Lender shall make the amount of such Lender's Pro
Rata Share of such Revolving Credit Advance available to Agent in same day funds
by wire transfer to Agent's account as set forth in Annex H not later than 1:00
p.m. (California time) on the requested funding date, in the case of an Index
Rate Loan, and not later than 10:00 a.m. (California time) on the requested
funding date, in the case of a LIBOR Loan. After receipt of such wire transfers
(or, in the Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested Revolving Credit
Advance to Borrower. All payments by each Lender shall be made without setoff,
counterclaim or deduction of any kind.
(ii) On the second Business Day of each calendar week (each, a
"Settlement Date"), Agent shall advise each Lender by telephone or telecopy of
the amount of such Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable Loan. Provided that
such Lender has funded all payments and Advances required to be made by it and
purchased all participations required to be purchased by it under this Agreement
and the other Loan Documents as of such Settlement Date, Agent shall pay to each
Lender such Lender's Pro Rata Share of principal, interest and Fees paid by
Borrower since the previous Settlement Date for the benefit of that Lender on
the Loans held by
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it. To the extent that any Lender (a "Non-Funding Lender") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender in Annex H or the applicable Assignment Agreement)
not later than 11:00 a.m. (California time) on the next Business Day following
each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Lender when due, Agent will be entitled to recover such
amount on demand from such Lender without setoff, counterclaim or deduction of
any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith
upon Agent's demand, Agent shall promptly notify Borrower and Borrower shall
immediately repay such amount to Agent. Nothing in this Section 9.9(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its Revolving Loan Commitment hereunder or to
prejudice any rights that Borrower may have against any Lender as a result of
any default by such Lender hereunder. To the extent that Agent advances funds to
Borrower on behalf of any Lender and is not reimbursed therefor on the same
Business Day as such Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by the applicable
Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to
make any Revolving Credit Advance or any payment required by it hereunder, or to
purchase any participation in any Swing Line Loan to be made or purchased by it
on the date specified therefor shall not relieve any other Lender (each such
other Lender, an "Other Lender") of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make an
Advance, or to purchase a participation required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a "Lender" (or be included in the calculation of
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"Requisite Lenders" or "Supermajority Lenders" hereunder) for any voting or
consent rights under or with respect to any Loan Document.
(e) Dissemination of Information. Agent shall use reasonable
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, that
Agent shall not be liable to Documentation Agent or any Lender for any failure
to do so, except to the extent that such failure is attributable to Agent's
gross negligence or willful misconduct. Lenders acknowledge that Borrower is
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall have no duty
to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent.
9.10 Relationship Between Co-Agents. As between Co-Agents, (a)
Administrative Agent shall serve as designated agent for Co-Agents and Lenders
under this Agreement and the other Loan Documents with respect to the
structuring, preparation, and negotiation of the Loan Documents, the filing,
recordation and perfection of Liens, the receipt and disbursement of funds to,
from, and on behalf of Credit Parties and Lenders, and the other administrative
functions specifically set forth in this Agreement and the other Loan Documents
as assigned to Administrative Agent, and (b) Documentation Agent shall serve as
designated agent for Co-Agents and Lenders under this Agreement and the other
Loan Documents with respect to the structuring, preparation, and negotiation of
the Loan Documents. Neither Co-Agent shall attempt to take action inconsistent
with the foregoing allocation of responsibility; provided, that each Co-Agent
shall, to the extent reasonably practical, (i) provide timely access to
information to the other relating to any actions taken or being considered by
such Co-Agent in connection with its duties, and (ii) upon the request of the
other, make such Co-Agent's representatives available to the other in timely
fashion to discuss any such actions. Each Co-Agent shall exercise reasonable
credit judgment in performing its duties hereunder; provided, that no provision
of this Section 9.10 shall be deemed (A) to modify the provisions of Section
9.3, or (B) restrict or modify the authority of a Co-Agent, in its capacity as a
Lender, accorded such Co-Agent by Section 9.4.
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10. SUCCESSORS AND ASSIGNS
This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Credit Party, Co-Agents, Lenders and their
respective successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein. No Credit Party may assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Co-Agents and Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Co-Agents and Lenders shall be void. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and obligations of
each Credit Party, Co-Agents and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
(other than the Fee Letter) between any Credit Party and Co-Agent or any Lender
or any of their respective Affiliates, predating this Agreement and relating to
a financing of substantially similar form, purpose or effect shall be superseded
by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement, any of the Notes or any other Loan Document, or any consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by each Co-Agent and Borrower, and by
Requisite Lenders, Supermajority Lenders or all affected Lenders, as applicable.
Except as set forth in clauses (b) and (c) below or as otherwise expressly set
forth in this Agreement, all such amendments, modifications, terminations or
waivers requiring the consent of any Lenders shall require the written consent
of each Co-Agent and Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that increases the percentage
advance rates set forth in the definition of the Borrowing Base or that makes
less restrictive the nondiscretionary criteria for exclusion from Eligible
Accounts set forth in Section 1.6 shall be effective unless the same shall be in
writing and signed by each Co-Agent, Supermajority Lenders and Borrower. No
amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement that waives compliance with the conditions precedent
set forth in Section 2.2 to the making of any Loan or the incurrence of any
Letter of Credit Obligations shall be effective unless the same shall be in
writing and signed by each Co-Agent, Requisite Lenders and Borrower.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or
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consent with respect to any Default (if in connection therewith Co-Agents or
Requisite Lenders, as the case may be, have exercised its or their right to
suspend the making or incurrence of further Advances or Letter of Credit
Obligations pursuant to Section 8.2(a)) or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in Section 2.2 unless the
same shall be in writing and signed by Co-Agents, Requisite Lenders and
Borrower.
(c) No amendment, modification, termination or waiver shall, unless
in writing and signed by Co-Agents and each Lender directly affected thereby:
(i) increase the principal amount of any Lender's Revolving Loan Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date (other than mandatory prepayments under
Section 1.3(b)) of the principal amount of any Loan of any affected Lender; (iv)
waive, forgive, defer, extend or postpone any payment of interest, principal or
Fees as to any affected Lender; (v) release any Guaranty or, except as otherwise
permitted herein or in the other Loan Documents, release, or permit any Credit
Party to sell or otherwise dispose of any Collateral with a value exceeding
$15,000,000 in any Fiscal Year (which action shall be deemed to directly affect
all Lenders); (vi) change the percentage of the Revolving Loan Commitments or of
the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 11.2 or the definitions of the terms "Requisite Lenders" or
"Supermajority Lenders" insofar as such definitions affect the substance of this
Section 11.2. Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of any Co-Agent or L/C Issuer under this
Agreement or any other Loan Document shall be effective unless in writing and
signed by Co-Agents or L/C Issuer, as the case may be, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent
of Requisite Lenders is obtained, but the consent of other Lenders whose consent
is required is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clauses (ii), (iii) and (iv) below being
referred to as a "Non-Consenting Lender"),
(ii) requiring the consent of Supermajority Lenders, the
consent of Requisite Lenders is obtained, but the consent of Supermajority
Lenders is not obtained, or
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(iii) requiring the consent of Requisite Lenders, the consent
of Lenders holding 51% or more of the aggregate Revolving Loan Commitments is
obtained, but the consent of Requisite Lenders is not obtained, then, so long as
Agent is not a Non-Consenting Lender, at Borrower's request Agent, or a Person
acceptable to Agent, shall have the right with Agent's consent and in Agent's
sole discretion (but shall have no obligation) to purchase from such
Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall,
upon Agent's request, sell and assign to Agent or such Person, all of the
Revolving Loan Commitment of such Non-Consenting Lenders for an amount equal to
the principal balance of all Loans held by such Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon indefeasible payment in full in cash and performance of
all of the Obligations (other than indemnification Obligations under Section
1.13) and termination of the Revolving Loan Commitments, and so long as no
suits, actions, proceedings or claims are pending or threatened against any
Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements,
mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse each Co-Agent and,
with respect to syndication expenses, GE Capital and Bank of America, for all
reasonable and actual out-of-pocket expenses incurred in connection with the
negotiation, preparation and syndication of the Loan Documents (including the
reasonable fees and expenses of all of its special loan counsel, advisors,
consultants and auditors retained in connection with the Loan Documents and the
Related Transactions and advice in connection therewith). Borrower shall
reimburse each Co-Agent (and, with respect to clauses (c), (d) and (e) below,
all Lenders) for all reasonable and actual fees, costs and expenses, including
the reasonable fees, costs and expenses of counsel or other advisors (including
environmental and management consultants and appraisers) for advice, assistance,
or other representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of any Loan;
(b) any amendment, modification or waiver of, consent with respect
to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the administration of the Loans made
pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person, and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against Borrower or any other Person that
may be obligated to any Co-Agent by virtue of the Loan Documents, including any
such litigation,
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contest, dispute, suit, proceeding or action arising in connection with any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided, that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(d) any attempt to enforce any remedies of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to any Co-Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided, that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(e) any work-out or restructuring of the Loans during the pendency
of one or more Events of Default; and
(f) efforts to, in accordance with the provisions of the Loan
Documents, (i) monitor the Loans or any of the other Obligations, (ii) evaluate,
observe or assess any of the Credit Parties or their respective Subsidiaries or
the affairs of the Credit Parties or their respective Subsidiaries, and (iii)
verify, protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of any of the Collateral; including, as to each of clauses (a)
through (f) above, all attorneys' and other professional and service providers'
fees arising from such services, including those in connection with any
appellate proceedings, and all expenses, costs, charges and other fees incurred
by such counsel and others in connection with or relating to any of the events
or actions described in this Section 11.3, all of which shall be payable, on
demand, by Borrower to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
Notwithstanding the generality of the foregoing, Borrower shall not be
required to reimburse any Co-Agent or Lender for any fees, costs or expenses
incurred in connection with any litigation, arbitration or court proceeding of
the type described in clause (c) above (other than any litigation, contest,
dispute, suit, proceeding or action, including any motion practice, application
or other matter in connection therewith, arising in or under a case or
proceeding that has been commenced against any Credit Party or any Subsidiary of
any Credit Party under the Bankruptcy Code or any other applicable federal,
state or foreign bankruptcy or other similar law, all of which shall be
reimbursable under this Section 11.3) between any Credit Party, on the one hand,
and any Co-Agent or Lender, on the other hand, (A) pending before a court of
competent jurisdiction, (B) that has not been voluntarily dismissed pursuant to
a settlement thereof, and (C) in which a final, non-appealable judgment or order
shall have been entered in favor of such Credit Party containing a determination
that such Credit Party is the prevailing party.
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11.4 No Waiver. Any Co-Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement or any other Loan Document shall not waive, affect or diminish
any right of such Co-Agent or such Lender thereafter to demand strict compliance
and performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by any Co-Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
each Co-Agent and the applicable required Lenders and directed to Borrower
specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.8 Confidentiality. Each Co-Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts such Co-Agent or such
Lender applies to maintain the confidentiality of its own confidential
information) to maintain as confidential all confidential information provided
to them by the Credit Parties and designated as confidential for a period of two
years following receipt thereof, except that each Co-Agent and each Lender may
disclose such information: (a) to Persons employed or engaged by such Co-Agent
or such Lender in evaluating, approving, structuring or administering the Loans
and the Revolving Loan Commitments; (b) to any bona fide assignee or participant
or potential assignee or participant that has agreed to comply with the covenant
contained in this Section 11.8 (and any such bona fide assignee or participant
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any Governmental Authority or reasonably believed by such
Co-Agent or such Lender to be compelled by any court decree, subpoena or legal
or administrative order or process; (d) as, on the advice of such Co-Agent's or
such Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in
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connection with any Litigation to which such Co-Agent or such Lender is a party;
or (f) that ceases to be confidential through no fault of any Co-Agent or any
Lender; provided, that with respect to clauses (c) and (d) above, such Co-Agent
or Lender shall notify Borrower as soon as is reasonably practicable under the
circumstances prior to any proposed disclosure and afford Borrower the
opportunity, at Borrower's expense, to limit or eliminate the disclosure or
obtain one or more protective orders with respect thereto, in each case only to
the extent that such Co-Agent or Lender has determined that the failure to
immediately disclose would not subject it to any liability.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
(WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF) AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN LOS ANGELES COUNTY, CITY OF
LOS ANGELES, CALIFORNIA, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, CO-AGENTS AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT CO-AGENTS, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF LOS
ANGELES COUNTY, CITY OF LOS ANGELES, CALIFORNIA; PROVIDED FURTHER, THAT NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE DAYS
AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID.
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11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered: (a) upon the earlier of actual receipt and three
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
prior to 5:00 p.m. local time of the recipient, or otherwise on the immediately
succeeding Business Day (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 11.10); (c) one Business Day after deposit with a
reputable overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated in Annex I or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Borrower or any Co-Agent)
designated in Annex I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG CO-AGENTS, LENDERS AND ANY CREDIT PARTY
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
62
<PAGE> 68
11.14 Press Releases. Each Credit Party on the one hand, and each
Co-Agent on the other, agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure using the name of
Borrower, any Co-Agent, or any of their respective Affiliates, or referring to
this Agreement, the other Loan Documents or the Related Transactions Documents,
without at least two Business Days' prior notice to such other Person and
without the prior written consent of such other Person unless (and only to the
extent that) such Credit Party, Co-Agent or their respective Affiliates is
required to do so under law and then, in any event, such Credit Party, Co-Agent
or their respective Affiliates will consult with such other Person before
issuing such press release or other public disclosure. Each Credit Party
consents to the publication by any Co-Agent or any Lender of a tombstone or
similar advertising material relating to the financing transactions contemplated
by this Agreement. Such Co-Agent or such Lender shall provide a draft of any
such tombstone or similar advertising material to each Credit Party for review
and approval prior to the publication thereof. Each Co-Agent reserves the right
to provide to industry trade organizations information necessary and customary
for inclusion in league table measurements with Borrower's consent, which
consent shall not be unreasonably withheld or delayed.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
[remainder of page left blank]
63
<PAGE> 69
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
"BORROWER"
WESTERN DIGITAL CORPORATION
By: /s/ Steven M. Slavin
----------------------------------------
Steven M. Slavin
Vice President, Taxes and Treasurer
"ADMINISTRATIVE AGENT" and "LENDER"
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Robert S. Yasuda
----------------------------------------
Robert S. Yasuda
Duly Authorized Signatory
"DOCUMENTATION AGENT" and "LENDER"
BANK OF AMERICA, N.A.
