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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED DECEMBER 31, 1995
Commission File No. 0-12933
LAM RESEARCH CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2634797
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4650 CUSHING PARKWAY, FREMONT, CALIFORNIA 94538
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 659-0200
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 90 days.
YES X NO
------ ------
As of December 31, 1995 there were 27,402,323 shares of Registrant's Common
Stock outstanding.
1
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INDEX
Page
No.
------
PART I. FINANCIAL INFORMATION ..................................... 3
Item 1. Financial Statements (unaudited)........................... 3
Condensed Consolidated Balance Sheets............ 3
Condensed Consolidated Statements of Income...... 4
Condensed Consolidated Statements of Cash Flows.. 5
Notes to Condensed Consolidated Financial
Statements.................................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 8
Results of Operations............................ 8
Liquidity and Capital Resources.................. 10
PART II. OTHER INFORMATION.......................................... 11
Item 1. Legal Proceedings.......................................... 11
Item 4. Results of Vote of Stockholders............................ 12
Item 6. Exhibits and Reports on Form 8-K........................... 13
2
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ITEM 1. FINANCIAL STATEMENTS
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
<TABLE>
December 31, June 30,
1995 1995
(Unaudited) (Note)
------------ --------
<S> <C> <C>
Assets
Cash and cash equivalents $ 17,785 $ 43,675
Short-term investments 91,807 57,334
Accounts receivable, net 228,597 195,682
Inventories 220,151 171,401
Prepaid expenses and other assets 11,768 25,263
Deferred income taxes 34,428 32,778
-------- --------
Total Current Assets 604,536 526,133
Equipment and leasehold improvements, net 130,243 117,571
Restricted cash 24,124 25,024
Other assets 19,554 13,921
-------- --------
Total Assets $778,457 $682,649
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Trade accounts payable $ 99,717 $ 82,542
Accrued expenses and other
current liabilities 115,418 98,633
Current portion of long-term debt and
capital lease obligations 6,983 7,572
-------- --------
Total Current Liabilities 222,118 188,747
Long-term debt and capital lease
obligations, less current portion 93,420 95,928
Deferred income taxes 2,712 2,712
-------- --------
Total Liabilities 318,250 287,387
Preferred stock: 5,000 shares authorized;
none outstanding
Common Stock at par value of $.001 per share
Authorized -- 90,000 shares; issued and
outstanding 27,402 shares at December 31,
1995 and 27,275 shares at June 30, 1995 27 27
Additional paid-in capital 225,729 224,730
Retained earnings 234,451 170,505
-------- --------
Total Stockholders' Equity 460,207 395,262
-------- --------
$778,457 $682,649
-------- --------
-------- --------
</TABLE>
- -------------------
Note -- The Condensed Consolidated Balance Sheet at June 30, 1995 has
been derived from the audited financial statements at that
date.
See Notes to condensed consolidated financial statements.
3
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
------------------------ ----------------------
December 31, December 31,
------------ ------------
1995 1994 1995 1994
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net sales $284,195 $169,777 $541,942 $328,697
Royalty income 6,322 2,962 11,819 5,555
-------- -------- -------- --------
Total revenue 290,517 172,739 553,761 334,252
Costs and expenses:
Cost of goods sold 148,507 88,851 283,214 173,541
Research and development 39,054 26,813 75,037 52,137
Selling, general and
administrative 52,578 30,136 100,162 59,255
-------- -------- -------- --------
Operating income 50,378 26,939 95,348 49,319
Other expense/(income), net 1,145 (106) 1,317 770
-------- -------- -------- --------
Income before income taxes 49,233 27,045 94,031 48,549
Income taxes 15,754 8,114 30,085 14,565
-------- -------- -------- --------
Net income $ 33,479 $ 18,931 $ 63,946 $ 33,984
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share
Primary $1.18 $0.68 $2.26 $1.29
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted $1.12 $0.64 $2.12 $1.22
-------- -------- -------- --------
-------- -------- -------- --------
Number of shares used in
per share calculations
Primary 28,300 27,935 28,350 26,350
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted 30,875 30,575 31,000 28,990
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See Notes to condensed consolidated financial statements.
4
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------------
December 31, December 31,
1995 1994
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $63,946 $33,984
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 14,803 9,790
Change in certain working capital
accounts (47,898) (52,135)
---------------- ----------------
Net cash provided by (used in)
operating activities 30,851 (8,361)
Cash flows from investing activites:
Capital expenditures (22,736) (25,187)
Purchase of short-term investments (191,932) --
Sale of short-term investments 157,459 --
Restricted cash 900 (2,618)
Proceeds from sales of securities 12,038 --
Other (5,633) (4,282)
---------------- ----------------
Net cash used in investing activities (49,904) (32,087)
---------------- ----------------
Cash flows from financing activities:
Sale of stock, net of issuance
costs 999 116,971
Principal payments on long-term debt
and capital lease obligations (7,155) (4,484)
Other (681) --
---------------- ----------------
Net cash provided by (used in)
financing activities (6,837) 112,487
---------------- ----------------
Net increase (decrease) in cash and
cash equivalents (25,890) 72,039
Cash and cash equivalents at beginning
of period 43,675 24,092
---------------- ----------------
Cash and cash equivalents at end of
period $17,785 $96,131
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to condensed consolidated financial statements.
5
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LAM RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
(Unaudited)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. The accompanying
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements of Lam
Research Corporation (the "Company") for the year ended June 30, 1995, which
are included in the Annual Report on Form 10-K, File number 0-12933.
The results of operations for the three and six month periods ended
December 31, 1995 are not necessarily indicative of the results that may be
expected for the entire fiscal year ending June 30, 1996.
NOTE B -- INVENTORIES
Inventories consist of the following:
December 31, June 30,
1995 1995
------------ --------------
(in thousands)
Raw materials $99,349 $80,910
Work-in-process 96,333 73,183
Finished goods 24,469 17,308
------------ --------------
$220,151 $171,401
------------ --------------
------------ --------------
NOTE C -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consist of the following:
December 31, June 30,
1995 1995
------------ --------------
(in thousands)
Equipment $91,836 $80,910
Furniture & fixtures 32,791 25,372
Leasehold improvements 72,707 64,707
------------ --------------
197,334 170,989
Accumulated depreciation and
amortization (67,091) (53,418)
------------ --------------
$130,243 $117,571
------------ --------------
------------ --------------
6
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NOTE D -- OTHER EXPENSE/(INCOME), NET
The significant components of other expense, net are as follows (in
thousands):
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
------- ------- ------- -------
Interest Expense $2,131 $1,572 $4,099 $3,008
Interest Income (1,364) (1,593) (2,739) (2,090)
Other 378 (85) (43) (148)
------- ------- ------- -------
$1,145 $(106) $1,317 $770
------- ------- ------- -------
------- ------- ------- -------
NOTE E -- INVESTMENTS
In November, 1995, the Financial Accounting Standards Board staff issued
a Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities". In accordance with
provisions in that Special Report, the Company elected to reclassify all of its
held-to-maturity securities to available-for-sale. At December 31, 1995, the
amortized cost of those securities (included in restricted cash on the Company's
condensed balance sheet) was $24,124,000, which approximates the fair value.
NOTE F -- NET INCOME PER SHARE
For the three and six month periods ended December 31, 1995 and 1994,
primary net income per share is calculated using the weighted average number of
shares of common stock and common stock equivalents outstanding during the
period. The common stock equivalents include shares issuable upon the assumed
exercise of stock options reflected under the treasury stock method. In
addition, fully diluted net income per share reflects the assumed conversion of
the Company's convertible subordinated debentures at the beginning of each
period, and also adds the interest expense incurred on the debentures, net of
income tax effect, to the net income amount for use in the fully diluted
calculation.
NOTE G -- LINE OF CREDIT
During the quarter ended December 1995, the Company entered into a
syndicated bank line of credit totaling $210.0 million, which expires in
December 1998.
NOTE H -- LITIGATION
See Part II, item 1 for discussion of litigation.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information in this discussion contains forward looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
and is subject to the Safe Harbor created by that statute. Such statements are
subject to certain risks and uncertainties, including those discussed below,
that could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.
The components of the Company's statements of income, expressed as a percentage
of total revenue, are as follows:
Three Months Six Months
Ended Ended
December 31, December 31,
1995 1994 1995 1994
--------------- --------------
Net Sales 97.8% 98.3% 97.9% 98.3%
Royalty income 2.2 1.7 2.1 1.7
--------------- --------------
100.0 100.0 100.0 100.0
Cost of goods sold 51.1 51.4 51.1 51.9
Research and development 13.5 15.6 13.6 15.6
Selling, general
& administrative 18.1 17.4 18.1 17.7
--------------- --------------
Operating income 17.3 15.6 17.2 14.8
Other expense/(income), net 0.4 (0.1) 0.2 0.3
--------------- --------------
Income before income taxes 16.9 15.7 17.0 14.5
Income taxes 5.4 4.7 5.4 4.3
--------------- --------------
Net income 11.5% 11.0% 11.6% 10.2%
--------------- --------------
--------------- --------------
RESULTS OF OPERATIONS
Net sales for the three and six month periods ended December 31, 1995 increased
by 67% and 65%, respectively, over the comparable prior year periods. Increased
unit sales of Transformer Coupled Plasma-TM- (TCP-TM-) and Rainbow-TM- systems
accounted for approximately 61% of the sales increase for the second quarter of
fiscal year 1996 as compared to the comparable prior year period. The Company's
Rainbow 4500 oxide etch and TCP 9600 metal etch products experienced the highest
net sales increase during the quarter ended December 31, 1995 compared to the
prior year quarter. Sales to foreign customers increased to 59% and 60%,
respectively, of net sales, for the three and six months ended December 31,
1995, from 45% and 47%, respectively, of net sales for the same periods of the
prior year. Increased sales of all Lam product lines in Europe accounted for
28% of the overall net sales increase during the quarter ended December 31,
1995; net sales in Japan and Asia Pacific were also much stronger than in
8
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the year-ago period. In addition, service and spares revenue which
represented approximately 21% of total revenue, increased 67% as compared to
the same period of the prior fiscal year, as a result of increases in the
Company's installed machine base.
Royalty income increased by 113% from the year-ago quarter due to continued
improvement in the Japanese semiconductor market which resulted in increased
sales of products incorporating the Company's technology being licensed by Tokyo
Electron Limited (TEL) and Sumitomo Metal Industries, Ltd. (SMI).
The Company's gross margin percentage improved to 48.9% for both the three and
six months periods ended December 31, 1995 as compared to 48.6 and 48.1%,
respectively, in the comparable periods of fiscal 1995. The improvement in gross
margin percentage resulted from increased shipments of Rainbow machines with a
higher margin during the quarter ended December 31, 1995 as compared to the
comparable period in the prior year. A favorable product mix within spares
during the quarter ended December 31, 1995 also contributed to the increase in
gross margin.
Research and development (R&D) expense increased for the three and six month
periods ended December 31, 1995 by 46% and 44% over the prior year periods, but
as a percentage of total revenue was lower than the comparable prior year
period. The increased expense was due to continued expenditures on advanced
etch applications, continued development of CVD technologies including Deep
SubMicron (DSM-TM-) 9800 (formerly Integrity-Registered Trademark-) and Deep
SubMicron(DSM-TM-) 9900 (formerly Epic-TM-), further enhancements of the TCP,
Alliance and Rainbow products and continued development of the Company's Flat
Panel Display technology. Although the Company has significantly increased
engineering headcount and spending, these expenditures have increased at a
slightly slower rate than the Company's revenue. The Company believes it is
critical to continue to make investments in R&D programs. During the quarter
ended December 31, 1995, construction began on a new engineering facility at the
Company's Fremont campus which the Company will occupy under an operating lease.
This facility is expected to be operational by the end of the current fiscal
year.
Selling, general and administrative (S,G&A) expenses for the three and six month
periods ended December 31, 1995 increased by 74% and 69%, respectively, over the
prior year periods. The Company has added employees in all customer support,
sales and administration areas to accommodate the increased sales volume. SG&A
expenditures by the Company's foreign subsidiaries increased at a rate higher
than that in the United States. The increase in the foreign expenditures for
SG&A was needed to accommodate the increase in sales in all foreign regions. The
Company opened a new manufacturing facility in Korea in July 1995 and is
expanding its facilities at in Japan and Taiwan. The Company therefore projects
that SG&A expenses in Asia Pacific and Japan will continue to increase over the
remainder of the fiscal year.
9
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The effective tax rate for the three month and six month fiscal 1996 periods is
32% compared to 30% for the prior year periods due primarily to the expiration
of the federal research and development credit.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $30.9 million for the six months
ended December 31, 1995, derived from income before depreciation and
amortization expenses totaling $78.7 million, offset by the increases in
inventories and accounts receivable related to the sales volume increase. In
addition, $47.7 million was provided from the sale of yen-denominated Japanese
receivables to a bank (under an agreement entered into during fiscal 1995
whereby the Company may sell up to $50.0 million of yen-denominated Japanese
receivables to the bank). The Company is currently renegotiating the agreement
to sell yen-denominated Japanese receivables in an effort to increase the amount
of receivables it may sell. Capital expenditures for the current three month
period were $22.7 million, primarily for new facility leasehold improvements,
and furnishings at both the Fremont campus, Japan facility and the new
manufacturing facility in Korea. The Company had net purchases of short-term
investments of $34.5 million. Cash receipts from investing activities of $12.0
million were provided from the sale of Brooks Automation, Inc. securities. In
addition, contributing to the overall use of cash were payments of $7.2 million
relating to long-term debt and capital lease obligations.
As of December 31, 1995, the Company had $109.6 million in cash, cash
equivalents and short-term investments compared with $101.0 million at June 30,
1995. The Company has a total of $210.0 million available under a syndicated
bank line of credit which expires in December 1998. There were no borrowings on
the line at December 31, 1995. The Company is currently renegotiating its pledge
agreement in an effort to reduce the amount of restricted investments ($24.1
million) under a long term facility lease.
The Company estimates that its cash, cash equivalents, short-term investments
and available line of credit at the end of the second quarter of fiscal 1996 are
adequate to support current levels of operations for at least the next twelve
months.
The Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In October 1993, Varian Associates, Inc. (Varian) brought suit against
the Company in the United States District Court, Northern District of
California, seeking monetary damages and injunctive relief based on the
Company's alleged infringement of certain patents held by Varian. The lawsuit
is in the late stages of discovery. No trial date has been set. The Company
has asserted defenses of invalidity and unenforceability of the patents that
are the subject of the lawsuit, as well as noninfringement of such patents by
the Company's products. While litigation is subject to inherent uncertainties
and no assurance can be given that the Company will prevail in such
litigation or will obtain a license under such patents on commercially
reasonable terms or at all if such patents are held valid and infringed by
the Company's products, the Company believes that the Varian lawsuit will not
have a material adverse effect on the Company's consolidated financial
statements.
In addition, the Company is from time to time notified by various
parties that it may be in violation of certain patents. In such cases, it is
the Company's intention to seek negotiated licenses where it is considered
appropriate. The outcome of these matters will not, in management's opinion,
have a material impact on the Company's consolidated financial position,
operating results or cash flows.
11
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ITEM 4. Results of Vote of Stockholders
The Annual Meeting of Stockholders of Lam Research Corporation was held
at the principle office of the Company at 4650 Cushing Parkway, Fremont,
California 94538 on October 26, 1995.
Out of 27,320,607 shares of Common Stock entitled to vote at such
meeting, there were present in person or by proxy 25,140,610 shares.
The vote for nominating directors, to serve for the ensuing year, and
until their successors are elected, was as follows:
NOMINEE IN FAVOR WITHHELD
- ------- -------- --------
Roger D. Emerick 24,822,827 317,783
David G. Arscott 24,823,473 317,137
Jack R. Harris 24,822,576 318,034
Grant M. Inman 24,825,726 314,884
Osamu Kano 24,822,565 318,045
The results of voting on the following items were as set forth below:
(a) Approval of amendment of the Company's 1984 Employee Stock Purchase Plan
to increase the number of shares reserved for issuance thereunder by
150,000 shares to 1,337,500:
BROKER
IN FAVOR OPPOSED WITHHELD NON-VOTES
---------- ------- -------- ---------
24,546,652 209,190 24,589 360,179
(b) Approval of amendment of the Company's Amended 1991 Incentive Stock Option
Plan to increase the number of shares reserved for issuance thereunder by
1,000,000 shares to 3,875,000:
BROKER
IN FAVOR OPPOSED WITHHELD NON-VOTES
---------- --------- -------- ---------
17,803,219 6,871,323 32,823 433,245
(c) Approval of the Performance-Based Restricted Stock Plan and the number of
shares reserved for issuance thereunder by 150,000:
BROKER
IN FAVOR OPPOSED WITHHELD NON-VOTES
---------- ------- -------- ---------
23,748,464 996,066 35,901 360,179
(d) Ratification of appointment of Ernst & Young LLP as independent auditors
for the Company for the fiscal year ending June 30, 1996:
BROKER
IN FAVOR OPPOSED WITHHELD NON-VOTES
---------- ------- -------- ---------
25,101,818 17,583 21,209 none
12
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4.3 Amended 1984 Employee Stock Purchase Plan
Exhibit 4.4 Amended 1991 Stock Option Plan
Exhibit 10.29 Credit Agreement dated December 20, 1995
between Lam Research Corporation and ABN AMRO
Bank N.V.
Exhibit 11.1 Statement Re: Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Registrant during
the quarter ended December 31, 1995.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 13, 1996
LAM RESEARCH CORPORATION
By: \s\ Henk J. Evenhuis
----------------------
Henk J. Evenhuis, Executive Vice
President, Finance & Chief
Financial Officer
10
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EXHIBIT 4.3
LAM RESEARCH CORPORATION
1984 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1984 Employee Stock Purchase
Plan of Lam Research Corporation.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with Section 13 of the Plan, if one is appointed.
(d) "COMMON STOCK" shall mean the Common Stock of the Company.
(e) "COMPANY" shall mean Lam Research Corporation, a Delaware
corporation.
(f) "COMPENSATION" shall mean all regular straight time gross
earnings, exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses, commissions or other compensation.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of
any interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, provided that such leave is for a
period of not more than 90 days or re-employment upon the expiration of such
leave is guaranteed by contract or statute.
(h) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(i) "EMPLOYEE" shall mean any person, including an officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(j) "EXERCISE DATE" shall mean the last day of each offering period
of the plan.
(k) "OFFERING DATE" shall mean the first day of each offering period
of the Plan.
(l) "PLAN" shall mean this 1984 Employee Stock Purchase Plan.
- 1 -
<PAGE>
(m) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a) Any Employee who is an Employee as of the Offering Date of a
given offering period shall be eligible to participate in such Offering Period
under the Plan, subject to the requirements of paragraph 5(a) and the
limitations imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee [or any other person whose stock would be attributed to
such Employee pursuant to Section 425(d) of the Code] would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) which permits his rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. OFFERING PERIODS. The Plan shall be implemented by one offering
during each offering period of the Plan, commencing on or about January 1, 1985,
and continuing thereafter until terminated in accordance with paragraph 19
hereof. Initially, the duration of each offering period shall be six months.
The Board or the Committee shall have the power to change the duration of
offering periods with respect to future offerings without stockholder approval
if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first offering period to be affected.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deduction on the form of
Exhibit A to this Plan and filing it with the Company's payroll office prior to
the applicable Offering Date, unless a later time for filing the subscription
agreement is set by the Board or the Committee for all eligible Employees with
respect to a given offering.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Offering Date and shall end on the Exercise Date of the
offering to which such authorization is applicable, unless sooner terminated by
the participant as provided in paragraph 10.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his subscription agreement, he
shall elect to have payroll deductions made on each payday during the offering
period in an amount not exceeding five percent (10%) of the Compensation which
he receives on each payday during the offering period, and the aggregate of such
payroll deductions during the offering period shall not exceed five percent
(10%) of his aggregate Compensation during said offering period.
(b) All payroll deductions made by a participant shall be credited to
his account under the Plan. A participant may not make any additional payments
into such account.
- 2 -
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(c) A participant may discontinue his participation in the Plan as
provided in paragraph 10, or may lower, but not increase, the rate of his
payroll deductions during the offering period by completing or filing with the
Company a new subscription agreement authorizing a change in payroll deduction
rate. The change in rate shall be effective fifteen (15) days following the
Company's receipt of the new subscription agreement.
7. GRANT OF OPTION.
(a) On the Offering Date of each offering period, each eligible
Employee participating in the Plan shall be granted an option to purchase (at
the per share option price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
during such offering period by the lower of (i) eighty-five percent (85%) of the
fair market value of a share of the Company's Common Stock on the Offering Date,
or (ii) eighty-five percent (85%) of the fair market value of a share of the
Company's Common Stock on the Exercise Date; provided that in no event shall an
Employee be permitted to purchase during each offering period more than a number
of shares determined by dividing $12,500 by the fair market value of a share of
the Company's Common Stock on the Offering Date, and provided further that such
purchase shall be subject to the limitations set forth in Section 3(b) and 12
hereof. Fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 7(b) herein.
(b) The option price per share of the shares offered in a given
offering period shall be the lower of: (i) 85% of the fair market value of a
share of the Common Stock of the Company on the Offering Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Exercise Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board or the Committee in its discretion;
provided, however, that where there is a public market for the Common Stock, the
fair market value per Share shall be the mean of the bid and asked prices [or
the closing price per share if the Common Stock is listed on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") National Market
System] of the Common Stock for such date, as reported in the Wall Street
Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or,
in the event the Common Stock is listed on a stock exchange, the fair market
value per Share shall be the closing price on such exchange on such date, as
reported in the Wall Street Journal.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan
as provided in paragraph 10, his option for the purchase of shares will be
exercised automatically on the Exercise Date of the offering period, and the
maximum number of full shares subject to option will be purchased for him at the
applicable option price with the accumulated payroll deductions in his account.
The shares purchased upon exercise of an option hereunder shall be deemed to be
transferred to the participant on the Exercise Date. During his lifetime, a
participant's option to purchase shares hereunder is exercisable only by him.
9. DELIVERY. As promptly as practicable after the Exercise Date of each
offering, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased upon exercise of
his option. Any cash remaining to the credit of a participant's account under
the Plan after a purchase by him of shares at the termination of each offering
period, or which is insufficient to purchase a full share of Common Stock of the
Company, shall be returned to said participant.
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10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his account under the Plan at any time prior to the
Exercise Date of the offering period by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his account will be paid to him promptly after receipt of his notice
of withdrawal and his option for the current period will be automatically
terminated, and no further payroll deductions for the purchase of shares will be
made during the offering period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of the offering period for any reason,
including retirement or death, the payroll deductions credited to his account
will be returned to him or, in the case of his death, to the person or persons
entitled thereto under paragraph 14, and his option will be automatically
terminated.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee for at least twenty (20) hours per week during the offering period
in which the employee is a participant, he will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to his account will
be returned to him and his option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his eligibility to participate in a succeeding offering or in any
similar plan which may hereafter be adopted by the Company.
11. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 1,337,500 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in paragraph 18. If the total number of shares which would otherwise be subject
to options granted pursuant to Section 7(a) hereof on the Offering Date of an
offering period exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall similarly
reduce the rate of payroll deductions, if necessary.
(b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his spouse or, beginning with the offering period ending June 8, 1990, in the
name of the participant and any joint tenant(s) designated by the participant.
13. ADMINISTRATION. The Plan shall be administered by the Board of the
Company or a committee of one or more persons appointed by the Board. The
administration, interpretation or application of the Plan by the Board or its
committee shall be final, conclusive and binding upon all participants. Members
of the Board and other persons who are eligible Employees are permitted to
participate in the Plan, provided that:
(a) No person who is eligible to participate in the Plan may vote on
any matter affecting the administration of the Plan or the grant of any option
pursuant to the Plan.
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(b) If a Committee is established to administer the Plan, no person
who is eligible to participate in the Plan may be a member of the Committee.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of the
offering period but prior to the delivery to him of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Exercise Date of the offering period.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant or, if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in paragraph 14 hereof) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with paragraph 10.
16. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees
promptly following each Exercise Date, which statements will set forth the
amounts of payroll deductions, the per share purchase price, the number of
shares purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board
or the Committee, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.
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<PAGE>
In the event of the proposed dissolution or liquidation of the Company, the
offering period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board or the Committee. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, each
option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless such successor corporation does not agree to
assume the option or to substitute an equivalent option, in which case the Board
or the Committee shall, in lieu of such assumption or substitution, provide for
the participant to have the right to exercise the option as to all of the
optioned stock, including shares as to which the option would not otherwise be
exercisable. If the Board or the Committee makes an option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board or the Committee shall notify the participant that the option shall be
fully exercisable for a period of thirty (30) days from the date of such notice,
and the option will terminate upon the expiration of such period.
The Board or the Committee may, if it so determines in the exercise of its
sole discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the event
that the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
19. AMENDMENT OR TERMINATION. The Board or the Committee may at any time
terminate or amend the Plan. Except as provided in paragraph 18, no such
termination can affect options previously granted, nor may an amendment make any
change in any option theretofore granted which adversely affects the rights of
any participant, nor may an amendment be made without prior approval of the
stockholders of the Company (obtained in the manner described in paragraph 21)
if such amendment would:
(a) Increase the number of shares that may be issued under the Plan;
(b) Permit payroll deductions at a rate in excess of ten percent
(10%) of the participant's Compensation;
(c) Change the designation of the employees (or class of employees)
eligible for participation in the Plan; or
(d) If the Company has a class of equity securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") at the time of such amendment, materially increase the benefits which may
accrue to participants under the Plan.
If any amendment requiring stockholder approval under this paragraph
19 of the Plan is made subsequent to the first registration of any class of
equity securities by the Company under Section 12 of the Exchange Act, such
stockholder approval shall be solicited as described in paragraph 21 of the
Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
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21. STOCKHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve months before or after the date the
Plan is adopted.
(b) If and in the event that the Company registers any class of
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the stockholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan itself
or of any amendment thereto is solicited at any time otherwise than in the
manner described in Section 17(b) hereof, then the Company shall, at or prior to
the first annual meeting of stockholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
Officer and Director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment were
then being solicited) by the rules and regulations in effect under Section 14(a)
of the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to stockholders.
22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in paragraph 21. It shall continue in
effect for a term of twenty (20) years unless sooner terminated under paragraph
19.
24. ADDITIONAL RESTRICTIONS OF RULE 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Securities Exchange Act of 1934 shall comply with the
applicable provisions of Rule 16b-3 of such Act. This Plan shall be deemed to
contain, and such options shall contain, and the shares issued upon exercise
thereof shall be subject to, such additional conditions and restrictions as may
be required by Rule 16b-3 to qualify for the maximum exemption from Section 16
of the Securities Exchange Act of 1934 with respect to Plan transactions.
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EXHIBIT 4.4
LAM RESEARCH CORPORATION
1991 STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF OCTOBER 26, 1995
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees, Consultants and Outside
Directors, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. The
Plan also provides for automatic grants of Nonstatutory Stock Options to Outside
Directors.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in accordance
with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Lam Research Corporation, a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services and who is compensated for
such
<PAGE>
services, provided that the term "Consultant" shall not include Directors who
are paid only a director's fee by the Company or who are not compensated by the
Company for their services as Directors.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship is not interrupted or terminated by the
Optionee, Company, any Parent or Subsidiary. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of: (i) any leave
of absence approved by the Board, including sick leave, military leave, or any
other personal leave, provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries or its successor.
(j) "CONTINUOUS STATUS AS AN OUTSIDE DIRECTOR" means that the Outside
Director relationship is not interrupted or terminated by the Outside Director,
Company, or any Parent. Continuous Status as an Outside Director shall not be
considered interrupted in the case of any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave.
(k) "DIRECTOR" means a member of the Board.
(l) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(m) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(n) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(o) "FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange,
the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, or a national market system, including without limitation the
National Market System of the NASDAQ System, or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and high asked prices for the Common Stock on the last market trading
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day prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Administrator.
(p) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(r) "NOTICE OF GRANT" means a written notice evidencing certain terms and
conditions of an individual Option. The Notice of Grant is part of the Option
Agreement.
(s) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means a stock option granted pursuant to the Plan.
