Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended December 28, 1996
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _______to_______
Commission File No.1-6635
APPLIED MAGNETICS CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
A Delaware Corporation 95-1950506
- ---------------------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
75 Robin Hill Road, Goleta, California 93117
--------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (805) 683-5353
(No Change)
-----------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days. Yes ..X.. No .....
Indicate the number of shares outstanding of each of the issuer's classes of
common stock: 23,585,384 $.10 par value common stock as of February 4, 1997.
Exhibit Index on Page 13
Page 1 of 90
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
The unaudited condensed consolidated financial statements included herein have
been prepared by Applied Magnetics Corporation and its subsidiaries (the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The unaudited condensed consolidated financial statements and
selected notes included therein should be read in conjunction with the audited
consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended
September 28,1996.
The following unaudited condensed consolidated financial statements reflect all
adjustments, consisting only of normal and recurring adjustments, which, in the
opinion of management, are necessary to present fairly the consolidated
financial position and results of operations for the periods presented.
Page 2 of 90
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations - Unaudited
(In thousands except share and per share data)
For the three months ended
December 28, December 30,
------------ ------------
1996 1995
---- ----
Net sales $121,627 $ 94,709
Cost of sales 75,030 71,195
----------- ----------
Gross profit 46,597 23,514
----------- ----------
Research and development expenses 11,148 13,315
Selling, general and administrative expenses 2,044 1,671
----------- ----------
Total operating expenses 13,192 14,986
----------- ----------
Income from operations 33,405 8,528
Interest income 1,862 538
Interest expense (3,151) (1,426)
Other income, net 279 1,489
----------- ----------
Income before taxes 32,395 9,129
Provision for income taxes 523 101
----------- ----------
Net income $31,872 $9,028
=========== ==========
Net income per share:
Primary $1.30 $0.38
=========== ==========
Fully diluted $1.10 $0.38
=========== ==========
Weighted average number of common
shares outstanding:
Primary 24,531,737 23,774,471
=========== ==========
Fully diluted 30,861,300 23,873,012
=========== ==========
The accompanying Selected Notes to Condensed Consolidated Financial Statements
are an integral part of these consolidated statements.
Page 3 of 90
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets - Unaudited
(In thousands except share and par value data)
December 28, September 28,
ASSETS 1996 1996
---- ----
Current Assets:
Cash and equivalents $ 156,974 $ 127,400
Accounts receivable, net 43,587 43,403
Inventories 37,517 35,980
Prepaid expenses and other 9,279 10,122
------- -------
247,357 216,905
------- -------
Property, plant and equipment, at cost 305,427 288,856
------- -------
Less-accumulated depreciation (162,507) (155,134)
------- -------
142,920 133,722
------- -------
Other assets 8,909 8,823
------- -------
$ 399,186 $ 359,450
=========== ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 1,790 $ 1,865
Bank notes payable 45,789 45,789
Accounts payable 38,684 32,314
Accrued payroll and benefits 11,410 11,001
Other current liabilities 8,835 8,054
------- -------
106,508 99,023
------- -------
Long-term debt, net 115,848 116,263
------- -------
Other liabilities 4,465 4,465
------- -------
Shareholders' Investment:
Preferred stock, $.10 par value, authorized
5,000,000 shares, none issued and outstanding -- --
Common stock, $.10 par value, authorized
40,000,000 shares, issued 23,453,399 shares
at December 28, 1996 and 23,283,047 at
September 28, 1996 2,345 2,328
Paid-in capital 186,155 185,378
Retained deficit (14,941) (46,813)
------- -------
173,559 140,893
Treasury stock, at cost (116,995 shares at
December 28, 1996 and September 28, 1996) (1,194) (1,194)
------- -------
172,365 139,699
------- -------
$ 399,186 $ 359,450
========== ==========
The accompanying Selected Notes to Condensed Consolidated Financial
Statements are an inegral part of these consolidated balance sheets
Page 4 of 90
<PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - Unaudited
(In thousands)
For the three months ended
December 28, December 30,
------------ ------------
1996 1995
---- ----
Cash Flows from Operating Activities:
Net income $ 31,872 $ 9,028
Adjustments to derive cash flows:
Depreciation and amortization 8,574 7,385
Changes in assets and liabilities
Accounts receivable (184) (16,862)
Inventories (1,537) 4,187
Prepaid expenses and other 845 1,313
Acounts payable 6,370 (1,820)
Accrued payroll and benefits 418 (263)
Other assets and liabilities 509 1,158
---------- ----------
Net cash flows provided by operating 46,867 4,126
activities ---------- ----------
Cash Flows from Investing Activities:
Additions to property, plant
and equipment (17,682) (6,034)
Notes receivable 31 1,010
---------- -----------
Net cash flows used in investing
activities (17,651) (5,024)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of debt 46,039 45,946
Repayment of debt (46,508) (38,553)
Payment of debt issuance costs 14 -
Proceeds from stock options exercised, net 785 1,194
---------- -----------
Net cash flows provided by
financing activities 330 8,587
---------- -----------
Effect of Exchange Rate Changes on Cash
and Equivalents 28 (257)
---------- -----------
Net Increase in Cash and Equivalents 29,574 7,432
---------- -----------
Cash and Equivalents at Beginning of Period 127,400 48,236
---------- -----------
Cash and Equivalents at End of Period $ 156,974 $ 55,668
========== ===========
The accompanying Selected Notes to Condensed Consolidated Financial
Statements are an integral part of these consolidated statements.
Page 5 of 90
<PAGE>
Selected Notes to Condensed Consolidated Financial Statements
Unaudited
Note A: Inventories
- -------------------
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventory costs consist of purchased materials and services, direct
production labor and manufacturing overhead expense. The components of inventory
are as follows (in thousands):
December 28, September 28,
----------- -------------
1996 1996
---- ----
Purchased parts and
manufacturing supplies $15,964 $ 10,957
Work in process 17,787 21,601
Finished goods 3,766 3,422
-------- ---------
$37,517 $35,980
======== =========
Note B: Credit Facilities
- -------------------------
During the second quarter of fiscal 1997, the Company's Malaysian
subsidiary completed credit facility agreements with two additional banks in
Malaysia. The total balance available to borrow under these two new facilities
was approximately $20.0 million at December 28, 1996. The facilities are
callable on demand, have no termination date, are unsecured, and are guaranteed
by the Company.
Note C: Earnings Per Share Computation
- --------------------------------------
Primary earnings per share is computed by dividing net income by the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period. Common stock equivalents include exercise of the
Company's stock options. Fully diluted earnings per share is computed based on
weighted average number of shares of common stock and common stock equivalents
outstanding during the period and as if the Company's Convertible Subordinated
Debentures were converted into common stock at the beginning of the period after
giving retroactive effect to the elimination of interest expense, net of income
tax effect, applicable to the Convertible Subordinated Debentures.
Page 6 of 90
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
The Company is continuing its strong financial and technical performance
that started in fiscal 1996 and continues to execute its time-to-market strategy
with leading edge products. Approximately 73% of the first quarter of fiscal
1997 revenue was generated from the Company's products to be used by its
customers in 3.5 inch disk drive applications with data storage capacities over
1 gigabyte per disk. This included shipment of initial production volumes of
advanced thin film products at the 1.3 gigabyte per disk capacity point.
For fiscal 1997, the Company is executing a plan that, by the fourth
quarter, is expected to more than double the unit volume production rate that
was achieved in the fourth quarter of fiscal 1996. The Company expects to
further benefit from the cost reductions associated with such improved economies
of scale. Fiscal 1997 will continue to be another year of rapid product and
technology transition and the Company believes it is well positioned to meet the
challenge.
Magnetoresistive ("MR") disk head product development continues to be
critical to the Company's future growth. It began production volume shipments
during the latter half of fiscal 1996 and expects MR technology products to
contribute to revenue and profitability during fiscal 1997.
Three Months Ended December 28, 1996
- ------------------------------------
NET SALES. Net sales of $121.6 million in the first quarter of fiscal 1997
increased 28.4% from net sales of $94.7 million in the first quarter of fiscal
1996, as a result of continuing increases in shipments of advanced thin film
disk heads. Thin film disk head net sales of $111.4 million increased 72.3% from
the same quarter in the prior year and represent 91.6% of the Company's total
net sales for the first quarter of fiscal 1997. By the end of fiscal 1996, the
Company successfully replaced ferrite disk head production with thin film disk
head production. MR disk head sales were $7.1 million for the first quarter of
fiscal 1997, as the Company continued to ship in volume production that began
during the latter half of fiscal 1996.
GROSS PROFIT. As a percentage of net sales, gross profit was 38.3 % and 24.8%,
for the first quarter of fiscal 1997 and the first quarter of fiscal 1996,
respectively. The increase in gross profit in the first quarter of fiscal 1997
as compared to the same quarter in the prior fiscal year was due to higher sales
volumes and units shipped, and overall production yield improvements.
Page 7 of 90
<PAGE>
RESEARCH AND DEVELOPMENT. Research and development expenses as a percent of net
sales were 9.2% and 14.1% for the first quarter of fiscal 1997 and the first
quarter of fiscal 1996, respectively. Expenses in dollars during the first
quarter of fiscal 1997 decreased $2.2 million from the first quarter of fiscal
1996 as the Company completed its transition from prototype development to
volume production of MR products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percent of net sales were 1.7% and 1.8% for the
first quarter of fiscal 1997 and the first quarter of fiscal 1996, respectively.
Expenses in dollars for the first quarter of fiscal 1997 increased $0.4 million
from the first quarter of fiscal 1996.
INTEREST INCOME AND EXPENSE. Interest income in the first quarter of fiscal 1997
increased $1.3 million compared the first quarter of fiscal 1996 due to higher
average cash balances. Interest expense in the first quarter of fiscal 1997
increased $1.7 million compared to the first quarter of fiscal 1996 due to
higher average debt outstanding. Increases in both categories were primarily as
a result of the Company's March 1996 issuance of $115.0 million 7% Convertible
Subordinated Debentures due in 2006.
OTHER INCOME AND EXPENSE. Other income, net, was $0.3 million and $1.5 million
for the first quarter of fiscal 1997 and the first quarter of fiscal 1996,
respectively. Other income in the first quarter of fiscal 1996 included $1.3
million related to the final payment from Seagate Technology, Inc., for their
purchase of the Company's Tape Head business unit in December 1994. Other income
for the current quarter and the balance of the prior year fiscal quarter was
primarily due to foreign exchange gains.
PROVISION FOR INCOME TAXES. The Company's provision for income taxes for the
three months ended December 28, 1996, primarily related to federal alternative
minimum taxes, state minimum taxes and foreign taxes.
Liquidity and Capital Resources
- -------------------------------
At December 28, 1996, the Company's cash and equivalents increased to
$157.0 million from $127.4 million at September 28, 1996. During the first
quarter of fiscal 1997, the Company generated $46.9 million from operating
activities, comprised primarily of the net effect of the following: i) $31.9
million from net income which included $8.6 million of depreciation and
amortization expense; ii) increase in inventories of $1.5 million and iii)
increase in the accounts payable balance of $6.4 million. Increased production
in response to increased customer orders resulted in slightly higher inventories
and accounts payable for the first quarter of fiscal 1997 as compared to the
Page 8 of 90
<PAGE>
same quarter in the prior year. Accounts payable increased more than inventories
for this period primarily as a result of timing of payments.
At December 28,1996, total debt, including notes payable, amounted to
$163.4 million, a decrease of $0.5 million from the balance outstanding at
September 28, 1996, primarily due to payments on capital leases. Total debt
included $115.0 million of 7.0% Convertible Subordinated Debentures, due 2006.
Also included in total debt at December 28, 1996, was $45.8 million drawn
against the credit facility at the Company's Malaysian subsidiary, which has
been in place since June 1990. The credit facility is callable on demand, has no
termination date, is guaranteed by the Company, is secured by the Company's real
property holdings in Malaysia and includes certain covenants which preclude the
Company from granting liens and security interests in other assets in Malaysia.
Additional borrowings available under this facility were approximately $1.5
million at December 28, 1996. During the second quarter of fiscal 1997, the
Company's Malaysian subsidiary completed credit facility agreements with two
additional banks in Malaysia. The total balance available under these two new
facilities was approximately $20.0 million at December 28, 1996. The facilities
are callable on demand, have no termination date, are unsecured, and are
guaranteed by the Company. Should all or any significant portion of the
Malaysian credit facilities become unavailable for any reason, the Company would
need to pursue alternative financing sources. The Company also has a secured,
asset-based revolving line of credit of $35.0 million from CIT Group/Business
Credit, Inc. There were no borrowings outstanding and the balance available to
borrow under this line of credit was approximately $20.9 million at December 28,
1996. The line of credit expires January 11, 1998.
During fiscal 1997, the Company plans approximately $135.0 million in
capital expenditures, including equipment to be obtained through operating
leases, to increase overall production capacity and continue to improve thin
film and MR production processes. Capital expenditures for the three months
ended December 28,1996 were $17.7 million. In addition, the Company leased $4.1
million of production equipment through operating leases. During fiscal 1997,
the Company believes that it will have sufficient cash resources available from
cash reserves, operations and operating lease financing alternatives to meet
its operating and capital expenditure requirements. Market and customer
demand continues to be strong for the Company's thin film disk heads. In the
event that demand for the Company's products decline, management believes that
it will be able to reduce its funding requirements for planned, but not
committed, capital expenditures. However, if the Company were unable to continue
to increase sales or maintain production yields at acceptable levels in order to
permit it to execute customer orders for new drive programs in a timely
Page 9 of 90
<PAGE>
manner, there could be a significant adverse impact on liquidity. This may
require the Company to either obtain additional capital from external sources
or to curtail its capital, research and development or working capital
expenditures. Such curtailment could adversely affect the Company's future
years' operations and competitive position.
Forward-Looking Information
- ---------------------------
Certain statements or assumptions in Management's Discussion and Analysis
contain or are based on "forward-looking" information (as defined in the
Private Securities Litigation and Reform Act of 1995) that involves risk and
uncertainties inherent in the Registrant's business. Actual outcomes are
dependent upon the Registrant's successful performance of internal plans, its
ability to control inventory levels, customer changes in short range and long
range plans, domestic and international competition in the Registrant's product
areas, successful completion of expansion within current cost estimates,
continued acceptance of existing products and the development and acceptance of
new products, performance issues with key customers, risks related to
international transactions and hedging strategies and general economic risks
and uncertainties.
Page 10 of 90
<PAGE>
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
10(a) Offer Letter dated July 18, 1996 between Arab-Malaysian
Bank Berhad and Applied Magnetics (M) Sdn Bhd for
credit facility
10(b) General Agreement between Arab-Malaysian Bank
Berhad and Applied Magnetics (M) Sdn Bhd for credit
facility
10(c) Corporate Guarantee of the Registrant dated August 14,
1996 in favor of Arab-Malaysian Bank Berhad
10(d) Offer Letters dated August 6, 1996 and September 26,
1996 between BHL Bank and Applied Magnetics (M)
Sdn Bhd for credit facility
10(e) Corporate Guarantee of the Registrant dated August 13,
1996 in favor of BHL Bank
11 Statement re computation of per share information.
27 Financial Data Schedule
(b) Reports on Form 8-K. None
Page 11 of 90
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APPLIED MAGNETICS CORPORATION
Dated: February 11, 1997 /s/Craig D. Crisman
-----------------------------
Craig D. Crisman
Chairman of the Board and
Chief Executive Officer
(Principal Financial Officer)
Dated: February 11, 1997 /s/Peter T. Altavilla
-----------------------------
Peter T. Altavilla
Corporate Controller
(Principal Accounting Officer)
Page 12 of 90
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page
- ------------------------------------------------------------------------------
10(a) Offer Letter dated July 18, 1996 between
Arab-Malaysian Bank Berhad and Applied
Magnetics (M) Sdn Bhd for credit facility 14
10(b) General Agreement between Arab-Malaysian
Bank Berhad and Applied Magnetics (M)
Sdn Bhd for credit facility 28
10(c) Corporate Guarantee of the Registrant dated
August 14, 1996 in favor of Arab-Malaysian
Bank Berhad 49
10(d) Offer Letters dated August 6, 1996 and
September 26, 1996 between BHL Bank and
Applied Magnetics (M)
Sdn Bhd for credit facility 59
10(e) Corporate Guarantee of the Registrant dated
August 13, 1996 in favor of BHL Bank 76
11 Statement re computation of per share
information 89
27 Financial Data Schedule 90
Page 13 of 90
<PAGE>
EXHIBIT 10(a)
-------------
Arab-Malaysian Bank Berhad
(A member of the ARAB-MALAYSIAN BANKING GROUP)
Head Office: 12th Floor, Bangunan Arab-Malaysian,
Jalan Raja Chulan, 50200 Kuala Lumpur.