By: /s/ Michael R. Williamson
----------------------------------------
Michael R. Williamson
Senior Vice President
<PAGE> 70
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as a Borrower.
"CREDIT PARTIES"
WESTERN DIGITAL (U.K.), LTD., a
corporation organized under the laws of
the United Kingdom
By: /s/ Kenneth Larsen /by: E. M. Livesey
---------------------------------------
Name: Kenneth Larsen
Title: Director
WESTERN DIGITAL (I.S.) LIMITED, a
corporation organized under
the laws of Ireland
By: /s/ Michael A. Cornelius
---------------------------------------
Name: Michael A. Cornelius
Title: Director
By: /s/ Raymond M. Bukaty
---------------------------------------
Name: Raymond M. Bukaty
Title: Director
<PAGE> 71
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings, and all references in the following definitions to
Sections, Exhibits, Schedules or Annexes shall refer to Sections, Exhibits,
Schedules or Annexes of the Agreement:
"Account Debtor" shall mean any Person who may become
obligated to any other Person under, with respect to, or on account of, an
Account.
"Accounting Changes" shall have the meaning assigned to it in
Annex G.
"Accounts" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by any Person, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments), whether arising out of goods sold or services
rendered by it or from any other transaction (including any such obligations
that may be characterized as an account or contract right under the Code), (b)
all of such Person's rights in, to and under all purchase orders or receipts for
goods or services, (c) all of such Person's rights to any goods represented by
any of the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to such Person under all
purchase orders and contracts for the sale of goods or the performance of
services or both by such Person or in connection with any other transaction
(whether or not yet earned by performance on the part of such Person), including
the right to receive the proceeds of said purchase orders and contracts, and (e)
all collateral security and guaranties of any kind given by any other Person
with respect to any of the foregoing.
"ACH Transactions" means any cash management or related
services provided by Bank of America to Borrower or any other Credit Party,
including the automatic clearing house transfer of funds by Bank of America for
the account of the Borrower pursuant to agreement or overdrafts.
"Acquisition Pro Forma" shall have the meaning assigned to it
in Section 6.1.
"Acquisition Projections" shall have the meaning assigned to
it in Section 6.1.
"Activation Event" and "Activation Notice" shall have the
respective meanings assigned to them in Annex C.
"Administrative Agent" shall mean GE Capital, in its capacity
as administrative agent for Co-Agents and Lenders, or its successor appointed
pursuant to Section 9.7.
<PAGE> 72
"Advance" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with
such Person, (c) each of such Person's officers, directors, joint venturers and
partners or (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, that the term "Affiliate" shall specifically
exclude each Co-Agent and each Lender.
"Agent" shall mean Administrative Agent and, as the context
may require, Security Trustee.
"Agreement" shall mean the Credit Agreement by and among
Borrower, the other Credit Parties party thereto, GE Capital, as Administrative
Agent and a Lender, Bank of America, as Documentation Agent and a Lender, and
the other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"Appendices" shall have the meaning assigned to it in the
recitals to the Agreement.
"Applicable L/C Margin" shall mean the per annum fee, from
time to time in effect, payable with respect to outstanding Letter of Credit
Obligations as determined by reference to Section 1.5(a).
"Applicable Percentage" shall have the meaning assigned to it
in Section 1.9(c).
"Applicable Revolver Index Margin" shall mean the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
Section 1.5(a).
"Applicable Revolver LIBOR Margin" shall mean the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a).
"Applicable Unused Line Fee Margin" shall mean the per annum
fee, from time to time in effect, payable in respect of Borrower's non-use of
available funds pursuant to Section 1.9(b), which fee is determined by reference
to Section 1.5(a).
"Assignment Agreement" shall have the meaning assigned to it
in Section 9.1(a).
<PAGE> 73
"Available Liquidity" shall mean, at any time, the sum of (a)
Net Borrowing Availability plus (b) available cash balances in Borrower's
deposit accounts set forth in Disclosure Schedule (3.19) plus (c) available cash
balances in the deposit accounts of Borrower's Subsidiaries (other than the
Excluded Subsidiaries), in each case at such time.
"Average Borrowing Availability" shall mean, for any calendar
month, the average daily Net Borrowing Availability for such month.
"Bank of America" shall mean Bank of America, N.A.
"Bank Products" means any one or more of the following types
of services or facilities extended to Borrower by Bank of America or any of its
Affiliates of the Bank in reliance on Bank of America's agreement to indemnify
such Affiliate: (a) credit cards; (b) ACH Transactions; and (c) Interest Rate
Protection Agreements.
"Bankruptcy Code" shall mean the provisions of title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq.
"Beneficiaries" shall mean the Co-Agents, Lenders and Security
Trustee.
"Borrower" shall have the meaning assigned to it in the
preamble to the Agreement.
"Borrower Accounts" shall have the meaning assigned to it in
Annex C.
"Borrower Pledge Agreement" shall mean the Pledge Agreement of
even date herewith executed by Borrower in favor of Agent, on behalf of
Co-Agents and Lenders, pledging all of the Stock of its domestic Subsidiaries
that are not Excluded Subsidiaries, 65% of the Stock of its foreign
Subsidiaries, and all Intercompany Notes owing to or held by it, as the same may
be amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof.
"Borrowing Availability" shall have the meaning assigned to it
in Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of determination
by Agent, from time to time, an amount equal to the sum at such time of:
(a) (i) 85% of Borrower's Eligible Domestic
Accounts, minus (ii) the Dilution Reserve with respect to such Eligible
Domestic Accounts; plus
(b) the least of (i) $30,000,000, (ii) 25% of
the value of all Collateral included in clauses (a), (b) and (c) of
this definition of "Borrowing Base," and (iii) (A) 85% of Borrower's
Eligible Foreign Accounts, subject to an acceptable credit review by
Co-Agents of the foreign Account Debtors of Borrower, minus (B) the
Dilution Reserve with respect to such Eligible Foreign Accounts; plus
<PAGE> 74
(c) the lesser of (i) $25,000,000 and (ii) (A)
85% of WD UK's and WD IS's Eligible Accounts, subject to an acceptable
credit review by Co-Agents of the Account Debtors of WD UK and WD IS,
minus (B) the Dilution Reserve with respect to WD UK's and WD IS's
Eligible Accounts.
"Borrowing Base Certificate" shall mean a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
States of California or New York and in reference to LIBOR Loans shall mean any
such day that is also a LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any fixed assets or improvements
or for replacements, substitutions or additions thereto that have a useful life
of more than one year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.
"Cash Collateral Account" shall have the meaning assigned to
it in Annex B.
"Cash Equivalents" shall have the meaning assigned to it in
Annex B.
"Cash Management System" shall have the meaning assigned to it
in Section 1.8.
"Change of Control" means any of the following: (a) any Person
or group of Persons (within the meaning of the Securities Exchange Act) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act) of
20% or more of the issued and outstanding shares of capital Stock of Borrower
having the right to vote for the election of directors of Borrower under
ordinary circumstances; (b) the occurrence of a change in the composition of the
board of directors of Borrower as a result of which fewer than a majority of all
directors are Incumbent Directors (as defined below); and (c) Borrower shall
cease to own and control all of the economic and voting rights associated with
all of the outstanding capital Stock of any of its Subsidiaries (other than the
Excluded Subsidiaries). For purposes of this definition, "Incumbent Director"
means any director who is either (i) a director of Borrower as of the Closing
Date, or (ii) a director who is elected or nominated for election to the board
of directors of Borrower with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include any individual whose election or nomination is in
<PAGE> 75
connection with an actual or threatened proxy contest relating to the election
of directors to Borrower); ***.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Person,
(d) any Person's ownership or use of any properties or other assets, or (e) any
other aspect of any Person's business.
"Chattel Paper" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by any Person, wherever
located.
"Closing Date" shall mean September 20, 2000.
"Co-Agents" shall collectively mean Administrative Agent,
Documentation Agent and, as the context may require, Security Trustee; provided,
that in the event that the Revolving Credit Commitment owned directly by Bank of
America is less than $25,000,000, then "Co-Agents" shall be a reference to
Administrative Agent and Security Trustee only.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of California;
provided, that in the event that, by reason of mandatory provisions of law, any
or all of the attachment, perfection or priority of, or remedies with respect
to, any Co-Agent's or any Lender's Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect from time to time in a
jurisdiction other than the State of California, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" shall mean the property covered by the Security
Agreement, and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of Co-Agents and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the
Borrower Pledge Agreement, the Overseas Security Documents, the Patent,
Trademark and Copyright Security Agreement and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to
the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of Agent,
account number 502-328-54 in the name of Agent at Bankers Trust Company in New
York, New York, ABA No. 021 001 033, or such other account as may be designated
in writing by Agent as the "Collection Account."
<PAGE> 76
"Commitment Termination Date" shall mean the earliest of (a)
September 20, 2003, (b) the date of termination of Lenders' obligations to make
Advances and to incur Letter of Credit Obligations or permit existing Loans to
remain outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans, the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars ($0), in each case in accordance with the provisions of Section 1.3(a).
"Compliance Certificate" shall have the meaning assigned to it
in Annex E.
"Concentration Account" shall have the meaning assigned to it
in Annex C.
"Connex" shall mean Connex, Inc., a Delaware corporation
formerly known as Crag Technologies, Inc.
"Contracts" shall mean all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which such Person may now or hereafter have any right,
title or interest, including any agreement relating to the terms of payment or
the terms of performance of any Account.
"Control Letter" shall mean a letter agreement between Agent
and (a) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (b) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (c) a futures commission merchant or clearing house with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant, as applicable, disclaims any security interest in the
applicable financial assets, acknowledges the Lien of Agent, on behalf of
Co-Agents and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Person under any written agreement granting any right
to use any Copyright or Copyright registration.
"Copyrights" shall mean all of the following now owned or
existing or hereafter adopted or acquired by any Person: (a) all copyrights and
General Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, or any territory thereof, or any other country or any political
subdivision thereof; and (b) all extensions or renewals thereof.
"***" shall have the meaning assigned to it in Section 6.5.
<PAGE> 77
"Credit Parties" shall mean Borrower, WD UK, WD IS, and any
Target that becomes a "Credit Party" in accordance with the provisions of
Section 6.1.
"Default" shall mean any event that, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Deposit Accounts" shall mean any "deposit accounts," as such
term is defined in the Code, now owned or hereafter acquired by any Person,
wherever located.
"Dilution Reserve" shall mean the Reserve maintained from time
to time against each of clauses (a), (b) and (c) set forth in the definition of
"Borrowing Base" in an amount equal to (a) the value of each of Borrower's, WD
UK's and WD IS's Accounts, as applicable, multiplied by (b) the amount by which
the dilution of all such Accounts exceeds 7.5% at such time, multiplied by (c)
two.
"Disbursement Account" shall have the meaning assigned to it
in Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by
Borrower and denominated as Disclosure Schedules (1.4) through (6.7) in the
Index to the Agreement.
"Documentation Agent" shall mean Bank of America, in its
capacity as Documentation Agent for Lenders.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located.
"Dollars" or "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to Borrower and its
Subsidiaries (other than the Excluded Subsidiaries) for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Persons for such period, minus (b) the sum of (i) income tax credits, (ii)
interest income, (iii) gain from extraordinary items for such period, (iv) any
aggregate net gain (but not any aggregate net loss) during such period arising
from the sale, exchange or other disposition of capital assets by such Persons
(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities), and (v)
any other non-cash gains that have been added in determining consolidated net
income, in each case to the extent included in the calculation of consolidated
net income of such Persons for such period in accordance with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income taxes, (ii)
Interest Expense, (iii) loss from extraordinary items for such period, (iv) the
amount of non-cash charges (including depreciation and amortization) for such
period, (v) amortized debt discount for such period, and (vi) the amount of any
deduction to consolidated net income as the result of any grant to any members
of the management of such Persons of any Stock, in each case to the extent
included in the calculation of consolidated net income of such Persons for such
period in accordance with GAAP, but without duplication. For purposes of this
definition, the following items shall be
<PAGE> 78
excluded in determining consolidated net income of Borrower and its Subsidiaries
(other than the Excluded Subsidiaries): (A) the income (or deficit) of any other
Person accrued prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's Subsidiaries; (B) the
income (or deficit) of any other Person (other than a Subsidiary) in which such
Person has an ownership interest, except to the extent any such income has
actually been received by such Person in the form of cash dividends or
distributions; (C) the undistributed earnings of any Subsidiary of such Person
to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(D) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (E) any write-up of any asset; (F) any net gain from the collection of
the proceeds of life insurance policies; (G) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person; (H) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets; and (I) any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"Eligible Accounts" shall have the meaning assigned to it in
Section 1.6.
"Eligible Domestic Account" is an Eligible Account that is an
obligation of an Account Debtor located in the United States and Canada
(excluding the provinces of Quebec and Newfoundland and the Northwest
Territories).
"Eligible Foreign Account" is an Eligible Account that is an
obligation of an Account Debtor located in a foreign country (excluding Canada).
"Environmental Laws" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et
seq.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic
Substance Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42
U.S.C. Sections 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Sections
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
<PAGE> 79
"Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including all such Person's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment, and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures,
together with all additions and accessions thereto, replacements therefor, all
parts therefor, all substitutes for any of the foregoing, fuel therefor, and all
manuals, drawings, instructions, warranties and rights with respect thereto, and
all products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"Equity Drawdown Facility" shall mean the equity draw-down
facility with an institutional investor that allows Borrower to issue up to
$150,000,000 (in monthly increments of up to $12,500,000) in common stock for
cash at the market price of Borrower's common Stock less a discount of 2.75% to
4.25%, or any renewal or extension thereof that does not have the effect of
increasing the maximum amount that may be issued by Borrower and is otherwise on
terms and conditions not less favorable to Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) that, together with
such Credit Party, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a "substantial employer," as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit Party or any
<PAGE> 80
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by
any Credit Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status;
or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Excluded Intellectual Property" shall mean all of the right,
title and interest of Borrower and each Excluded Subsidiary in, to and under the
Intellectual Property designated as "Excluded Intellectual Property" in
Supplement A to Disclosure Schedule (3.15).