(u) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(v) "OPTIONED STOCK" means the Common Stock subject to an Option.
(w) "OPTIONEE" means an Employee or Consultant who holds an outstanding
Option.
(x) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors of
the Company who is not an Employee or a Consultant.
(y) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(z) "PLAN" means this Lam Research Corporation 1991 Stock Option Plan.
(aa) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
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(bb) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.
(cc) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of the
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 3,875,000 Shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock. However, should the
Company reacquire Shares which were issued pursuant to the exercise of an
Option, such Shares shall not become available for future grant under the Plan.
If an Option expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto shall become
available for future grant under the Plan (unless the Plan has terminated).
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to Outside Directors,
Directors who are also Employees or Consultants, Officers who are not Directors,
and Employees who are neither Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS SUBJECT TO
SECTION 16(b). With respect to Option grants made to Employees who are also
Officers or Directors subject to Section 16(b) of the Exchange Act, the Plan
shall be administered by (A) the Board, if the Board may administer the Plan in
compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted to comply with the
rules governing a plan intended to qualify as a discretionary plan under Rule
16b-3. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the
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Company, the Plan shall be administered by (A) the Board or (B) a committee
designated by the Board, which committee shall be constituted to satisfy
Applicable Laws. Once appointed, such Committee shall serve in its designated
capacity until otherwise directed by the Board. The Board may increase the size
of the Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and remove
all members of the Committee and thereafter directly administer the Plan, all to
the extent permitted by Applicable Laws.
(iv) ADMINISTRATION WITH RESPECT TO AUTOMATIC GRANTS TO OUTSIDE
DIRECTORS. Automatic grants to Outside Directors shall be pursuant to a
non-discretionary formula as set forth in Section 5(b) hereof and therefore
shall not be subject to discretionary administration.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(o) of the Plan;
(ii) to select the Consultants and Employees to whom Options may be
granted hereunder;
(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be covered
by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and
conditions may include, but are not limited to, the exercise price, the time
or times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding an Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option shall have declined since the date the Option was granted;
(viii) to construe and interpret the terms of the Plan;
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(ix) to prescribe, amend and rescind rules and regulations relating to
the Plan;
(x) to modify or amend each Option (subject to Section 15(c) of the
Plan);
(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously granted by the
Administrator;
(xii) to determine the terms and restrictions applicable to Options;
and
(xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.
5. ELIGIBILITY.
(a) Options may be granted to Employees, Consultants and Outside
Directors provided that (i) Incentive Stock Options may only be granted to
Employees and (ii) Options may only be granted to Outside Directors in
accordance with the provisions of Section 5(b) hereof. Each Option shall be
designated in the written option agreement as either an Incentive Stock Option
or a Nonstatutory Stock Option. Subject to Section 5(b) with respect to Outside
Directors, an Employee, Consultant or Outside Director who has been granted an
option may, if such Employee, Consultant or Outside Director is otherwise
eligible, be granted additional Option(s).
(b) The provisions set forth in this Section 5(b) shall not be amended
more than once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. All grants of Options to Outside Directors under this Plan shall be
automatic and non-discretionary and shall be made strictly in accordance with
the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of shares to be
covered by Options granted to Outside Directors; provided, however, that nothing
in this Plan shall be construed to prevent an Outside Director from declining to
receive an Option under this Plan.
(ii) Each Outside Director shall be automatically granted an Option to
purchase 6,000 Shares on the first business day of January of each calendar
year.
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(iii) The terms of an Option granted pursuant to this Section 5(b)
shall be as follows:
(A) the term of the Option shall be ten (10) years;
(B) except as provided in subsections 5(b)(iii)(G) and (H)
hereof, the Option shall be exercisable only while the Outside Director remains
a director;
(C) the exercise price per share of Common Stock shall be 100%
of the Fair Market Value on the date of grant of the Option;
(D) the Option shall be 100% vested upon the date of grant;
(E) the consideration to be paid for the Shares to be issued
upon exercise of an automatic Outside Director Option shall consist of cash or
check;
(F) if an Outside Director ceases to serve as a Director the
Option shall terminate immediately (except in the event of the Outside
Director's death or Disability, as described below);
(G) in the event an Outside Director's Continuous Status as an
Outside Director terminates as a result of his or her Disability, he or she may,
but only within six (6) months from the date of termination, exercise his or her
Option. If he or she does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate; and
(H) in the event of the death of an Outside Director, the Option
may be exercised, at any time within six (6) months following the date of death,
by the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance. If the option is not exercised (to the extent
it was entitled to be exercised) within the time specified herein, the Option
shall terminate.
6. LIMITATIONS.
(a) Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares subject to an Optionee's incentive stock options granted by
the Company, any Parent or Subsidiary, which become exercisable for the first
time during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), incentive stock
options shall be taken into
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<PAGE>
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than two hundred thousand (200,000) Shares. The
foregoing limitation shall be adjusted proportionately in connection with any
change in the Company's capitalization as described in Section 12.
(d) If an Option is canceled in the same fiscal year of the Company in
which it was granted (other than in connection with a transaction described in
Section 12), the cancelled Option will be counted against the limit set forth in
Section 5(c). For this purpose, if the exercise price of an Option is reduced,
the transaction will be treated as a cancellation of the Option and the grant of
a new Option.
7. TERM OF PLAN. Subject to Section 18 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the stockholders of the Company as described in Section 18 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice of
Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. Except with respect to automatic stock option grants
to Outside Directors, the per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be determined by the Administrator,
subject to the following:
(i) In the case of an Incentive Stock Option:
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(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price may be less than 100%, but shall be no less than 85%, of the Fair
Market Value per Share on the date of grant, if the Administrator determines
that a discount from the Fair Market Value is appropriate in lieu of the payment
of a reasonable amount of salary or cash bonus to the Optionee.
(b) WAITING PERIOD AND EXERCISE DATES. Except with respect to automatic
stock option grants to Outside Directors, at the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions which must be satisfied before the Option may be
exercised. In so doing, the Administrator may specify that an Option may not be
exercised until the completion of a service period.
(c) FORM OF CONSIDERATION. Except with respect to automatic stock option
grants to Outside Directors, the Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price;
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(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, jointly with a person as specified by the Optionee. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
that an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed three (3) months from the date of termination) when the
Option is granted. In the case of a Nonstatutory Stock Option, such period of
time may not exceed six (6) months from the date of termination. If, at the
date of termination, the Optionee is not entitled to exercise his
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or her entire Option, the Shares covered by the unexercisable portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(i) DISABILITY OF OPTIONEE. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within six (6) months from the date of such termination (or, if an Employee or
Consultant, such other period of time not exceeding twelve (12) months as is
determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option), but only
to the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(c) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of death an
Employee or Consultant and who shall have been in Continuous Status as an
Employee or Consultant since the date of grant of the Option, the Option may be
exercised, at any time within six (6) months (or such other period of time as is
determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) following
the date of death (but in no event later than the date of expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous Status as
an Employee or Consultant six (6) months after the date of death; or
(ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Notice of Grant), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
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11. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, to the extent that an Option has not been
previously exercised, it will terminate immediately prior to the consummation of
such proposed action. The Board may, in the exercise of its sole discretion in
such instances, declare that any Option (except for Options granted to Outside
Directors) shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his or her Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the Board
shall, in lieu of such assumption or substitution, provide for the Optionee to
have the right to exercise the Option as to all or a portion of the Optioned
Stock, including Shares as to which it would not otherwise be exercisable. If
the Administrator makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option shall be fully exercisable
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for a period of fifteen (15) days from the date of such notice, and the Option
will terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
13. DATE OF GRANT. The date of grant of an Option shall be, for all purposes,
the date on which the Administrator makes the determination granting such
Option, or such other later date as is determined by the Administrator. Notice
of the determination shall be provided to each Optionee within a reasonable time
after the date of grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) STOCKHOLDER APPROVAL. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
stockholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall
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comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, Applicable Laws, and the requirements of any stock
exchange or quotation system upon which the Shares may then be listed or quoted,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
16. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by an
Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional stockholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 15(b) of the Plan.
17. RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such stockholder approval shall be obtained in the
manner and to the degree required under applicable federal and state law.
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EXHIBIT 10.29
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 20, 1995, is entered into by
and among:
(1) LAM RESEARCH CORPORATION, a Delaware corporation ("BORROWER");
(2) Each of the financial institutions from time to time listed in
SCHEDULE I hereto, as amended from time to time (such financial
institutions to be referred to herein collectively as the "LENDERS"); and
(3) ABN AMRO BANK N.V., San Francisco International Branch, as agent
for the Lenders (in such capacity, "AGENT").
RECITALS
A. Borrower has requested the Lenders to provide certain credit
facilities to Borrower.
B. The Lenders are willing to provide such credit facilities upon the
terms and subject to the conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION I. INTERPRETATION.
1.01. DEFINITIONS. Unless otherwise indicated in this Agreement or any
other Credit Document, each term set forth below, when used in this Agreement or
any other Credit Document, shall have the respective meaning given to that term
below or in the provision of this Agreement or other document, instrument or
agreement referenced below.
"ABN" shall mean ABN AMRO Bank N.V., San Francisco International
Branch.
"AFFILIATE" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially or as
a trustee, guardian or other fiduciary, ten percent (10%) or more of any
class of Equity Securities of such Person,
<PAGE>
(b) each Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person or (c) each of such Person's
officers, directors, joint venturers and partners; PROVIDED, HOWEVER, that in no
case shall Agent or any Lender be deemed to be an Affiliate of Borrower or any
of its Subsidiaries for purposes of this Agreement. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"AGENT" shall have the meaning given to that term in CLAUSE (3) OF THE
INTRODUCTORY PARAGRAPH hereof.
"AGENT'S FEE LETTER" shall mean the letter agreement dated as of
November 7, 1995 between Borrower and Agent.
"AGREEMENT" shall mean this Credit Agreement.
"APPLICABLE LENDING OFFICE" shall mean, with respect to any Lender,
(a) initially, its office designated as such in SCHEDULE I (or, in the case
of any Lender which becomes a Lender by an assignment pursuant to
SUBPARAGRAPH 8.05(c), its office designated as such in the applicable
Assignment Agreement) and (b) subsequently, such other office or offices as
such Lender may designate to Agent as the office at which such Lender's
Loans will thereafter be maintained and for the account of which all
payments of principal of, and interest on, such Lender's Loans will
thereafter be made.
"APPLICABLE MARGIN" shall mean, with respect to any Loan at any time,
the per annum margin which is determined pursuant to the Pricing Grid and
added to the Base Rate or LIBO Rate, as the case may be, for such Loan;
PROVIDED, HOWEVER, that each Applicable Margin determined pursuant to the
Pricing Grid shall be increased by two percent (2.00%) on the date an Event
of Default occurs and shall continue at such increased rate during the
continuance of such Event of Default.
"ASSIGNEE LENDER" shall have the meaning given to that term in
SUBPARAGRAPH 8.05(C).
"ASSIGNMENT" shall have the meaning given to that term in SUBPARAGRAPH
8.05(c).
"ASSIGNMENT AGREEMENT" shall have the meaning given to that term in
SUBPARAGRAPH 8.05(c).
"ASSIGNMENT EFFECTIVE DATE" shall have, with respect to each
Assignment Agreement, the meaning set forth therein.
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"ASSIGNOR LENDER" shall have the meaning given to that term in
SUBPARAGRAPH 8.05(c).
"BASE RATE" shall mean, on any day, the greater of (a) the Prime Rate
in effect on such date and (b) the Federal Funds Rate for such day PLUS
one-half percent (0.50%).
"BASE RATE LOAN" shall mean, at any time, a Loan which then bears
interest as provided in CLAUSE (i) OF SUBPARAGRAPH 2.01(c).
"BORROWER" shall have the meaning given to that term in CLAUSE (1) OF
THE INTRODUCTORY PARAGRAPH hereof.
"BORROWING" shall mean a borrowing by Borrower consisting of the Loans
made by each of the Lenders on the same date and of the same Type pursuant
to a single Notice of Borrowing.
"BUSINESS DAY" shall mean any day on which (a) commercial banks are
not authorized or required to close in San Francisco, California and (b) if
such Business Day is related to a Loan which bears or is to bear interest
based on a LIBO Rate, dealings in Dollar deposits are carried out in the
London interbank market.
"CAPITAL ADEQUACY REQUIREMENT" shall have the meaning given to that
term in SUBPARAGRAPH 2.10(d).
"CAPITAL ASSET" shall mean, with respect to any Person, any tangible
fixed or capital asset owned or leased (in the case of a Capital Lease) by
such Person, or any expense incurred by such Person that is required by
GAAP to be reported as a non-current asset on such Person's balance sheet.
"CAPITAL EXPENDITURES" shall mean, with respect to any Person and any
period, all amounts expended and indebtedness incurred or assumed by such
Person during such period for the acquisition of Capital Assets (including
all amounts expended and indebtedness incurred or assumed in connection
with Capital Leases).
"CAPITAL LEASES" shall mean any and all lease obligations that, in
accordance with GAAP, are required to be capitalized on the books of a
lessee.
"CHANGE OF LAW" shall have the meaning given to that term in
SUBPARAGRAPH 2.10(b).
"CLOSING DATE" shall mean December 20, 1995.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITMENT" shall mean, with respect to any Lender at any time, such
Lender's Proportionate Share at such time of the Total Commitment at such
time.
"COMMITMENT FEE PERCENTAGE" shall mean, with respect to the Unused
Commitment at any time, the per annum rate which is determined pursuant to
the Pricing Grid and used to calculate the Commitment Fees.
"COMMITMENT FEES" shall have the meaning given to that term in
SUBPARAGRAPH 2.04(b).
"COMPLIANCE CERTIFICATE" shall have the meaning given to that term in
SUBPARAGRAPH 5.01(a).
"CONTINGENT OBLIGATION" shall mean, with respect to any Person,
without duplication, (a) any Guaranty Obligation of that Person; and
(b) any direct or indirect obligation or liability, contingent or
otherwise, of that Person (i) in respect of any letters of credit,
acceptances, bank guaranties, surety bonds or similar instrument issued for
the account of that Person or as to which that Person is otherwise liable
for reimbursement of drawings, (ii) as a partner or joint venturer in any
partnership or joint venture, or (iii) incurred pursuant to any interest
rate swap, currency swap, forward, cap, floor or other similar contract
that is not entered into in connection with a bona fide hedging operation
that provides offsetting benefits to such Person. The amount of any
Contingent Obligation shall (subject, in the case of Guaranty Obligations,
to the last sentence of the definition of "Guaranty Obligation") be deemed
equal to the maximum reasonably anticipated liability in respect thereof.