Postal Address: Ground Floor, Plaza See Hoy Chan,
Jalan Raja Chulan, 50200 Kuala Lumpur,
Malaysia.
Telephone: 03-2387922 Facsimile: 03-2304941
Telex: MA 30424
Date: 18 July 1996
APPLIED MAGNETICS (M) SDN BHD.
Plot 201, Phase 3
Bayan Lepas Free Trade Zone
11900 Bayan Lepas
Penang
Attn: En Muhammad Nasi/Mr. Lee Beng Jin
Dear Sirs:
RE: TRADE FACILITIES OF RM20.0 MILLION
FOREIGN EXCHANGE CONTRACT LIMIT OF RM20.0 MILLION
- -------------------------------------------------------------------------------
Arab-Malaysian Bank Berhad ("AMBB") is pleased to offer the
above credit facilities to Applied Magnetics (M) Sdn. Bhd. (the
"Borrower") on the following terms and conditions:
1. TYPE OF FACILITY
Facility I
Trade Facilities comprising:
Letters of Credit ("LC")
Trust Receipts ("TR")
Bankers Acceptance ("BA")
Local Bills Purchase/
Discounting ("LBEP/D")
Foreign Bills Purchase/
Discounting ("FBEP/D")
Shipping Guarantee ("SG")
Bank Guarantee ("BG")
Facility II
Foreign Exchange Contract ("FXC")
-1-
Page 14 of 90
<PAGE>
2. EXTENT OF FACILITY
Facility I Limit
---------- -----
Not exceeding RM20,000,000
(Ringgit Malaysia: Twenty Million). RM20,000,000
Facility II
Not exceeding RM20,000,000
(Ringgit Malaysia: Twenty Million).
(FXC risk is 10% of FXC line) RM 2,000,000
------------
Total Facilities RM22,000,000
============
3. PURPOSE OF FACILITY
Facility I
LC/TR - To finance purchase of raw materials,
stocks, machinery and equipment related to
Borrower's business.
BA - To finance local/foreign purchase/sales to
acceptable parties.
LBEP/D - To purchase/discount local bills.
FBEP/D - To purchase/discount foreign bills.
SG - To facilitate clearance of goods pending
receipt of original shipping documents.
BG - As performance bonds favoring statutory
bodies and/or acceptable third parties.
Facility II
To hedge foreign exchange risks on imports and exports.
4. TENURE OF FACILITY
Facility I
LC - Sight/Usance up to 180 days.
TR - Maximum 180 days (inclusive of usance
period) for LC, DP, and DA Bills
BA - Maximum 180 days
-2-
Page 15 of 90
<PAGE>
LBEP/D - Maximum 180 days for LC, DP and DA bills.
FBEP/D - Maximum 180 days for LC, DP and DA bills.
SG - Maximum 30 days.
BG - Max 12 months renewable at AMBB's sole
discretion or such other period acceptable
to AMBB in accordance with the Rules of the
Association of Banks in Malaysia (ABM).
Facility II
FXC - Spot/Forward up to 180 days.
5. AVAILABILITY PERIOD
Facility I and II
Subject to periodic review.
Nevertheless all the facilities abovementioned are subject
to AMBB's review from time to time irrespective of whether
or not an event of default has occurred and nothing herein
shall be deemed to impose on AMBB any obligation either at
law or in equity to make or to continue to make available
the facilities to you.
6. INTEREST RATE/COMMISSIONS
Facility I
LC - Commission at 0.1% per month on each LC
(Minimum RM50.0 per LC).
TR - Interest rate at 1.0% above our Bank's BLR
(currently at 9.20% per annum).
BA - Commission at 1.0% p.a.
LBEP/D - Interest rate at 1.0% above our Bank's BLR
FBEP/D - Interest rate at 1.0% above prevailing
foreign currency interest rate.
SG - 0.1% flat.
BG - Commission at 1.0% per annum.
Facility II
FXC - At prevailing market rate.
-3-
Page 16 of 90
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7. INTEREST ON ANY CLAIM MADE UNDER THE SG/BG
In the event of any claim made against any BG/SG issued,
AMBB should be entitled to the right of immediate
settlement and shall charge an interest rate of 4% per
annum above our BLR from the date of payment of claim
until the date of settlement by you.
8. SECURITY
Facility I and II
Clean.
9. GUARANTEE
A corporate guarantee by Applied Magnetics Corporation,
USA.
10. REPAYMENT
Facility I
On maturity
Any BG/SG issued must be returned to us for cancellation
upon its expiry. AMBB shall at all times be entitled to
make payment under any guarantee for which a demand has
been made without further investigation or enquiry and
need not concern itself with the propriety of any claim
made or that AMBB was or might have been justified in
refusing payment, in whole or in part, of the amount so
demanded.
11. CONDITIONS PRECEDENT TO DRAWDOWN
a) The Borrower shall have delivered to AMBB the
following documents:
i) Board of Directors' Resolution authorising the
acceptance of the facilities and the execution
of all legal documents in connection with the
facilities;
ii) A certified true copy of its Memorandum and
Articles of Association, Forms 24, 44 and 49;
iii) Specimen signatures of its authorised
signatories.
-4-
Page 17 of 90
<PAGE>
b) Receipt of Corporate Guarantee By Borrower's holding
company, Applied Magnetics Corporation.
c) Receipt of duplicate copy of this Letter of Offer
duly endorsed by the Borrower's authorised
signatories.
d) Receipt of General Agreement in AMBB's standard
format (copy enclosed) is to be executed by the
Borrower under common seal. Should the said document
be executed under hand, it has to be witnessed by our
Bank Officer or a solicitor.
12. OTHER STANDARD TERMS AND CONDITIONS
i) AMBB reserves the right not to issue any BG, the form
and substance of which are not acceptable to AMBB.
ii) In accordance with the provisions of the revised Biro
Maklumat Cet ("BMC") guidelines, AMBB reserves the
right to close your account once you have been
blacklisted by the BMC as a "bad" cheque offender.
iii) AMBB may also vary from time to tome [sic], the terms and
conditions stated herein to comply with all relevant
rules, decisions and ruling of Bank Negra Malaysia
and/or Association of Banks in Malaysia, whether the
same be made before or after the date of this letter.
iv) The Annexure referred to herein forms an integral
part of this Letter of Offer and is to be taken and
construed as an essential part of this offer.
Please signify your acceptance of the terms and conditions
stated herein by signing and returning the enclosed duplicate
copy of this letter not later than fourteen (14) days from the
date hereof, failing which, this offer shall lapse.
Your signature will also serve as our authority to debit your
account with all charges, costs and incidental expenses in
connection with the perfection of legal documentation for the
above facilities.
Yours faithfully,
for ARAB-MALAYSIAN BANK BERHAD
/s/ Ahmad Farid Bin Omar /s/ Goh Hean Peen
- ------------------------ ----------------------
AHMAD FARID BIN OMAR GOH HEAN PEEN
General Manager Senior Manager
Corporate Banking Corporate Banking
-5-
Page 18 of 90
<PAGE>
"I/We hereby confirm the acceptance of the
above terms and conditions and those
contained in the Annexure attached.
/s/ Dr. John S. Foster
- -----------------------------
(Authorised Signatories
and affix Company's Chop) /s/Muhammad Nasir Haji Hanifah
Name: Dr. John S. Foster Muhammad Nasir Haji Hanifah
Managing Director (Finance Director)
Date: 31-07-96
APPLIED MAGNETICS (M) SDN BHD
PLOT 201.
BAYAN LEPAS FREE INDUSTRIAL ZONE
11900 PENANG, MALAYSIA.
-6-
Page 19 of 90
<PAGE>
ANNEXURE
STANDARD TERMS AND CONDITIONS
(WHERE APPLICABLE)
1. VARIATION OF INTEREST RATE
Notwithstanding the rate of the Margin and/or the Base
Lending Rate of AMBB and/or the Cost of Fund and/or the
provisions relating to the rate of interest as provided,
AMBB shall be entitled at any time and from time to time
hereinafter to vary at its absolute discretion the Margin
and/or the Base Lending Rate and/or Cost of Fund and/or
the rate of interest applicable to the Facility by serving
a notice on the Borrower of such its intention in the
following manner:
a. in respect of the Base Lending Rate of AMBB, by
placing in one of a daily newspaper of AMBB's choice
a general notice of change of the Base Lending Rate
of AMBB addressed to the public generally or by
serving a notice in writing on the Borrower, and
b. in respect of the Margin and/or the additional
interest on late payment by serving a notice in
writing on the Borrower of the change in the Margin
and/or the additional interest of late payment;
c. in respect of the facility pegged against the Cost of
Fund, by serving the Borrower a written notice to
that effect. The varied RATE OF INTEREST shall be
applied to new loans drawn or rollovers made
subsequent to the date of the notice.
and such amended rate of interest shall be applicable as
from the date specified in such notice; service of such
notice shall be deemed to have been sufficiently given and
served on the Borrower, if despatched by personal delivery
or sent by ordinary post to the address herein stated.
2. DEFAULT INTEREST
a. In the event of a default in the repayment or payment
(i) within seven (7) days grace period (applicable
to Term and Bridging Loan Facilities)
(ii) within the next day (applicable to Overdraft,
Revolving Credit and Trade Bills)
from the due date of the instalments and/or interest
thereon or any other monies herein covenanted to be paid,
the Borrower shall pay to AMBB damages by way of interest
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at the rate of 1.0% per annum over and above the
prescribed rate ('the default rate' which expression shall
include where and when applicable such other rate as may
from time to time hereafter be substituted therefore in
the manner hereinafter provided) on the instalment and/or
interest or any other sums at that time in arrears
calculated on the daily outstanding amount or balance
thereof from the due date until the date of receipt of
payment thereof as well as before or after any court order
or judgement.
b. Notwithstanding the provisions relating to the
default rate as hereinabove provided AMBB shall be
entitled at any time and from time to time hereafter
to vary at its absolute discretion the default rate
by serving a notice on the Borrower of such
intention and such amended default rate shall be
payable as from the date specified (IF APPLICABLE) in
such notice; service of such notice may be effected
in the same manner as a notice on the variation of
interest rate.
c. The rights of AMBB to charge default interest at the
rate and in the manner of computation as conferred on
AMBB by the security documents shall subsist and
continue to subsist notwithstanding the issue and/or
service of a demand for payment of moneys or any of
the moneys intended to be hereby secured and/or
notwithstanding that the relationship of banker
customer between the parties hereto shall have ceased
for any reason or by any cause whatsoever.
3. FOREIGN EXCHANGE CONTRACTS (FEC)
a. Authorised Persons to Transact FEC
The Borrower is required to provide AMBB with a List
of personnel who are authorised to transact/enter
into FEC-deals over the telephone with AMBB.
For this purpose, the Borrower is also required to
advise AMBB in writing of any changes to the above
List.
b. Purpose of FEC
The conditions under which the FEC is to be utilised
must comply with the requirements specified in
Exchange Control Act, 1953 and ECM 6.
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c. Confirmation on FEC Contracts
(i) All FEC contracts concluded will be followed by
telex/fax confirmation from AMBB. In the event
of any errors in the telex/fax, the Borrower is
to notify AMBB of the same forthwith and in any
event at the latest by the close of the
following business day failing which it shall be
deemed that there are no errors.
(ii) Confirmation letters (Contract Notes) will also
subsequently be sent to the Borrower. The
Borrower is required to check its contents and
(without prejudice to c(i) above) return the
acknowledgment copy duly signed by the
Borrower's authorised signatory and stamped with
the Borrower's chop within seven (7) days of
receipt.
d. Utilisation of FEC
The Borrower is required to quote the Contract Number
every time a contract is taken up.
e. Extension of FEC
i. Valid reasons should be provided should the
Borrower wish to extend the maturity date of the
contract(s). Extension is at AMBB's discretion
subject to Exchange Control regulations.
ii. A request for extension of a forward contract
must be made at the latest within 5 days after
its maturity date, failing which the Bank may
cancel the contract and charge your Account for
any cost incurred.
f. Cancellation of FEC
Written notice together with valid reasons must be
given to the Bank for any cancellation of FEC
Contracts. Any cost incurred shall be charged to
your Account.
4. REVIEW
All facilities are subject to periodic review and shall be
repayable on demand.
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5. STANDARD CONDITIONS PRECEDENT TO DRAWDOWN
The obligation of AMBB to make the facility available for
disbursement to the Borrower shall be conditional upon
a. All relevant security or other documentation
stipulated herein having been duly executed, stamped
and have been presented for registration with
relevant authorities.
b. The Borrower having complied with all the terms and
conditions stipulated herein to the satisfaction of
AMBB.
c. No event of default has occurred.
d. Submission of certified true copy of the Borrowers
Board Resolution authorising the acceptance of this
facility and providing the security and guarantee on
the terms and conditions stated herein and specimen
signatures of its authorised signatories.
e. Submission of a certified true copy of the Borrower's
Memorandum and Articles of Association and its
Certificate of Incorporation, Forms 24, 44 & 49.
6. INSURANCE
The security offered is to be insured in the joint names
of the Borrower and AMBB up to the full insurable value
against Fire Risk and such other risks as AMBB may
require. All insurance shall be handled by Arab-Malaysian
Assurance Berhad or such other insurance companies
approved or as may be from time to time be approved by
AMBB.
7. LEGAL FEES AND OTHER COSTS
a. All legal fees and incidental expenses incurred from
the date hereof in connection with the preparation,
stamping and registration of the security documents
are payable by the Borrower even if it fails to
execute any of the security documents for any reason.
b. The Borrower will also be liable to pay all fees and
expenses in connection with or incident to this
facility including AMBB's solicitors fees if it
becomes necessary to recover any of the monies agreed
to be advanced hereunder by any process of law or
through AMBB's solicitors.
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8. PREPAYMENT
Upon repayment of all accrued interest up to the date of
prepayment and subject to one (1) month prior written
notice or such other period acceptable to AMBB or by
paying one (1) month's interest in lieu of notice, the
Borrower may prepay in multiples of the instalments; due
or such other amount acceptable to the Bank PROVIDED
ALWAYS that such notice of prepayment shall be
irrevocable and shall oblige the Borrower to effect such
prepayment on the date specified in such notice.
Prepayment by redemption or by fixed repayment schedule
shall not be deemed as prepayment.
9. STANDARD CONDITIONS
a. That as far as the Borrower is aware the granting of
the loan hereunder by AMBB will not contravene or
violate Section 62 of the Banking and Financial
Institutions Act 1989. AMBB has the right to recall
the facilities in the event the Borrower fail to make
the appropriate declaration resulting in AMBB
contravening the aforesaid Section of BAFIA.
b. AMBB is to be satisfied that this facility will not
constitute a breach by the Borrower of any limit
imposed by its Memorandum and Articles of Association
on its borrowing powers and no adverse restriction
apply to the Borrower's activities which may be
calculated to prejudice the security and that the
Borrower shall have power under its Memorandum and
Articles of Association to conclude the security
arrangements.
c. During the term of the loan and whilst any part
thereof shall be outstanding AMBB shall be supplied
with such information as it shall reasonably require
including the Borrower's latest audited and
management Balance Sheet and Profit & Loss accounts
within six (6) months after the financial year-end
and financial half-year-end respectively.
d. AMBB reserves the right to recall the facility at its
absolute discretion at any time including before the
drawdown of the facility if it is deemed necessary,
although it is not anticipated that this right be
exercised in normal circumstances.