"Excluded Investments" shall mean the now existing or
hereafter acquired promissory notes, certificated or uncertificated Stock, or
other Investment Property of any Credit Party (or any Subsidiary of any Credit
Party) in or with respect to Valence Semiconductor, Inc., a California
corporation, e-Hitex, Inc., a Delaware corporation, Intera Systems, Inc., a
California corporation, and Aristos Logic Corporation, a California corporation.
"Excluded Subsidiaries" shall mean Connex, SageTree, Pacifica,
Cameo Technologies, Inc, a Delaware corporation formerly known as WDC.NET, Inc.,
Keen Personal Media, Inc., a Delaware corporation, Keen Technologies, Inc., a
Delaware corporation, and Targets that become "Excluded Subsidiaries" in
accordance with the provisions of Section 6.1.
"Fair Labor Standards Act" shall mean the provisions of the
Fair Labor Standards Act, 29 U.S.C. Sections 201 et seq.
"Federal Funds Rate" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by Agent
in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System.
"Fee Letter" shall mean that certain letter of even date
herewith between GE Capital, Bank of America and Borrower with respect to
certain Fees to be paid from time to time by Borrower.
<PAGE> 81
"Fees" shall mean any and all fees payable to any Co-Agent or
any Lender pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" shall have the meaning assigned to it in
Section 6.10.
"Financial Statements" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrower delivered in accordance with Section 3.4 and Annex E.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower.
"Fiscal Year" shall mean any of the 52 or 53-week annual
accounting periods of Borrower ending on the Friday nearest June 30 of each
year.
"Fixtures" shall mean all "fixtures," as such term is defined
in the Code, now owned or hereafter acquired by any Person, wherever located.
"Funded Debt" shall mean, with respect to any Person, without
duplication, all Indebtedness of such Person for borrowed money evidenced by
notes, bonds, debentures or similar evidences of Indebtedness that by its terms
matures more than one year from, or is directly or indirectly renewable or
extendible at such Person's option under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than one
year from the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrower, the Obligations and, without duplication,
Guaranteed Indebtedness consisting of guaranties of Funded Debt of other
Persons.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, consistently applied, as such term is further
defined in Annex G to the Agreement.
"GE Capital" shall mean General Electric Capital Corporation,
a New York corporation.
"General Intangibles" shall mean all "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any Person,
including all right, title and interest that such Person may now or hereafter
have in or under any Contracts, Licenses, Copyrights, Trademarks, Patents,
websites, domain names, and all applications therefor and reissues, extensions
or renewals thereof, interests in partnerships, joint ventures and other
business associations, permits, inventions (whether or not patented or
patentable), knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, Goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned
<PAGE> 82
premiums), uncertificated and certificated securities, choses in action,
deposit, checking and other bank accounts, rights to receive tax refunds and
other payments, rights to receive dividends, distributions, cash, instruments
and other property in respect of or in exchange for pledged shares or other
equity interests, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including all tapes,
cards, computer runs and other papers and documents in the possession or under
the control of such Person or any computer bureau or service company from time
to time acting for such Person.
"Goods" shall mean any "goods" as such term is defined in the
Code, now owned or hereafter acquired by any Person.
"Goodwill" shall mean all goodwill, trade secrets, proprietary
or confidential information, technical information, procedures, formulae,
quality control standards, designs, operating and training manuals, customer
lists, and other General Intangibles now or hereafter owned or acquired by any
Person.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) indemnify the owner of such
primary obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser at
such time of (x) the stated or determinable amount of the primary obligation in
respect of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.
"Guaranties" shall mean, collectively, the Ireland Guarantee
and Debenture and the UK Guarantee and Debenture, and any other guaranty
executed by any Guarantor in favor of Agent and Lenders in respect of the
Obligations.
"Guarantors" shall mean each of WD UK and WD IS, and each
other Person, if any, that executes a guaranty or other similar agreement in
favor of Agent, for the benefit of Co-Agents and Lenders, in connection with the
transactions contemplated by the Agreement and the other Loan Documents.
<PAGE> 83
"Hazardous Material" shall mean any substance, material or
waste that is regulated by, or forms the basis of liability now or hereafter
under, any Environmental Laws, including any material or substance that is (a)
defined as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred six months or
more, but excluding obligations to trade creditors (including commission
payments) incurred in the ordinary course of business that are not unsecured and
overdue by more than six months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit, bankers'
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index
Rate as in effect on the Closing Date) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to
it in Section 1.13.
"Index Rate" shall mean, for any day, a floating rate equal to
the higher of (a) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (b) the Federal Funds Rate plus 50 basis points per annum. Each
change in any interest rate provided for in the Agreement based upon the Index
Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or any portion thereof
bearing interest by reference to the Index Rate.
<PAGE> 84
"Instruments" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including all certificated securities, all certificates of deposit, and
all notes and other evidences of indebtedness, other than instruments that
constitute, or are a part of a group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses,
Patents, Copyrights, Trademarks and the Goodwill associated with any of the
foregoing.
"Intellectual Property Collateral" shall mean all of the
right, title and interest of any Credit Party, whether presently existing or
hereafter arising or acquired, in, to and under the following:
(a) each Patent owned and Patent application filed by
such Person;
(b) each Patent License to which such Person is a party
(or the assignee of a party);
(c) each Trademark owned and Trademark application filed
by such Person;
(d) each Trademark License to which such Person is a
party (or the assignee of a party);
(e) each Copyright owned and Copyright application filed
by such Person;
(f) each Copyright License to which such Person is a
party;
(g) the Goodwill associated with each Trademark and
Trademark application, and each of such Person's Trademarks licensed
under any Trademark License; and
(h) all Proceeds of the foregoing, including (i) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable
to any Person from time to time with respect to any of the foregoing,
(ii) any and all payments (in any form whatsoever) made or due and
payable to any Person from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the foregoing by any Governmental Authority (or any
Person acting under color of Governmental Authority), (iii) any claim
of any Person against third parties for (A) past, present or future
infringement of any Patent or Patent License, (B) past, present or
future infringement of any Copyright, Copyright License, (C) past,
present or future infringement or dilution of any Trademark or
Trademark License, or (D) injury to the Goodwill associated with any
Trademark or Trademark License, (iv) any recoveries by any Person
against third parties with respect to any litigation or dispute
concerning any of the foregoing, and (v) any and all other amounts from
time to time paid or payable under or in connection with any of the
foregoing, upon disposition or otherwise.
"Intercompany Note" shall mean a demand note to evidence
intercompany Indebtedness owing at any time by any Credit Party or any
Subsidiary of any Credit Party in favor of Borrower, each of which Intercompany
Notes shall be in form and substance
<PAGE> 85
satisfactory to each Co-Agent and pledged and delivered to Agent pursuant to the
Pledge Agreement as additional collateral security for the Obligations.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person, but excluding the accrual of interest under the
Subordinated Notes.
"Interest Rate Protection Agreement" means (a) any and all
rate swap transactions, basis swaps, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, or (b) any and all transactions of any kind, and the
related confirmations, that are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Associations, Inc., or any other master agreement (any such
master agreement, together with any related schedules, as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, a
"Master Agreement"), including any such obligations or liabilities under any
such Master Agreement.
"Interest Payment Date" shall mean (a) as to any Index Rate
Loan, the first Business Day of each month to occur while such Loan is
outstanding, and (b) as to any LIBOR Loan, the last day of the applicable LIBOR
Period; provided, that in addition to the foregoing, each of (x) the date upon
which all of the Revolving Loan Commitments have been terminated and the Loans
have been paid in full and (y) the Commitment Termination Date shall be deemed
to be an "Interest Payment Date" with respect to any interest that has then
accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including inventory, merchandise, goods and other personal property
that are held by or on behalf of such Person for sale or lease or are furnished
or are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Person's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
"Investment Property" shall mean any "investment property," as
such term is defined in the Code, now owned or hereafter acquired by any Person,
wherever located, including (a) all securities, whether certificated or
uncertificated, including stocks, bonds,
<PAGE> 86
interests in limited liability companies, partnership interests, treasuries,
certificates of deposit, and mutual fund shares, (b) all securities entitlements
of such Person, including the rights of such Person to any securities account
and the financial assets held by a securities intermediary in such securities
account and any free credit balance or other money owing by any securities
intermediary with respect to such account, (c) all securities accounts of such
Person, (d) all commodity contracts held by such Person, and (e) all commodity
accounts held by such Person.
"IRC" shall mean the Internal Revenue Code of 1986 and any
regulations promulgated thereunder.
"Ireland Guarantee and Debenture" shall mean that certain All
Assets Guarantee and Debenture of even date herewith entered into by WD IS in
favor of Agent, in its capacity as Security Trustee on behalf of Beneficiaries,
as the same may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms thereof.
"Ireland Share Charge" shall mean that certain Charge Over
Shares of even date herewith entered into by WD IS in favor of Agent, in its
capacity as Security Trustee on behalf of Beneficiaries, as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof.
"IRS" shall mean the Internal Revenue Service.
"Komag Stock" shall mean shall mean the capital Stock of
Komag, Incorporated, a Delaware corporation, owned by Borrower.
"L/C Issuer" shall have the meaning assigned to it in Annex B.
"L/C Sublimit" shall have the meaning assigned to it in Annex
B.
"Lenders" shall mean GE Capital, Bank of America, N.A., the
other Lenders named on the signature pages of the Agreement and, if any such
Lender shall decide to assign all or any portion of the Obligations, any
assignee of such Lender.
"Letter of Credit Fee" shall have the meaning assigned to it
in Annex B.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in Annex B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount that
may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letter of Credit Rights" shall mean any "letter of credit
rights," as such term is defined in the Code, now owned or hereafter acquired by
any Person, including any right to payment under any letter of credit.
<PAGE> 87
"Letters of Credit" shall mean commercial or standby letters
of credit issued for the account of Borrower by any L/C Issuer, and bankers'
acceptances issued by Borrower, for which Agent and Lenders have incurred Letter
of Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks
in the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower pursuant to
the Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond
the Commitment Termination Date shall end two LIBOR Business Days prior
to such date;
(c) any LIBOR Period that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than five separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of
interest determined by Agent equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period that appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the second full LIBOR Business
Day preceding the first day of such LIBOR Period (unless such date is
not a Business Day, in which event the next succeeding Business Day
will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is
<PAGE> 88
two LIBOR Business Days prior to the beginning of such LIBOR Period
(including basic, supplemental, marginal and emergency reserves under
any regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board) that are required to be maintained by a member bank of the
Federal Reserve System.
If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Co-Agents and Borrower.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Person.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section
3.13.
"Lloyds Guarantee" shall mean the Lloyds TSB Bank Plc
guarantee issued to HM Customs & Excise.
"Lloyds Priority Documents" shall have the meaning assigned to
it in Section 2.1(b).
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the
Collateral Documents and all other agreements, instruments, documents and
certificates identified in the Schedule of Documents executed and delivered to,
or in favor of, any Co-Agent or any Lender and including all other pledges,
powers of attorney, consents, assignments, contracts, notices, and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Credit Party, or any employee of any Credit Party, and delivered to any
Co-Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Loan Document
to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto,
and shall refer to such Agreement or Loan Document as the same may be in effect
at any and all times such reference becomes operative.
"Loans" shall mean the Revolving Loan and the Swing Line Loan.
"Lock Boxes" shall have the meaning assigned to it in Annex C.
<PAGE> 89
"Margin Stock" shall have the meaning assigned to it in
Section 3.10.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations or financial condition of the Credit
Parties and their Subsidiaries considered as a whole, (b) Borrower's or any
Guarantor's ability to pay any of the Loans or any of the other Obligations in
accordance with the terms of the Agreement, (c) the Collateral or Agent's Liens,
on behalf of Co-Agents and Lenders, on the Collateral or the priority of such
Liens, or (d) any Co-Agent's or any Lender's rights and remedies under the
Agreement and the other Loan Documents.
"Maximum Amount" shall mean, at the time any determination
thereof is to be made, the amount at such time equal to the Revolving Loan
Commitment of all Lenders.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 1.5(f).
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making, is obligated to make, or has made or been obligated to
make, contributions on behalf of participants who are or were employed by any of
them.
"Net Borrowing Availability" shall mean as of any date of
determination, the lesser of (a) the Maximum Amount and (b) the Borrowing Base,
in each case less the sum of the Revolving Loan and Swing Line Loan then
outstanding.
"Net Worth" shall mean, with respect to any Person as of any
date of determination, (a) the book value of the assets of such Person, minus
(b) reserves applicable thereto, minus (c) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"Non-Funding Lender" shall have the meaning assigned to it in
Section 9.9(a)(ii).
"Notes" shall mean, collectively, the Revolving Notes and the
Swing Line Note.
"Notice of Conversion/Continuation" shall have the meaning
assigned to it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations for the performance of covenants, tasks or duties or
for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
any Credit Party to any Co-Agent or any Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, arising under the
Agreement or any of the other Loan Documents. This term includes all principal,
interest (including all interest that accrues after the commencement of any case
or proceeding by or against any Credit Party in bankruptcy,
<PAGE> 90
whether or not allowed in such case or proceeding), Fees, Charges, expenses,
attorneys' fees, all debts, liabilities and obligations now or hereafter arising
from or in connection with Bank Products, and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Overseas Security Documents" shall mean the Ireland Guarantee
and Debenture, the Ireland Share Charge, the UK Guarantee and Debenture, the UK
Share Charge, and the Security Trust Deed.
"Pacifica" shall mean Pacifica Insurance Corporation, a Hawaii
corporation.
"Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by any Person granting any right with respect to
any invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or of any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any territory thereof, or any other country, and (b) all
reissues, continuations, continuations-in-part, divisions or extensions thereof.
"Patent, Trademark and Copyright Security Agreement" shall
mean the Patent, Trademark and Copyright Security Agreement made in favor of
Agent, on behalf of Co-Agents and Lenders, by each applicable Credit Party.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean a Plan described in Section 3(2) of
ERISA.