"CONTRACTUAL OBLIGATION" of any Person shall mean, any indenture,
note, lease, loan agreement, security, deed of trust, mortgage, security
agreement, guaranty, instrument, contract, agreement or other form of
contractual obligation or undertaking to which such Person is a party or by
which such Person or any of its property is bound.
"CREDIT DOCUMENTS" shall mean and include this Agreement, the LC
Applications, the Notes and the Agent's Fee Letter; all other documents,
instruments and agreements delivered to Agent or any Lender pursuant to
PARAGRAPH 3.01; and all other documents, instruments and agreements
delivered by Borrower or any of its Subsidiaries to Agent or any Lender in
connection with this Agreement on or after the date of this Agreement.
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"CREDIT EVENT" shall mean the making of any Loan; the conversion of
any Base Rate Loan into a LIBOR Loan; the selection of a new Interest
Period for any LIBOR Loan; the issuance of any Letter of Credit or any
amendment of any Letter of Credit which increases its stated amount or
extends it expiration date.
"DEFAULT" shall mean any event or circumstance not yet constituting an
Event of Default which with the giving of any notice or the lapse of any
period of time or both, would become an Event of Default.
"DEFAULTING LENDER" shall mean a Lender which has failed to fund its
portion of any Borrowing which it is required to fund under this Agreement
and has continued in such failure for three (3) Business Days after written
notice from Agent.
"DOLLARS" and "$" shall mean the lawful currency of the United States
of America and, in relation to any payment under this Agreement, same day
or immediately available funds.
"DRAWING PAYMENT" shall have the meaning given to that term in
SUBPARAGRAPH 2.02(c).
"EBIT" shall mean, with respect to any Person for any period, the sum
of the following, determined on a consolidated basis in accordance with
GAAP where applicable:
(a) The net income or net loss of such Person and its
Subsidiaries for such period before provision for income taxes;
PLUS
(b) All Interest Expense of such Person and its Subsidiaries
accruing during such period (to the extent deducted in calculating net
income or loss in CLAUSE (a) above).
"EMPLOYEE BENEFIT PLAN" shall mean any employee benefit plan within
the meaning of section 3(3) of ERISA maintained or contributed to by
Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
"ENVIRONMENTAL LAWS" shall mean all Requirements of Law relating to
the protection of human health and the environment, including, without
limitation, all Requirements of Law, pertaining to reporting, licensing,
permitting, transportation, storage, disposal, investigation, and
remediation of emissions, discharges, releases, or threatened releases of
Hazardous Materials, chemical substances, pollutants,
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contaminants, or hazardous or toxic substances, materials or wastes,
whether solid, liquid, or gaseous in nature, into the air, surface water,
groundwater, or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
chemical substances, pollutants, contaminants, or hazardous or toxic
substances, materials, or wastes, whether solid, liquid, or gaseous in
nature.
"EQUITY SECURITIES" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other
equity interests in and of such Person (regardless of how designated and
whether or not voting or non-voting) and (b) all warrants, options and
other rights to acquire any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended or supplemented,
including any rules or regulations issued in connection therewith.
"ERISA AFFILIATE" shall mean any Person which is treated as a single
employer with Borrower under Section 414 of the Code.
"EVENT OF DEFAULT" shall have the meaning given to that term in
PARAGRAPH 6.01.
"FEDERAL FUNDS RATE" shall mean, for any day, the Federal funds
effective rate as set forth in the weekly statistical release designated as
H.15(519) published by the Federal Reserve Bank of New York for such day,
or in any successor publication (or, if such rate is not so published for
any day, the average rate quoted to Agent on and for such day by three (3)
Federal funds brokers of recognized standing selected by Agent).
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the
Federal Reserve System.
"FINANCIAL PERFORMANCE LETTER OF CREDIT" shall have the meaning given
to that term in SUBPARAGRAPH 2.02(a).
"FINANCIAL STATEMENTS" shall mean, with respect to any accounting
period for any Person, statements of income, shareholders' equity and cash
flows of such Person for such period, and a balance sheet of such Person as
of the end of such period, setting forth in each case in comparative form
figures for the corresponding period in the preceding fiscal year if such
period is less than a full fiscal year or, if such period is a full fiscal
year, corresponding figures from the preceding annual audit, all prepared
in reasonable detail and in accordance with GAAP.
"FUNDED DEBT" of any Person shall mean, without duplication, all
Indebtedness of such Person, as described in SUBPARAGRAPHS (a)-(d) of the
definition of Indebtedness.
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"GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to time,
consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any
department, agency, authority or bureau of any of the foregoing, or any
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including, without
limitation, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, the Comptroller of the Currency, any central bank or any comparable
authority.
"GOVERNMENTAL CHARGES" shall mean, with respect to any Person, all
levies, assessments, fees, claims or other charges imposed by any
Governmental Authority upon such Person or any of its property or otherwise
payable by such Person.
"GOVERNMENTAL RULE" shall mean any law, rule, regulation, ordinance,
order, code interpretation, judgment, decree, directive, guidelines, policy
or similar form of decision of any Governmental Authority.
"GUARANTY OBLIGATION" shall mean, with respect to any Person, any
direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary
obligation, or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, or (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation,
or (d) otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof. The amount of any Guaranty
Obligation shall be deemed equal to the stated or determinable amount of
the primary obligation in respect of which such Guaranty Obligation is made
or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof.
"HAZARDOUS MATERIALS" shall mean all materials, substances and wastes
which are classified or regulated as "hazardous," "toxic" or similar
descriptions under any Environmental Law or which are hazardous, toxic,
harmful or dangerous to human health.
"INDEBTEDNESS" of any Person shall mean, without duplication:
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(a) All obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments and all other obligations of
such Person for borrowed money;
(b) All obligations of such Person for the deferred purchase
price of property or services (including obligations under credit
facilities which secure or finance such purchase price and obligations
under synthetic leases), other than trade payables incurred by such
Person in the ordinary course of its business on ordinary terms;
(c) All obligations of such Person under conditional sale or
other title retention agreements with respect to property acquired by
such Person (to the extent of the value of such property if the rights
and remedies of the seller or lender under such agreement in the event
of default are limited solely to repossession or sale of such
property);
(d) All obligations of such Person as lessee under or with
respect to Capital Leases;
(e) All obligations of such Person with respect to accounts
receivable and related rights and property sold, assigned or
transferred by such Person with recourse to such Person;
(f) All Contingent Obligations of such Person; and
(g) All Indebtedness of other Persons of the types described in
CLAUSES (a) - (f) above to the extent secured by (or for which any
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien in any property (including
accounts and contract rights) of such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness.
"INTEREST ACCOUNT" shall have the meaning given to that term in
SUBPARAGRAPH 2.07(b).
"INTEREST COVERAGE RATIO" shall mean, with respect to any Person for
any period, the ratio, determined on a consolidated basis in accordance
with GAAP where applicable, of:
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(a) The remainder of (i) EBIT of such Person and its
Subsidiaries for such period, MINUS (ii) all Capital Expenditures of
such Person and its Subsidiaries for such period;
TO
(b) All Interest Expenses of such Person and its Subsidiaries
for such period.
"INTEREST EXPENSES" shall mean, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with
GAAP, of all interest accruing on the indebtedness of such Person during
such period (including interest attributable to Capital Leases).
"INTEREST PERIOD" shall mean, with respect to any LIBOR Loan, the time
periods selected by Borrower pursuant to SUBPARAGRAPH 2.01(b) or
SUBPARAGRAPH 2.01(d) which commences on the first day of such Loan or the
effective date of any conversion and ends on the last day of such time
period, and thereafter, each subsequent time period selected by Borrower
pursuant to SUBPARAGRAPH 2.01(e) which commences on the last day of the
immediately preceding time period and ends on the last day of that time
period.
"INVESTMENT" of any Person shall mean any loan or advance of funds by
such Person to any other Person (other than advances to employees of such
Person in the ordinary course of business), any purchase or other
acquisition of any Equity Securities or Indebtedness of any other Person,
any capital contribution by such Person to or any other investment by such
Person in any other Person (including any Guaranty Obligations of such
Person and any indebtedness of such Person of the type described in CLAUSE
(g) of the definition of "Indebtedness" on behalf of any other Person);
PROVIDED, HOWEVER, that Investments shall not include (a) accounts
receivable or other indebtedness owed by customers of such Person which are
current assets and arose from sales of inventory in the ordinary course of
such Person's business, (b) prepaid expenses of such Person incurred and
prepaid in the ordinary course of business, and (c) Capital Expenditures of
such Person incurred in the ordinary course of business.
"ISSUING BANK" shall have the meaning given to that term in
SUBPARAGRAPH 2.02(a).
"LC APPLICATION" shall have the meaning given to that term in
SUBPARAGRAPH 2.02(b).
"LC COMMITMENT" shall have the meaning given to that term in
SUBPARAGRAPH 2.02(a).
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"LC FEE RATE" shall mean, with respect to Letters of Credit, the per
annum rate which is determined pursuant to the Pricing Grid and used to
calculate the LC Usage Fees.
"LC ISSUANCE FEES" shall have the meaning given to that term in
SUBPARAGRAPH 2.04(c).
"LC USAGE FEES" shall have the meaning given to that term in
SUBPARAGRAPH 2.04(c).
"LENDERS" shall have the meaning given to that term in CLAUSE (2) OF
THE INTRODUCTORY PARAGRAPH HEREOF. Unless otherwise indicated, the term
"Lenders" shall include ABN acting in its capacity as Issuing Bank; for
purposes of clarification only, to the extent ABN may have any rights or
obligations in addition to those of the Lenders due to its status as
Issuing Bank, its status as such will be specifically referenced.
"LETTER OF CREDIT" shall have the meaning given to that term in
SUBPARAGRAPH 2.02(a).
"LEVERAGE RATIO" shall mean, with respect to any Person at any time,
the ratio, determined on a consolidated basis in accordance with GAAP, of:
(a) The Total Liabilities of such Person and its Subsidiaries at
such time;
TO
(b) The Tangible Net Worth of such Person and its Subsidiaries
at such time.
"LIBO RATE" shall mean, with respect to any Interest Period for the
LIBOR Loans in any Borrowing consisting of LIBOR Loans, a rate per annum
equal to the quotient of (a) the offered rate per annum (rounded upward if
necessary to the nearest 1/16 of one percent) appearing on the Telerate
page 3750 (or any successor publication) on the second Business Day prior
to the first day of such Interest Period at or about 11:00 A.M. (London
time) (for delivery on the first day of such Interest Period) for a term
comparable to such Interest Period, DIVIDED BY (b) one minus the Reserve
Requirement for such Loans or Portion in effect from time to time. If for
any reason rates are not available as provided in CLAUSE (a) of the
preceding sentence, the rate to be used in CLAUSE (a) shall be, at the
Agent's reasonable discretion, (i) the rate per annum at which Dollar
deposits are offered to Agent in the London interbank eurodollar currency
market or (ii) the rate at which Dollar deposits are offered to Agent in,
or by Agent to major banks in, any
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offshore interbank eurodollar market selected by Agent, in each case on the
second Business Day prior to the commencement of such Interest Period at or
about 10:00 A.M. (New York time) (for delivery on the first day of such
Interest Period) for a term comparable to such Interest Period and in an
amount approximately equal to the amount of the Loan to be made or funded
by Agent as part of such Borrowing.
"LIBOR LOAN" shall mean, at any time, a Loan which then bears interest
as provided in CLAUSE (ii) OF SUBPARAGRAPH 2.01(c).
"LIEN" shall mean, with respect to any property, any security
interest, mortgage, deed of trust, pledge, lien, charge or other
encumbrance in, of, or on such property or the income therefrom, including,
without limitation, the interest of a vendor or lessor under a conditional
sale agreement, Capital Lease or other title retention agreement, or any
agreement to provide any of the foregoing, and the filing of any financing
statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction.
"LOAN" shall have the meaning given to that term in SUBPARAGRAPH
2.01(a).
"MARGIN STOCK" shall have the meaning given to that term in
Regulation U issued by the Federal Reserve Board, as amended from time to
time, and any successor regulation thereto.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the business, assets, operations or financial condition of Borrower and
its Subsidiaries; (b) the ability of Borrower to pay or perform the
Obligations in accordance with the terms of this Agreement and the other
Credit Documents; or (c) the rights and remedies of Agent or any Lender
under this Agreement, the other Credit Documents or any related document,
instrument or agreement.
"MATERIAL SUBSIDIARY" shall mean, with respect to any Subsidiary of
the Borrower, any Subsidiary whose (a) total assets exceed ten percent
(10%) of the consolidated total assets of Borrower and its Subsidiaries at
any time or (b) gross revenues exceed five percent (5%) of the consolidated
gross revenues of Borrower and its Subsidiaries at any time.
"MATURITY" shall mean, with respect to any Loan, interest,
Reimbursement Obligation, fee or other amount payable by Borrower under
this Agreement or the other Credit Documents, the date such Loan,
Reimbursement Obligation, interest, fee or other amount becomes due,
whether upon the stated maturity or due date, upon acceleration or
otherwise.
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"MATURITY DATE" shall mean December 20, 1998.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Borrower
or any ERISA Affiliate.
"NET PROCEEDS" shall mean, with respect to any sale or issuance of any
Equity Security by any Person, the aggregate consideration received by such
Person from such sale or issuance LESS the sum of the actual amount of the
reasonable fees and commissions payable to Persons other than such Person
or any Affiliate of such Person, the reasonable legal expenses and the
other reasonable costs and expenses directly related to such sale or
issuance that are to be paid by such Person.
"NON-FINANCIAL PERFORMANCE LETTER OF CREDIT" shall have the meaning
given to that term in SUBPARAGRAPH 2.02(a).
"NOTE" shall have the meaning given to that term in SUBPARAGRAPH
2.07(a).
"NOTICE OF BORROWING" shall have the meaning given to that term in
SUBPARAGRAPH 2.01(b).