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e. It is hereby expressly acknowledged and declare that
any condition precedents contained herein are
inserted for the sole benefit of AMBB and may be
waived wholly or in parts by AMBB at its sole and
absolute discretion without prejudicing its rights
herein and such waiver shall not prejudice AMBB from
insisting on the Chargor's and/or the borrower's
and/or the guarantor's (whichever is applicable)
compliance with any such waived condition precedent
at any subsequent time.
f. Notwithstanding any provisions hereof, it is hereby
expressedly agreed that upon default or breach by the
Borrower of any term, covenant, stipulation and/or
undertaking herein provided and on the part of the
Borrower to be observed and performed, AMBB shall
thereafter have the right to exercise all or any of
the remedies available whether by this Agreement or
by statute or otherwise and shall be entitled to
exercise such remedies concurrently, including
pursuing all remedies to this Agreement and civil
suit to recover all monies due and owing to AMBB.
g. The proferred properties are subject to periodic
valuation by a valuer on AMBB's panel the cost
arising thereto will be borne by you.
h. Consent must be obtained from AMBB if there is any
change in the controlling shareholding structure of
the Borrower.
i. Subject to AMBB's consent being first obtained,
Borrower is to submit extracts of the minutes of the
Director's Circular Resolution and Board of Directors
Meeting for AMBB within 30 days of such meetings with
regards to any of the following
(i) A significant change in business direction.
(ii) A change in the key management personnel of the
company.
(iii) Acquisition of future land and building.
(iv) Loans extended to or obtained from directors or
third parties.
10. EVENTS OF DEFAULT
AMBB reserves the right to recall the loan at any time if
one or more of the following events should occur:
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a. if the Borrower/Guarantor (whichever is applicable)
fails to pay, when due any instalment or other sum of
money in accordance with the terms herein,
b. if the Borrower/Guarantor (whichever is applicable)
is unable to pay its debts as they become due, or
commit an act of bankruptcy or insolvency or if
judgement is obtained against the Borrower/Guarantor
(whichever is applicable) by any third party,
c. if any receiver or trustee or bailiff is appointed to
take possession of the Borrower/Guarantor's
(whichever is applicable) properties, or if execution
of any form of actions is levied or taken against any
of the Borrower/Guarantors (whichever is applicable)
properties,
d. if any default occurs under any other agreement
involving the borrowing of monies or the advance of
credit to the Borrower which gives the creditor
concerned (including AMBB) the right to recall the
loan or to accelerate payment or withdraw the advance
of credit,
e. if any of the terms and conditions of AMBB's security
documents are breached or become ineffective.
11. CHANGES IN CIRCUMSTANCES
If, as a result of any change in applicable law, regulation
or regulatory requirement or in the interpretation or
application thereof or if compliance by AMBB with any
applicable direction, request or requirement (whether or
not having the force of law) will impose on AMBB any
condition, burden or obligation then AMBB's commitment to
make or maintain the Facility will end upon notice to the
Company of the happening of such event after becoming aware
thereof.
12. INFORMATION DISCLOSURE
The Borrower hereby consents to AMBB giving information
regarding the Borrower's credit facility to the Central
Credit Unit established by Bank Negara Malaysia or any
other agencies approved by the Association of Banks in
Malaysia.
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13. ADDITIONAL SECURITY
AMBB may reasonably require additional security to be
provided and you agree to provide such additional security
as and when so required.
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EXHIBIT 10(b)
-------------
GENERAL AGREEMENT BY CUSTOMER(S)
To: Arab-Malaysian Bank Berhad
In consideration of Arab-Malaysian Bank Berhad hereinafter
called (the "Bank", which expression shall where the context so
admits include its successors and assigns) opening or
continuing my/our account(s) with the Bank or from time to time
making or continuing advances to me/us or negotiating on my/our
behalf bill of exchange and/or invoices or other documents
representing or relating to goods or opening or establishing at
my/our request such documentary or other credits as the Bank
may think fit or providing other banking services and
accommodation for me/us or any of us or for such other person,
firm or company at my/our request as the Bank my [sic] think fit,
I/we HEREBY AGREE AND UNDERTAKE with the Bank as follows:-
1. Payment
(A) All moneys, obligations and liabilities whether
actual or contingent now or at any time hereafter
due, owing or incurred to the Bank by me/us in
respect of any of the facilities made available by
the Bank for me/us or transactions undertaken by the
Bank for me/us as aforesaid on any account whatsoever
(whether alone or jointly and in whatever style, name
or form and whether as principal or surety) shall be
repaid by me/us immediately on demand together with
interest to date of repayment at such rates and upon
such terms as may from time to time be payable,
commissions, fees and other charges and all expenses
incurred by the Bank in relation to me/us or the
preparation or enforcement of any guarantees or
security for any moneys, obligations or liabilities
as aforesaid including legal and other costs on a full
indemnity basis.
(B) The Bank shall cease to be under any further
commitment to me/us and all term loans and other
moneys obligations and liabilities hereby secured not
otherwise so repayable shall become payable on demand
and cash cover shall be provided on demand for all
contingent liabilities on the occurrence of any of
the following events or default, namely:-
(i) if I/we fail to pay any money from time to time
due to the Bank on the due date or fail to
comply with any provisions contained or
incorporated in this Agreement or in any
facility from or other agreement with the Bank
or if (in any respect considered by the Bank to
be material) any representation or warranty made
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to the Bank by me/any one or more of us proves
to be incorrect;
(ii) if any other loan, debt or other obligation in
respect of borrowed moneys (including for this
purpose liabilities under acceptance credits,
discounting, hire purchase, rental or other
financial agreements) becomes capable of being
declared payable prior to its stated maturity by
reason of default by me/us or is not paid when
due:
(iii) if (being a limited company) a petition is
presented or an order made or a resolution
passed for winding up or a notice is issued
convening a meeting for the purpose of passing
any such resolution (save for the purpose of and
followed by reconstruction or amalgamation on
terms previously approved in writing by the
Bank):
(iv) if I or any one or more of us shall die or
commit an act of bankruptcy or become of unsound
mind or make any general assignment for the
benefit of creditors or any bankruptcy petition
is filed against me/any one or more of us:
(v) if the security for any of my/our liabilities
ceases to be in full force and effect or shall
become enforceable or an encumbrancer shall take
possession or a Receiver shall be appointed of
the whole or any part of my/our undertaking
property or assets;
(vi) if (being a limited company) we convene a meeting
of or propose or enter into any composition or
arrangement with creditors;
(vii) if any judgment or order made against me/any one
or more of us is not complied with within seven
days or if an execution distress sequestration
or other process be levied or enforced upon or
sued out against any of my/our property or assets;
(viii) if I/any one or more of us fail to pay my/our
debts as and when they fall due or become or
(being a limited company) are deemed to be
insolvent whether within the meaning of
Section 218 of the Companies Act 1965 or
otherwise:
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(ix) if I/we stop payment or cease or threaten to
cease to carry on business or any part thereof
in the normal course of change the nature or
mode of conduct of my/our trading in any respect
which the Bank may consider material;
(x) if my/our undertaking property or assets or any
part thereof from time to time considered by the
Bank to be material is sold disposed of or
compulsorily acquired (otherwise than in the
normal course of trading or on terms previously
approved in writing by the Bank);
(xi) if any of the foregoing events occurs in
relation to any third party which has guaranteed
or provided security for or given an indemnity
in respect of any money, obligation or liability
hereby secured.
2. Interest and Commissions
I/We shall pay commission, interest, fees and charges at
such rates as may from time to time be agreed between the
Bank and me/us (or, in default of agreement, as may be
specified in writing by the Bank). Interest shall be
payable on the cleared daily balance of the moneys,
obligations and liabities [sic] from time to time due owing or
incurred by me/us to the Bank as aforesaid and charged to
my/our account monthly in arrears but without prejudice to
the right of the Bank to require payment of such interest
and, in the event of such interest not being punctually
paid, interest shall be compounded with monthly rests in
accordance with the usual practice of the Bank. Interest,
commission and fees will accrue from day to day and will
be calculated on the basis of the actual number of days
elapsed and a 365 day year or such other period as may be
appropriate or customary having regard to the currency (or
currencies) in which the relevant facility (or facilities)
are made available.
3. General Hypothecation
(A) All bills or exchange drawn, accepted or endorsed by
me/us, all produce and goods, bills of lading,
warrants, delivery orders, wharfingers' or other
warehouse keepers certificates or receipts and all
documents of title, invoices and like documents (and
the produce and goods to which they relate) which are
now or may at any time hereafter be (a) warehoused or
stored in the name of the Bank or its agent or
nominee or (b) received by, deposited or lodged with,
transferred to or otherwise held by or pledged to the
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order or under the control of the Bank or its agent
or nominee (either directly or indirectly whether
from or by me/us or any one or more of us or any
other person and whether for safe custody,
collection, security or for any specific purpose or
generally) shall be held by the Bank as a continuing
security for the moneys, obligations and liabilities
referred to in paragraph 1 above.
(B) I/We hereby undertake to provide the Bank with
funds:-
(i) to meet on demand all bills negotiated endorsed
or advanced against or purchased by the Bank for
me/us or any one or more of us which may be
dishonored on presentation for acceptance or
which may not be paid at the due date thereof
according to the original tenor and all
liability in respect thereof however arising and
non-payment of a bill shall be deemed to have
taken place if at that date funds have not been
placed at the free disposal of the Bank for the
whole sum due;
(ii) to reimburse the Bank for all advances made
against documents of title which may not have
been duly taken up on presentation;
(iii) to meet re-exchange expenses and all interest
commission discount and other bankers charges
legal notarial and other costs disbursements and
expenses on a full indemnity basis;
(iv) to meet all freight warehouse dock transit
and other charges the cost of insurance rent
and all other costs of and incidental to produce
and goods represented by documents hypothecated
to the Bank hereunder.
(C) The Bank is hereby authorised at its absolute
discretion without notice to me/us or further consent
of any person interested:-
(i) to insure all produce and goods represented by
documents hypothecated to the Bank hereunder
against all insurance risks whether by land sea
or air for their full value and to recover the
full amount from the insurers;
(ii) to land and store or arrange for the storage of
such produce and goods and/or re-ship the same
to any other port;
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(iii) to pay all freight warehouse dock transit and
other charges the cost of insurance rent and
all other costs of and incidental to such
produce and goods as the Bank may from time to
time think fit;
(iv) to pay or retain and charge me/us with such
charges for commission as are usual between
merchant and correspondent and such interest
re-exchange notarial and banking charges as are
usually payable in these circumstances;
(v) to take conditional acceptance of bills of
exchange (including acceptances for honour)
and/or to extend the due date for payment
thereof upon such conditions as the Bank thinks
fit;
(vi) to accept payment from drawees or acceptors
(whether or not the acceptance is conditional
before maturity under rebate or discount and on
payment to deliver up the relative documents to
or to the order of the drawees or acceptors;
(vii) to accept part payment before maturity and to
deliver such proportionate part of the produce
and goods held against the same as the Bank in
its absolute discretion thinks fit;
(viii) to convert into Malaysian currency by
telegraphic remittance or otherwise at the
discretion of the Bank any moneys received by
the Bank under or by virtue of this Agreement
and to debit my/our account with all costs
charges and loss on exchange thereby incurred;
(ix) to debit my/our account with all payments of
freight warehouse dock transit and other
charges the cost of insurance rent interest
and all other expenses incurred hereunder and
with all money chargeable to me/us under this
Agreement and with the amount of unaccepted or
unpaid bills of exchange or of advances against
other documents of title for which I/we or any
of us are liable to the Bank or any deficiency
arising after realisation but so that the Bank
is under no obligation to do any of the
foregoing and is not liable for any loss I/we
may sustain as a result of the Bank's delay or
failure so to do.
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(D) The Bank is hereby authorised to sell assign
transfer negotiate or otherwise dispose of all or
any produce or goods represented by documents
hypothecated to the Bank hereunder or to which they
relate without demand for payment or notice or
further consent of any person at such times or times
in such manner and for such consideration (whether
payable or deliverable immediately or by
instalments) as the Bank may in its absolute
discretion think fit without being under any
responsibility to me/us for the price obtained
thereby in any of the following events:-
(i) on default being made in acceptance on presentation
or in payment at maturity of any bill of exchange or
of any other sums due hereunder;
(ii) on any drawee or acceptor of any bill (whether
conditionally or absolutely accepted) suspending
payment becoming bankrupt or insolvent or taking any
steps for composition or arrangement with creditors;
(iii) if I/we fail to repay on demand any money obligation
or liability due owing or incurred to the Bank by
me/us or any one or more of us with all interest
commission discount and other bankers charges legal
and other costs disbursements and expenses;
(iv) on any payment being made by the Bank which it is
authorised to made under this Agreement;
(v) if and whenever the Bank considers it desirable
having regard to the then market value of the produce
or goods that the same should be sold whether or not
I/we shall have then become contingently or otherwise
liable to the Bank;
But so that the Bank is under no obligation so to
sell or otherwide [sic] dispose and is not liable for any
loss I/we may sustain as a result of its delay or
failure so to do.
(E) I/we further undertake to facilitate any such sale or
disposal by executing such documents as may from time
to time be necessary or desirable to vest the produce
or goods in the Bank or its transferee or to effect
delivery of the same as the Bank may require and by
doing all such acts and things as may from time to
time be necessary or expedient. The Bank is
authorised to execute and sign any such document as
my/our agent and to do any such act or thing on
my/our behalf. I/We declare that the produce and
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goods are free from any other hypothecation pledge
charge or encumbrance of any kind.
(F) After deduction of all expenses charges and
commissions the net proceeds of the sale or other
disposition of the produce and goods shall be applied
at the Bank's absolute discretion in discharge or
reduction or any actual or contingent debt obligation
or liability to the Bank of me/us or any one or more
of us and any surplus shall (subject to the
provisions of this Agreement) be at my/our disposal.
Any statement of account rendered to me/us by the
Bank shall be sufficient proof of the sale or other
disposal of any produce or goods hereunder and of
my/our deficiency resulting therefrom and shall for
all purposes be conclusive between me/us and the
Bank.
(G) I/We hereby undertake that the produce and goods
represented by documents hypothecated to the Bank
will be kept insured in their full value against an
insurable risks including fire and flood and all
policies whether effected by the Bank or not are to
be treated as part of the Bank's security. Should
any claim arise under any insurance the Bank is
hereby irrevocably authorised to recover the full
amount thereof from the insurers and to give a valid
receipt on my/our behalf to charge the same
commission on the proceeds as on a sale of the
produce or goods and to apply such proceeds as if the
same represented proceeds of sale of any produce or
goods sold by the Bank under the power contained
above. I/We hereby undertake to assign to the Bank
the policies of insurance for that purpose and to
deliver them to the Bank on demand and in the case of
loss or damage to the produce or goods howsoever
caused to pay over to the Bank all sums received by
me/us or any of us in respect of such insurance and
make up any deficiency which may result in the amount
of any moneys due to the Bank and pending payment
I/we shall hold all such sums in trust for the Bank.
(H) The holding by the Bank of any additional guarantees
or securities is not to prejudice the rights of the
Bank on any bills in case of dishonor nor shall any
recourse or proceedings taken thereon or the Bank
giving time or granting any indulgence or making any
arrangement or composition affect the Bank's title to
any security or my/our liability.
(I) The Bank shall not be liable for default by any
insurer warehouse keeper broker auctioneer agent
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carrier captain or other officer of any ship or craft
or other person employed in the insurance sale
disposal storage shipment or carriage of any produce
or goods or for any other purpose connected therewith
nor for any deficiency in the quality or value of any
produce or goods nor for the stoppage or detention
thereof by the shipper or any other person whomsoever
nor for loss on exchange rates or any loss damage or
delay however caused.
4. Shares and other Securities
(A) All stocks, shares, certificates of deposit, bonds,
notes, debenture stock certificates and other
securities (whether marketable or not)which may from
time to time be lodged with or held by the Bank or
transferred to the Bank or its nominee or registered
in the name of the Bank or its nominee (whether for
safe custody, security or for any other purpose)
together with any substituted securities and all
dividends or interest thereon paid or payable after
the date of this Agreement and all other moneys or
rights accruing thereto or offered by way of
redemption bonus option or otherwise (all of which
are hereinafter included in the expression
"Securities") shall be charged to the Bank as a
continuing security for the payment and discharge of
all the moneys, obligations and liabilities referred
to in paragraph 1 above but so that the Bank shall
not in any circumstances incur any liability
whatsoever in respect of any calls instalments or
other payments.
(B) I/We shall upon demand deposit with the Bank and the
Bank shall be entitled to retain (i) all stock and
share certificates and documents of title relating to
the Securities and (ii)transfer of the Securities
duly completed in favour of the Bank or otherwise as
the Bank may direct and such other documents as the
Bank may from time to time require for perfecting its
title to the Securities or for enabling it to vest
the same in itself or its nominee or in any purchaser
to the intent that the Bank may at any time after it
shall consider it prudent so to do present them for
registration without notice to me/us.