"Permitted Acquisition" shall have the meaning assigned to it
in Section 6.1.
"Permitted Credit Party Transactions" shall mean intercompany
loans, advances or investments made by Borrower to any Credit Party or any
Subsidiary of any Credit Party (other than the Excluded Subsidiaries), so long
as (a) each such Credit Party or Subsidiary shall have executed and delivered to
Borrower, on the Closing Date, an Intercompany Note to evidence all such loans
and advances; (b) Borrower shall record all such loans, advances and investments
on its books and records in a manner satisfactory to each Co-Agent; (c) at the
time of any such loan, advance or investment, and after giving effect thereto,
Borrower shall be Solvent; (d) no Default or Event of Default would occur and be
continuing after giving effect to any such loan, advance or investment; and (e)
the aggregate amount of such loans, advances and investments to all such Credit
Parties and Subsidiaries shall not exceed $*** in any Fiscal Year.
<PAGE> 91
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable; (b) pledges or deposits of money securing statutory
obligations under workmen's compensation, unemployment insurance, social
security or public liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to which any Credit
Party is a party as lessee made in the ordinary course of business; (d) inchoate
and unperfected workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to Equipment, Fixtures or
Real Estate; (e) carriers', warehousemen's, suppliers' or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $250,000 at any
time, so long as such Liens attach only to Inventory; (f) deposits securing, or
in lieu of, surety, appeal or customs bonds in proceedings to which any Credit
Party is a party; (g) any attachment or judgment lien not constituting an Event
of Default under Section 8.1(j); (h) zoning restrictions, easements, licenses,
or other restrictions on the use of any Real Estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the use, value, or marketability of such Real Estate;
(i) Liens existing on the Closing Date and listed in Disclosure Schedule (6.7);
(j) presently existing or hereafter created Liens in favor of Agent, on behalf
of Co-Agents and Lenders; (k) Liens created after the Closing Date by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $*** outstanding at any one time
for all such Liens (provided that such Liens attach only to the assets subject
to such purchase money debt and such Indebtedness is incurred within 20 days
following such purchase and does not exceed 100% of the purchase price of the
subject assets); (l) Liens on insurance proceeds in favor of insurance companies
granted solely as security for financed premiums; (m) bankers' rights of offset;
and (n) inchoate and unperfected Liens of landlords of Borrower's Real Estate.
"Permitted Excluded Subsidiary Transactions" shall mean
intercompany loans and advances made by Borrower to, or investments made by
Borrower in, or amounts payable in connection with the formation or acquisition
of, the Excluded Subsidiaries, so long as (a) each Excluded Subsidiary shall
have executed and delivered to Borrower, on the Closing Date, an Intercompany
Note to evidence all such loans and advances; (b) Borrower shall record all such
loans, advances and investments on its books and records in a manner
satisfactory to each Co-Agent; (c) at the time of any such loan, advance,
investment or payment and after giving effect thereto, Borrower shall be
Solvent; (d) no Default or Event of Default would occur and be continuing after
giving effect to any such loan, advance, investment or payment; (e) Borrower and
its Subsidiaries (other than the Excluded Subsidiaries) shall have Available
Liquidity of not less than $150,000,000 after giving effect to such loan,
advance, investment or payment; and (f) the aggregate amount of such loans,
advances, investments and payments to or in all Excluded Subsidiaries shall not
exceed $*** in any Fiscal Year.
"Permitted Foreign Bank Accounts" shall have the meaning
assigned to it in Annex C.
<PAGE> 92
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean, at any time, an "employee benefit plan," as
defined in Section 3(3) of ERISA, that any Credit Party or any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to, or has
maintained, contributed to or had an obligation to contribute to at any time
within the last seven years on behalf of participants who are or were employed
by any Credit Party or any ERISA Affiliate.
"Private Offering" shall mean the sale of Borrower's Stock in
a private equity sale, made in compliance with all applicable laws and
regulations.
"Proceeds" shall mean "proceeds," as such term is defined in
the Code, including (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Person from time to time with respect to any
of the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Person from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Person against third parties (i)
for past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the Goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Person against third parties with respect to any litigation or dispute
concerning any of the Collateral, and (e) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral, upon
disposition or otherwise.
"Projections" shall mean Borrower's forecasted consolidated:
(a) balance sheets; (b) profit and loss statements; and (c) cash flow
statements, consistent with the historical Financial Statements of Borrower,
together with appropriate supporting details and a statement of underlying
assumptions.
"Pro Rata Share" shall mean, with respect to all matters
relating to any Lender, (a) at all times prior to the Commitment Termination
Date, the percentage obtained by dividing (i) the Revolving Loan Commitment of
that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders, and
(b) at all times on and after the Commitment Termination Date, the percentage
obtained by dividing (i) the aggregate outstanding principal balance of the
Loans held by such Lender, by (ii) the outstanding principal balance of the
Loans held by all Lenders.
"Public Offering" shall mean a firm underwritten public
offering of common stock registered on form S-1, S-2 or S-3 under the Securities
Act by a nationally-recognized investment banking firm and after giving effect
to which the issuer shall be qualified for listing on the NASDAQ National
Market, the American Stock Exchange or the New York Stock Exchange.
<PAGE> 93
"Qualified Account Debtor" shall mean each of Compaq Computer
Corporation, Dell Computer Corporation, Gateway, Inc., Ingram Micro Inc., Tech
Data Corporation, and Synnex Information Technologies, Inc.
"Qualified Plan" shall mean a Pension Plan that is intended to
be tax-qualified under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section
3.6.
"Refunded Swing Line Loan" shall have the meaning assigned to
it in Section 1.1(b)(iii).
"Related Transactions" shall mean the initial borrowing under
the Revolving Loan on the Closing Date and the payment of all fees, costs and
expenses associated with all of the foregoing and the execution and delivery of
all of the Related Transactions Documents.
"Related Transactions Documents" shall mean the Loan Documents
and all other documents executed in connection with the Related Transactions.
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" shall mean Lenders having (a) more than
sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan Commitments of
all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more
than sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding
amount of all of the Loans.
"Reserves" shall mean, with respect to the Borrowing Base of
Borrower, (a) reserves established pursuant to Section 5.4(c), and (b) such
other reserves against Eligible Accounts or Borrowing Availability of Borrower
that Agent may, after consultation among Co-Agents, in its reasonable credit
judgment, establish from time to time. Without limiting the generality of the
foregoing, (i) the Dilution Reserve, (ii) the UK Reserve, (iii) a Reserve in the
amount of any Charges, Taxes or claims being contested by any Credit Party in
accordance with the provisions of Section 5.2, to the extent Agent, after
consultation among Co-Agents, reasonably believes that nonpayment or
nondischarge thereof could reasonably be expected to result in a Material
Adverse Effect, and (iv) other Reserves established to ensure the payment of
accrued Interest Expenses or Indebtedness where the failure to pay the same
could reasonably be expected to result in a Material Adverse Effect, shall be
deemed to be a reasonable exercise of Co-Agent's credit judgment.
"Restricted Payment" shall mean, with respect to any Person:
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of such Person's Stock; (b) any payment
<PAGE> 94
on account of the purchase, redemption, defeasance, sinking fund or other
retirement of such Person's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any
Subordinated Debt of such Person; (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Person now or hereafter
outstanding; (e) any payment of a claim for the rescission of the purchase or
sale of, or for material damages arising from the purchase or sale of, any
shares of such Person's Stock or of a claim for reimbursement, indemnification
or contribution arising out of or related to any such claim for damages or
rescission; (f) any payment, loan, contribution, or other transfer of funds or
other property to any Stockholder of such Person other than payment of
compensation in the ordinary course to Stockholders who are employees of such
Person; and (g) any payment of management fees (or other fees of a similar
nature) by such Person to any Stockholder of such Person or its Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Welfare Plan
that provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Revolving Loan" shall mean, at any time, (a) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (b) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Revolving Credit Advances
(including without duplication Swing Line Advances as a subset of such
commitment of the Swing Line Lender) or incur Letter of Credit Obligations as
set forth in Annex J or in the most recent Assignment Agreement executed by such
Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Revolving Credit Advances (including without duplication Swing Line
Advances as a subset of such commitment of the Swing Line Lender) or incur
Letter of Credit Obligations, which aggregate commitment shall be One Hundred
and Twenty-Five Million Dollars ($125,000,000) on the Closing Date, as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Revolving Note" shall have the meaning assigned to it in
Section 1.1(a)(ii).
"SageTree" shall mean SageTree, Inc., a Delaware corporation.
<PAGE> 95
"Schedule of Documents" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Securities Act" shall mean the provisions of the Securities
Act of 1933, 15 U.S.C. Sections 77a et seq.
"Securities Exchange Act" shall mean the provisions of the
Securities Exchange Act of 1934, 15 U.S.C. Sections 78a et seq.
"Security Trust Deed" shall mean that certain Security Trust
Deed of even date herewith entered into between Borrower, WD IS and WD UK (as
Obligors), Agent (acting in its capacity as Agent and as the Security Trustee),
and the Beneficiaries, as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof.
"Security Trustee" shall mean GE Capital, in its capacity as
Security Trustee for Beneficiaries, or its successor appointed in accordance
with the terms of the Security Trust Deed.
"Security Agreement" shall mean the Security Agreement of even
date herewith entered into by and among Agent, on behalf of Co-Agents and
Lenders, and each Credit Party signatory thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date: (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person; (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.
***
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act).
<PAGE> 96
"Stockholder" shall mean, with respect to any Person, each
holder of Stock of such Person.
"Subordinated Debt" shall mean the Indebtedness of Borrower
evidenced by the Subordinated Notes and any other Indebtedness of any Credit
Party subordinated to the Obligations in a manner and form satisfactory to
Co-Agents and Lenders in their sole discretion, as to right and time of payment
and as to any other rights and remedies thereunder, including, in each case, any
refinancing thereof permitted under Section 6.14.
"Subordinated Debt Documents" shall mean the Subordinated
Notes, the Subordinated Indenture and all other agreements, instruments,
documents and certificates executed in connection therewith.
"Subordinated Indenture" shall mean the Indenture dated as of
February 18, 1998, between Borrower, as Issuer, and State Street Bank and Trust
Company of California, N.A., as Trustee.
"Subordinated Notes" shall mean those certain Zero Coupon
Convertible Subordinated Debentures due 2018, issued by Borrower in an aggregate
original principal amount of $1,297,200,000.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person shall
have an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Supermajority Lenders" shall mean Lenders having (a) 80% or
more of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving
Loan Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan (with the Swing Line Loan being attributed to the
Lender making such Loan) and Letter of Credit Obligations.
"Supporting Obligations" shall mean any "supporting
obligations," as such term is defined in the Code, now owned or hereafter
acquired by any Person.
"Swing Line Advance" shall have the meaning assigned to it in
Section 1.1(b)(i).
"Swing Line Availability" shall have the meaning assigned to
it in Section 1.1(b)(i).
<PAGE> 97
"Swing Line Commitment" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Advances as
set forth in Annex J, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean at any time, the aggregate amount
of Swing Line Advances outstanding to Borrower.
"Swing Line Note" shall have the meaning assigned to it in
Section 1.1(b)(ii).
"Tangible Net Worth" shall mean, with respect to any Person at
any date, the Net Worth of such Person at such date, excluding, however, from
the determination of the total assets at such date, (a) all goodwill,
capitalized organizational expenses, capitalized research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other intangible items, (b) all
unamortized debt discount and expense, (c) treasury Stock, (d) any write-up in
the book value of any asset (other than write-ups in the value of Borrower's
marketable securities in accordance with GAAP) resulting from a revaluation
thereof, and (e) the amount of any intercompany loans and advances between
Borrower and its Subsidiaries.
"Target" shall have the meaning assigned to it in Section 6.1.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of any Co-Agent or any Lender by the
jurisdictions under the laws of which such Co-Agent or Lenders are organized or
conduct business or by any political subdivision thereof.
"Termination Date" shall mean the date on which (a) the Loans
have been indefeasibly repaid in full, (b) all other Obligations under the
Agreement and the other Loan Documents have been completely discharged, (c)
Letter of Credit Obligations have been terminated, replaced, guaranteed or cash
collateralized in accordance with Annex B, and (d) Borrower shall not have any
further right to borrow any monies under the Agreement.
"Title IV Plan" shall mean a Pension Plan (other than a
Multiemployer Plan) that is covered by Title IV of ERISA and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to, or has maintained, contributed to or had an obligation to
contribute to at any time within the last seven years, on behalf of participants
who are or were employed by any of them.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Person granting any right to
use any Trademark.
"Trademarks" shall mean all of the following now owned or
existing or hereafter adopted or acquired by any Person: (a) all trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels
<PAGE> 98
on which any of the foregoing have appeared or appear, designs and general
intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all extensions or renewals thereof; and (c)
all goodwill associated with or symbolized by any of the foregoing.
"UK Guarantee and Debenture" shall mean that certain Composite
Guarantee and Debenture of even date herewith entered into by WD UK in favor of
Agent, in its capacity as Security Trustee on behalf of Beneficiaries, as the
same may be amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof.
"UK Reserve" shall mean the Reserve maintained from time to
time against the Borrowing Availability and the Net Borrowing Availability in an
amount equal to the sum of (a) the aggregate amount of any preferential debts
(of the types listed in Schedule 6 to the Insolvency Act 1986 (in the case of WD
UK) or Section 285 of the Companies Act 1963 (in the case of WD IS), or any
statutory re-enactment or modification thereof pursuant to which the payment of
certain obligations of a Person are given statutory preference over the payment
of other such obligations) of WD UK and WD IS that would, pursuant to the
provisions of any law relating to liquidation, bankruptcy, insolvency or
creditors' rights generally, be paid in priority or preference to other
Indebtedness in a winding up, dissolution, administration, insolvency,
examination, or other similar process of law in any jurisdiction, and (b) until
such time as the Lloyds Guarantee has been replaced by a Letter of Credit issued
by a Lender or guaranteed by Agent in accordance with Annex B, the amount of the
Lloyds Guarantee.
"UK Share Charge" shall mean that certain Charge Over Shares
of even date herewith entered into by WD UK in favor of Agent, in its capacity
as Security Trustee on behalf of Beneficiaries, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five years following a transaction that might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Vixel Stock" shall mean the shares of Stock of Vixel
Corporation owned by Borrower.