"NOTICE OF CONVERSION" shall have the meaning given to that term in
SUBPARAGRAPH 2.01(d).
"NOTICE OF INTEREST PERIOD SELECTION" shall have the meaning given to
that term in SUBPARAGRAPH 2.01(e).
"OBLIGATIONS" shall mean and include, with respect to Borrower, all
loans, advances, debts, liabilities, and obligations, howsoever arising,
owed by Borrower to Agent or any Lender of every kind and description
(whether or not evidenced by any note or instrument and whether or not for
the payment of money), direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising pursuant to the terms of
this Agreement or any of the other Credit Documents, including without
limitation all interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Borrower or payable by Borrower hereunder
or thereunder.
"PARTICIPANT" shall have the meaning given to that term in
SUBPARAGRAPH 8.05(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
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"PERMITTED INDEBTEDNESS" shall have the meaning given to that term in
SUBPARAGRAPH 5.02(a).
"PERMITTED LIENS" shall have the meaning given to that term in
SUBPARAGRAPH 5.02(b).
"PERSON" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a Governmental Authority.
"PRICING GRID" shall mean SCHEDULE 1.01(a).
"PRIME RATE" shall mean the per annum rate publicly announced by Agent
from time to time at its Chicago office. The Prime Rate is determined by
Agent from time to time as a means of pricing credit extensions to some
customers and is neither directly tied to any external rate of interest or
index nor necessarily the lowest rate of interest charged by Agent at any
given time for any particular class of customers or credit extensions. Any
change in the Base Rate resulting from a change in the Prime Rate shall
become effective on the Business Day on which each change in the Prime Rate
occurs.
"PROPORTIONATE SHARE" shall mean, with respect to each Lender, the
percentage set forth under the caption "Proportionate Share" opposite such
Lender's name on SCHEDULE I, or, if changed, such percentage as may be set
forth for such Lender in the Register.
"QUICK RATIO" shall mean, with respect to any Person at any time, the
ratio, determined on a consolidated basis in accordance with GAAP, of:
(a) The remainder at such time of (i) the sum of all cash, cash
equivalents (less than ninety (90) days in term), short-term
marketable securities (less than one (1) year in term) and accounts
receivable of such Person and its Subsidiaries (less all reserves
therefor) minus (ii) the sum of (a) the aggregate amount of such cash,
cash equivalents, short-term marketable securities and accounts
receivable which are subject to any Lien or are otherwise encumbered
or restricted (to the extent such amounts do not secure a
corresponding current liability amount included in the calculation of
subpart (b) below), and (B) with respect to any accounts receivable
sold, assigned or transferred, to the extent included under SUBPART
(a)(i) above, the aggregate amount of any accounts receivable
representing the discounted portion of such accounts receivable so
sold, assigned or transferred;
TO
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<PAGE>
(b) The sum at such time of (i) the current liabilities of such
Person and its Subsidiaries, (ii) the aggregate principal amounts
outstanding under any revolving credit facility (including, without
limitation, in the case of Borrower, the aggregate principal amount of
all Loans then outstanding), and (iii) in the event such Person or any
of its Subsidiaries exercises a purchase option under a synthetic
lease or a purchase payment otherwise becomes due under a synthetic
lease, the portion of any synthetic lease payment that would be
utilized to purchase the underlying property within one year of the
date of such exercise or acceleration.
"REIMBURSEMENT OBLIGATION" shall have the meaning given to that term
in SUBPARAGRAPH 2.02(c).
"REIMBURSEMENT PAYMENT" shall have the meaning given to that term in
SUBPARAGRAPH 2.02(c).
"REGISTER" shall have the meaning given to that term in SUBPARAGRAPH
8.05(d).
"REPORTABLE EVENT" shall have the meaning given to that term in ERISA
and applicable regulations thereunder.
"REQUIRED LENDERS" shall mean (a) at any time Loans and/or
Reimbursement Obligations are outstanding, Lenders holding sixty-six and
two-thirds percent (66-2/3%) or more of the aggregate principal amount of
such Loans and/or Reimbursement Obligations and (b) at any time no Loans
and/or Reimbursement Obligations are outstanding, Lenders whose
Proportionate Shares equal or exceed sixty-six and two-thirds percent
(66-2/3%).
"REQUIREMENT OF LAW" applicable to any Person shall mean (a) the
Articles or Certificate of Incorporation and By-laws, Partnership Agreement
or other organizational or governing documents of such Person, (b) any
Governmental Rule applicable to such Person, (c) any license, permit,
approval or other authorization granted by any Governmental Authority to or
for the benefit of such Person or (d) any judgment, decision or
determination of any Governmental Authority or arbitrator, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESERVE REQUIREMENT" shall mean, with respect to any day in an
Interest Period for a LIBOR Loan, the aggregate of the reserve requirement
rates (expressed as a decimal) in effect on such day for eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of the Federal Reserve Board) maintained by a
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member bank of the Federal Reserve System. As used herein, the term
"reserve requirement" shall include, without limitation, any basic,
supplemental or emergency reserve requirements imposed on Lender by any
Governmental Authority.
"SENIOR FUNDED DEBT" of any Person shall mean any Funded Debt which is
not Subordinated Debt.
"SENIOR INDEBTEDNESS" of any Person shall mean, without duplication:
(a) all Senior Funded Debt of such Person;
(b) all Contingent Obligations of such Person;
(c) all obligations of such Person with respect to any synthetic
leases; and
(d) all obligations of such Person with respect to any sale,
transfer or assignment of accounts receivable and related rights and
property by such Person with recourse to such Person.
"SENIOR INDEBTEDNESS RATIO" shall mean, with respect to any Person at
any time, the ratio, determined on a consolidated basis in accordance with
GAAP, of:
(a) The total Senior Indebtedness of such Person and its
Subsidiaries at such time;
TO
(b) The sum at such time of (i) the total Senior Indebtedness
and Subordinated Debt of such Person and its Subsidiaries at such time
plus (ii) the total Tangible Net Worth of such Person and its
Subsidiaries at such time.
"SUBORDINATED DEBT" shall mean Borrower's $66,000,000 Six Percent (6%)
Convertible Subordinated Debentures due 2003 and any other subordinated
debt permitted by SUBPARAGRAPH 5.02(a)(xi).
"SUBSIDIARY" of any Person shall mean (a) any corporation of which
more than 50% of the issued and outstanding Equity Securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency) is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more of its
other
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<PAGE>
Subsidiaries or by one or more of such Person's other Subsidiaries, (b) any
partnership, joint venture, or other association of which more than 50% of
the equity interest having the power to vote, direct or control the
management of such partnership, joint venture or other association is at
the time owned and controlled by such Person, by such Person and one or
more of the other Subsidiaries or by one or more of such Person's other
Subsidiaries or (c) any other Person included in the Financial Statements
of such Person on a consolidated basis.
"TANGIBLE NET WORTH" shall mean, with respect to any Person at any
time, the remainder at such time, determined on a consolidated basis in
accordance with GAAP, of (a) the total assets of such Person and its
Subsidiaries MINUS (b) the sum (without limitation and without duplication
of deductions) of (i) the total liabilities of such Person and its
Subsidiaries, (ii) all reserves established by such Person and its
Subsidiaries for anticipated losses and expenses (to the extent not
deducted in calculating total assets in CLAUSE (a) above), and (iii) all
intangible assets of such Person and its Subsidiaries (to the extent
included in calculating total assets in CLAUSE (a) above), including,
without limitation, goodwill (including any amounts, however designated on
the balance sheet, representing the cost of acquisition of businesses and
investments in excess of underlying tangible assets), trademarks, trademark
rights, trade name rights, copyrights, patents, patent rights, licenses,
unamortized debt discount, marketing expenses, organizational expenses,
non-compete agreements and deferred research and development.
"TAXES" shall have the meaning given to such term in
SUBPARAGRAPH 2.11(a).
"TOTAL COMMITMENT" shall have the meaning given to that term in
SUBPARAGRAPH 2.03(a).
"TOTAL LIABILITIES" of any Person shall mean, without duplication:
(a) all liabilities of such Person, as determined in accordance
with GAAP;
(b) all Contingent Obligations of such Person;
(c) all obligations of such Person with respect to any synthetic
leases; and
(d) all obligations of such Person with respect to any sale,
assignment or transfer of accounts receivable and related rights and
property by such Person with recourse to such Person.
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"TYPE" shall mean, with respect to any Loan or Borrowing at any time,
the classification of such Loan or Borrowing by the type of interest rate
it then bears, whether an interest rate based on the Base Rate or the LIBO
Rate.
"UCP" shall have the meaning given to that term in SUBPARAGRAPH
2.02(a).
"UNUSED COMMITMENT" shall mean, at any time, the remainder of (a) the
Total Commitment at such time minus (b) the sum of (i) the aggregate
principal amount of all Loans then outstanding , (ii) the aggregate amount
available for drawing under all Letters of Credit then outstanding, and
(iii) the aggregate amount of all Reimbursement Obligations then
outstanding.
1.02. GAAP. Unless otherwise indicated in this Agreement or any other
Credit Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP. If GAAP
changes during the term of this Agreement such that any covenants contained
herein would then be calculated in a different manner or with different
components, Borrower, the Lenders and Agent agree to negotiate in good faith to
amend this Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating Borrower's financial condition to
substantially the same criteria as were effective prior to such change in GAAP;
PROVIDED, HOWEVER, that, until Borrower, the Lenders and Agent so amend this
Agreement, all such covenants shall be calculated in accordance with GAAP as in
effect immediately prior to such change.
1.03. HEADINGS. Headings in this Agreement and each of the other
Credit Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
1.04. PLURAL TERMS. All terms defined in this Agreement or any other
Credit Document in the singular form shall have comparable meanings when used in
the plural form and VICE VERSA.
1.05. TIME. All references in this Agreement and each of the other
Credit Documents to a time of day shall mean San Francisco, California time,
unless otherwise indicated.
1.06. GOVERNING LAW. This Agreement and each of the other Credit
Documents (unless otherwise provided in such other Credit Documents) shall be
governed by and construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
1.07. CONSTRUCTION. This Agreement is the result of negotiations
among, and has been reviewed by, Borrower, each Lender, Agent and their
respective counsel. Accordingly, this Agreement shall be deemed to be the
product of all parties hereto, and no ambiguity shall be construed in favor of
or against Borrower, any Lender or Agent.
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1.08. ENTIRE AGREEMENT. This Agreement and each of the other Credit
Documents, taken together, constitute and contain the entire agreement of
Borrower, the Lenders and Agent and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter hereof
(including the commitment letter dated as of November 7, 1995 between Borrower
and Agent).
1.09. CALCULATION OF INTEREST AND FEES. All calculations of interest
and fees under this Agreement and the other Credit Documents for any period (a)
shall include the first day of such period and exclude the last day of such
period and (b) shall be calculated on the basis of a year of 360 days for actual
days elapsed, except that during any period any Loan bears interest based upon
the Prime Rate, such interest shall be calculated on the basis of a year of 365
or 366 days, as appropriate, for actual days elapsed.
1.10. OTHER INTERPRETIVE PROVISIONS. References in this Agreement to
"Recitals," "Sections," "Paragraphs," "Subparagraphs," "Exhibits" and
"Schedules" are to recitals, sections, paragraphs, subparagraphs, exhibits and
schedules herein and hereto unless otherwise indicated. References in this
Agreement and each of the other Credit Documents to any document, instrument or
agreement (a) shall include all exhibits, schedules and other attachments
thereto, (b) shall include all documents, instruments or agreements issued or
executed in replacement thereof, and (c) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified and
supplemented from time to time and in effect at any given time. References in
this Agreement and each of the other Credit Documents to any statute or other
law (i) shall include any successor statute or law, (ii) shall include all rules
and regulations promulgated under such statute or law (or any successor statute
or law), and (iii) shall mean such statute or law (or successor statute or law)
and such rules and regulations, as amended, modified, codified or reenacted from
time to time and in effect at any given time. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement or any other
Credit Document shall refer to this Agreement or such other Credit Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Credit Document, as the case may be. The words
"include" and "including" and words of similar import when used in this
Agreement or any other Credit Document shall not be construed to be limiting or
exclusive. This Agreement and the other Credit Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. In the event of any
inconsistency between the terms of this Agreement and the terms of any other
Credit Document, the terms of this Agreement shall govern.
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SECTION II. CREDIT FACILITY.
2.01. LOAN FACILITY.
(a) AVAILABILITY. Subject to the terms and conditions of this
Agreement (including the amount limitations set forth in PARAGRAPH 2.03),
each Lender severally agrees to advance to Borrower from time to time
during the period beginning on the Closing Date and ending on the Maturity
Date such loans as Borrower may request under this PARAGRAPH 2.01
(individually, a "LOAN"). All Loans shall be made on a pro rata basis by
the Lenders in accordance with their respective Proportionate Shares, with
each Borrowing to be comprised of a Loan by each Lender equal to such
Lender's Proportionate Share of such Borrowing. Except as otherwise
provided herein, Borrower may borrow, repay and reborrow Loans until the
Maturity Date.
(b) NOTICE OF BORROWING. Borrower shall request each Borrowing by
delivering to Agent an irrevocable written notice in the form of EXHIBIT A,
appropriately completed (a "NOTICE OF BORROWING"), which specifies, among
other things:
(i) The principal amount of the requested Borrowing, which shall
be in the amount of (A) $1,000,000 or an integral multiple of $100,000
in excess thereof in the case of a Borrowing consisting of Base Rate
Loans; or (B) $1,000,000 or an integral multiple of $500,000 in excess
thereof in the case of a Borrowing consisting of LIBOR Loans;
(ii) Whether the requested Borrowing is to consist of Base Rate
Loans or LIBOR Loans;
(iii) If the requested Borrowing is to consist of LIBOR Loans, the
initial Interest Periods selected by Borrower for such Loans in
accordance with SUBPARAGRAPH 2.01(e); and
(iv) The date of the requested Borrowing, which shall be a
Business Day;
PROVIDED, HOWEVER, that all Borrowings made during the period commencing on
the Closing Date and ending three (3) Business Days thereafter shall
consist solely of Base Rate Loans. Borrower shall give each Notice of
Borrowing to Agent at least three (3) Business Days before the date of the
requested Borrowing in the case of a Borrowing consisting of LIBOR Loans
and at least one (1) Business Day before the date of the requested
Borrowing in the case of a Borrowing consisting of Base Rate Loans. Each
Notice of Borrowing shall be delivered by first-class mail or facsimile to
Agent at the
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office or facsimile number and during the hours specified in PARAGRAPH
8.01; PROVIDED, HOWEVER, that Borrower shall promptly deliver to Agent the
original of any Notice of Borrowing initially delivered by facsimile.