(C) At any time after the Bank shall have demanded
payment or discharge of any money, obligation or
liability hereby secured (or if requested by me/any
one or more of us):-
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(i) the Bank and any nominee of the Bank wheresoever
situate may without further notice sell or
dispose of any of the securities subject hereto
or any part thereof or any substituted
securities in such manner and for such
consideration as the Bank may think fit and the
Bank may apply the proceeds of sale in or
towards discharge of the costs incurred therein
and of the money or liabilities hereby secured;
and
(ii) any dividends interest of other payments which
may be received or receivable by the Bank or by
any nominee in respect of any of the Securities
may be applied by the Bank as though they were
proceeds of sale.
(D) Until the Bank shall have made demand as provided in
paragraph 4(C) above:-
(i) the Bank will hold all interest and dividends
paid on and received by it in respect of the
Securities for my/our account and will pay such
interest and dividends to me/us upon being
called upon to do so by me/any one of us; and
(ii) the Bank will exercise all voting and other
rights and powers attached to the Securities as
I/we may from time to time in writing direct.
(E) The Bank and its nominee at the discretion of the
Bank may exercise in my/our name or otherwise at any
time whether before or after demand for payment and
without any further consent or authority on my/our
part in respect of the Securities any voting rights
and all powers given to trustees by Sections
II4)and II(5) of the Trustee Ordinance (1949)in
respect of securities or property subject to a trust
and any power or rights which may be exercisable by
the person in whose name the Securities are
registered but such power shall be exercised subject
to the provisions of paragraph 4(D) above.
(F) I/We hereby warrant to the Bank that I/we am/are the
beneficial owner of and have a good right to deposit
and transfer the Securities and the same are fully
paid up and are free from any lien charge or
encumbrance of any kind.
(G) I/We hereby undertake to pay all calls or other
instalments and make all other payments in respect of
the Securities and if I/we default in so doing the
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Bank may if it thinks fit make such payments on
my/our behalf. Any sums so paid by the Bank shall be
repayable by me/us to the Bank on demand and pending
such repayment shall be a charge on the Securities.
(H) I/We hereby undertake to maintain the value of the
Securities at a sum equal to the moneys, obligations
and liabilities from time to time secured by this
Agreement with such margin as may from time to time
be specified in writing by the Bank and to pay all
calls instalments or other payments (if any)in
respect of the Securities as and when the same from
time to time become due.
5. Documentary Credits
(A) All documentary credits opened at my/our request by
the Bank ("Credits") shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993);
Revision) of the International Chamber of Commerce
(or any modification or amendment thereof for the
time being in force), the provisions of which shall
be deemed to be incorporated in this agreement as if
the same were set out in extenso herein.
(B) Except insofar as the Bank receives from me/us
instructions in writing to the contrary we agree that
part shipments may be made under the Credits and the
Bank and/or its agents may honour the relative drafts
and if the Credit specifies shipments in instalments
within stated periods and the shipper fails to ship
in any designated period, shipments of subsequent
instalments may nevertheless be made in their
respective designated period and the Bank and/or its
agents may honour the relative drafts.
(C) I/We agree that in the event of any extension of time
for presentation of drafts, acceptances or documents
or any other modification of the terms of the Credits
at my/our request with or without modification to the
others or in the event of any increase in the amount
of the Credits at my/our request, this Agreement
shall be binding upon me/us with regard to the
Credits so increased or otherwise modified, with
regard to drafts, documents and property covered
thereby and with regard to any action taken by the
Bank and/or its agents in accordance with such
extension, increase or other modification.
(D) The beneficiaries to the Credits shall be deemed to
be my/our agents and I/we assume all risks of their
acts or omissions. Neither the Bank nor its agents
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<PAGE>
shall be responsible for the existence, character,
quality, quantity, condition, packing, value or
delivery of the goods or property the subject of the
Credit ("property") purporting to be represented by
the relative documents, for any difference in
character, quality, quantity, condition or value of
the property from that expressed in such documents,
for the validity, sufficiency or genuineness of
documents even if such documents should in fact prove
to be in any or all respects invalid, insufficient,
fraudulent or forged, for the time, place or manner
in which shipment is made, for partial or incomplete
shipment or failure or omission to ship any or all of
the property, for the character, adequacy, validity
or genuineness of any insurance, for the solvency or
responsibility of any insurer, or for any other risk
connected with insurance, for any deviation from
instructions, delay, default or fraud by the shipper
or anyone else in connection with the property or the
shipping thereof, for the solvency, responsibility or
relationship to the property of any party issuing any
documents in connection with the property, for delay
in arrival or failure to arrive of either the
property or any of the documents relating thereto,
for delay in giving or failure to give notice of
arrival or any other notice, for any breach of
contract between the shippers or vendors and me/us,
for failure of any draft to bear any reference or
adequate reference to the relevant Credit or failure
of documents to accompany any draft at negotiation or
failure of any person to send forward documents apart
from drafts as required by the terms of the Credit,
each of which provisions if contained in the Credit
itself may be waived by the Bank, or for errors,
omissions, interruptions or delays in transmission or
delivery of any messages by mail, cable, telegraph,
wireless or otherwise nor shall the Bank be
responsible for any error, neglect or default of any
of its agents and none of the above shall affect or
prevent the vesting of any of the Bank's right or
powers hereunder. I/We further agree that any action
taken by or omitted to be taken by the Bank or by any
of its agents under or in connection with the Credits
or the relative drafts, documents or property shall
be binding on me/us and shall not put the Bank or any
of its agents under any resulting liability to me/us.
(E) I/We agree to procure promptly any necessary import
and export or other licences for the import or export
or shipping of the property and to comply with all
foreign and domestic governmental regulations in
regard to the shipment of the property or the
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financing thereof and to furnish such certificates in
that respect as the Bank may at any time require.
(F) Without prejudice to the provisions of
paragraphs 5(1) and 6(A) below, if at my/our request
the Bank or any of its agents or correspondents
countersigns or issues any guarantee or indemnity
covering discrepancies between the documents actually
presented under the terms of a Credit and the
relative terms of such Credit I/we hereby
unconditionally and irrevocably agree:-
(i) to pay to the Bank forthwith on demand all
moneys and liabilities whatsoever which may be
claimed or demanded from the Bank and/or its
agents and/or its correspondents or which the
Bank and/or its agents and/or its correspondents
may be called to pay or shall pay or incur by
reason of having countersigned or issued such
guarantee or indemnity; and
(ii) to indemnity the Bank against all actions
claims, demands, liabilities, damages, losses,
costs and expenses of whatever nature that may be
incurred, suffered, sustained or paid by the
Bank and/or its agents and/or its correspondents
in connection with or arising out of such
guarantee or indemnity or by reason of the Bank
having negotiated bill(s) notwithstanding the
discrepancies in the documents.
(G) If the Bank makes any payment at my/our request in
negotiating or purchasing from me/any one or more of
us or any other person any document or draft in
respect of a letter of credit or an authority to pay
and discrepancies exist between any document or draft
presented to the Bank and the terms of the applicable
letter of credit or authority to pay I/we agree to
refund to the Bank on demand, irrespective of when
such discrepancies are discovered, all moneys paid by
the Bank in respect of such document or draft and,
without prejudice to the provisions of
paragraphs 5(I) and 6(A) below, I/we shall indemnify
and hold indemnified the Bank against all actions
claims demands liabilities losses damages costs and
expenses of whatever nature which may result or which
the Bank may suffer incur or sustain in connection
with or arising out of the Bank's action in making
such payment as aforesaid. I/We further agree that
the Bank shall not be liable for any loss damage
expense or delay howsoever caused, whether or not due
to the negligence or default of the Bank or its
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officers or correspondents, in respect of any
negotiation or purchase of documents or drafts as
aforesaid including in particular, but without
limiting the generality of the foregoing, any loss
resulting from payment of a bill or draft being
effected in a currency other than that in which it is
drawn by reason of exchange control restrictions or
other direction of a government or other authority or
suspension of or interference with the means to
effect transmission of the relevant payment.
(H) If the Bank or its agent or correspondent considers
in its discretion that it would be inadvisable to
deliver up the shipping or other documents upon
acceptance of any bill of exchange or draft drawn or
endorsed by me/any one or more of us, the Bank and
its agent and correspondents are hereby authorised to
deliver up such documents as aforesaid only upon
payment of the relevant bill of exchange or draft
notwithstanding that such procedure may be contrary
to my/our previous instructions.
(I) Without prejudice to the provisions of paragraph 5(F)
above and paragraph 6(A) below, if the Bank
countersigns letters of guarantee or letters of
indemnity covering the release of goods without
production to the shipping companies and/or their
agents and/or forwarding agents of the relevant bills
of lading or other documents of title, I/we shall
indemnify and hold the Bank harmless from and against
any and all consequence which may arise or result
therefrom. I/We further undertake that I/we shall
endeavor to obtain the bills of lading and/or other
documents of title to the said goods or produce that
upon their receipt I/we shall procure the release of
the Bank from the guarantee or indemnity and return
the relevant document to the Bank for cancellation.
I/We further authorize the Bank to endorse in my/our
name(s) all relative bills of lading so that such
bills of lading may be delivered direct by the Bank
to the shipping companies and/or their agents and/or
forwarding agents aforesaid and in order to give
effect to this, in the case of shipments under
letters of credit, I/we undertake to disregard all
discrepancies (if any) between the shipping documents
received and those called for by the relative letter
of credit and to accept all such shipping documents
as if they were all the documents and the only
documents called for by the relative letter(s) of
credit.
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(J) Where the Bank makes any collection on any of my/our
document or documents and drafts upon my/our request,
I/we agree that if credit has been given by the Bank
for any such document or documents and drafts such
credit is conditional and is subject to collection
and receipt by the Bank of full payment of such
document or documents and drafts and in the absence
of such collection and receipt by the Bank, I/we
agree, upon the Bank's demand, to reimburse the Bank
for the amount so advanced. I/We further agree that
in receiving any items for deposit or collection the
Bank assumes no responsibility beyond the exercise of
due care. All items which are credited are so
credited subject to actual payment in cash and the
Bank will not be liable in any way whatever for the
default or negligence of its duly selected
correspondents for any losses in transit and each
such correspondent shall not be liable except for its
own negligence. The Bank and any of its agents may
accept a draft or credit as conditional payment in
lieu of cash settlement of any obligation but my/our
obligation to the Bank will not be discharged until
the Bank has duly received payment on such draft or
credit.
6. Counter Indemnity
(A) I/We hereby unconditionally and irrevocably agree to
indemnify the Bank against all actions claim
demands liabilities losses damages costs and
expenses of whatever nature which may result or which
the Bank may suffer incur or sustain in connection
with or arising in any way whatsoever as a
consequence of the Bank at my/our request or on
my/our behalf giving any guarantee or indemnity or
opening any documentary or other credit or otherwise
incurring or assuming any obligation (together
"Guarantees") and to pay to the Bank forthwith all
moneys and liabilities whatsoever which may from time
to time be claimed or demanded from the Bank or which
the Bank shall pay or become liable to pay or suffer
or incur under or by reason of or in connection with
the Guarantees.
(B) I/We hereby irrevocably authorise the Bank without
making prior demand to debit my account/the account
of any one or more of us with any moneys from time to
time payable hereunder and in the event of a debit
balance resulting to charge interest thereon to date
of repayment (notwithstanding any demand or any
judgement obtained by the Bank or any other matter
whatsoever) at such rate as may from time to time be
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payable on such account in accordance with
paragraph 2 above.
(C) I/We hereby irrevocably authorise the Bank to pay
immediately any amounts demanded from the Bank or
which the Bank from time to time becomes liable to
pay under or by reason of the Guarantees without any
reference to or further authority from me/us and
without being under any duty to enquire whether any
claims or demands on the Bank are properly made
notwithstanding that I/any of us may dispute the
validity of any such claim or demand and I/we shall
accept any claim or demand on the Bank as conclusive
evidence that the Bank was liable to pay and any
payment which the Bank makes purporting to be in
accordance with the Guarantees as binding upon me/us.
(D) I/We agree that any step taken by the Bank in good
faith under or in connection with the Guarantees
shall be binding on me/us and shall not place the
Bank under any liability to me/us.
(E) I/We further agree that the Bank may at any time
without prior reference to me/us determine the
Guarantees or any of them or reduce the liability of
the Bank thereunder.
(F) This counter indemnity shall not be in any way
discharged or diminished nor shall the liability of
me/any of us be affected by reason of any other
indemnity assurance guarantee lien bill note charge
mortgage security payment or other rights being or
becoming wholly or in part invalid defective or
unenforceable or otherwise failing to be perfected or
enforced or being avoided on any ground whatsoever or
by reason of the Bank from time to time without the
knowledge or consent of me/us varying realising or
releasing any of the same or granting any time
indulgence of concession or compounding with any
person or concurring in accepting or varying any
compromise arrangement or settlement or omitting to
claim or enforce payment or determining varying
reducing or extending the terms of the Guarantees or
any of them or by anything done or omitted which but
for this provision might operate to exonerate me/us.
(G) I/We waive all rights of subrogation and agree not to
claim any set-off or counter claim against any other
person liable or to claim or prove in competition
with the Bank in the event of the insolvency of any
such person or to have the benefit of or share in any
indemnity guarantee or security now or hereafter held
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by the Bank until the Bank has been fully indemnified
against all matters referred to in paragraph 6(A)
above. Any security now or hereafter held by or for
me/any one or more of us which extends to any
liability hereunder and all moneys at any time
received in respect thereof shall be held in trust
for the Bank as security for my/our obligations
hereunder. Money received by virtue of this counter
indemnity may be placed to the credit of a suspense
account with a view to preserving the Bank's rights
to prove for the whole of its claim against any other
person liable.
7. Set-Off
The Bank may at any time without notice notwithstanding
any settlement of account or other matter whatsoever
combine or consolidate all or any of my/our then existing
accounts (whether current deposit loan or of any other
nature whatsoever and whether subject to notice or not)
and set-off or transfer any sum standing to the credit of
any one or more such accounts wheresoever situate in or
towards satisfaction of any of my/our liabilities to the
Bank on any other account or in any other respect
whatsoever whether such liabilities be present or future
actual or contingent primary or collateral and several or
joint. Where such combination set-off or transfer
requires the conversion of one currency into another such
conversion shall be calculated at the spot rate of
exchange (as conclusively determined by the Bank)
prevailing in the London Foreign Exchange Market at
11:00 a.m. on the date of the combination set-off or
transfer.
8. Currency Indemnity
(A) If for the purpose of obtaining in any court in any
country it becomes necessary under the laws of such
country to convert into a currency (the "Judgment
Currency") other than Malaysian dollars or other
currency in which my/our obligations under this
Agreement are expressed to be payable (hereinafter
called the "Agreed Currency" an amount due in the
Agreed Currency under or pursuant to this Agreement
then the conversion shall be made, in the discretion
of the Bank, at the rate of exchange prevailing
either on the date of default or on the day before
the day on which judgment is given.
(B) If there is a change in the rate of exchange
prevailing between the date of which conversion is
made for the purposes of any such judgement and the
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date of payment of the amount due the Borrower will
pay such additional amounts as may be necessary to
ensure that the amount paid in the Judgment Currency
when converted at the rate of exchange prevailing on
the date of payment will produce the amount then due
under this Agreement in the Agreed Currency.
(C) Any amount due from me/us under this paragraph shall
be due as a separate debt and shall not be affected
by judgment being obtained for any other sums due
under or in respect of this Agreement.
(D) "The term "rate of exchange" in this paragraph 8
means the spot rate at which the Bank in accordance
with its normal practice is able on the relevant date
to purchase the Agreed Currency with the Judgment
Currency and includes any premium and costs of
exchange payable in connection with such purchase."
9. Continuing Security
(A) The security constituted by this Agreement shall be a
continuing security notwithstanding any settlement of
account or other matter whatsoever and is in addition
to and shall not merge or otherwise prejudice or
affect the security created by any deposit of
documents or any guarantee lien pledge bill note
mortgage or other security now or hereafter held by
the Bank or any right or remedy of the Bank in
respect of the same and shall not be in any way
prejudiced or affected thereby or by the invalidity
thereof or by the Bank now or hereafter dealing with
exchanging releasing modifying or abstaining from
perfecting or enforcing any of the same or any rights
which it may now or hereafter have or giving time for
payment or indulgence or compounding with any other
person liable.