"WD IS" shall mean Western Digital (IS) Limited.
"WD UK" shall mean Western Digital (U.K.) Ltd.
<PAGE> 99
"Welfare Plan" shall mean a Plan described in Section 3(1) of
ERISA.
"*** Loan" shall mean the loan provided by ***, a corporation
organized under the laws of ***, to Borrower pursuant to that certain Loan
Agreement dated as of ***, 2000.
Rules of construction with respect to accounting terms used in
the Agreement or any of the other Loan Documents shall be as set forth in Annex
G. All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of California to the extent the same are used or
defined therein. Unless otherwise specified, references in the Agreement or any
of the Appendices to a section, subsection or clause refer to such section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
The phrase "after consultation among Co-Agents," when used
with respect to any determination made or to be made by Administrative Agent or
any discretion exercised or exercisable by Administrative Agent, shall mean that
(i) Administrative Agent may make and continue to make such determination or
exercise such discretion unilaterally unless and until contacted by either
Co-Agent with respect to such matter, (ii) either Co-Agent may contact the other
to discuss any such matter (but shall have no obligation to contact the other)
at any time, (iii) if either Co-Agent initiates such contact, then the Co-Agents
shall discuss such matter, and (iv) if the Co-Agents fail to reach agreement on
such matter, then the Administrative Agent shall thereafter make such
determination or exercise such discretion in the manner proposed by the Co-Agent
asserting the more conservative credit judgment.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
<PAGE> 100
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Agent and Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower and for Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be issued
(by a bank or other legally authorized Person selected by or acceptable to Agent
in its sole discretion (each, an "L/C Issuer")) for Borrower's account and
guaranteed by Agent; provided, that if the L/C Issuer is a Lender, then such
Letters of Credit shall not be guaranteed by Agent but rather each Lender shall,
subject to the terms and conditions hereinafter set forth, purchase (or be
deemed to have purchased) risk participations in all such Letters of Credit
issued with the written consent of Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the least of (i) Twenty-Five Million Dollars
($25,000,000) (the "L/C Sublimit"), (ii) the Maximum Amount less the aggregate
outstanding principal balance of the Revolving Credit Advances and the Swing
Line Loan, and (iii) the Borrowing Base less the aggregate outstanding principal
balance of the Revolving Credit Advances and the Swing Line Loan. No such Letter
of Credit shall have an expiry date that is more than one year following the
date of issuance thereof, and neither Agent nor Lenders shall be under any
obligation to incur Letter of Credit Obligations in respect of, or purchase risk
participations in, any Letter of Credit having an expiry date that is later than
the Commitment Termination Date unless otherwise determined by Agent, in its
sole discretion.
(b) Advances Automatic; Participations.
(i) In the event that Agent or any Lender shall
make any payment on or pursuant to any Letter of Credit Obligation, such payment
shall then be deemed automatically to constitute a Revolving Credit Advance
under Section 1.1(a) regardless of whether a Default or Event of Default shall
have occurred and be continuing and notwithstanding Borrower's failure to
satisfy the conditions precedent set forth in Section 2, and each Lender shall
be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.
The failure of any Lender to make available to Agent for Agent's own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or
in respect of a Letter of Credit shall not relieve any other Lender of its
obligation hereunder to make available to Agent its Pro Rata Share thereof, but
no Lender shall be responsible for the failure of any other Lender to make
available such other Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for
Borrower to incur Revolving Credit Advances as contemplated by paragraph (b)(i)
above because of an Event of Default described in Sections 8.1(h) or (i) or
otherwise or if it shall be illegal or unlawful for any Lender to be deemed to
have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Lender, then (A) immediately and without
further action whatsoever, each Lender shall be deemed to have irrevocably and
unconditionally purchased
<PAGE> 101
from Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such Lender's Pro Rata Share (based on the Revolving Loan
Commitments) of the Letter of Credit Obligations in respect of all Letters of
Credit then outstanding and (B) thereafter, immediately upon issuance of any
Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation in such Lender's Pro Rata Share (based on
the Revolving Loan Commitments) of the Letter of Credit Obligations with respect
to such Letter of Credit on the date of such issuance. Each Lender shall fund
its participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to Revolving
Credit Advances.
(c) Cash Collateral.
(i) If Borrower is required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement prior
to the Commitment Termination Date, Borrower will pay to Agent for the ratable
benefit of Co-Agents and Lenders cash or cash equivalents acceptable to Agent
("Cash Equivalents") in an amount equal to 105% of the maximum amount then
available to be drawn under each applicable Letter of Credit outstanding. Such
funds or Cash Equivalents shall be held by Agent in a cash collateral account
(the "Cash Collateral Account") maintained at a bank or financial institution
acceptable to Agent. The Cash Collateral Account shall be in the name of
Borrower and shall be pledged to, and subject to the control of, Agent, for the
benefit of Co-Agents and Lenders, in a manner satisfactory to Agent. Borrower
hereby pledges and grants to Agent, on behalf of Co-Agents and Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether
or not then due and payable, shall for any reason be outstanding on the
Commitment Termination Date, Borrower shall either (A) provide cash collateral
therefor in the manner described above, (B) cause all such Letters of Credit and
guaranties thereof to be canceled and returned, or (C) deliver a stand-by letter
(or letters) of credit in guarantee of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration (plus
30 additional days) as, and in an amount equal to 105% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.
(iii) From time to time after funds are deposited
in the Cash Collateral Account by Borrower, whether before or after the
Commitment Termination Date, Agent may apply such funds or Cash Equivalents then
held in the Cash Collateral Account to the payment of any amounts, and in such
order as Agent may elect, as shall be or shall become due and payable by
Borrower to Lenders with respect to such Letter of Credit Obligations of
Borrower and, upon the satisfaction in full of all Letter of Credit Obligations
of Borrower, to any other Obligations then due and payable.
<PAGE> 102
(iv) Neither Borrower nor any Person claiming on
behalf of or through Borrower shall have any right to withdraw any of the funds
or Cash Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent or Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations, any remaining amount
shall be paid to Borrower or as otherwise required by law.
(d) Fees and Expenses. Borrower agrees to pay (i) to
Agent for the benefit of Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (A) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (B) for
each month during which any Letter of Credit Obligation shall remain
outstanding, a Fee (the "Letter of Credit Fee") in an amount equal to the
Applicable L/C Margin from time to time in effect multiplied by the daily
average of the maximum amount available from time to time to be drawn under the
applicable Letter of Credit during such month, which Fee shall be paid to Agent
for Co-Agents and the ratable benefit of the Lenders in arrears, on the first
day of each month and on the Commitment Termination Date, and (ii) to any L/C
Issuer, on demand, such fees (including all per annum fees), charges and
expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.
(e) Request for Incurrence of Letter of Credit
Obligations. Borrower shall give Agent at least two Business Days' prior written
notice requesting the incurrence of any Letter of Credit Obligation, specifying
the date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary to which such Letter of Credit Obligation relates and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) to be guaranteed and, to the extent not previously delivered to
Agent, copies of all agreements between Borrower and the L/C Issuer pertaining
to the issuance of Letters of Credit. Notwithstanding anything contained herein
to the contrary, Letter of Credit applications by Borrower and approvals by
Agent and the L/C Issuer may be made and transmitted pursuant to electronic
codes and security measures mutually agreed upon and established by and among
Borrower, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to
reimburse Agent and Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrower and
Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances, including the following:
(i) any lack of validity or enforceability of
any Letter of Credit or the Agreement or the other Loan Documents or any other
agreement;
<PAGE> 103
(ii) the existence of any claim, setoff, defense
or other right that Borrower or any of its Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such transferee may be acting), Agent, any
Lender, or any other Person, whether in connection with the Agreement, the
Letter of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary for which the Letter of Credit was
procured);
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any
Letter of Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of such Letter
of Credit or such guaranty;
(v) any other circumstance or event whatsoever
that is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere
provided in the Agreement, Borrower hereby agrees to pay and to protect,
indemnify, and save harmless Agent and each Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including attorneys' fees and allocated costs of internal counsel) that Agent
or any Lender may incur or be subject to as a consequence, direct or indirect,
of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the
failure of Agent or any Lender seeking indemnification or of any L/C Issuer to
honor a demand for payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in each case
other than to the extent solely as a result of the gross negligence or willful
misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agent and any Lender and
Borrower, Borrower assumes all risks of the acts and omissions of, or misuse of
any Letter of Credit by, beneficiaries of any Letter of Credit. In furtherance
and not in limitation of the foregoing, to the fullest extent permitted by law,
neither Agent nor any Lender shall be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of
<PAGE> 104
any Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit; provided, that in the case of any payment
by Agent under any Letter of Credit or guaranty thereof, Agent shall be liable
to the extent such payment was made solely as a result of its gross negligence
or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or guaranty thereof complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or guaranty thereof; (D)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they may
be in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a payment under any Letter of Credit or guaranty thereof or of the proceeds
thereof; (G) the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) any consequences arising from causes beyond
the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent's or any Lender's rights or powers hereunder
or under the Agreement.
(iii) Nothing contained herein shall be deemed to
limit or to expand any waivers, covenants or indemnities made by Borrower in
favor of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between Borrower and such
L/C Issuer.
<PAGE> 105
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the cash management system described below:
(a) On or before the Closing Date and until the
Termination Date, each of Borrower and each Guarantor shall (i) establish lock
boxes ("Lock Boxes") at one or more of the banks set forth in Disclosure
Schedule (3.19), and shall request in writing and otherwise take such reasonable
steps to ensure that all Account Debtors forward payment directly to such Lock
Boxes, and (ii) deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise
delivered to a Lock Box) into one or more bank accounts in Borrower's name or
any such Subsidiary's name (each, a "Borrower Account" and collectively, the
"Borrower Accounts") at a bank identified in Disclosure Schedule (3.19) as a
bank at which such Borrower Accounts are maintained (each, a "Relationship
Bank"). On or before the Closing Date, each of Borrower and each Guarantor shall
have established a concentration account in its name (the "Concentration
Account") at the bank that shall be designated as the Concentration Account bank
for Borrower in Disclosure Schedule (3.19) (the "Concentration Account Bank"),
which bank shall be satisfactory to Co-Agents.
(b) Borrower and each Guarantor may maintain, in its
name, one or more accounts (each, a "Disbursement Account" and collectively, the
"Disbursement Accounts") at a bank acceptable to Co-Agents into which Agent
shall, from time to time, deposit proceeds of Revolving Credit Advances and
Swing Line Advances made to Borrower pursuant to Section 1.1 for use by Borrower
solely in accordance with the provisions of Section 1.4; provided, that at no
time shall Borrower or any Guarantor maintain deposits in excess of US$500,000
in any Disbursement Account located outside of the United States; provided, that
the foregoing limitation shall not apply to deposits maintained in the
Disbursement Accounts identified on Appendix I to this Annex C (collectively,
the "Permitted Foreign Bank Accounts"). Borrower and each Guarantor shall not
accumulate or maintain cash in any Disbursement Account located in the United
States and at a bank other than Bank of America, as of any date of determination
in excess of checks outstanding against such account as of such date; provided,
that, from the Closing Date through March 31, 2001, with respect to (i) Union
Bank of California, N.A., Account No. ***, Borrower may maintain a cash balance
of $5,000 and (ii) Wells Fargo Bank, N.A., Account No. ***, Borrower may
maintain a cash balance of $30,000.
(c) On or before the Closing Date (or such later date as
Co-Agents shall consent to in writing), the Concentration Account Bank, the bank
where the Disbursement Account is maintained and all other Relationship Banks
shall have entered into tri-party blocked account agreements with Agent, for the
benefit of Co-Agents and Lenders, and Borrower and Subsidiaries thereof, as
applicable, in form and substance acceptable to Agent, which shall
<PAGE> 106
become operative on or prior to the Closing Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of Co-Agents and Lenders, (ii) the bank executing such agreement has no
rights of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) from and after the Closing Date (A) with
respect to banks at which a Borrower Account is maintained, such bank agrees,
from and after the receipt of a notice (an "Activation Notice") from Agent
(which Activation Notice may be given by Agent at any time at which (1) a
Default or Event of Default shall have occurred and be continuing, (2) Agent
reasonably believes based upon information available to it that a Default or an
Event of Default is likely to occur, (3) Agent reasonably believes that an event
or circumstance that is likely to have a Material Adverse Effect has occurred,
(4) Borrower and its Subsidiaries (other than the Excluded Subsidiaries) have
Available Liquidity of less than $125,000,000, or (5) Agent reasonably has
grounds to question the integrity of Borrower's Cash Management System or
Borrower's compliance with the provisions of this Annex C or any other
provisions of the Loan Documents to the extent related to such Cash Management
System (any of the foregoing being referred to herein as an "Activation
Event")), to forward immediately all amounts in each Borrower Account to the
Concentration Account Bank and to commence the process of daily sweeps from such
Borrower Account into the Concentration Account and (B) with respect to the
Concentration Account Bank, such bank agrees from and after the receipt of an
Activation Notice from Agent upon the occurrence of an Activation Event, to
immediately forward all amounts received in the Concentration Account to the
Collection Account through daily sweeps from such Concentration Account into the
Collection Account. From and after the date Agent has delivered an Activation
Notice to any bank with respect to any Borrower Account(s), Borrower shall not,
and shall not cause or permit any Subsidiary thereof to, accumulate or maintain
cash in the Disbursement Accounts or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.
(d) So long as no Default or Event of Default shall have
occurred and be continuing, Borrower may amend Disclosure Schedule (3.19) to add
or replace a Relationship Bank, Lock Box or Borrower Account or to replace any
Concentration Account or the Disbursement Account; provided, that (i) Co-Agents
shall have consented in writing in advance to the opening of such account or
Lock Box with the relevant bank and (ii) prior to the time of the opening of
such account or Lock Box, Borrower or its Subsidiaries, as applicable, and such
bank shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance satisfactory to Co-Agents. Borrower shall close
any of its accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days following notice
from Agent that the creditworthiness of any bank maintaining an account is no
longer acceptable in Co-Agents' reasonable judgment, or as promptly as
practicable and in any event within 60 days following notice from Agent that the
operating performance, funds transfer or availability procedures or performance
with respect to accounts or Lock Boxes of the bank maintaining such accounts or
Agent's liability under any tri-party blocked account agreement with such bank
is no longer acceptable in Agent's reasonable judgment; provided, that
<PAGE> 107
Borrower shall close each Borrower Account and Disbursement Account identified
as "to be closed" on Disclosure Schedule (3.19) on or before the earlier of (A)
the date on which all checks outstanding against such account have cleared and
(B) March 31, 2001.