Agent shall promptly (but in any event no later than 5:00 p.m., San
Francisco time, on the Business Day Agent is deemed to receive such notice
under PARAGRAPH 8.01) notify each Lender of the contents of each Notice of
Borrowing and of the amount and Type of (and, if applicable, the Interest
Period for) each Loan to be made by such Lender as part of the requested
Borrowing.
(c) INTEREST RATES. Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until the maturity
thereof, at one of the following rates per annum:
(i) During such periods as such Loan is a Base Rate Loan, at a
rate per annum equal to the Base Rate PLUS the Applicable Margin
therefor, such rate to change from time to time as the Applicable
Margin or Base Rate shall change;
(ii) During such periods as such Loan is a LIBOR Loan, at a rate
per annum equal at all times during each Interest Period for such
LIBOR Loan to the LIBO Rate for such Interest Period PLUS the
Applicable Margin therefor, such rate to change from time to time
during such Interest Period as the Applicable Margin shall change.
All Loans in each Borrowing shall, at any given time prior to maturity,
bear interest at one, and only one, of the above rates. The Applicable
Margins for Loans shall be determined as provided in the Pricing Grid and
may change as provided in the Pricing Grid. The number of Borrowings
consisting of LIBOR Loans shall not exceed twenty (20) at any time.
(d) CONVERSION OF LOANS. Borrower may convert any Borrowing from one
Type of Borrowing to another Type; PROVIDED, HOWEVER, that any conversion
of a Borrowing consisting of LIBOR Loans into a Borrowing consisting of
Base Rate Loans shall be made on, and only on, the last day of an Interest
Period for such LIBOR Loans. Borrower shall request such a conversion by
an irrevocable written notice to Agent in the form of EXHIBIT B,
appropriately completed (a "NOTICE OF CONVERSION"), which specifies, among
other things:
(i) The Borrowing which is to be converted;
(ii) The Type of Borrowing into which such Borrowing is to be
converted;
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(iii) If such Borrowing is to be converted into a Borrowing
consisting of LIBOR Loans, the initial Interest Period selected by
Borrower for such Loans in accordance with SUBPARAGRAPH 2.01(e); and
(iv) The date of the requested conversion, which shall be a Business
Day.
Borrower shall give each Notice of Conversion to Agent at least three (3)
Business Days before the date of the requested conversion in the case of a
conversion into a Borrowing consisting of LIBOR Loans and at least one (1)
Business Day before the date of the requested conversion in the case of a
conversion into a Borrowing consisting of Base Rate Loans. Each Notice of
Conversion shall be delivered by first-class mail or facsimile to Agent at
the office or to the facsimile number and during the hours specified in
PARAGRAPH 8.01; PROVIDED, HOWEVER, that Borrower shall promptly deliver to
Agent the original of any Notice of Conversion initially delivered by
facsimile. Agent shall promptly (but in any event no later than 5:00 p.m.,
San Francisco time, on the Business Day Agent receives such notice under
PARAGRAPH 8.01) notify each Lender of the contents of each Notice of
Conversion.
(e) LIBOR LOAN INTEREST PERIODS.
(i) The initial and each subsequent Interest Period selected by
Borrower for a LIBOR Loan shall be one (1), two (2), three (3) or six
(6) months; PROVIDED, HOWEVER, that (A) any Interest Period which
would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless such next Business
Day falls in another calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day; (B) any
Interest Period which begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and (C) no such Interest
Period shall end after the Maturity Date.
(ii) Borrower shall notify Agent by an irrevocable written notice
in the form of EXHIBIT C, appropriately completed (a "NOTICE OF
INTEREST PERIOD SELECTION"), at least three (3) Business Days prior to
the last day of each Interest Period for LIBOR Loans of the Interest
Period selected by Borrower for the next succeeding Interest Period
for such Loans. Each Notice of Interest Period Selection shall be
given by first-class mail or facsimile to the office or the facsimile
number and during the hours specified in PARAGRAPH 8.01; PROVIDED,
HOWEVER, that Borrower shall promptly deliver to Agent the original of
any Notice of Interest Period Selection initially delivered by
facsimile. If Borrower fails to notify Agent of the next Interest
Period for LIBOR Loans in accordance with this SUBPARAGRAPH
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2.01(e), such Loans shall automatically convert to Base Rate Loans on
the last day of the current Interest Period therefor. Agent shall
promptly (but in any event no later than 5:00 p.m., San Francisco
time, on the Business Day Agent receives such notice under PARAGRAPH
8.01) notify each Lender of the contents of each Notice of Interest
Period Selection.
(f) SCHEDULED LOAN PAYMENTS. Borrower shall repay the principal
amount of the Loans on the Maturity Date. Borrower shall pay accrued
interest on the unpaid principal amount of each Loan in arrears (A) in the
case of a Base Rate Loan, on the last day in each March, June, September
and December (commencing March 31, 1996), (B) in the case of a LIBOR Loan,
on the last day of each Interest Period therefor (and, if any such Interest
Period is longer than three (3) months, every three (3) months); and (C) in
the case of all Loans, upon prepayment (to the extent thereof) and at
maturity.
(g) PURPOSE. Borrower shall use the proceeds of the Loans for
Borrower's general corporate needs.
2.02. LETTER OF CREDIT FACILITY.
(a) LETTER OF CREDIT AVAILABILITY. Subject to the terms and
conditions of this Agreement (including the amount limitations set forth in
PARAGRAPH 2.03), ABN (in its capacity as the issuer of letters of credit
under this PARAGRAPH 2.02, "ISSUING BANK") agrees to issue on behalf of
Borrower from time to time during the period beginning on the Closing Date
and ending on the Maturity Date such standby letters of credit as Borrower
may request under this PARAGRAPH 2.02 (individually, a "LETTER OF CREDIT");
PROVIDED, HOWEVER, as follows:
(i) The aggregate amount available for drawing under all Letters
of Credit at any time outstanding plus the aggregate amount of all
Reimbursement Obligations at any time outstanding shall not exceed
Fifty Million Dollars ($50,000,000) (such amount, the "LC COMMITMENT")
and each Letter of Credit shall be in a face amount of not less than
Five Hundred Thousand Dollars ($500,000).
(ii) Each Letter of Credit shall be an irrevocable standby Letter
of Credit issued to secure (a) trade payables in the ordinary course
of Borrower's business (provided such trade payables are not overdue
on the date of issuance of such Letter of Credit) or other financial
obligations of Borrower (other than (1) trade payables which are
overdue or (2) any other financial obligations of Borrower under which
a default or any event which with the giving of notice or lapse of
time or both would constitute a default exists) (individually, a
"FINANCIAL PERFORMANCE LETTER OF CREDIT"), or (b) non-financial
obligations of Borrower to perform in the ordinary course of
Borrower's business (individually, a "NON-
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FINANCIAL PERFORMANCE LETTER OF CREDIT"). Whether a Letter of Credit
is a Financial Performance Letter of Credit or a Non-Financial
Performance Letter of Credit shall be determined by Issuing Bank in
its reasonable discretion in accordance with its usual custom and
procedures taking into account applicable federal and state bank
regulations and opinions.
(iii) Each Letter of Credit shall expire on or prior to the
Maturity Date.
(iv) Except as otherwise provided herein, each Letter of Credit
shall be governed by the Uniform Customs and Practices for Documentary
Credits as most recently published by the International Chamber of
Commerce (the "UCP") prior to the date of issuance of such Letter of
Credit and the terms of the UCP are hereby incorporated by reference
with respect to each Letter of Credit.
(v) Each Letter of Credit shall be in a form reasonably
acceptable to Issuing Bank.
Except as otherwise provided herein, Borrower may request Letters of
Credit, cause or allow Letters of Credit to expire and request additional
Letters of Credit until the Maturity Date.
(b) LC APPLICATION. Borrower shall request each Letter of Credit by
delivering to Agent and Issuing Bank an irrevocable written application in
a form reasonably acceptable to Issuing Bank, appropriately completed (an
"LC APPLICATION"), which specifies, among other things:
(i) The stated amount of the requested Letter of Credit which
shall be in a face amount of not less than Five Hundred Thousand
Dollars ($500,000) for each requested Letter of Credit and shall only
be issued in United States Dollars;
(ii) The name and address of the beneficiary of the requested
Letter of Credit;
(iii) The expiration date of the requested Letter of Credit;
(iv) The documentary conditions for drawing under the requested
Letter of Credit;
(v) The date of issuance for the requested Letter of Credit,
which shall be a Business Day; and
(vi) The aggregate amount available for drawing under all Letters
of Credit then outstanding.
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Borrower shall give each LC Application to Issuing Bank at least three (3)
Business Days before the proposed date of issuance of the requested Letter
of Credit. Each LC Application shall be delivered by first-class mail or
facsimile to Agent and Issuing Bank at their respective offices or
facsimile numbers and during the hours specified in PARAGRAPH 8.01;
PROVIDED, HOWEVER, that Borrower shall promptly deliver to Issuing Bank the
original of any LC Application initially delivered by facsimile. Agent
shall promptly notify each Lender of the contents of each LC Application.
In the event of any conflict between the terms of this Agreement and the
terms of any LC Application, the terms of this Agreement shall control.
(c) DISBURSEMENT AND REIMBURSEMENT.
(i) DISBURSEMENT. Issuing Bank will notify Borrower by
facsimile forthwith upon receipt of the presentment of any demand for
payment under any Letter of Credit, together with notice of the amount
of such payment and the date such payment shall be made. Subject to
the terms and provisions of such Letter of Credit, Issuing Bank shall
make such payment (a "DRAWING PAYMENT") to the appropriate
beneficiary.
(ii) TIME OF REIMBURSEMENT. Not later than 11:00 a.m. on the day
following each Drawing Payment made by Issuing Bank, Borrower shall
make or cause to be made to Issuing Bank a payment in the amount of
such Drawing Payment (a "REIMBURSEMENT PAYMENT"), together with any
accrued interest thereon as provided below; PROVIDED, HOWEVER, that
(1) Borrower shall make such Reimbursement Payment to, or cause such
Reimbursement Payment to be made to, Agent for the benefit of the
Lenders if, prior to the time such Reimbursement Payment is made,
Issuing Bank has notified Borrower that it has requested the Lenders
pursuant to CLAUSE (ii) OF SUBPARAGRAPH 2.02(d) to pay to Issuing Bank
their respective Proportionate Shares of the Drawing Payment made by
Issuing Bank and (2) Borrower shall pay interest on the amount of any
Reimbursement Payment not paid on the same day that the applicable
Drawing Payment is made at a per annum rate equal to (y) for the first
day, the rate then applicable to Loans which are Base Rate Loans and
(z) for the second day and any subsequent day, the rate then
applicable to Loans which are Base Rate Loans plus two percent per
annum. If any such Reimbursement Payment is made to Agent, Agent
shall promptly pay to each Lender which has paid its Proportionate
Share of the Drawing Payment, such Lender's Proportionate Share of the
Reimbursement Payment, together with any accrued interest thereon as
provided above, and shall promptly pay to Issuing Bank the balance of
such Reimbursement Payment, together with any accrued interest thereon
as provided above.
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(iii) REIMBURSEMENT OBLIGATION ABSOLUTE. The obligation of
Borrower to reimburse Issuing Bank or the Lenders, as the case may be,
for Drawing Payments (such obligation, together with the obligation to
pay interest thereon, to be referred to herein collectively as a
"REIMBURSEMENT OBLIGATION") shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the
terms of this Agreement under and without regard to any circumstances,
including, without limitation (A) any lack of validity or
enforceability of any of the Credit Documents, (B) the existence of
any claim, setoff, defense or other right which Borrower may have at
any time against any beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such beneficiary or transferee may
be acting), Issuing Bank, Agent, any other Lender or any other Person,
whether in connection with this Agreement, the transactions
contemplated herein or in the other Credit Documents, or in any
unrelated transaction, (C) any breach of contract or dispute between
Borrower, any beneficiary or any transferee of any Letter of Credit
(or any Persons for whom any such beneficiary or transferee may be
acting), Issuing Bank, any Agent, any Lender or any other Person,
(D) any demand, statement or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect, (E) payment by Issuing Bank under any Letter of Credit
against presentation of a demand for payment which does not comply
with the terms of such Letter of Credit, (F) any non-application or
misapplication by any beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such beneficiary or transferee may
be acting) of the proceeds of any drawing under such Letter of Credit
or (G) any delay, extension of time, renewal, compromise or other
indulgence or modification granted or agreed to by Issuing Bank, Agent
or any Lender, with or without notice to or approval by Borrower, with
respect to Borrower's indebtedness under this Agreement; PROVIDED,
HOWEVER, that this SUBPARAGRAPH 2.02(c) shall not abrogate any right
which Borrower may have to seek to enjoin any drawing under any Letter
of Credit or to recover damages from Issuing Bank pursuant to
SUBPARAGRAPH 2.02(e).
(d) LENDER PARTICIPATIONS; LOAN FUNDING.
(i) PARTICIPATION AGREEMENT. Each Lender severally,
unconditionally and irrevocably agrees with Issuing Bank to
participate in the extension of credit arising from the issuance of
each Letter of Credit in an amount equal to such Lender's
Proportionate Share of the stated amount of such Letter of Credit from
time to time, and the issuance of each Letter of Credit shall be
deemed a confirmation by Issuing Bank of such participation in such
amount; PROVIDED, HOWEVER, that at the time of such issuance the
amount limitations set forth in PARAGRAPHS 2.02(a)(i) AND 2.03 are not
exceeded.