(B) All moneys received by the Bank from me/any one or
more of us or any other person may be applied by the
Bank to such account or liability of mine/ours as the
Bank in its absolute discretion may from time to time
conclusively determine.
(C) Nothing contained in this Agreement shall restrict
the operation of any general lien right of set-off or
other rights or remedies whatsoever which the Bank as
bankers may have whether by law or otherwise and this
Agreement is in addition to any other indemnity
guarantee lien bill note mortgage or other security
right or remedy now or hereafter held by or available
to the Bank.
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10. Execution of documents, power of attorney
(A) I/We shall if and whenever so required by the Bank
execute such further legal or other mortgages charges
or assignments as the Bank shall require over all or
any of the Securities (including any substituted
securities and any vendor's lien) and/or any produce
or goods hypothecated to the Bank pursuant to this
Agreement and any other transfers or documents the
Bank may from time to time require for perfecting its
title to the same or for vesting or enabling it to
vest the same in itself or its nominee or in any
purchaser to secure all moneys obligations and
liabilities hereby covenanted to be paid or otherwise
hereby secured such further mortgages charges or
assignments to be prepared by or on behalf of the
Bank at my/our cost and to contain a power of sale
and such other provisions for the benefit of the Bank
as the Bank may reasonably require.
(B) I/We by way of security hereby irrevocably appoint
the Bank and the persons deriving title under it
jointly and also severally to be my/our Attorney to
insert the name of the Bank or its nominees or of any
purchaser or to make any other alteration or addition
in any transfers or other documents which the Bank
may require for perfecting its title to or for
vesting the Securities or any documents relating to
any produce and goods from time to time hypothecated
to the Bank pursuant to this Agreement in the Bank or
its nominee or in any purchaser and to make any
alteration or addition to the Securities comprised
therein or any such documents aforesaid or any other
alteration or addition thereto and to redeliver the
same thereafter and otherwise generally for it and in
its name and on its behalf and as its act and deed or
otherwise to execute seal and deliver and otherwise
perfect and do any such transfers or other documents
and any legal or other mortgage charge or assignment
over the Securities or any such documents aforesaid
required by the Bank and all such deeds assurances
agreements instruments acts and things which may be
required for the full exercise of all or any of the
powers hereby confeerred [sic] or which may be deemed
proper on or in connection with any sale or disposition
of any of the Securities or of any of the produce and
goods represented by the documents aforesaid by the
Bank or its nominees or any of the purposes
aforesaid. I/We hereby ratify and confirm and agree
to ratify and confirm any instrument act or thing
which any such attorney may execute or do.
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(C) The Bank shall have the right to require me/us to
transfer all or any of the Securities or all or any
of the other documents from time to time held by or
indorsed to the Bank hereunder to such nominees or
agents wheresoever situate as the Bank may select and
to hold all or any of such Securities or other
documents aforesaid in any branch of the Bank or with
any correspondents or other agents whether in
Malaysia or overseas and all the Securities and other
such documents shall be held at my/our expense risk
and responsibility.
11. Waivers, Remedies
(A) Any waiver by the Bank of any event of default or any
breach of any of the warranties covenants terms or
conditions contained herein or other relaxation or
indulgence granted at any time by the Bank to me/any
one or more of us shall without any express
reservation to that effect by the Bank be deemed to
be without prejudice to and shall not affect the
exercise at any time thereafter by the Bank of all or
any of its rights and remedies hereunder as though no
such waiver had been made or relaxation or indulgence
granted.
(B) No failure or delay on the part of the Bank to
exercise any power or right under this Agreement
shall operate as a waiver thereof, nor shall any
single or partial exercise by the Bank of any right
hereunder preclude any other or further exercise
thereof or the exercise of any other right. The
remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.
12. No Responsibility
(A) The Bank shall not be responsible for any loss or
damage or depreciation or diminution in value of any
of the goods and produce from time to time
hypothecated to the Bank hereunder or of any of the
Securities or of any other document from time to time
lodged with the Bank or its agent or nominee (whether
for safe custody security or otherwise).
(B) If owing to exchange control restrictions or other
circumstances beyond the control of the Bank payment
of a bill or other instrument on my/our behalf or for
my/our account is effected in a currency other than
in which it is drawn or expressed to be payable the
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Bank shall not be responsible for any foreign
exchange loss which arises as a result thereof.
13. Information
I/We undertake to deliver to the Bank such financial or
other information concerning my/our affairs, audited by
auditors satisfactory to the Bank as the Bank may from
time to time reasonably require and in particular but
without limiting the generality of the foregoing, I/we
undertake to notify the Bank forthwith of any change in
the character, extent or nature of my/our business.
14. Joint and several liability
Where there is more than one of the undersigned the
obligations and undertakings of the undersigned herein
contained are joint and several and shall be construed
accordingly and none of the undersigned shall be entitled
to any of the rights or remedies legal or equitable of a
surety as regards the liabilities of the others of them.
Each of the undersigned agrees and consents to be bound by
this Agreement notwithstanding that any others who were
intended to sign or to be bound by these presents may not
do so or be effectually bound hereby and notwithstanding
that this Agreement may be invalid or unenforceable
against any one or more of the undersigned whether or not
the deficiency is known to the Bank. The Bank shall be at
liberty to release compound with or otherwise vary or
agree to vary the liability of, or to grant time or
indulgence to, or make other arrangements with, any one or
more of the undersigned without prejudicing or affecting
its rights and remedies against the other or others.
Where this Agreement is signed on behalf of a firm, all
agreements undertakings and liabilities shall be binding
both on the present partners and on the persons from time
to time carrying on business in the name of such firm or
under the name in which the business of such firm may from
time to time be continued.
15. Notices
Any notice or demand for payment by the Bank hereunder
shall without prejudice to any other effective mode of
making the same be deemed to have been sufficiently made
hereunder on me/us if sent by post to my/our last known
place of business or (in the case of a limited company)
its Registered Office and shall be assumed to have reached
the addressee within 24 hours of posting and in proving
such service it shall be sufficient to prove that the
notice or demand was properly addressed and posted. Any
such notice or demand or any certificate as to the amount
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at any time secured hereby shall be conclusive and binding
upon me/us if signed by an officer of the Bank.
16. Governing Law
This Agreement and all contracts or other transactions
arising out of this Agreement shall (unless otherwise
expressly provided in such contracts or transactions) be
governed by and interpreted in accordance with the laws of
Malaysia.
17. Interpretation
In this Agreement unless the context otherwise requires,
the singular shall include the plural number also and vice
versa. Paragraph headings are inserted for convenience of
reference only and shall not affect the interpretation of
this Agreement.
Dated 19
SIGNED by
)
) -----------------------------
)
)
in the presence of:
*SIGNED BY /s/ Dr. John S. Foster
--------------------------------
Dr. John S. Foster
Managing Director
/s/ Muhammad Nasir Haji Hanifah
--------------------------------
Muhammad Nasir Haji Hanifah
(Finance Director)
/s/ [Initials]
---------------
Secretary
for and on behalf of APPLIED MAGNETICS (M) SDN. BHD.
PLOT 201, BAYAN LEPAS FREE TRADE ZONE
11900 PENANG, MALAYSIA
in the presence of:
*NB If executed by a limited company, a certified copy of the
resolution of the Board of Directors of the company
approving the execution of this Agreement (such resolution
to be in Bank's standard form) must be attached hereto.
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EXHIBIT 10(c)
-------------
GUARANTEE
To: Arab-Malaysian Bank Berhad Date: August 14, 1996
---------------
1. In consideration of Arab-Malaysian Bank Berhad (hereinafter called "the
Bank") which expression shall where the context so admits include the Bank's
successors and assigns) making or continuing advances or otherwise giving credit
or affording banking facilities for as long as the Bank may think fit or
granting time to Applied Magnetics (M) SDN BHD of Plot 201, Phase 23, Bayan
-----------------------------------------------------------
Lepas Free Trade Zone, 11900 Bayan Lepas, Penang
- -------------------------------------------------------------------------------
(hereinafter called "the Customer") at my/our request, I/we hereby jointly and
severally guarantee to the Bank the payment of an undertake on demand being made
to me/us or any of us by the Bank to pay and satisfy to the Bank forthwith all
money or liability whether actual, certain or contingent now or hereafter owing
or incurred or due and unpaid to the Bank anywhere on any account whatsoever
whether from the Customer solely or from the Customer jointly with any other
person or persons or from any firm in which the Customer may be a partner
including the amount of notes or bills discounted or paid and other loans,
credits or advances made to or for the accommodation or at the request either of
the Customer solely or jointly with any other person and in whatever name, style
or firm or of any such firm as aforesaid or for any money for which the Customer
may be liable as principal or surety or in any other way whatsoever including:-
(a) in the case of the death, bankruptcy, winding-up or liquidation of
the Customer all sums which would at any time have been owing to the
Bank by the Customer if such death had occurred or such bankruptcy
or winding-up or liquidation had commenced respectively at the time
when the Bank receives actual notice thereof and notwithstanding
such death, bankruptcy, winding-up or liquidation;
(b) all monies obtained from or liabilities incurred to the Bank
notwithstanding that the borrowing or incurring of such liabilities
may be invalid or ultra vires or in excess of the powers of the
Customer or of any director, attorney, agent or other person
purporting to borrow or act on behalf of the Customer and
notwithstanding any other irregularity in such borrowing or
incurring such liabilities;
(c) in the event of the discontinuance by any means of this guarantee
all cheques, drafts, bills, notes and negotiable instruments drawn
by or for the account of the Customer on the Bank or its agents and
purporting to be dated on or before the date when such
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discontinuance becomes known to the Bank or its agents although
presented to or paid by the Bank or them after that date and all
liabilities of the Customer to the Bank at such date whether certain
or contingent and whether payable forthwith or at some future time or
times and also all credits then established by the Bank for the
Customer;
together with the customary rate(s) of interest on all such debts and
liabilities aforesaid to the date of payment, commission, banking charges, legal
and other costs, charges and expenses occasioned by or incident to this or any
other security held by or offered to the Bank for the same indebtedness or by or
to the enforcement of any such security.
2. This guarantee shall not be considered as satisfied by any intermediate
payment or satisfaction of the whole or any part of any sum or sums of money
owing as aforesaid but shall extend to cover any sum or sums of money which
shall for the time being constitute the balance due from the Customer to the
Bank upon any such account as hereinbefore mentioned and shall be a continuing
security binding on (as the case may be) (i) (in the case of the undersigned
being of one person only) me/my executors, administrators and legal
representatives until the expiration of 3 calendar months after I or in the case
of my dying or becoming under disability or mental disorder my executors,
administrators or legal representatives shall have given to the Bank notice in
writing to discontinue and determine it or (ii) (in the case of the undersigned
consisting or two or more persons) each of us and his executors administrators
or legal representatives and shall not be determined except at the expiration of
3 calendar months' written notice to the Bank by each of us of our intention so
to do and in the event of all or any of us dying or becoming under disability or
mental disorder the liability of our legal personal representatives and of our
estates shall continue until the expiration of 3 calendar months' written notice
to determine this guarantee given to the Bank by each of us and by the legal
personal representatives of the person or persons so dying or under disability
or mental disorder or (iii) (in the case of the undersigned being a limited
company) us/our successors or assigns until the expiration of 3 calendar months
after we/our successors or assigns shall have given to the Bank notice in
writing to discontinue and determine it.
3. Notwithstanding that the Customer is a committee or association or
other unincorporated body which has no legal existence or which is under no
legal liability to discharge obligations undertaken or purported to be
undertaken by it or on its behalf this guarantee shall be valid and binding on
me/us and have effect as through I/we were joint and several principal debtors.
4. In the event of the dissolution of any firm whose account is hereby
secured this guarantee shall apply to all money borrowed and liabilities
incurred in the firm name until receipt by the Bank of actual notice of such
dissolution. If however the dissolution be by reason only of the
-2-
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<PAGE>
introduction of a further partner or partners into the firm the guarantee shall
continue and in addition to the debts and liabilities of the old firm shall
apply to all money and liabilities due or incurred to the Bank from or by the
new firm thereby constituted as though there had been no change in the firm as
previously constituted.
5. The Bank may at all times without prejudice to this guarantee and
without discharging or in any way affecting my/our liabilities hereunder:-
(a) determine, vary or increase any credit to the Customer;
(b) grant to the Customer or to any other person any time or indulgence;
(c) renew any bills, notes or other negotiable securities;
(d) deal with, exchange, release, modify or abstain from perfecting or
enforcing any securities or other guarantees or rights which the
Bank may now or hereafter have from or against the Customer or any
other person;
(e) compound with the Customer or with any other person or guarantor.
6. The liability of me/any of us hereunder shall not be affected by any
failure by the Bank to take any security or by any invalidity of any security
taken or by any existing or future agreement by the Bank as to the application
of any advances made or to be made to the Customer.
7. This present guarantee shall be construed and take effect as a
guarantee of the whole and every part of the principal money and interest owing
and to become owing as aforesaid and accordingly I am not/any of us is not to be
entitled as against the Bank to any right of proof in the bankruptcy or
insolvency of the Customer or other right of a surety discharging his liability
in respect of the principal debt unless and until the whole of the principal
money and interest and other monies or liabilities secured herein shall have
first been completely discharged and satisfied. And further for the purpose of
enabling the Bank to sue the Customer or prove against his estate for the whole
of the money owing as aforesaid or to preserve intact the liability of any other
part the Bank may at any time and place keep for such time as it may think
prudent any money received, recovered or realised hereunder to and at a separate
or suspense account to the credit either of me/any of us or of such other person
or persons or transaction if any as it shall think fit without any intermediate
obligation on the part of the Bank to apply the same or any part thereof in or
towards the discharge of the money owing as aforesaid or any intermediate right
on my/any of our part to sue the Customer or prove against his estate in
-3-
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<PAGE>
competition with or so as to diminish any dividend or other advantage that
would or might come to the Bank or to treat the liability of the Customer as
diminished.
8. Until all money and liabilities due or incurred by the Customer to the
Bank shall have been paid or discharged I/we will not by any means or on any
other ground claim any set-off or counter-claim against the Customer in respect
of any liability on the part of me/us or any of us to the Customer or claim or
prove in competition with the Bank in respect of any payment by me/any of us
hereunder or be entitled to claim or have the benefit of any set-off,
counter-claim or proof against or dividend composition or payment by the
Customer or his or their estate or the benefit of any other security which the
Bank may now or hereafter hold for any money or liabilities due or incurred by
the Customer to the Bank or to have any share therein.
9. Any security now or hereunder held by or for me/us or any of us from
the Customer in respect of the liability of me/us or any of us hereunder shall
be held in trust for the Bank and as security for my/our liability hereunder.
10. Any notice or demand hereunder shall be deemed to have been
sufficiently given if sent by prepaid letter post to the address in Malaysia
last known to the Bank or stated hereon of me/us or the one of us to whom or to
whose personal representatives such notice is given and shall be assumed to have
reached the addressee in the course of post. In case of my death/the death of
any of us and until the Bank receives notice in writing of the grant of probate
of his will or of administration of his estate any notice or demand by the Bank
sent by post as aforesaid addressed to me/such one of us or his personal
representatives at his address last known to the Bank or stated hereon shall for
all purposes of this guarantee be deemed a sufficient notice or demand by the
Bank to me/such one of us and his personal representatives and shall be as
effectual as if he were still living.
11. It is agreed that a copy of the account of the Customer contained in
the Bank's book of account or of the account for the preceding six months if the
account shall have extended beyond that period signed by any officer of the Bank
shall be conclusive evidence against me/us of the amount for the time being due
to the Bank from the Customer.
12. This guarantee shall be in addition to any other guarantee or other
security for the Customer which the Bank may now or hereafter hold whether from
me/us or any of us or otherwise and on discharge by payment or otherwise shall
remain the Bank's property.
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<PAGE>
13. This guarantee shall be enforceable notwithstanding any change in the
name of the Bank or any change in the constitution of the Bank, its successors
or assigns or by its absorption of or by its amalgamation with any other bank or
banks.
14. The Bank shall be at liberty to release or discharge any of us/me from
the obligations of this guarantee or to accept any composition from or make any
other arrangements with me/any of us without thereby prejudicing or affecting
the Bank's rights and remedies against the other or others of us.