(e) The Lock Boxes, Borrower Accounts, Disbursement
Account and the Concentration Account shall be cash collateral accounts, with
all cash, checks and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which Borrower and each
Subsidiary thereof shall have granted a Lien to Agent, on behalf of Co-Agents
and Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall
be deemed received by Agent in accordance with Section 1.10 and shall be applied
(and allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of Co-Agents and Lenders, all checks, cash and other items of payment
received by Borrower or any such Related Person, and (ii) within one Business
Day after receipt by Borrower or any such Related Person of any checks, cash or
other items of payment, deposit the same into a Borrower Account. Borrower and
each Related Person acknowledges and agrees that all cash, checks or other items
of payment constituting proceeds of Collateral are the Collateral of Agent and
Lenders. All proceeds of the sale or other disposition of any Collateral shall
be deposited directly into Borrower Accounts.
<PAGE> 108
APPENDIX 1
WESTERN DIGITAL (U.K.) LTD.
Fleet (BankBoston)
39 Victoria Street
London England
STG payments ***
US$ receipts ***
Lloyds Bank PLC
64 High Street
Epson England
STG payments ***
WESTERN DIGITAL (IS) LIMITED
Ulster Bank
54 South Mall
Cork Ireland
Payments ***
Ulster Bank
33 College Green
Dublin Ireland
Receipts ***
<PAGE> 109
*Subject to terms of open items letter of even date herewith.
<PAGE> 110
ANNEX D (SECTION 2.1(a))
TO
CREDIT AGREEMENT
SCHEDULE OF DOCUMENTS
[Omitted]
<PAGE> 111
ANNEX E (SECTION 4.1(a))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to each
Co-Agent or to Co-Agents and Lenders, as indicated, the following:
(a) Monthly Financials. To Co-Agents and Lenders, within
30 days after the end of each Fiscal Month, financial information regarding
Borrower and its Subsidiaries consisting of consolidated and consolidating: (i)
unaudited balance sheets as of the close of such Fiscal Month and the related
statements of income for that portion of the Fiscal Year ending as of the close
of such Fiscal Month; (ii) unaudited statements of income for such Fiscal Month,
prepared in accordance with GAAP (subject to normal quarterly and year-end
adjustments); and (iii) a summary of the outstanding balance of all Intercompany
Notes as of the last day of such Fiscal Month. Such financial information shall
be accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate") showing the calculations used in determining compliance with each
financial covenant set forth in Annex G that is tested on a monthly basis
(regardless of whether such covenants are being tested in accordance with the
terms of Section 6.10), and (B) a statement from the Chief Financial Officer of
Borrower that (1) such financial information presents fairly in accordance with
GAAP (subject to normal quarterly and year-end adjustments) the financial
position and results of operations of Borrower and its Subsidiaries, on a
consolidated basis, in each case as at the end of such Fiscal Month and for that
portion of the Fiscal Year ending as of the end of such Fiscal Month and (2) any
other information presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
(b) Quarterly Financials. To Co-Agents and Lenders,
within 45 days after the end of each Fiscal Quarter, consolidated financial
information regarding Borrower and its Subsidiaries, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements
of income and cash flows for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments). Such financial information
shall be accompanied by (A) a Compliance Certificate in respect of each of the
financial covenants set forth in Annex G that is tested on a quarterly basis
(regardless of whether such covenants are being tested in accordance with the
terms of Section 6.10), and (B) a statement from the Chief Financial Officer of
Borrower that (1) such financial information presents fairly in accordance with
GAAP (subject to normal year-end adjustments) the financial position, results of
operations and statements of cash flows of Borrower and its Subsidiaries, on a
consolidated basis, as at the end of such Fiscal Quarter and for that portion of
the Fiscal Year
<PAGE> 112
ending as of the end of such Fiscal Quarter, (2) any other information presented
is true, correct and complete in all material respects and that there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrower shall deliver to Agent and Lenders, within 45 days after the
end of each Fiscal Quarter, a management discussion and analysis that includes a
comparison to budget for that Fiscal Quarter and a comparison of performance for
that Fiscal Quarter to the corresponding period in the prior year.
(c) Operating Plan. To Co-Agents and Lenders, as soon as
available, but not later than 30 days after the end of each Fiscal Year, an
annual operating plan for Borrower, approved by the Board of Directors of
Borrower, for the following year, which will (i) include a statement of all of
the material assumptions on which such plan is based, (ii) include quarterly
balance sheets and a quarterly budget for the following Fiscal Year and (iii)
integrate sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections, all prepared on the same
basis and in similar detail as that on which operating results are reported (and
in the case of cash flow projections, representing management's good faith
estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities.
(d) Annual Audited Financials. To Co-Agents and Lenders,
within 90 days after the end of each Fiscal Year, audited Financial Statements
for Borrower and its Subsidiaries on a consolidated basis, consisting of balance
sheets and statements of income and retained earnings and cash flows, setting
forth in comparative form in each case the figures for the previous Fiscal Year,
which Financial Statements shall be prepared in accordance with GAAP and audited
without qualification by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) a statement prepared in reasonable detail showing
the calculations used in determining compliance with each of the Financial
Covenants, (ii) a report from such accounting firm to the effect that, in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (iii) the annual letters from Borrower and its
agents and representatives to such accountants in connection with such audit
examination detailing contingent liabilities and material litigation matters,
and (iv) the statement from the Chief Executive Officer or Chief Financial
Officer of Borrower that all such Financial Statements present fairly in
accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrower and its Subsidiaries on a consolidated
basis, as at the end of such Fiscal Year and for the period then ended, and that
there was no Default or Event of Default in existence as of such time or, if a
Default or Event of Default shall have occurred and be continuing, describing
the nature thereof and all efforts undertaken to cure such Default or Event of
Default.
(e) Management Letters. To Co-Agents and Lenders, within
five Business Days after receipt thereof by any Credit Party, and subject to the
approval of such Credit Party's
<PAGE> 113
independent certified public accounts (which approval such Credit Party shall
use its best efforts to obtain), copies of all management letters, exception
reports or similar letters or reports received by such Credit Party from such
independent certified public accountants.
(f) Default Notices. To Co-Agents and Lenders, as soon as
practicable, and in any event within five Business Days after an executive
officer of Borrower has actual knowledge of the existence of any Default, Event
of Default or other event that has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Co-Agents and
Lenders, promptly upon their becoming available, copies of: (i) all Financial
Statements, reports, notices and proxy statements made publicly available by any
Credit Party to its security holders; (ii) all regular and periodic reports and
all registration statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority; and (iii) all press releases
and other statements made available by any Credit Party to the public concerning
material adverse changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To each
Co-Agent, as soon as practicable, copies of all material written notices given
or received by any Credit Party with respect to any Subordinated Debt or Stock
of such Person, and, within two Business Days after any Credit Party obtains
knowledge of any matured or unmatured event of default with respect to any
Subordinated Debt, notice of such event of default.
(i) Supplemental Schedules. To each Co-Agent,
supplemental disclosures, if any, required by Section 5.6.
(j) Litigation. To each Co-Agent in writing, promptly
upon learning thereof, notice of any Litigation commenced or threatened against
any Credit Party or any Subsidiary of any Credit Party that (i) seeks damages in
excess of $2,500,000, (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or against any Credit
Party or ERISA Affiliate in connection with any Plan, (iv) alleges criminal
misconduct by any Credit Party or any Subsidiary of any Credit Party, (v)
alleges the violation of any law regarding, or seeks remedies in connection
with, any Environmental Liabilities, or (vi) involves any product recall.
(k) Insurance Notices. To each Co-Agent, disclosure of
losses or casualties required by Section 5.4.
(l) Lease Default Notices. To each Co-Agent, within five
Business Days after receipt thereof by any Credit Party, copies of (i) any and
all default notices received under or with respect to any leased location or
public warehouse where Collateral is located, and (ii) such other notices or
documents as Agent may request in its reasonable discretion.
<PAGE> 114
(m) Lease Amendments. To each Co-Agent, within five
Business Days after receipt thereof by any Credit Party, copies of all material
amendments to real estate leases.
(n) Other Documents. To Co-Agents and Lenders, such other
financial and other information respecting any Credit Party's or any Subsidiary
of any Credit Party's business or financial condition as any Co-Agent or any
Lender shall, from time to time, reasonably request.
<PAGE> 115
ANNEX F (SECTION 4.1(b))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To each Co-Agent, upon the request of any Co-Agent
and in any event no later than the tenth Business Day of each Fiscal Month
(together with a copy of all or any part of the following reports requested by
any Lender in writing after the Closing Date), the following reports, each of
which shall be prepared by Borrower as of the last day of the immediately
preceding Fiscal Month or such other period as may be requested by any Co-Agent:
(i) a Borrowing Base Certificate with respect to
each Credit Party, accompanied by such supporting detail and documentation as
shall be requested by any Co-Agent in its reasonable discretion;
(ii) with respect to each Credit Party, a summary
of Inventory by location and type with a supporting perpetual Inventory report,
in each case accompanied by such supporting detail and documentation as shall be
requested by Co-Agents in their reasonable discretion;
(iii) with respect to each Credit Party, a monthly
trial balance showing Accounts outstanding aged from invoice due date as
follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or more,
accompanied by such supporting detail and documentation as shall be requested by
Co-Agents in their reasonable discretion; and
(iv) reports with respect to the roll-forward of
each Credit Party's Accounts, including all additions and reductions (cash and
non-cash) with respect thereto, in each case accompanied by such supporting
detail and documentation as shall be requested by Co-Agents in their reasonable
discretion.
(b) To each Co-Agent, at the time of delivery of each of
the monthly Financial Statements delivered pursuant to Annex E, a reconciliation
of the Accounts trial balance and month-end Inventory reports of Borrower to
Borrower's general ledger and monthly Financial Statements delivered pursuant to
Annex E, in each case accompanied by such supporting detail and documentation as
shall be requested by Co-Agents in their reasonable discretion;
(c) To each Co-Agent, at the time of delivery of each of
the quarterly or annual Financial Statements delivered pursuant to Annex E, (i)
a listing of government contracts of Borrower subject to the Federal Assignment
of Claims Act of 1940; and (ii) a list of any applications for the registration
of any Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in the prior Fiscal Quarter;
<PAGE> 116
(d) Borrower, at its own expense, shall deliver to each
Co-Agent the results of each physical verification, if any, that Borrower or any
of its Subsidiaries may in their discretion have made, or caused any other
Person to have made on their behalf, of all or any portion of their Inventory
(and, if a Default or an Event of Default shall have occurred and be continuing,
Borrower shall, upon the request of Co-Agents, conduct, and deliver the results
of, such physical verifications as Co-Agents may require);
(e) Borrower, at its own expense, shall deliver to each
Co-Agent such appraisals of its assets as Co-Agents may request at any time
after the occurrence and during the continuance of a Default or an Event of
Default, such appraisals to be conducted by an appraiser, and in form and
substance, satisfactory to Co-Agents; and
(f) Such other reports, statements and reconciliations
with respect to the Borrowing Base or Collateral of any or all Credit Parties as
any Co-Agent shall from time to time request in its reasonable discretion.
<PAGE> 117
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
So long as (a) there are any outstanding Revolving Credit
Advances or Letter of Credit Obligations (excluding Letters of Credit (i) for
bank guarantees issued on behalf of WD UK, (ii) to support Borrower's
replacement real estate lease for its headquarters location, and (iii) to
support other corporate purposes acceptable to Co-Agents in an aggregate
outstanding amount not to exceed $20,000,000), (b) as of end of any March, June,
September or December of each year, Borrower and its Subsidiaries (other than
Excluded Subsidiaries) shall have Available Liquidity of less than $200,000,000,
or (c) as of end of any month other than March, June, September or December of
each year, Borrower and its Subsidiaries (other than Excluded Subsidiaries)
shall have Available Liquidity of less than $150,000,000, then Borrower shall
not breach or fail to comply with any of the following financial covenants, each
of which shall be calculated in accordance with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower and its
Subsidiaries (other than the Excluded Subsidiaries) on a consolidated basis
shall not make aggregate Capital Expenditures that exceed (i) during period No.
1 through No. 3 below, the respective amounts set forth opposite such periods,
and (ii) during periods No. 4 through No. 12 below, the lesser of (A) the
respective amounts set forth opposite such periods, and (B) total EBITDA for
Borrower and its Subsidiaries on a consolidated basis during such period:
<TABLE>
<CAPTION>
No. Period Maximum Capital Expenditures
--- ------ ----------------------------
<S> <C> <C>
1 7/1/00 through 9/29/00 $***
2 7/1/00 through 12/29/00 $***
3 7/1/00 through 3/30/01 $***
4 7/1/00 through 6/29/01 $***
5 9/30/00 through 9/28/01 $***
6 12/30/00 through 12/28/01 $***
7 3/31/01 through 3/29/02 $***
8 6/30/01 through 6/28/02 $***
9 9/29/01 through 9/27/02 $***
10 12/29/01 through 12/27/02 $***
11 3/30/02 through 3/28/03 $***
12 6/29/02 through 6/2703 $***
</TABLE>
<PAGE> 118
provided; that beginning with the Fiscal Year ending 6/29/01 and for each Fiscal
Year thereafter, to the extent the maximum amount of Capital Expenditures
permitted above for any such Fiscal Year (i.e., Year 1) exceeds the amount of
Capital Expenditures actually made by Borrower and such Subsidiaries during such
Fiscal Year (such excess being the "Excess Amount"), then the amount of
permitted Capital Expenditures for each period above that ends during the
immediately succeeding Fiscal Year (i.e., Year 2) will be increased by the
positive amount (the "Carry Over Amount") equal to (i) the lesser of (A) the
Excess Amount and (B) 25% of the amount of permitted Capital Expenditures for
such Fiscal Year (i.e., Year 1), minus (ii) that portion of the Excess Amount,
if any, expended during a previous period during such succeeding Fiscal Year.