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(ii) PARTICIPATION FUNDING. Issuing Bank may request the Lenders
to fund their participations in Letters of Credit by paying to Issuing
Bank all or any portion of any Drawing Payment made or to be made by
Issuing Bank under any Letter of Credit. Issuing Bank shall make such
a request by delivering to Agent (with a copy to Borrower), at any
time after the drawing for which such payment is requested has been
made upon Issuing Bank, a written request for such payment which
specifies the amount of such Drawing Payment and the date on which
such Drawing Payment is to be made or was made; PROVIDED, HOWEVER,
that Issuing Bank shall not request the Lenders to make any payment
under this SUBPARAGRAPH 2.02(d) in connection with any portion of a
Drawing Payment for which Issuing Bank has been reimbursed from a
Reimbursement Payment by Borrower unless such Reimbursement Payment
has been thereafter recovered by Borrower. Agent shall promptly
notify each Lender of the contents of each such request and of such
Lender's Proportionate Share of the applicable portion of such Drawing
Payment. Promptly following receipt of such notice from Agent, each
Lender shall pay to Agent, for the benefit of Issuing Bank, such
Lender's Proportionate Share of the applicable portion of such Drawing
Payment.
(iii) FUNDING THROUGH LOANS. At any time any Reimbursement
Obligations are outstanding, Agent may or, upon the written request of
Issuing Bank (if Borrower is not then the subject of a bankruptcy
proceeding), shall (subject to the terms and conditions of this
SUBPARAGRAPH 2.02(d)), initiate a Borrowing in an amount not exceeding
the aggregate amount of such outstanding Reimbursement Obligations and
use the proceeds of such Borrowing to repay all or a portion of such
Reimbursement Obligations. Agent shall initiate such a Borrowing by
delivering to each Lender (with a copy to Borrower) a written notice
which specifies the aggregate amount of outstanding Reimbursement
Obligations, the amount of the Borrowing (which initially shall
consist of Base Rate Loans), the date of such Borrowing and the amount
of the Loan to be made by such Lender as part of such Borrowing. Each
Lender shall make available to Agent funds in the amount of its Loan
as provided in SUBPARAGRAPH 2.08(a). After receipt of such funds,
Agent shall promptly disburse such funds to Issuing Bank and the
Lenders, as appropriate, in payment of the outstanding Reimbursement
Obligations.
(iv) OBLIGATIONS ABSOLUTE. Each Lender's obligations to fund its
participations under this SUBPARAGRAPH 2.02(d) shall be absolute,
unconditional and irrevocable and shall not be affected by (A) the
occurrence or existence of any Default or Event of Default, (B) any
failure to satisfy any condition set forth in SECTION III, (C) any
event or condition which might have a Material Adverse Effect, (D) the
failure of any other Lender to make any payment under this
SUBPARAGRAPH 2.02(d), (E) any right of offset, abatement, withholding
or reduction which such Lender
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may have against Issuing Bank, Agent, any Lender or Borrower, (F) any
event, circumstance or condition set forth in SUBPARAGRAPH 2.02(c) or
SUBPARAGRAPH 2.02(e), or (G) any other event, circumstance or
condition whatsoever, whether or not similar to any of the foregoing;
PROVIDED, HOWEVER, that nothing in this PARAGRAPH 2.02 shall prejudice
any right which any Lender may have against Issuing Bank for any
action by Issuing Bank which constitutes gross negligence or willful
misconduct.
(e) LIABILITY OF ISSUING BANK, ETC. Borrower agrees that none of
Issuing Bank, Agent or any Lender (nor any of their respective directors,
officers or employees) shall be liable or responsible for (i) the use which
may be made of any Letter of Credit or for any acts or omissions of any
beneficiary or transferee thereof in connection therewith; (ii) any
reference which may be made to this Agreement or to any Letter of Credit in
any agreements, instruments or other documents relating to obligations
secured by such Letter of Credit; (iii) the validity, sufficiency or
genuineness of documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged or any statement therein prove to be
untrue or inaccurate in any respect whatsoever; (iv) payment by Issuing
Bank against presentation of documents which do not comply with the terms
of any Letter of Credit, including failure of any documents to bear any
reference or adequate reference to any Letter of Credit; or (v) any other
circumstances whatsoever in making or failing to make payment under any
Letter of Credit, except only that Issuing Bank shall be liable to Borrower
for acts or events described in CLAUSES (i) THROUGH (v) above, to the
extent, but only to the extent, of any damages suffered by Borrower
(excluding consequential damages) which Borrower proves were caused by
(A) Issuing Bank's willful misconduct or gross negligence in determining
whether a drawing made under any Letter of Credit complies with the terms
and conditions therefor stated in such Letter of Credit or (B) Issuing
Bank's willful misconduct or gross negligence in failing to pay under any
Letter of Credit after a drawing by the beneficiary thereof strictly
complying with the terms and conditions of such Letter of Credit. Without
limiting the foregoing, Issuing Bank may accept a drawing that appears on
its face to be in order, without responsibility for further investigation.
The determination of whether a drawing has been made under any Letter of
Credit prior to its expiration or whether a drawing made under any Letter
of Credit is in proper and sufficient form shall be made by Issuing Bank in
its sole discretion, which determination shall be conclusive and binding
upon Borrower to the extent permitted by law. Borrower hereby waives any
right to object to any payment made under any Letter of Credit with regard
to a drawing that is in the form provided in such Letter of Credit but
which varies with respect to punctuation, capitalization, spelling or
similar matters of form.
(f) REPORTS OF ISSUING BANK. Issuing Bank shall on a monthly basis
provide to Agent or any Lender such information regarding the Letters of
Credit as Agent or such
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Lender may reasonably request, including the Letters of Credit outstanding,
the stated amounts of outstanding Letters of Credit, the expiration dates
of outstanding Letters of Credit, the names of the beneficiaries of
outstanding Letters of Credit, the amounts of unpaid Reimbursement
Obligations and the amounts and times of Drawing Payments and Reimbursement
Payments.
(g) PURPOSE. Borrower shall use Letters of Credit solely as provided
in CLAUSE (ii) OF SUBPARAGRAPH 2.02(a).
(h) CASH COLLATERAL PLEDGE. Upon the request of Agent, if, as of the
Maturity Date, any Letters of Credit for any reason remain outstanding,
then Borrower shall immediately deliver to Agent funds in an amount equal
to the aggregate amount available for drawing under all such Letters of
Credit and Agent shall hold such funds in an interest bearing account as
collateral for such Obligations, and Borrower hereby grants to Agent, for
the benefit of the Lenders, a security interest in such funds and in such
account. The obligations of Borrower under this SUBPARAGRAPH 2.02(h) shall
survive the termination of this Agreement.
2.03. AMOUNT LIMITATIONS, COMMITMENT REDUCTIONS, ETC.
(a) TOTAL COMMITMENTS. The sum at any time of (i) the aggregate
principal amount of all Loans outstanding at any time, (ii) the aggregate
amount available for drawing under all Letters of Credit then outstanding
and (iii) the aggregate amount of all Reimbursement Obligations then
outstanding shall not exceed Two Hundred Ten Million Dollars ($210,000,000)
(the "TOTAL COMMITMENT") or if such amount is reduced pursuant to
SUBPARAGRAPH 2.03(b), the amount to which so reduced and in effect at such
time. The sum at any time of (x) the aggregate principal amount of all
Loans outstanding at any time made by each Lender, (y) each Lender's
Proportionate Share of the aggregate amount available for drawing under all
Letters of Credit then outstanding, and (z) each Lender's Proportionate
Share of the aggregate amount of all Reimbursement Obligations then
outstanding shall not exceed each such Lender's Commitment at such time.
(b) REDUCTION OR CANCELLATION OF COMMITMENTS. Borrower may, upon
three (3) Business Days written notice to Agent, permanently reduce the
Total Commitment by the amount of Five Million Dollars ($5,000,000) or an
integral multiple of Five Hundred Thousand Dollars ($500,000) in excess
thereof or cancel the Total Commitment in its entirety; PROVIDED, HOWEVER,
that:
(i) Borrower may not reduce the Total Commitment prior to the
Maturity Date, if, after giving effect to such reduction, the
aggregate principal amount of all Loans, the aggregate amount
available for drawing under all Letters of Credit and
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the aggregate amount of all Reimbursement Obligations then outstanding
would exceed the Total Commitment; and
(ii) Borrower may not cancel the Total Commitment prior to the
Maturity Date, if, after giving effect to such cancellation, any Loan,
Reimbursement Obligation or Letter of Credit would then remain
outstanding.
(c) EFFECT OF COMMITMENT REDUCTIONS. From the effective date of any
reduction of the Total Commitment, the Commitment Fees payable pursuant to
SUBPARAGRAPH 2.04(b) shall be computed on the basis of the Total Commitment
as so reduced. Once reduced or cancelled, the Total Commitment may not be
increased or reinstated without the prior written consent of all Lenders.
Any reduction of the Total Commitment pursuant to SUBPARAGRAPH 2.03(b)
shall be applied ratably to reduce each Lender's Commitment in accordance
with CLAUSE (i) OF SUBPARAGRAPH 2.09(a).
2.04. FEES.
(a) AGENT'S FEE. Borrower shall pay to Agent, for its own account,
fees in the amounts and at the times set forth in the Agent's Fee Letter.
(b) COMMITMENT FEES. Borrower shall pay to Agent, for the ratable
benefit of the Lenders as provided in CLAUSE (v) OF SUBPARAGRAPH 2.09(a),
nonrefundable commitment fees (the "COMMITMENT FEES") equal to the
Commitment Fee Percentage on the daily average Unused Commitment for the
period beginning on the date of this Agreement and ending on the Maturity
Date. The Commitment Fee Percentage shall be determined as provided in the
Pricing Grid and may change as provided in the Pricing Grid. Borrower
shall pay the Commitment Fees quarterly in arrears on the last day in each
March, June, September and December (commencing March 31, 1996) and on the
Maturity Date (or if the Total Commitment is cancelled on a date prior to
the Maturity Date, on such prior date).
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(c) LETTER OF CREDIT FEES.
(i) LETTER OF CREDIT USAGE FEES. Borrower shall pay to Agent,
for the ratable benefit of the Lenders as provided in CLAUSE (v) OF
SUBPARAGRAPH 2.09(a), nonrefundable Letter of Credit fees for the
Letters of Credit (the "LC USAGE FEES") equal to the LC Fee Rate on
the daily average undrawn amount of each Letter of Credit for the
period beginning on the date such Letter of Credit is issued and
ending on the date such Letter of Credit expires. The LC Fee Rate
shall be determined as provided in the Pricing Grid in accordance with
whether such Letter of Credit is a Financial Performance Letter of
Credit or a Non-Financial Performance Letter of Credit, and may change
as provided in the Pricing Grid. Borrower shall pay the LC Usage Fees
quarterly in arrears on the last day in each March, June, September
and December (commencing March 31, 1996) and on the Maturity Date.
(ii) LETTER OF CREDIT ISSUANCE FEES. Borrower shall pay to
Agent, for the sole benefit of Issuing Bank, nonrefundable issuance
fees for the Letters of Credit (the "LC ISSUANCE FEES") equal to
seventy-five one-thousandths of one percent (0.075%) per annum on the
daily average undrawn amount of each Letter of Credit for the period
beginning on the date such Letter of Credit is issued and ending on
the date such Letter of Credit expires. Borrower shall pay the LC
Issuance Fees for each Letter of Credit quarterly in arrears on the
last day in each March, June, September and December (commencing
March 31, 1996) and on the Maturity Date.
(iii) OTHER LETTER OF CREDIT FEES. In addition to the LC Usage
Fees and the LC Issuance Fees, Borrower shall pay to Agent, for the
benefit of Issuing Bank, other standard fees of Issuing Bank for
drawings under, transfers of and amendments to any Letter of Credit
and other administrative actions performed by Issuing Bank in
connection with any Letter of Credit, payable at such times and in
such amounts as are consistent with Issuing Bank's standard fee policy
at the time of such amendment or other action.
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2.05. PREPAYMENTS.
(a) TERMS OF ALL PREPAYMENTS. Upon the prepayment of any Loan
(whether such prepayment is an optional prepayment under SUBPARAGRAPH
2.05(b), a mandatory prepayment required by SUBPARAGRAPH 2.05(c) or a
mandatory prepayment required by any other provision of this Agreement or
the other Credit Documents, including, without limitation, a prepayment
upon acceleration), Borrower shall pay to the Lender which made such Loan
(i) all accrued interest to the date of such prepayment on the amount
prepaid and (ii) if such prepayment is the prepayment of a LIBOR Loan on a
day other than the last day of an Interest Period for such LIBOR Loan, all
amounts payable to such Lender pursuant to PARAGRAPH 2.12.
(b) OPTIONAL PREPAYMENTS. At its option, Borrower may, upon five (5)
Business Days notice to Agent, prepay the Loans in any Borrowing in part,
in an aggregate principal amount of $1,000,000 or more, or in whole.
(c) CASH COLLATERALIZATION OF LETTERS OF CREDIT; MANDATORY PREPAYMENT
OF LOANS. If, at any time, the aggregate amount available for drawing
under all Letters of Credit then outstanding plus the aggregate amount of
all Reimbursement Obligations then outstanding exceeds the LC Commitment,
upon notice from Agent, Borrower shall deliver to Agent funds in an amount
equal to the excess of the maximum amount then available to be drawn under
all Letters of Credit plus the aggregate amount of all Reimbursement
Obligations then outstanding over the LC Commitment and Agent shall hold
such funds in an interest bearing account as collateral for such
Obligations, and Borrower hereby grants to Agent for the benefit of the
Lenders, a security interest in such funds and in such account. If, at any
time after giving effect to any cash collateralization made pursuant to the
preceding sentence, the aggregate principal amount of all Loans then
outstanding, the aggregate amount available for drawing under all Letters
of Credit then outstanding and the aggregate amount of all Reimbursement
Obligations then outstanding exceeds the Total Commitment at such time,
Borrower shall immediately prepay Loans in an aggregate principal amount
equal to such excess. At such time as the aggregate amount available for
drawing under all Letters of Credit then outstanding plus the aggregate
amount of all Reimbursement Obligations then outstanding no longer exceeds
the LC Commitment, any excess funds deposited pursuant to this SUBPARAGRAPH
2.05(c) shall be released to Borrower.
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2.06. OTHER PAYMENT TERMS.