15. If the name of the Customer hereinbefore inserted is that either of a
firm or of a limited company or other corporation or of any committee or
association or other unincorporated body any of the provisions hereinbefore
contained which are primarily and liberally applicable to the case of a single
and individual Customer only shall be construed and take effect so as to give
the Bank hereunder a guarantee for the money owing from that firm and every
member thereof or from that limited company or corporation or committee or
association or other unincorporated body as identical or analogous as may be
with or to that which would have been given for the money owing from a single
individual if the Customer had been a single individual and any money shall be
deemed to be so owing notwithstanding any defect, informality or insufficiency
in the borrowing powers of the Customer or in the exercise thereof which might
be a defence as between the Customer and the Bank. In the case of a firm this
guarantee shall be deemed to be a continuing guarantee of all money owing on any
such account as hereinbefore mentioned from the person or persons carrying on
business in the name of or in succession to the firm or from any one or more
such persons although by death, retirement or admission of partners or other
causes the constitution of the firm may have been in part or wholly varied. In
the case of a limited company or other corporation any reference to bankruptcy
shall be deemed to be a reference to liquidation or other analogous proceeding
and the money owing as aforesaid and hereby guaranteed shall be deemed to
include any money owing in respect of debentures or debenture stock of the
limited company or other corporation held by or on behalf of the Bank.
16. I/we hereby agree that all sums of money which may not be recoverable
from me/us on the footing of a guarantee by reason of any legal limitation,
disability or incapacity on or of the Customer shall nevertheless be recoverable
from me/us or any of us as joint and several principal debtors.
17. No conveyance, assignment, assurance, security or payment which may be
avoided under any enactments relating to bankruptcy or under Section 293 of the
Companies Act 1965 or any statutory modification or re-enactment thereof and no
release settlement or discharge which may have been given or made on the faith
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<PAGE>
or any such conveyance, assignment, assurance, security or payment shall
prejudice or affect the Bank's right to recover from me/us or any of us to the
full extent of this guarantee as if such conveyance, assignment, assurance,
security, payment, release, settlement or discharge (as the case may be) had
never been granted, given or made.
18. Entirely without prejudice to clauses 7 and 8 hereof, in the event of
this guarantee being determined either by notice under clause 2 hereof or by
demand in writing by the Bank, it shall be lawful for the Bank to continue the
account with the Customer notwithstanding such determination and the liability
of me/us or any of us or our estate respectively for the amount due from the
Customer at the date when the guarantee is so determined shall remain
notwithstanding any subsequent payment into or out of the account by or on
behalf of the Customer.
19. The Bank shall so long as any money remains owing hereunder have a
lien therefor on all money now or hereafter standing to my/our credit or the
credit of any of us with the Bank on any current or other account(s) and the
Bank may at any time and without notice to me/us or any of us combine or
consolidate all or any of my/our or any of our account(s) or the account(s) of
any of us whether current deposit or otherwise with my/our liabilities or the
liabilities of any of us to the Bank hereunder and set off or transfer any sum
or sums standing to the credit of any one or more of such account(s) in or
towards satisfaction of any of my/our liabilities or the liabilities of any of
us to the Bank hereunder or on any other account or in other respect whether
such liabilities be actual or contingent, primary or collateral and several or
joint and may retain as security for the discharge of my/our liabilities or the
liabilities of any of us hereunder any stocks, shares or other marketable
securities or negotiable instruments and property belonging to me/us or any of
us whether held for safe custody or otherwise.
20. This guarantee shall be governed and construed in accordance with
the laws of the States of Malaysia.
21. I/we or each of us undertake at my/our own costs and expenses to sign,
execute and deliver any transfers, deeds or other documents which the Bank may
require me/us or any of us to sign, execute and deliver for perfecting the
Bank's title to any securities (if any) or any part thereof deposited subject
hereto or for safe custody whether now or hereafter and for vesting in or
delivering the same to the Bank or the Bank's nominees or any purchasers from
the Bank and also to execute and sign all powers of attorney that the Bank may
require for completing or perfecting the Bank's title to any securities
deposited subject hereto or for safe custody whether now or hereafter or for
vesting or enabling the Bank to vest the same in the Bank or the Bank's nominees
or in any purchaser or purchasers.
-6-
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22. In this guarantee:-
(a) each and every undertaking and liability of each signatory hereto,
if more than one, shall be joint and several on their part and be
construed accordingly;
(b) the liabilities and obligations of the Customer if more than one,
shall be deemed to be joint and several on their part and be
construed accordingly;
(c) unless the context requires otherwise:
(i) the singular shall include the plural and vice versa;
(ii) the masculine shall include the feminine and vice versa;
(iii) references to any person, including signatory or signatories
hereto, shall mean and include any person or persons liable
hereunder or any one or more of them, including all the
partners in the firm, the personal representatives of any
individual, and the committee receiver or other person lawfully
acting on behalf of any such signatory, provided that no
personal liability shall attach to any duly authorised agent
or attorney acting as such;
(iv) the expression "this guarantee" shall mean and extend to every
separate and independent stipulation contained herein;
(v) any liberty or power which may be exercised or any
determination which may be made hereunder by the Bank may be
exercised or made in the absolute and unfettered discretion of
the Bank which shall not be under any obligation to give
reasons therefor;
(vi) references to any statutory provision shall be deemed to mean
and to include a reference to any modification or re-enactment
thereof for the time being in force; and
(vii) the expression "person" shall include limited company or
corporation and vice versa.
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<PAGE>
Name(s) & Signature(s) of GUARANTOR(S)
--------------------------------------
Occupation &
Passport or
Name I/C No. Address Signature
- ---- ------- ------- ---------
Applied Magnetics
Corporation, USA Chairman & CEO 75 Robin Hill Rd. /s/Craig D. Crisman
Goleta, California -------------------
93117 Craig D. Crisman
Corporate Controller /s/Peter T. Altavilla
& Secretary -----------------------
Peter T. Altavilla
WITNESS to the signatures of the Guarantors:-
Name: Bernice Williams
Address: 75 Robin Hill Rd.
Goleta, California 93117
/s/ Bernice Williams
- ----------------------------------
Notary Public
N.B. If executed by a limited company, the Bank's standard resolution form
must be attached.
-8-
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<PAGE>
State of California
County of Santa Barbara
On January 21, 1997 before me, Bernice Williams, Notary Public
personally appeared Craig D. Crisman and Peter T. Altavilla, personally known to
me to be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the persons, or the entity upon
behalf of which the persons acted, executed the instrument.
WITNESS my hand and office seal.
/s/ Bernice Williams
- ---------------------------
SIGNATURE OF NOTARY
[Seal]
BERNICE WILLIAMS
COMM. # 993654
Notary Public - California
SANTA BARBARA COUNTY
My Comm. Expires MAY 14, 1997
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<PAGE>
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL GUARANTEE
-----------------------------------
[X] CORPORATE OFFICER TITLE OR TYPE OF DOCUMENT
Chairman, CEO & Corporate Controller & Secretary
- -----------------------------------------------------
TITLE(S) 3
---------------------------------
NUMBER OF PAGES
[ ] PARTNER(S) [ ] LIMITED
[ ] GENERAL August 14, 1996
---------------------------------
DATE OF DOCUMENT
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER: ___________________
__________________________
NO OTHER SIGNERS
------------------------------------
SIGNER IS REPRESENTING: SIGNER(S) OTHER THAN NAMED ABOVE
NAME OF PERSON(S) OR ENTITY(IES):
___________________________________
___________________________________
-10-
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<PAGE>
EXHIBIT 10(d)
-------------
BHL BANK
(Company No. 1147-M)
Ban Hin Lee Bank Berhad
(Incorporated in Malaysia)
PRIVATE & CONFIDENTIAL
AZ/KC/96/APPLIED MAGNETICS
27 September 1996
The Directors
Applied Magnetics (M) Sdn Bhd
Plot 201,
Bayan Lepas FIZ-Phase 3,
11900 Penang
Dear Sirs,
RE: BANKING FACILITIES
Interest/
Commission
Rate/Period of
Facilities Limit Financing
---------- ----- ---------
i. OD/LC/ TR/USD RM20,000,000-00
TR/BA/TDG/LBEP/
FBEP/LBNLC/FBNL
C/BG
US Dollar Trust Financing in US
Receipt (USD TR) Dollars:
SIBOR + 1.5%
p.a.
Maximum tenor
120 days.
Foreign Bills Financing in
Negotiated Ringgit:
under As per the
Letter of LBNLC rate.
Credit Financing in
(FBNLC) foreign
currency:
SIBOR + 1.5%
p.a.
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<PAGE>
ii. Foreign RM30,000,000-00
Exchange
Forward
Contract
Facility
(FOREX)
iii. Post-shipment RM10,000,000-00
ECR/BA/LBEP/
FBEP/LBNLC/
FBNLC
Foreign Bills Financing in
Negotiated Ringgit:
under Letter of As per the
Credit (FBNLC) LBNLC rate.
Financing in
Foreign
Currency:
SIBOR + 1.5%
p.a.
We refer to the above matter.
As requested, we are pleased to advise that the Bank has agreed
to change the interest rate for the USD TR and FBNLC facilities
to SIBOR + 1.5% p.a.
Our current Base Lending Rate (BLR) is 9.20% per annum.
All other terms and conditions remain unchanged as per Letter of
Offer dated 6 August 1996.
Servicing Branch: Ban Hin Lee Bank Berhad
90 Jalan Mayang Pasire
Bandar Bayan Baru
11950 Bayan Lepas
Penang
Please confirm your acceptance of the above by signing and
returning the duplicate copy of this letter to us.
Yours faithfully,
for Bam Hin Lee Bank Berhad
Bayan Baru Branch
/s/ Ahmad Zulaime Bin Mohd Zain
--------------------------------
Ahmad Zulaime Bin Mohd Zain
Manager
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<PAGE>
Confirmed
/s/Dr. John S. Foster /s/Muhammad Nasir Haji Hanifah
- ---------------------- -------------------------------
Dr. John S. Foster Muhammad Nasir Haji Hanifah
Managing Director (Finance Director)
29/10/96
- ------------------------------- --------------------
Signature(s) & Company's stamp Date
APPLIED MAGNETICS (M) SDN,BHD
Plot 201, Bayan Lepas Free Trade Zone
11900 Penang, Malaysia.
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<PAGE>
GET/AZ/HYT/96/APPLIED MAGNETICS [BHL BANK LOGO]
6 August 1996
The Directors Ban Hin Lee Bank Berhad
Applied Magnetics (M) Sdn Bhd (Incorporated in Malaysia)
Plot 201,
Bayan Lepas FIZ-Phase 3,
11900 Penang
Dear Sirs/Madam: PRIVATE & CONFIDENTIAL
RE: BANKING FACILITIES
- ------------------------------------------------------------------------------
We are pleased to advise that the Bank has agreed to grant you
the following facilities subject to your acceptance of the
following salient terms and conditions:-
Borrower : Applied Magnetics (M) Sdn Bhd
Plot 201
Bayan Lepas FIZ-Phase 3
11900 Penang
Lender : Ban Hin Lee Bank Berhad
(The Bank) 43, Beach Street
10300 Penang
Current Account No.: To be opened.
TYPES, LIMIT & INTEREST RATE OF CREDIT FACILITIES
- -------------------------------------------------
Interest/
Commission
Rate/Period of
Facilities Limit Financing
---------- ----- ---------
i. Overdraft RM20,000,000-00 BLR + 1.0% p.a.
(OD)/ Sublimit to
RM100,000-00
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<PAGE>
Letter of Sight LC:
Credit Association of
(LC)/ Banks in Malaysia
(ABM) rate,
currently 0.1% per
month (min RM10)
Usance LC:
Additional 0.1%
per month on
usance period (min
- RM10) of 90 days
Interest on Inward
Bills under LC
(IBLC):
Financing in
Ringgit:
BLR + 1.0% p.a.,
currently 10.35%
p.a.
Financing in
Foreign Currency:
the Bank's foreign
currency interest
rate.
Trust Receipt Financing in
(TR)/ Ringgit:
BLR + 1.0% p.a.,
currently 10.35%
p.a.
Maximum tenor 120
days.
US Dollar Financing in US
Trust Receipt Dollars:
(USD TR)/ the Bank's US
Dollar Base Trust
Receipt rate (USD
BTR) 1.5% p.a.
Maximum tenor 120
days.
Bankers Acceptance
Acceptances Commission @ 1.0%.
(BA)/ interest rate at
the Bank's
prevailing BA
discount rate.
LC term, BA is for
a maximum of 180
days.
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<PAGE>
Transport Commission: ABM
Document rate, currently
Guarantee 0.1% for the first
(TDG)/ 3 months,
additional 0.5%
p.a. from fourth
month onward (min
RM10).
Local Bills of Interest:
Exchange BLR + 1.0% p.a.
Purchased currently 10.35%
(LBEP)/ p.a.
Commission: ABM
rate,
currently 0.1%
flat (min RM5, max
RM500).
Foreign Bills Financing in
of Exchange Ringgit:
Purchased As per the LBEP
(FBEP)/ rate.
Financing in
Foreign currency:
SIBOR + 1.50%
Local Bills Interest:
Negotiated BLR + 1.0% p.a.,
under Letter currently 10.35%
of Credit p.a.
(LBNLC)/ Commission: ABM
rate,
currently 0.1%
flat (min RM5, max
RM500).
Foreign Bills Financing in
Negotiated Ringgit:
under Letter As per the LBNLC
of Credit rate.
(FBNLC)/ Financing in
Foreign currency:
the Bank's foreign
currency interest
rate.
-3-
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<PAGE>
Bank Guarantee Commission: 1.0%
(BG)/ p.a. or min RM50-
00 (on per year
basis whichever is
higher.
Sublimit to
RM500,000-00.
ii. Foreign RM30,000,000-00
Exchange
Forward
Contract
Facility
(FOREX)
iii Post-shipment RM10,000,000-00 RNM ECR funding
. Export Credit rate + 1.0%.
Refinancing Currently 7.70%.
(Post-shipment
ECR)/
Bankers Acceptance
Acceptances Commission @ 1.0%,
(BA)/ interest rate at
the Bank's
prevailing BA
discount rate.
To finance
exports/sales.
Local Bills of Interest:
Exchange BLR + 1.0% p.a.
Purchased currently 10.35%
(LBEP)/ p.a.
Commission: ABM
rate,
currently 0.1%
flat (min RM5, max
RM500).
Foreign Bills Financing in
of Exchange Ringgit:
Purchased As per the LBEP
(FBEP)/ rate.
Financing in
Foreign currency;
SIBOR + 1.50%
-4-
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<PAGE>
Local Bills Interest:
Negotiated BLR + 1.0% p.a.,
under Letter currently 10.35%
of Credit p.a.
(LBNLC) Commission: ABM
rate,
currently 0.1%
flat (min RM5, max
RM500).
Foreign Bills Financing in
Negotiated Ringgit:
under Letter As per the LBNLC
of Credit rate.
(FBNLC). Financing in
Foreign currency:
the Bank's foreign
currency interest
rate.
Our current Base Lending Rate (BLR) is 9.35% per annum.
Bank Negara Malaysia (BNM) funding rate is currently 6.70% per
annum.
For the purpose of this Letter of Offer, the term interest rate
and prescribed rate of interest shall be used interchangeably.
PURPOSE
The banking Facilities shall be used by the Borrower for the
purpose made known herein. In the event the Borrower requires
or proposes or intends to use the facility for any other
purpose, written consent from the Bank must first be obtained
by the Borrower.
OD For working capital.
LC To facilitate payment for purchases of
raw materials, goods and/or
machineries.
TR/USD TR For financing of bills drawn under the
Bank's LC only.
BA To finance purchases and sales of
goods against collection bills/bills
under letters of credit.
TDG To indemnify carriers, shipping
companies and their agents for release
-5-
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<PAGE>
and delivery of goods without
presentation of original bills of
lading or documents of title in
instances where goods arrive before
receipt of documents of title that are
drawn under the Bank's letter of
credit.
LBEP To finance local sales of goods
against outward bills sent through the
bank on collection basis and/or
documents with discrepancies that are
drawn under domestic letters of
credit.
FBEP To finance export of goods against
outward bills sent through the Bank on
collection basis and/or documents with
discrepancies that are drawn under
export letters of credit.