For purposes of measuring compliance herewith, the Carry Over Amount shall be
deemed to be the last amount spent on Capital Expenditures in any Fiscal
Quarter.
(b) Minimum EBITDA. Borrower and its Subsidiaries (other
than the Excluded Subsidiaries) on a consolidated basis shall have, at the end
of each Fiscal Quarter set forth below, EBITDA for the 12-month period then
ended (or with respect to the Fiscal Quarters ending on or before September 28,
2001, for the period commencing on September 29, 2000, and ending on the last
day of such Fiscal Quarter) of not less than the following:
<TABLE>
<CAPTION>
Period Ending On EBITDA
---------------- ------
<S> <C>
December 29, 2000 $***
March 30, 2001 $***
June 29, 2001 $***
September 28, 2001 $***
December 28, 2001 $***
March 29, 2002 $***
June 28, 2002 $***
September 27, 2002 $***
December 27, 2002 $***
March 28, 2003 $***
June 27, 2003 $***
</TABLE>
(c) Minimum Tangible Net Worth. Borrower and its
Subsidiaries (other than the Excluded Subsidiaries) on a consolidated basis
shall maintain Tangible Net Worth, at the end of each Fiscal Quarter set forth
below, equal to or greater than the following:
<TABLE>
<CAPTION>
Period Ending On Minimum Tangible Net Worth
---------------- --------------------------
<S> <C>
September 29, 2000 $***
December 29, 2000 $***
March 30, 2001 $***
June 29, 2001 $***
September 28, 2001 $***
December 28, 2001 $***
March 29, 2002 $***
June 28, 2002 $***
September 27, 2002 $***
December 27, 2002 $***
March 28, 2003 $***
June 27, 2003 $***
</TABLE>
<PAGE> 119
; provided, that if (a) there are any outstanding Revolving Credit Advances or
Letter of Credit Obligations (excluding Letters of Credit (i) for bank
guarantees issued on behalf of WD UK, (ii) to support Borrower's replacement
real estate lease for its headquarters location, and (iii) to support other
corporate purposes acceptable to Co-Agents in an aggregate outstanding amount
not to exceed $20,000,000), and (b) (i) as of end of any March, June, September
or December of each year, Borrower and its Subsidiaries (other than Excluded
Subsidiaries) shall have Available Liquidity of less than $200,000,000, or (ii)
as of end of any month other than March, June, September or December of each
year, Borrower and its Subsidiaries (other than Excluded Subsidiaries) shall
have Available Liquidity of less than $150,000,000, then the required minimum
Tangible Net Worth amount shall be measured at the end of each Fiscal Month
during the applicable Fiscal Quarters set forth above.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Co-Agents and Lenders agree to enter into negotiations
in order to amend such provisions of the Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for evaluating
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, that the agreement of Requisite Lenders to any required amendments of
such provisions shall be sufficient to bind all Lenders. "Accounting Changes"
means (i) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion of the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or any
successor thereto or any agency with similar functions); (ii) changes in
accounting principles concurred in by Borrower's certified public accountants;
(iii) purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and
the application of the accounting principles set forth in FASB 109, including
the establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (iv) the reversal of any reserves
established as a result of purchase accounting adjustments. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period. If Co-Agents,
Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP consistently applied after giving effect to the
implementation of such Accounting
<PAGE> 120
Change. If Co-Agents, Borrower and Requisite Lenders cannot agree upon the
required amendments within 30 days following the date of implementation of any
Accounting Change, then all Financial Statements delivered and all calculations
of financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
a breach of a Financial Covenant contained in this Annex G shall be deemed to
have occurred as of any date of determination by Agent or as of the last day of
any specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.
<PAGE> 121
ANNEX H (SECTION 1.1(d))
TO
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
If to GE Capital, at:
Bank Name: Bankers Trust
Location: 1 Banker's Trust Place, New York, NY 10006
Account Name: GECC/CAF Depository (Western Digital)
Account Number: 50232854
ABA Number: 021001033
Reference: CFW#3310
If to Bank of America, at:
Bank Name: Bank of America
Location: San Francisco, California
Account Name: Bank of America Business Credit
Account Number: 1257503561
ABA Number: 121000358
Reference: Western Digital
<PAGE> 122
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
350 South Beverly Drive, Suite 200
Beverly Hills, California 90212
Attention: Account Manager (Western Digital)
Facsimile: (310) 785-0644
Telephone: (310) 203-0335
with copies to:
General Electric Capital Corporation Murphy Sheneman Julian & Rogers
201 High Ridge Road 2049 Century Park East, Suite 2100
Stamford, Connecticut 06927-5100 Los Angeles, California 90067
Attention: Corporate Counsel Attention: Gary B. Rosenbaum, Esq.
Facsimile: (203) 316-7822 Facsimile: (310) 788-3777
Telephone: (203) 316-7500 Telephone: (310) 788-3700
(B) If to Documentation Agent or Bank of America, N.A., at
Bank of America, N.A.
55 South Lake Avenue, Suite 900
Pasadena, California 91101
Attention: Portfolio Manger (Western Digital)
Facsimile: (626) 578-6143
Telephone: (626) 578-6070
<PAGE> 123
(C) If to Borrower, at
Western Digital Corporation
8105 Irvine Center Drive
Irvine, California 92618
Attention: Mr. Steven M. Slavin
Facsimile: (949) 932-5995
Telephone: (949) 932-5000
With copies to:
Western Digital Corporation
8105 Irvine Center Drive
Irvine, California 92618
Attention: Michael A. Cornelius, Esq., General Counsel
Facsimile: (949) 932-5633
Telephone: (949) 932-5000
<PAGE> 124
ANNEX J (ANNEX A - "COMMITMENTS")
TO
CREDIT AGREEMENT
COMMITMENTS AS OF THE CLOSING DATE
<TABLE>
<CAPTION>
Lenders Revolving Loan Commitment
------- -------------------------
<S> <C>
General Electric Capital Corporation $75,000,000 (including a Swing Line
Commitment of $10,000,000)
Bank of America, N.A. $50,000,000
</TABLE>
<PAGE> 125
SCHEDULES
TO
CREDIT AGREEMENT
Schedules (1.1) - (6.3),
(6.6) and (6.7) - Omitted
<PAGE> 126
DISCLOSURE SCHEDULE 6.5
***
Following is a general description of the ***:
***
<PAGE> 127
EXHIBIT 1.1(a)(i)
(NOTICE OF REVOLVING CREDIT ADVANCE)
[DATE]
General Electric Capital Corporation
350 South Beverly Drive, Suite 200
Beverly Hills, CA 90212
Attention: Account Manager (Western Digital)
Re: Western Digital
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
September 20, 2000 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by and among
Western Digital Corporation, a Delaware corporation ("Borrower"), the other
Credit Parties party thereto, the Lenders from time to time signatory thereto,
General Electric Capital Corporation, as administrative agent, and Bank of
America, N.A., as documentation agent. Capitalized terms or matters of
construction defined or established in Annex A to the Credit Agreement shall be
applied herein as defined or established therein.
Borrower hereby gives irrevocable notice, pursuant to Section 1.1(a)(i)
of the Credit Agreement, of the following request for a Revolving Credit
Advance:
Amount:
--------------------------------------------
Requested Date of Borrowing:
-------------------------------------------
Special instructions (if any):
-----------------------------------------
Borrower hereby represents and warrants that the conditions in Section
2.2 of the Credit Agreement have been satisfied on and as of the date hereof,
and will continue to be satisfied on and as of the date of the Revolving Credit
Advance requested herein, both before and after giving effect thereto and to the
application of the proceeds therefrom, and hereby confirms the granting of the
Liens to Agent, for the benefit of Co-Agents and Lenders, pursuant to the
Collateral Documents.
IN WITNESS WHEREOF, Borrower has caused this Notice of Revolving Credit
Advance to be executed and delivered by its duly authorized officer as of the
date first set forth above.
WESTERN DIGITAL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 128
EXHIBIT 1.1(a)(ii)
FORM OF REVOLVING NOTE
[PAYEE'S PRO RATA SHARE
OF REVOLVING LOAN COMMITMENT] September __, 2000
FOR VALUE RECEIVED, the undersigned, Western Digital Corporation, a
Delaware corporation ("Borrower"), hereby promises to pay to the order of
[______________] ("Payee"), for its own account as one of the lenders
(collectively, "Lenders") under the Credit Agreement (defined below), or its
assigns, at the offices of General Electric Capital Corporation, a New York
corporation, as administrative agent for Lenders (in such capacity,
"Administrative Agent" or "Agent"), at its address at 350 South Beverly Drive,
Suite 200, Beverly Hills, California 90212, or at such other place as Agent may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of
[__________________] DOLLARS ($[_________]), or such lesser or greater principal
amount as may be from time to time outstanding pursuant to the Credit Agreement
with respect to Payee's Pro Rata Share of the Revolving Loan.
Capitalized terms or matters of construction defined or established in
Annex A to the Credit Agreement of even date herewith by and among Borrower, the
other Credit Parties party thereto, Lenders, Agent and Bank of America, N.A., as
documentation agent for Lenders ("Documentation Agent"; Administrative Agent and
Documentation Agent are collectively referred to as "Co-Agents" and each, a
"Co-Agent") (including all annexes, exhibits and schedules thereto, and as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") shall be applied herein as defined or established
therein. This Revolving Note ("Note") is issued pursuant to the Credit
Agreement, is one of the "Revolving Notes" referred to therein, and is entitled
to the benefit and security of the Loan Documents provided for therein, to which
a reference is hereby made for a statement of all of the terms and conditions
under which the Revolving Loan is made and is to be repaid. All of the terms,
covenants and conditions of the Credit Agreement and all other Instruments
evidencing or securing the Indebtedness hereunder, including the Loan Documents,
are hereby made a part of this Note and are deemed incorporated herein in full.
The date and amount of each Revolving Credit Advance made by Revolving Lenders
to Borrower, the rates of interest applicable thereto and each payment made on
account of the principal thereof shall be recorded by Agent on its books and
records; provided, that the failure by Agent to make any such recordation shall
not affect the obligations of Borrower to make payment when due of any amount
owing under the Loan Documents in respect of the Revolving Credit Advances made
by Payee to Borrower.
The principal amount of the Indebtedness from time to time evidenced
hereby may be repaid and reborrowed and shall be payable in the amounts and on
the dates specified in the Credit Agreement and, if not sooner paid in full, on
the Commitment Termination Date. Interest on the outstanding principal amount of
this Note shall be paid until such principal amount is paid in full at such
rates of interest, including the Default Rate, if applicable, and at such times
as are specified in the Credit Agreement.
<PAGE> 129
Except as otherwise provided in the Credit Agreement, if any payment or
prepayment on this Note becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
Upon the occurrence and during the continuance of an Event of Default,
this Note may, without demand, notice or legal process of any kind, as provided
in the Credit Agreement, be declared, and upon such declaration immediately
shall become, or upon certain circumstances set forth in the Credit Agreement
may become without declaration, due and payable.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower waives presentment, demand, protest, and notice of
nonpayment and protest.
Except as provided in the Credit Agreement, this Note may not be
assigned by Payee to any Person.
THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
WESTERN DIGITAL CORPORATION,
a Delaware corporation
By:
------------------------------------
Steven M. Slavin
Vice President, Taxes and Treasurer
<PAGE> 130
EXHIBIT 1.1(b)(ii)
FORM OF SWING LINE NOTE
$10,000,000 ________ __, 2000
FOR VALUE RECEIVED, the undersigned, Western Digital
Corporation, a Delaware corporation ("Borrower"), hereby promises to pay to the
order of General Electric Capital Corporation, a New York corporation ("GE
Capital"), for its own account as Swing Line Lender under the Credit Agreement
(defined below), or its assigns, at the offices of GE Capital, as administrative
agent (in such capacity, "Administrative Agent" or "Agent") for the lenders
under the Credit Agreement, at its address at 350 South Beverly Drive, Suite
200, Beverly Hills, California 90212, or at such other place as Agent may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of TEN MILLION
DOLLARS ($10,000,000), or such lesser principal amount as may be from time to
time outstanding pursuant to the Credit Agreement with respect to the Swing Line
Loan.
Capitalized terms or matters of construction defined or
established in Annex A to the Credit Agreement of even date herewith by and
among Borrower, the other Credit Parties party thereto, Lenders, Agent and Bank
of America, N.A., as documentation agent for Lenders ("Documentation Agent";
Administrative Agent and Documentation Agent are collectively referred to as
"Co-Agents" and each, a "Co-Agent") (including all annexes, exhibits and
schedules thereto, and as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") shall be applied
herein as defined or established therein. This Swing Line Note ("Note") is
issued pursuant to the Credit Agreement, is the "Swing Line Note" referred to
therein, and is entitled to the benefit and security of the Loan Documents
provided for therein, to which a reference is hereby made for a statement of all
of the terms and conditions under which the Swing Line Loan is made and is to be
repaid. All of the terms, covenants and conditions of the Credit Agreement and
all other Instruments evidencing or securing the Indebtedness hereunder,
including the Loan Documents, are hereby made a part of this Note and are deemed
incorporated herein in full. The date and amount of each Swing Line Advance made
by Swing Line Lender to Borrower, the rates of interest applicable thereto and
each payment made on account of the principal thereof shall be recorded by Agent
on its books and records; provided, that the failure by Agent to make any such
recordation shall not affect the obligations of Borrower to make payment when
due of any amount owing under the Loan Documents in respect of the Swing Line
Advances made by Swing Line Lender to Borrower.
The principal amount of the Indebtedness from time to time
evidenced hereby shall be payable in the amounts and on the dates specified in
the Credit Agreement and, if not sooner paid in full, on the Commitment
Termination Date. Interest on the outstanding principal amount of this Note
shall be paid until such principal amount is paid in full at such rates of
interest, including the Default Rate, if applicable, and at such times as are
specified in the Credit Agreement.