LBNLC To finance local sales of goods
against documents that are drawn
without discrepancies under domestic
letter of credit.
FBNLC To finance export of goods against
documents that are drawn without
discrepancies under export letters of
credit.
BG As security deposit issued to
Government bodies, Semi-Government
bodies and Public Utilities Board.
FOREX To hedge against fluctuations in
exchange rates for trade related
transactions.
SECURITY
The borrower will provide the following security:-
a) Corporate Guarantee from the Borrower's ultimate holding
company, Applied Magnetics Corporation for
RM30,000,000-00.
INTEREST, COMMITMENT FEES, COMMISSION AND CHARGES
INTEREST & COMMISSION RATES
The Base Lending Rate (BLR) including mark-up, interest,
penalty interest on the late payment and commission rates are
-6-
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<PAGE>
subject to the changes by the Bank at the [sic] its absolute discretion
without having to give notice to the Borrower.
INTEREST RATE ON EXCESSES
Should the Bank allow the Borrower to exceed the approved limit
temporarily, such excesses will be charged at Base Lending Rate
plus 4% per annum with the monthly rests or at such rate as
shall be determined by the Bank from time to time.
INTEREST ON LATE PAYMENT
If the Borrower defaults in the payment on the due date of any
one installment of the loan and/or interest to be paid, or
default in the payment of any Bank charges, the Borrower shall
pay an additional interest at the rate of 1% per annum or such
other rate as may be fixed from time to time at the absolute
discretion of the Bank above the prescribed rate on the
installment and/or interest to be paid and/or other sum in
arrears calculated from the due date until the date of payment.
Penalty interest is debited to the account monthly.
INTEREST ON OVERDUE TRUST RECEIPT/BANKERS ACCEPTANCE/IBLC
For overdue Trust Receipts, Bankers Acceptance or IBLC, the
outstanding amount will be charged at Base Lending Rate plus 4%
per annum with monthly rests or at such rate as shall be
determined by the Bank from time to time.
INTEREST ON OVERDUE OVERDRAFT
If a Borrower defaults in payment of any sums due on the
overdraft, interest at the rate of 4% plus Base Lending Rate
per annum with monthly rests or such other rate as shall be
determined from time to time by the Bank shall be charged on
all sums due from the due date to the date of payment.
COMPOUND INTEREST
The rights of the Bank to charge compound interest as herein
conferred shall subsist notwithstanding that the Bank shall
have served on the Borrower(s) any demand for payment of any
sums outstanding to the Bank from the Borrower and
notwithstanding that the banker-customer relationship between
the Bank and the Borrower(s) shall have ceased whether by
termination of the loan/overdraft facility herein or by any
reason whatsoever.
COMMITMENT FEES ON OVERDRAFT
A commitment fee of 1.0% per annum with monthly rests, in
accordance with the rules of the Association of Banks Malaysia,
-7-
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<PAGE>
will be charged on the unutilized portion of the Borrower's
overdraft facility and debited to the Borrower's account
accordingly.
COMMISSION ON BANK GUARANTEE
A commission of 1% per annum subject to a minimum of RM50-00
shall be charged for the full liability period (inclusive of
the claim period) of the Guarantee issued. Where a Guarantee
does not have a claim period, additional commission of 1.0% per
annum shall be charged from the date of expiry to the date of
return of the Guarantee or on receipt of notification from the
beneficiary that the Bank is no longer liable under the
Guarantee.
DOCUMENTATION REQUIREMENTS
i. Acceptance of this Letter of Offer together with an
effective Resolution by the Borrower's Board of Directors
accepting the banking facilities and agreeing to the terms
and conditions stipulated herein.
ii. Completion of all security documents relating to the
provision of above mentioned security as deemed necessary
by the Bank.
DISBURSEMENT/DRAWDOWN
The banking facilities are only available for disbursement or
drawdown upon the following:
a) completion of the legal documentation;
b) Upon the written advice of the Bank to utilize the
facilities.
BANKERS ACCEPTANCE
UTILIZATION
Utilization of BA is subject to the following conditions:-
i. Strict compliance with all guidelines imposed by Bank
Negara Malaysia (BNM) and/or any other regulatory
authorities which may be amended and/or revised from time
to time;
ii. All applications for utilization of the facilities are for
genuine trade transactions only and must be made on the
Bank's standard form. Utilization of the facilities are
-8-
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<PAGE>
subject to the terms and conditions contained in the
Bank's standard application form as well as any written
agreement between the Bank and the customer;
iii. The Bank reserves the right not to extend financing and/or
impose its own conditions in addition to BNM's guidelines
without having to give any reasons thereto.
BANK GUARANTEE
GUARANTEE CALLED UPON
In the event the Bank is called upon to make payment under the
Banker's Guarantee issued (upon request by your goodself), the
Bank is given the authority, irrevocably and unconditionally
(by the Borrower) to honor its obligation to pay under the
Bankers Guarantee, and, in doing so such amounts shall be
immediately due and payable from your goodselves. The Bank is
further hereby authorized to debit the Borrower's account or
accounts or set off any deposit(s) pledged as security at any
of the Bank's Branches with the amount of payment made under or
in respect of the guarantee notwithstanding any instruction not
to pay that the Bank receive from the Borrower.
EXPIRED BANK GUARANTEE
All Bank Guarantees with or without a claim period are to be
returned upon the expiry of claim period, to the Bank for
cancellation.
In the event the Bank Guarantee is not returned to the Bank for
cancellation for any reason whatsoever and the Bank is called
upon to make payment under the Bank Guarantee at any time
thereafter (as before or after the claim period), the Bank is
given the authority irrevocably and unconditionally to pay,
defend, settle or compromise any claim or any actions suits or
proceedings which may be brought against the Bank in respect of
such claim and it is further expressly agreed that the decision
of the Bank to pay, defend, settle or compromise any claim is
at the sole discretion of the Bank.
Any amounts paid by the Bank to a claimant and any expenses,
damages, costs incurred by the Bank in defending such claim
shall forthwith be due and immediately be payable by your
goodselves.
It is expressly agreed that in the event the Bank Guarantee is
not returned to the Bank or cancellation, the Bank shall be
entitled to withhold the release or discharge of any security
held in respect of the Bank Guarantee until such item that the
Bank Guarantee is returned and canceled. In the event of a
claim made as stated in the preceding paragraphs, the Bank
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<PAGE>
reserves the right to withhold the discharge of such security
until the settlement of such claim.
FORWARD FOREIGN EXCHANGE CONTRACT
UTILIZATION
Utilization of the Forward Foreign Exchange Contracts are
subject to the following conditions:-
i. The Forward contracts entered into by the Borrower are to
hedge against fluctuations in exchange rates for genuine
underlying foreign currency denominated trade-related
transactions. There must be strict compliance with the
Malaysian Exchange Control Act 1953 on Dealings in Gold
and Foreign Currency as stated in Exchange Control
Malaysia Notice No. 2 (ECM 2) or any other ECM notice
which may be amended by Bank Negara Malaysia or the
relevant authorities from time to time.
ii. Utilization of the forward foreign exchange contracts are
subject to the terms and conditions contained in the
Bank's standard Agreement and Risk Disclosure Statement
form as well as any written agreement between the Bank and
the Borrower.
THE RIGHTS OF THE BANK
RIGHT TO RECALL FACILITIES
The banking facilities granted herein are subject to review by
the Bank at any time before or after full disbursement and may,
at the absolute discretion of the Bank be varied/freezed/
recalled/terminate or restructured upon such review.
RIGHT TO AMEND TERMS & CONDITIONS
The Bank reserves the right to amend existing terms and
conditions on the above facilities by giving written notice to
the Borrower. All notices given or made, delivered or mailed,
shall be deemed to have been given or made when so delivered or
mailed.
RIGHT TO DEBIT ACCOUNT
The Bank reserves the right to debit the current account of the
Borrower at any of the Bank's Branches in respect of any
interest, fees, charges, disbursements or any amount howsoever
described payable by the Borrower.
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<PAGE>
RIGHT OF DISCLOSURE
The Bank is at liberty to divulge, disclose, reveal and forward
information relating to the Borrower's banking accounts to any
credit bureau or agencies as may be approved or directed by
Bank Negara Malaysia or Association of Banks in Malaysia, or
any authorities having power in that behalf without prior
notice to or consent from the Borrower and without being liable
to the Borrower in any manner whatsoever.
RELATIONSHIP BETWEEN BORROWER & BANK'S EMPLOYEES
The approval and continual utilization of the above facility/
facilities is/are strictly conditional that neither the
Borrower nor the Borrower's managers, shareholders, agents,
guarantors are directly related to any of the Bank's and its
subsidiaries' present or future employees either as parents,
spouses or children. The Bank reserves the right to recall the
entire facility/facilities should the above conditions be not
complied with.
RIGHT OF DISCLOSURE TO GUARANTOR
The Bank is authorized to divulge, disclose, reveal and forward
information relating to the Borrower's banking account to the
guarantor(s).
OTHER TERMS & CONDITIONS
PAYMENT ON DEMAND
Overdraft facility/facilities granted by the Bank is/are
repayable on demand at any time the Bank deems fit.
CONCLUSIVE EVIDENCE
A statement signed by the Bank's authorized signatories as to
the money and liabilities for the time being due or incurred to
the Bank by you should be final and conclusive evidence against
you for all purpose.
LEGAL FEES AND INCIDENTAL FEES/CHARGES
All legal fees and disbursements including the solicitors'
costs and expenses incurred by the Bank arising from or
incidental to the preparation and completion of the security
documents pertaining to these banking facilities shall be for
the account of the Borrower and payable by the Borrower prior
to the release of the facility/facilities notwithstanding the
facilities may be canceled for any reason whatsoever prior to
the Borrower's utilization thereof or if unutilized whether in
part or in whole.
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<PAGE>
If any amounts owing shall be required to be recovered by the
Bank through the process of the law, the Borrower shall pay all
fees & expenses including solicitor's fee (on a client &
solicitor basis) incurred by the Bank in respect of such
collection.
FINANCIAL STATEMENT
A copy of the latest audited Profit & Loss Account and Balance
Sheet of the Borrower shall be given to the Bank within one
month form [sic] date of the auditor's report.
COMPANY/BANKURPTCY SEARCH
A search of the relevant office shall be conducted by the Bank
on the borrower, guarantor, chargor, pledgor and all related
parties as and when required, and all fees/sums/expenses shall
be for the Borrower's account. The Bank reserves the right not
to release or allow drawdown of the facilities pending
confirmation of the search.
BANK NEGARA MALAYSIA (BNM) AND/OR OTHER REGULATORY GUIDELINES
Utilization of the banking facilities are strictly subject to
full compliance with BNM and/or other regulatory guidelines
that may be imposed, amended or revised from time to time.
EXCHANGE CONTROL MALAYSIA
The releases of the banking facilities are strictly subject to
full compliance with the Exchange Control Malaysia Ruling.
Servicing Branch: Ban Hin Lee Bank Berhad
90 Jalan Mayan Pasir
Bandar Bayan Baru
11950 Bayan Lepas
Penang
Telephone: 04-6432532
Manager: Ahmad Zulaime Bin Mohd Zain
Please confirm your acceptance of this Letter of Offer by
signing and returning the duplicate of this Letter within
fourteen (14) days from the date hereof, failing which the Bank
may at its absolute discretion treat the offer as lapsed.
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<PAGE>
This Letter of Offer cancels and supersedes all our previous
Letter of Offer to you.
Yours faithfully,
For BAN HIN LEE BANK BERHAD
/s/ Dato' Goh Eng Toon
- --------------------------------
Dato' Goh Eng Toon
Chairman & Chief Executive
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<PAGE>
We hereby covenant and declare that we have been advised by the
Bank to seek Independent Legal Advise on the effects and
consequences of us signing this Letter of Offer and acceptance
and agree that the provisions contained herein shall be binding
on us, regardless of whether we have resorted to any such
advice.
Having read and fully understood this Letter of Offer, we
accept the above facilities, subject to the terms and
conditions herein.
/s/ Dr. John S. Foster 14 August 1996
- ------------------------- ---------------------
Signature(s) & Firm's Stamp Date
- -/hyt /s/Muhammad Nasir Haji
Dr. John S. Foster Hanifah
Managing Director
MUHAMMAD NASIR HAJI HANIFAH
APPLIED MAGNETICS (M) SDN. (Finance Director)
BHD.
Plot 201. APPLIED MAGNETICS (M) SDN.
BAYAN LEPAS FREE INDUSTRIAL BHD.
ZONE Plot 201, Bayan Lepas Free
11900 PENANG, MALYASIA Trade Zone
11900 Penang, Malaysia
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<PAGE>
EXHIBIT 10(e)
-------------
BHL BANK
Ban Hin Lee Bank Berhad
CORPORATE GUARANTEE
TO: BAN HIN LEE BANK BERHAD
Bayan Baru Branch
----------------------------
We, Applied Magnetics Corporation, a company incorporated in
United States of America and having its registered office at No.
HEREBY ENTER into this Guarantee in favour of BAN HIN LEE
BANK BERHAD.
ARTICLE I
DEFINITION AND INTERPRETATION
SECTION 1.01 DEFINITION
Except where the context otherwise requires or unless this
Guarantee otherwise provides, all words and expressions when used
or referred to in this Guarantee shall have the meanings as that
provided for hereunder:
"Address for Service" (a) LENDER
(b) GUARANTOR
"Borrower" Applied Magnetics (M) SDN. BHD.
and its
successors-in-titles.
"Guarantor" Applied Magnetics Corporation
and includes its
successors-in-title.
"Guarantee" this agreement and which includes
all variation or amendments which
may be made from time to time.
"Lender" BAN HIN LEE BANK BERHAD and its
successors-in-title and assigns.
"Legal Process" Pleadings, all forms of originating
processes, interlocutory
applications of whatever nature,
affidavits orders and such
documents other than the aforesaid
which are required to be served
under the Rules of Court, notices
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<PAGE>
required to be given to the other
hereunder and correspondence
between the parties hereto, notices
under the Companies Act 1965.
"Facilities" refers collectively to the
facilities granted to the Borrower
by the Lender amounting to Ringgit
30,000,000.00 or any one or more of
them pursuant to the terms
contained in the Lender's Letter of
Offer and includes any part
thereof.
"Letter of Offer" the letter of offer of the Lender
to the Borrower dated.
SECTION 1.02 INTERPRETATION
(a) Words importing the singular number include the plural and
vice versa.
(b) Words importing the masculine gander include the feminine
and neuter genders.
(c) The words "hereof", "herein", "hereon", "hereinafter" and
"hereunder", and words of similar import, when used in this
Guarantee, shall, where the context requires or allows,
refer to this Guarantee as a whole and not to any particular
provision of this Guarantee.
(d) Reference herein to Sections are reference to Sections in
this Guarantee unless otherwise specified.
(e) The headings and sub-headings in this Guarantee are inserted
for convenience only and are to be ignored in construing the
provisions of this Guarantee.
(f) Where an act is required to be done within a specified
number of days after or from a specified date, the period is
inclusive of and begins to run from the date so specified.
(g) A period of a month from the happening of an event or the
doing of an act or thing shall be deemed to be inclusive of
the day on which the event happens or the act or thing is or
is required to be done.
(h) Any reference to statutes and the rules made thereunder
includes all amendments which may be enacted from time to
time.
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<PAGE>
ARTICLE II
COVENANT TO REPAY
SECTION 2.01
In consideration of the Lender's promise to grant the
Facilities to the Borrower at our request and upon such terms as
the Lender deems fit, we hereby irrevocably and unconditionally
guarantee as principal debtor and not merely as surety the
repayment to the Lender the Facilities together with interest,
cost, charges and all other sums payable by the Borrower under
the terms governing the Facilities in the event of the Borrower's
default in the repayment of the Facilities or any part thereof or
in paying the interest due thereon or any other sums payable or
the breach of any terms governing the Facilities by the Borrower.
Our liability herein is coextensive with that of the Borrower.
SECTION 2.02
If and whenever the Borrower shall make default in the
payment of any moneys due and payable to the Lender, we shall an
demand by the Lender forthwith pay all moneys in regard to which
such default has been made by the Borrower and any amount payable
by the Borrower arising from such default as if we were the
principal debtor.
SECTION 2.03
This Guarantee is in addition to and not in substitution for
any other rights which the Lender may have against the Borrower
or any third party and may be enforced without first having
recourse to any such rights and without taking any step or
proceedings against the Borrower or any other guarantor or
indemnifier.
SECTION 2.04
This Guarantee shall cover all moneys whatsoever now or
hereafter or from time to time owing to the Lender by the
Borrower whether alone, or with another or others notwithstanding
that the Borrower may at any time or from time to time cease to
be so indebted for any period or periods and the Guarantee shall
not be prejudiced by any conditional payment or satisfaction of
the whole or any part of the moneys hereby secured or by any
payments made to the Lender and held in a suspense account.
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<PAGE>
ARTICLE III
CONTINUING LIABILITY
SECTION 3.01
We hereby declare that our obligations herein shall not be
discharged except by performance and then only to the extent of
such performance. Such obligations shall not be subject to any
prior notice to us with regard to any default of the Borrower and
shall not be impaired by any extension of time or forbearance, or
concession given to the Borrower or to us, or any assertion of,
or failure to assert any right, or remedy against the Borrower or
us, or in respect of any security created by or in pursuance of
the terms of the letter of offer or any modification or
amplification of the provisions thereof, or any failure of the
Borrower to comply with any requirements, or any law regulations,
or order in Malaysia or of any political sub-division or agency
thereof.
SECTION 3.02
We hereby declare that we shall not be discharged or
released from this Guarantee by:
(a) any arrangement entered into or any composition accepted by
the Lender modifying the rights and remedies of the Lender
against the Borrower or any other party or both;
(b) any variation, or alteration of, or to the obligations terms
stipulations covenants and undertakings pertaining to the
Facilities;
(c) any forbearance on the part of the Lender to sue or to
enforce any other remedy (including any security given by
the Borrower or any other party or both), or otherwise;
(d) by the release of any one or more sureties or guarantors now
or hereafter in respect of the Facilities;
(e) by any failure to take or perfect any security offered or
agreed to be given by the Borrower or any other party or
both.
For the purpose of giving effect to the above, we hereby
give our specific consent to all and any of the
matters aforesaid.
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<PAGE>
SECTION 3.03
Notwithstanding any provision to the contrary herein, this
Guarantee shall in all respects and for all purposes be binding
and operative until discharge by performance thereof.
SECTION 3.04
We hereby declare that our liabilities and/or obligations
created herein shall continue to be valid and binding for all
purposes whatsoever notwithstanding any change by amalgamation,
or reconstruction, or otherwise which may be made in our
constitution or that of the Lender or the Borrower or both and it
is hereby expressly declared that no change of any sort
whatsoever in relation to or affecting us, the Lender or the
Borrower shall in any way affect the liabilities and obligations
created hereunder in relation to any transaction whatsoever
whether past present or future.
SECTION 3.05
This Guarantee shall be binding upon our successors-in-title.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01
(1) We hereby represent and warrant to the Lender that:
(a) We have the power or capacity to execute, deliver and
perform the terms of this Guarantee;
(b) this Guarantee constitutes our legal valid and binding
obligations in accordance with its terms;
(c) the execution, delivery and performance of this Guarantee
(i) does not and will not violate the provisions of any law,
or regulation, or any order, or decree of any governmental
authority, agency, or court to which we are subject or any
mortgage, contract or other undertaking or instrument to
which we are a party or which is binding upon us or our
assets and (ii) does not and will not result in the creation
or imposition of or any obligation to create or impose any
mortgage, lien, pledge or charge on any of our assets
pursuant to the provisions of any such mortgage, contract or
other undertaking or other instrument;
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<PAGE>
(d) we are not in default under any agreement to which we are a
party or by which we may be bound and no litigation, or
arbitration or administrative proceedings are presently
current, or pending, or threatened which default, or
litigation, or arbitration, or administrative proceedings,
as the case may be, might materially affect our solvency or
might affect our ability to perform our obligations under
this Guarantee;
(e) the indebtedness and other obligations incurred or to be
incurred by us hereunder will rank at least pari passu in
priority of payment and in all other respects with all our
other general unsecured liabilities and obligations whether
actual or contingent except for those which are preferred
solely by statute.
(2) We hereby further represent and warrant that:
(a) we are a company duly incorporated under the laws of
Malaysia as a separate legal entity and have the full power
and authority to own our assets and carry on our business as
it is now being carried;
(b) we have taken all corporate and other action to authorise
the execution and delivery of this guarantee;
(c) the execution, delivery and performance of this Guarantee
will not exceed the power granted to us or violate the
provisions or our Memorandum and Articles of Association;
(d) all our accounts (including all reports and statements
thereto):
(i) were prepared in accordance with accounting principles
and practices generally accepted in Malaysia and
consistently applied and have been prepared examined
reported on and approved in accordance with the
procedures required by our Memorandum and Articles of
Association,
(ii) together with the notes thereto, give a true and fair
view of our financial condition as at that date for
the period then ended, and
(iii) together with those notes, disclose or reserve
against all our liabilities (contingent or
otherwise) as at that date all material unrealized
and anticipated losses from any commitment entered
into by us and which existed on that date; and
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<PAGE>
(e) there has been no material adverse change in our financial
condition or operations.
SECTION 4.02
We shall (i) deliver to the Lender as soon as they are
available, but in any event within one hundred and twenty (120)
days of the end of each of our financial years, our accounts for
such financial year, which shall contain a profit and loss
account and balance sheet, and (ii) supply the Lender with such
additional financial information as the Lender may from time to
time request including, but without limitation, half-yearly
unaudited accounts and cash flow statements.
ARTICLE V
INDULGENCES
SECTION 5.01
The Lender shall be at liberty without thereby affecting the
Lender's rights against us grant to the Borrower any time or
indulgence for the payment of moneys due to it or observance
of any term, stipulation, covenant or undertaking on the
part of the Borrower to be observed and performed under the
terms of the Lender's Letter of Offer and of this Guarantee
or to vary or substitute the securities held by the Lender
or to release any such securities or part thereof and We
hereby give our specific consent to all and any of the
matters aforesaid.
SECTION 5.02
We agree that the Lender shall have full power at its
discretion to give time for payment or to make any other
arrangements with any other person or persons or corporation
without prejudice to this present Guarantee or any liability
thereunder.
ARTICLE VI
SECURITIES HELD BY AND FOR THE LENDER
SECTION 6.01
This Guarantee shall be in addition to and shall not be in
any way prejudiced or affected by any collateral or other
security now or hereafter held by the Lender for all or any part
of the Facilities hereby guaranteed nor shall such collateral or
other security or lien to which the lender may be otherwise
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<PAGE>
entitled or the liability of any person or persons or corporation
not parties hereto for all or any part of the moneys hereby
secured be in any way prejudiced or affected by this Guarantee.
Further, we shall make no claim to any such collateral or other
security or any part thereof or any interest therein unless and
until the Lender shall have received the full amount guaranteed
to it hereunder.
SECTION 6.02
We hereby declare that we have not received any security
from the Borrower for the giving of this Guarantee, or that the
giving or the furnishing of any security whatsoever and of
whatever nature by the Borrower or whomsoever constitutes a
reason for the giving of this Guarantee or that the giving of all
or any of the security aforesaid is a condition precedent to
payment by us, or to our liability herein, and we agree that we
will not, so long as the principal sums or any part thereof or
any interest or any other sum from time to time due and payable
by the Borrower shall remain outstanding, take any security from
the Borrower in respect of our liabilities herein without first
obtaining the consent of the Lender and we hereby agree that in
the event of our taking such security it shall be held in trust
for the Lender and forthwith be deposited with the Lender.
ARTICLE VII
SUBORDINATION
SECTION 7.01
Until all moneys and liabilities due or incurred by the
Borrower to the Lender have been paid or discharged in full, we
will not by paying off any sum recoverable hereunder or by any
other means or any other ground **********MISSING PAGES*******
claim any set-off or
counterclaim, or proof against any dividend, composition, or
payment by the Borrower or any other security which the Lender
may now or hereafter hold for any moneys or liabilities due or
incurred by the Borrower to the Lender.
SECTION 7.02
We hereby expressly agree with the Lender to subordinate any
and all loans advanced by us to the Borrower and our rights as
lender thereunder to the Facilities and all the rights of the
Lender with respect to the Facilities. Without prejudice to the
generality of the foregoing We hereby undertake to the Lender
that at all times during the continuance of the Facilities, we
will not (without the prior consent of the Lender which the
Lender may give or withhold without assigning any reason
whatsoever) demand or accept from the Borrower repayment of any
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<PAGE>
loan advanced by us to the Borrower or any part thereof and in
the event of our accepting such repayment the moneys so received
shall be deemed to be received in trust for the Lender and shall
forthwith be paid over to the Lender.
SECTION 7.03
Without limitation to the generality of Sections 7.01 and
7.02 hereof, we hereby declare that we shall not prove in the
winding-up of the Borrower in respect of any loans advanced by us
to the Borrower unless and until all moneys and liabilities due
or incurred by the Borrower to the Lender have been paid or
discharged in full.
SECTION 7.04
For the purpose of enabling the Lender to sue the Borrower
or to prove against it for the whole of the moneys owing by the
Borrower to the Lender, the Lender may at any time place and keep
for such time as it may consider prudent any money received,
recovered or realised hereunder to and at a suspense account to
our credit or of such other person or persons or transaction (if
any) as the Lender shall think fit without any intermediate
obligation on the part of the Lender to apply such money or any
part thereof in or towards the discharge of the money owing as
aforesaid or any intermediate right on our part to sue the
Borrower or prove against its assets in competition with or so as
to diminish any dividend or advantage that would or might come to
the Lender or to treat the liability of the Borrower as
diminished.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01
If the Borrower shall in any respect fail to perform any of
its obligations governing the Facilities or commits any breach of
its obligations pertaining thereto then we shall, in addition to
our liability herein, as a separate covenant indemnify the Lender
and its respective assigns and successors-in-title against all
losses, damages, costs, expenses or otherwise which may be
incurred by the Lender by reason of any default on the part of
the Borrower in performing and observing the agreements,
conditions, covenants and undertakings on its part to be observed
and performed.
SECTION 8.02
Time wherever mentioned shall be of the essence.
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<PAGE>
SECTION 8.03
It is hereby agreed that any admission acknowledgment in
writing by the Borrower, or by any person authorised on behalf of
the Borrower, or a judgment (by default or otherwise obtained
against the Borrower), or a statement of account in writing
showing the indebtedness of the Borrower in relation to the
subject matter of this Guarantee which is duly certified by an
authorised officer of the Lender shall except for manifest error
be binding and conclusive evidence against us and our successors-
in-title (as the case may be) for whatever purpose including as
being conclusive evidence of indebtedness in a court of Law.
SECTION 8.04
This Guarantee shall be governed and construed in all
respects in accordance with the laws of the States of Malaysia
and the parties hereto hereby submit to the jurisdiction of the
Courts of the States of Malaysia in all matters connected
herewith under this Guarantee and We hereby further agree that
the service of any Legal Process may be made in the manner set
out in Section 8.05
SECTION 8.05
(a) The service of any Legal Process may be given by prepaid
registered post sent to the respective Address for Service
of the parties hereto and such Legal Process shall be deemed
to have been duly served after the expiration of five (5)
days from the date it is posted.
(b) No change in the Address for service howsoever brought about
shall be effective or binding or either party unless that
party has given to other actual notice of the change of
Address for service and nothing done in reliance on Section
8.05 (a) shall be affected or prejudiced by any subsequent
change in the Address of Service over which the other party
has no actual knowledge of at the time the act or thing was
done or carried out.
SECTION 8.06
We hereby acknowledge that we are fully aware of the terms
and conditions contained in the Lender's Letter of Offer and that
We have not either collectively or individually agreed to enter
into this Guarantee on condition that any other third party or
parties shall join as co-surety or co-sureties. Accordingly the
failure of any third party or parties to stand as additional
surety or sureties to us to execute this Guarantee or any other
guarantee shall not prejudice our liabilities herein.
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<PAGE>
SECTION 8.07
Each and every term contained herein are severable from the
other so that no term which may be unenforceable in law shall
affect the legality of any or all of the other provisions
contained herein.
IN WITNESS WHEREOF we have hereto affixed our Common Seal
this day of August 13, 1996
The common Seal of )
)
)
)
)
was hereunto affixed in )
the presence of: )
/s/Bernice Williams
APPLIED MAGNETICS CORPORATION
DIRECTOR DIRECTOR SECRETARY
By /s/ Craig D. Crisman By /s/ Peter T. Altavilla
------------------- ------------------------
Craig D. Crisman Peter T. Altavilla
ITS Chairman and Chief ITS Controller
Executive Officer
-11-
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<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. 5907
State of California
------------------
County of Santa Barbara
-----------------
On Aug. 15, 1996 before me, Bernice Williams Notary Public,
-------------- ------------------------------
Date Name, Title of Officer - E.G.,
"JANE DOE, NOTARY PUBLIC"
personally appeared Craig D. Crisman and Peter T. Altavilla
----------------------------------------
Name of Signer(s)
[ X ] personally known to me - OR -
[ ] proved to me on the basis of
satisfactory evidence to be
the person(s) whose name(s)
are subscribed to the within
instrument and acknowledged to
me that they executed the same
in their authorized
capacity(ies), and that by
their signature(s) on the
instrument the person(s), or
the entity upon behalf of
which the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Bernice Williams
--------------------------------
Signature of Notary
[seal] Bernice Williams
Comm. #993654
Notary Public - California
Santa Barbara County
My Comm. Expires May 14, 1997
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<PAGE>
OPTIONAL
Though the date below is not required by law, it may prove
valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED
DOCUMENT
[ ] INDIVIDUAL
[ X ] CORPORATE OFFICER
Director & Director/Secretary Corporate Guarantee
- ----------------------------- ---------------------
TITLE(S) TITLE OR TYPE OF DOCUMENT
[ ] PARTNERS [ ] LIMITED
[ ] GENERAL 6
---------------------
NUMBER OF PAGES
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER:_________________ August 13, 1996
_______________________ -------------------
_______________________ DATE OF DOCUMENT
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
Applied Magnetics Corporation No Other Signers
- ------------------------------- -----------------------
- ------------------------------- SIGNER(S) OTHER THAN
NAMED ABOVE
-13-
Page 88 of 90
<PAGE>
Exhibit 11
----------
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
----------------------------------------------
(in thousands)
For the three months ended
December 28, December 30,
------------ ------------
1996 1995
---- ----
Primary Earnings Per Share:
Net income $ 31,872 $ 9,028
=========== ==========
Shares
Weighted average common
shares outstanding 23,267 22,698
Dilutive effect of stock options 1,265 1,076
---------- ---------
Weighted average number of
common shares outstanding 24,532 23,774
========= =========
Primary earnings per common share $ 1.30 $ 0.38
=========== =========
Fully Diluted Earnings Per Share:
Net income $ 31,872 $ 9,028
Interest expense related to
convertible subordinated
debentures, net of tax effect 2,035 -
----------- ----------
Net income as adjusted $ 33,907 $ 9,028
=========== ==========
Shares
Weighted average common shares
outstanding 23,267 22,698
Dilutive effect of stock options 1,411 1,175
Assuming conversion of convertible
subordinated debentures 6,183 -
----------- ----------
Weighted average number of common
shares outstanding as adjusted 30,861 23,873
=========== ===========
Fully diluted earnings per common share $ 1.10 $ 0.38
=========== ===========
-14-
Page 89 of 90
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of December 28, 1996, and the Consolidated
Statement of Operations for the quarter ended as of December 28, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> DEC-28-1996
<CASH> 156,974
<SECURITIES> 0
<RECEIVABLES> 43,587
<ALLOWANCES> 0
<INVENTORY> 37,517
<CURRENT-ASSETS> 247,357
<PP&E> 305,427
<DEPRECIATION> (162,507)
<TOTAL-ASSETS> 399,186
<CURRENT-LIABILITIES> 106,508
<BONDS> 0
0
0
<COMMON> 2,345
<OTHER-SE> 170,020
<TOTAL-LIABILITY-AND-EQUITY> 399,186
<SALES> 121,627
<TOTAL-REVENUES> 121,627
<CGS> 75,030
<TOTAL-COSTS> 75,030
<OTHER-EXPENSES> 13,192
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,151
<INCOME-PRETAX> 32,395
<INCOME-TAX> 523
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,872
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.10
</TABLE>