<PAGE> 131
Except as otherwise provided in the Credit Agreement, if any
payment or prepayment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
Upon the occurrence and during the continuance of an Event of
Default, this Note may, without demand, notice or legal process of any kind, as
provided in the Credit Agreement, be declared, and upon such declaration
immediately shall become, or upon certain circumstances set forth in the Credit
Agreement may become without declaration, due and payable.
Time is of the essence of this Note. To the fullest extent
permitted by applicable law, Borrower waives presentment, demand, protest, and
notice of nonpayment and protest.
Except as provided in the Credit Agreement, this Note may not
be assigned by Swing Line Lender to any Person.
THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
WESTERN DIGITAL CORPORATION,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 132
EXHIBIT 1.5(e)
(NOTICE OF CONVERSION/CONTINUATION)
[DATE]
General Electric Capital Corporation
350 South Beverly Drive, Suite 200
Beverly Hills, CA 90212
Attention: Account Manager (Western Digital)
Re: Western Digital Corporation
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement
dated as of June __, 2000, (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"), by and among
Western Digital Corporation, a Delaware corporation ("Borrower"), the other
Credit Parties party thereto, the Lenders from time to time signatory thereto,
General Electric Capital Corporation, as administrative agent, and Bank of
America, N.A., as documentation agent. Capitalized terms or matters of
construction defined or established in Annex A to the Credit Agreement shall be
applied herein as defined or established therein.
Borrower hereby gives irrevocable notice, pursuant to Section
1.5(e) of the Credit Agreement, of the following request to:
[OPTION A: on [ DATE ] convert [$__________] of the aggregate
outstanding principal amount of the [__________] Loan made to [_______________],
bearing interest by reference to the [______] Rate, into a(n) [_________] Loan
[and, in the case of a LIBOR Loan, having a LIBOR Period of [__] month(s)].
[OPTION B: on [ DATE ] continue [$__________] of the
aggregate outstanding principal amount of the [__________] Loan made to
[_______________], bearing interest by reference to the LIBOR Rate, as a LIBOR
Loan having a LIBOR Period of [__] month(s).]
Borrower hereby represents and warrants that the conditions in
Section 2.2 of the Credit Agreement have been satisfied on and as of the date
hereof, and will continue to be satisfied on and as of the date of the
conversion/continuation requested hereby, both before and after giving effect
thereto, and hereby confirms the granting of the Liens to Agent, for the benefit
of Co-Agents and Lenders, pursuant to the Collateral Documents.
[Remainder of Page Intentionally Left Blank]
<PAGE> 133
IN WITNESS WHEREOF, Borrower has caused this Notice of
Conversion/Continuation to be executed and delivered by its duly authorized
officer as of the date first set forth above.
WESTERN DIGITAL CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 134
EXHIBIT 9.1(a)
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of
___________ __, ____ by and between __________________________________
("Assignor Lender") and ________________________ ("Assignee Lender") and
acknowledged and consented to by (i) General Electric Capital Corporation, as
administrative agent (in such capacity, "Administrative Agent" or "Agent") (ii)
Bank of America, N.A., as documentation agent (in such capacity, "Documentation
Agent"; Administrative Agent and Documentation Agent are collectively referred
to as "Co-Agents" and each, a "Co-Agent") for lenders ("Lenders"), and (iii)
Western Digital Corporation, as borrower ("Borrower") from time to time parties
to the Credit Agreement (as defined below). All capitalized terms used in this
Agreement and not otherwise defined herein will have the respective meanings set
forth in the Credit Agreement.
RECITALS:
A. Western Digital Corporation, a Delaware corporation
("Borrower"), the other Credit Parties thereto, Agent, Bank of America, N.A., as
documentation agent for Lenders ("Documentation Agent"; Administrative Agent and
Documentation Agent are collectively referred to as "Co-Agents" and each, a
"Co-Agent"), Assignor Lender and the other Lenders signatory thereto have
entered into that certain Credit Agreement dated as of June __, 2000 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), pursuant to which Assignor Lender has agreed to extend
certain financial accommodations to or for the direct or indirect benefit of
Borrower.
B. Assignor Lender desires to assign to Assignee Lender [ALL/A
PORTION] of its interest in the Loans (as described below), the Letter of Credit
Obligations and the Collateral and to delegate to Assignee Lender [ALL/A
PORTION] of its Commitments and other duties with respect to such Loans, Letter
of Credit Obligations and Collateral.
C. Assignee Lender desires to become a Lender under the Credit
Agreement and to accept such assignment and delegation from Assignor Lender.
D. Assignee Lender desires to appoint Agent to serve as
administrative agent and appoint Documentation Agent as documentation agent for
Assignee Lender under the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions, and covenants herein contained, Assignor Lender and
Assignee Lender agree as follows:
<PAGE> 135
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and
assigns to Assignee Lender, without recourse and without representations or
warranties of any kind (except as set forth in Section 3.2), [ALL/SUCH
PERCENTAGE] of Assignor Lender's right, title, and interest in [THE REVOLVING
LOAN ], [LETTER OF CREDIT OBLIGATIONS], Loan Documents and Collateral as will
result in Assignee Lender having as of the Effective Date (as hereinafter
defined) a Pro Rata Share thereof, as follows:
<TABLE>
<CAPTION>
Assignee Lender's Loans Principal Amount Pro Rata Share
----------------------- ---------------- --------------
<S> <C> <C>
Revolving Loan $____________ ____%
</TABLE>
1.2 Delegation. Assignor Lender hereby irrevocably
assigns and delegates to Assignee Lender [ALL/A PORTION] of its Commitments and
its other duties and obligations as a Lender under the Loan Documents equivalent
to [100%/___%] of Assignor Lender's Revolving Loan Commitment (such percentage
representing a commitment of $ ___________).
1.3 Acceptance by Assignee Lender. By its execution of
this Agreement, Assignee Lender irrevocably purchases, assumes and accepts such
assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender agrees,
to the extent provided herein, to relinquish its rights and be released from its
obligations and duties under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by
Assignor Lender and acceptance by Assignee Lender will be effective and Assignee
Lender will become a Lender under the Loan Documents as of [THE DATE OF THIS
AGREEMENT] ("Effective Date") and upon payment of the Assigned Amount and the
Assignment Fee (as each term is defined below). [INTEREST AND FEES ACCRUED PRIOR
TO THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNOR LENDER, AND INTEREST AND
FEES ACCRUED FROM AND AFTER THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNEE
LENDER.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will
pay to Assignor Lender, in immediately available funds, not later than 12:00
noon (New York time) on the Effective Date, an amount equal to its Pro Rata
Share of the then outstanding principal amount of the Loans as set forth above
in Section 1.1 [TOGETHER WITH ACCRUED INTEREST, FEES AND OTHER AMOUNTS AS SET
FORTH ON SCHEDULE 2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [ASSIGNOR LENDER AND/OR
ASSIGNEE LENDER] will pay to Agent, for its own account in immediately available
funds, not later than 12:00 noon (New York time) on the Effective Date, the
assignment fee in the amount of $3,500 (the "Assignment Fee") as required
pursuant to Section 9.1(a) of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of
the Assigned Amount and the Assignment Fee, Assignor Lender will deliver to
Agent the Notes previously
<PAGE> 136
delivered to Assignor Lender for redelivery to Borrower and Agent will obtain
from Borrower for delivery to [ASSIGNOR LENDER AND] Assignee Lender, new
executed Notes evidencing Assignee Lender's [AND ASSIGNOR LENDER'S RESPECTIVE]
Pro Rata Share[S] in the Revolving Loans after giving effect to the assignment
described in Section 1. Each new Note will be issued in the aggregate maximum
principal amount of the [APPLICABLE] Commitment [OF THE LENDER TO WHOM SUCH NOTE
IS ISSUED] OR [THE ASSIGNEE LENDER].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and
Covenants. Assignee Lender hereby represents, warrants, and covenants the
following to Assignor Lender and Co-Agents:
(a) This Agreement is a legal, valid, and
binding agreement of Assignee Lender, enforceable according to its
terms;
(b) The execution and performance by Assignee
Lender of its duties and obligations under this Agreement and the Loan
Documents will not require any registration with, notice to, or consent
or approval by any Governmental Authority;
(c) Assignee Lender is familiar with
transactions of the kind and scope reflected in the Loan Documents and
in this Agreement;
(d) Assignee Lender has made its own independent
investigation and appraisal of the financial condition and affairs of
each Credit Party, has conducted its own evaluation of the Loans and
Letter of Credit Obligations, the Loan Documents and each Credit
Party's creditworthiness, has made its decision to become a Lender to
Borrower under the Credit Agreement independently and without reliance
upon Assignor Lender or Agent, and will continue to do so;
(e) Assignee Lender is entering into this
Agreement in the ordinary course of its business, and is acquiring its
interest in the Loans and Letter of Credit Obligations for its own
account and not with a view to or for sale in connection with any
subsequent distribution; provided, that at all times the distribution
of Assignee Lender's property shall, subject to the terms of the Credit
Agreement, be and remain within its control;
(f) No future assignment or participation granted by
Assignee Lender pursuant to Section 9.1 of the Credit Agreement will
require Assignor Lender, any Co-Agent, or Borrower to file any
registration statement with the Securities and Exchange Commission or
to apply to qualify under the blue sky laws of any state;
(g) Assignee Lender has no loans to, written or
oral agreements with, or equity or other ownership interest in any
Credit Party;
(h) Assignee Lender will not enter into any
written or oral agreement with, or acquire any equity or other
ownership interest in, any Credit Party without the prior written
consent of each Co-Agent; and
<PAGE> 137
(i) As of the Effective Date, Assignee Lender
(i) is entitled to receive payments of principal and interest in
respect of the Obligations without deduction for or on account of any
taxes imposed by the United States of America or any political
subdivision thereof [, (ii) IS NOT SUBJECT TO CAPITAL ADEQUACY OR
SIMILAR REQUIREMENTS UNDER SECTION 1.16(a) OF THE CREDIT AGREEMENT,
(iii) DOES NOT REQUIRE THE PAYMENT OF ANY INCREASED COSTS UNDER SECTION
1.16(b) OF THE CREDIT AGREEMENT, AND (iv) IS NOT UNABLE TO FUND LIBOR
LOANS UNDER SECTION 1.16(c) OF THE CREDIT AGREEMENT,] and Assignee
Lender will indemnify each Co-Agent from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, or expenses that result from Assignee Lender's failure to
fulfill its obligations under the terms of Section 1.15(c) of the
Credit Agreement [OR FROM ANY OTHER INACCURACY IN THE FOREGOING].
[DRAFTING NOTE: THE REPS IN CLAUSES (ii) THROUGH (iv) CAN BE DELETED FOR
ASSIGNMENTS WHEN AN EVENT OF DEFAULT EXISTS AND IS CONTINUING UNDER THE CREDIT
AGREEMENT].
3.2 Assignor Lender's Representations, Warranties and
Covenants. Assignor Lender hereby represents, warrants and covenants the
following to Assignee Lender:
(a) Assignor Lender is the legal and beneficial
owner of the Assigned Amount;
(b) This Agreement is a legal, valid and binding
agreement of Assignor Lender, enforceable according to its terms;
(c) The execution and performance by Assignor
Lender of its duties and obligations under this Agreement and the Loan
Documents will not require any registration with, notice to or consent
or approval by any Governmental Authority;
(d) Assignor Lender has full power and
authority, and has taken all action necessary to execute and deliver
this Agreement and to fulfill the obligations hereunder and to
consummate the transactions contemplated hereby;
(e) Assignor Lender is the legal and beneficial
owner of the interests being assigned hereby, free and clear of any
adverse claim, lien, encumbrance, security interest, restriction on
transfer, purchase option, call or similar right of a third party; and
(f) This Assignment by Assignor Lender to
Assignee Lender complies, in all material respects, with the terms of
the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2)
nor Agent makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, Letter
of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the
<PAGE> 138
Collateral, or (e) the financial condition of any Credit Party or other obligor
or the performance or observance by any Credit Party of its obligations under
any of the Loan Documents. Neither Assignor Lender nor Agent has or will have
any duty, either initially or on a continuing basis, to make any investigation,
evaluation, appraisal of, or any responsibility or liability with respect to the
accuracy or completeness of, any information provided to Assignee Lender which
has been provided to Assignor Lender or Agent by any Credit Party. Nothing in
this Agreement or in the Loan Documents shall impose upon the Assignor Lender or
Agent any fiduciary relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in
the exercise of any power, right, or privilege hereunder or under any Loan
Document will impair such power, right, or privilege or be construed to be a
waiver of any default or acquiescence therein. No single or partial exercise of
any such power, right, or privilege will preclude further exercise thereof or of
any other right, power, or privilege. All rights and remedies existing under
this Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
6. NOTICES
Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given will be in writing and
addressed to the respective party as set forth below its signature hereunder, or
to such other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any
provision of this Agreement will be effective without the written concurrence of
Assignor Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. In
the event any provision of this Agreement is or is held to be invalid, illegal,
or unenforceable under applicable law, such provision will be ineffective only
to the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement. In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included
for convenience of reference only, do not constitute a part of this Agreement
for any other purpose, and have no substantive effect.
<PAGE> 139
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which, when so executed and
delivered, will be deemed an original and all of which shall together constitute
one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 140
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
"ASSIGNEE LENDER" "ASSIGNOR LENDER"
------------------------------------- -------------------------------------
By: By:
---------------------------------- ----------------------------------
Title: Title:
------------------------------- -------------------------------
Notice Address: Notice Address:
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
ACKNOWLEDGED AND CONSENTED TO:
"CO-AGENT" "CO-AGENT"
GENERAL ELECTRIC CAPITAL BANK OF AMERICA, N.A.
CORPORATION
By: By:
---------------------------------- ----------------------------------
Robert S. Yasuda Name:
--------------------------------
Duly authorized Signatory Title:
-------------------------------
"BORROWER"
WESTERN DIGITAL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 141
SCHEDULE 2.1
Assignor Lender's Loans
Principal Amount
Revolving Loan $
----------------
Subtotal $
----------------
Accrued Interest $
----------------
Unused Line Fee $
----------------
Other + or - $
----------------
Total $
================
All determined as of the Effective Date.