(a) PLACE AND MANNER. Borrower shall make all payments due to each
Lender hereunder by payments to Agent, for the account of such Lender and
such Lender's Applicable Lending Office, at Agent's office, located at the
address specified in PARAGRAPH 8.01, in lawful money of the United States
and in same day or immediately available funds not later than 11:00 a.m. on
the date due. Agent shall promptly disburse to each Lender each such
payment received by Agent for such Lender.
(b) DATE. Whenever any payment due hereunder shall fall due on a day
other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in
the computation of interest or fees, as the case may be.
(c) LATE PAYMENTS. If any amounts required to be paid by Borrower
under this Agreement or the other Credit Documents (including, without
limitation, principal or interest payable on any Loan, any Reimbursement
Payments or interest thereon, any fees or other amounts) remain unpaid
after such amounts are due, Borrower shall pay interest on the aggregate,
outstanding balance of such amounts from the date due until those amounts
are paid in full at a per annum rate equal to the Base Rate PLUS two
percent (2.00%), such rate to change from time to time as the Base Rate
shall change.
(d) APPLICATION OF PAYMENTS. All payments hereunder shall be applied
first to unpaid fees, costs and expenses then due and payable under this
Agreement or the other Credit Documents, second to accrued interest then
due and payable under this Agreement or the other Credit Documents, third
to any unpaid Reimbursement Obligations, and finally to reduce the
principal amount of outstanding Loans.
(e) FAILURE TO PAY AGENT. Unless Agent shall have received notice
from Borrower at least one (1) Business Day prior to the date on which any
payment is due to the Lenders hereunder that Borrower will not make such
payment in full, Agent may assume that Borrower has made such payment in
full to Agent on such date and Agent may, in reliance upon such assumption,
cause to be distributed to the appropriate Lenders on such due date an
amount equal to the amount then due such Lenders. If and to the extent
Borrower shall not have so made such payment in full to Agent, each such
Lender shall repay to Agent forthwith on demand such amount distributed to
such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to Agent, at (i) the Federal Funds Rate for the first three (3) days
and (ii) the per annum rate applicable to Base Rate Loans thereafter. A
certificate of Agent submitted to any Lender with respect to any
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amounts owing by such Lender under this SUBPARAGRAPH 2.06(e) shall be
conclusive absent manifest error.
2.07. NOTES AND INTEREST ACCOUNT.
(a) NOTES. The obligation of Borrower to repay the Loans made by
each Lender and to pay interest thereon at the rates provided herein shall
be evidenced by a promissory note in the form of EXHIBIT D (individually, a
"NOTE") which note shall be (i) payable to the order of such Lender,
(ii) in the amount of such Lender's Commitment, (iii) dated the Closing
Date and (iv) otherwise appropriately completed. Borrower authorizes each
Lender to record on the schedule annexed to such Lender's Note the date and
amount of each Loan made by such Lender and of each payment or prepayment
of principal thereon made by Borrower, and agrees that all such notations
shall constitute prima facie evidence of the matters noted; PROVIDED,
HOWEVER, that any failure by a Lender to make any such notation shall not
affect the Obligations. Borrower further authorizes each Lender to attach
to and make a part of such Lender's Note continuations of the schedule
attached thereto as necessary. If, because any Lender designates separate
Applicable Lending Offices for Base Rate Loans or LIBOR Loans, such Lender
requests that separate promissory notes be executed to evidence separately
such Loans, then each such note shall be in the form of EXHIBIT D, MUTATIS
MUTANDIS to reflect such division, and shall be (w) payable to the order of
such Lender, (x) in the amount of such Lender's Commitment, (y) dated the
Closing Date and (z) otherwise appropriately completed. Such notes shall,
collectively, constitute a Note.
(b) INTEREST ACCOUNT. Borrower authorizes Agent to record in an
account or accounts maintained by Agent on its books (the "INTEREST
ACCOUNT") (i) the interest rates applicable to all Loans and the effective
dates of all changes thereto, (ii) the Interest Period for each LIBOR Loan,
(iii) the date and amount of each principal and interest payment on each
Loan and (iv) such other information as Agent may determine is necessary
for the computation of interest payable by Borrower hereunder.
2.08. LOAN FUNDING.
(a) LENDER FUNDING AND DISBURSEMENT TO BORROWER. Each Lender shall,
before 11:00 a.m. on the date of each Borrowing, make available to Agent at
its office specified in PARAGRAPH 8.01, in same day or immediately
available funds, such Lender's Proportionate Share of such Borrowing.
After Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in SECTION III, Agent will promptly disburse such
funds in same day or immediately available funds to Borrower. Unless
otherwise directed by Borrower, Agent shall disburse the proceeds of each
Borrowing to Borrower by disbursement to the account or accounts specified
in the applicable Notice of Borrowing.
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(b) LENDER FAILURE TO FUND. Unless Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not
make available to Agent such Lender's Proportionate Share of such
Borrowing, Agent may assume that such Lender has made such portion
available to Agent on the date of such Borrowing in accordance with
SUBPARAGRAPH 2.08(a), and Agent may, in reliance upon such assumption, make
available to Borrower (or otherwise disburse) on such date a corresponding
amount. If any Lender does not make the amount of its Proportionate Share
of any Borrowing available to Agent on or prior to the date of such
Borrowing, such Lender shall pay to Agent, on demand, interest which shall
accrue on such amount until made available to Agent at rates equal to (i)
the daily Federal Funds Rate during the period from the date of such
Borrowing through the third Business Day thereafter and (ii) the rate
applicable to Base Rate Loans thereafter. A certificate of Agent submitted
to any Lender with respect to any amounts owing under this SUBPARAGRAPH
2.08(B) shall be conclusive absent manifest error. If any Lender's
Proportionate Share of any Borrowing is not in fact made available to Agent
by such Lender within three (3) Business Days after the date of such
Borrowing, Borrower shall pay to Agent, on demand, an amount equal to such
Proportionate Share together with interest thereon, for each day from the
date such amount was made available to Borrower until the date such amount
is repaid to Agent, at the interest rate applicable at the time to the
Loans comprising such Borrowing.
(c) LENDERS' OBLIGATIONS SEVERAL. The failure of any Lender to make
the Loan to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation hereunder to make its Loan on the date of
such Borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on the date
of any Borrowing.
2.09. PRO RATA TREATMENT.
(a) BORROWINGS, COMMITMENT REDUCTIONS, ETC. Except as otherwise
provided herein:
(i) Each Borrowing, each reduction of the Total Commitment, and
each participation in each Letter of Credit shall be made or shared
among the Lenders pro rata according to their respective Proportionate
Shares;
(ii) Each payment of principal of Loans in any Borrowing shall be
shared among the Lenders which made or funded the Loans in such
Borrowing pro rata according to the respective unpaid principal
amounts of such Loans so made or funded by such Lenders;
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(iii) Each payment of interest on Loans in any Borrowing shall be
shared among the Lenders which made or funded the Loans in such
Borrowing pro rata according to (A) the respective unpaid principal
amounts of such Loans so made or funded by such Lenders and (B) the
dates on which such Lenders so made or funded such Loans;
(iv) Each Reimbursement Payment and interest payable by Borrower
thereon shall be shared among the Lenders (including Issuing Bank)
which made or funded the applicable Drawing Payment so made or funded
by such Lenders;
(v) Each payment of Commitment Fees and LC Usage Fees shall be
shared among the Lenders (including, with respect to LC Usage Fees,
Issuing Bank in its capacity as a Lender) pro rata according to
(A) their respective Proportionate Shares and (B) in the case of each
Lender which becomes a Lender hereunder after the date hereof, the
date upon which such Lender so became a Lender;
(vi) Each payment of interest (other than interest on Loans)
shall be shared among the Lenders and Agent owed the amount upon which
such interest accrues pro rata according to (A) the respective amounts
so owed such Lenders and Agent and (B) the dates on which such amounts
became owing to such Lenders and Agent; and
(vii) All other payments under this Agreement and the other Credit
Documents shall be for the benefit of the Person or Persons specified.
(b) SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of Loans or Reimbursement Obligations owed
to it in excess of its ratable share of payments on account of such Loans
or Reimbursement Obligations obtained by all Lenders entitled to such
payments, such Lender shall forthwith purchase from the other Lenders such
participations in the Loans or Reimbursement Obligations as shall be
necessary to cause such purchasing Lender to share the excess payment
ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender,
such purchase shall be rescinded and each other Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such other Lender's ratable share
(according to the proportion of (i) the amount of such other Lender's
required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this SUBPARAGRAPH 2.09(b) may, to the fullest extent permitted
by law, exercise all its rights of
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payment (including the right of setoff) with respect to such participation
as fully as if such Lender were the direct creditor of Borrower in the
amount of such participation.
2.10. CHANGE OF CIRCUMSTANCES.
(a) INABILITY TO DETERMINE RATES. If, on or before the first day of
any Interest Period for any LIBOR Loan, (i) any Lender shall advise Agent
that the LIBO Rate for such Interest Period cannot be adequately and
reasonably determined due to the unavailability of funds in or other
circumstances affecting the London interbank market or (ii) any Lender
shall advise Agent that the rates of interest for such Loans do not
adequately and fairly reflect the cost to such Lender of making or
maintaining such LIBOR Loans, Agent shall immediately give notice of such
condition to Borrower and the other Lenders. After the giving of any such
notice and until Agent shall otherwise notify Borrower that the
circumstances giving rise to such condition no longer exist, Borrower's
right to request the making of or conversion to, and the Lenders'
obligations to make or convert to LIBOR Loans shall be suspended. Any
LIBOR Loans outstanding at the commencement of any such suspension shall be
converted at the end of the then current Interest Period for such LIBOR
Loans into Base Rate Loans unless such suspension has then ended.
(b) ILLEGALITY. If, after the date of this Agreement, the adoption
of any Governmental Rule, any change in any Governmental Rule or the
application or requirements thereof (whether such change occurs in
accordance with the terms of such Governmental Rule as enacted, as a result
of amendment or otherwise), any change in the interpretation or
administration of any Governmental Rule by any Governmental Authority, or
compliance by any Lender with any request or directive (whether or not
having the force of law) of any Governmental Authority (a "CHANGE OF LAW")
shall make it unlawful or impossible for any Lender to make or maintain any
LIBOR Loan, such Lender shall immediately notify Agent and Borrower of such
Change of Law. Upon receipt of such notice, (i) Borrower's right to
request the making of or conversion to, and such Lender's obligation to
make or convert to, any Loans of the Type affected by such Change of Law
shall be terminated, and (ii) Borrower shall, at the request of such
Lender, either (A) pursuant to SUBPARAGRAPH 2.01(d) convert any such then
outstanding LIBOR Loans into Base Rate Loans at the end of the current
Interest Period for such LIBOR Loans, or (B) immediately repay or convert
any such LIBOR Loans if such Lender shall notify Borrower that the such
Lender may not lawfully continue to fund and maintain such LIBOR Loans.
Any conversion or prepayment of LIBOR Loans made pursuant to the preceding
sentence prior to the last day of an Interest Period for such LIBOR Loans
shall be deemed a prepayment thereof for purposes of PARAGRAPH 2.12. After
any Lender notifies Agent and Borrower of such a Change of Law and until
such Lender notifies Agent and Borrower that it is no longer unlawful or
impossible for such Lender to make or maintain a LIBOR Loan, all Loans of
such Lender shall be Base Rate Loans.
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(c) INCREASED COSTS. If, after the date of this Agreement, any
Change of Law:
(i) Shall subject any Lender to any tax, duty or other charge
with respect to any LIBOR Loan or Letter of Credit or shall change the
basis of taxation of payments by Borrower to any Lender on such a
LIBOR Loan or Letter of Credit or in respect to such a LIBOR Loan or
Letter of Credit under this Agreement (except for changes in the rate
of taxation on the overall net income of any Lender imposed by its
jurisdiction of incorporation or the jurisdiction in which its
principal executive office is located); or
(ii) Shall impose, modify or hold applicable any reserve
(excluding any Reserve Requirement or other reserve to the extent
included in the calculation of the LIBO Rate for any Loans), special
deposit or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances or loans by, or
any other acquisition of funds by any Lender for any LIBOR Loan or
Letter of Credit; or
(iii) Shall impose on any Lender any other condition related to
any LIBOR Loan, Letter of Credit or such Lender's Commitment;
And the effect of any of the foregoing is to increase the cost to such
Lender of making, renewing, or maintaining any such LIBOR Loan or Letter of
Credit or its Commitment or to reduce any amount receivable by such Lender
hereunder; then Borrower shall from time to time, within five (5) days
after demand by such Lender, pay to such Lender additional amounts
sufficient to reimburse such Lender for such increased costs or to
compensate such Lender for such reduced amounts. A certificate as to the
amount of such increased costs or reduced amounts, submitted by such Lender
to Borrower shall, in the absence of manifest error, be conclusive and
binding on Borrower for all purposes. The obligations of Borrower under
this SUBPARAGRAPH 2.10(c) shall survive the payment and performance of the
Obligations and the termination of this Agreement; PROVIDED, HOWEVER, that
any Lender must submit a demand for payment pursuant to this provision
within six (6) months after such Lender has first conclusively determined
that such reimbursement or compensation is due such Lender under this and
similar agreements.
(d) CAPITAL REQUIREMENTS. If, after the date of this Agreement, any
Lender determines that (i) any Change of Law affects the amount of capital
required or expected to be maintained by such Lender or any Person
controlling such Lender (a "CAPITAL ADEQUACY REQUIREMENT") and (ii) the
amount of capital maintained by such Lender or such Person which is
attributable to or based upon the Loans, the Letters of Credit, the
Commitments or this Agreement must be increased as a result of such Capital
Adequacy Requirement (taking into account such Lender's or such Person's
policies with respect to
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capital adequacy), Borrower shall pay to such Lender or such Person, within
five (5) days after demand of such Lender, such amounts as such Lender or
such Person shall determine are necessary to compensate such Lender or such
Person for the increased costs to such Lender or such Person of such
increased capital. A certificate of any Lender setting forth in reasonable
detail the computation of any such increased costs, delivered by such
Lender to Borrower shall, in the absence of manifest error, be conclusive
and binding on Borrower for all purposes. The obligations of Borrower
under this SUBPARAGRAPH 2.10(d) shall survive the payment and performance
of the Obligations and the termination of this Agreement; PROVIDED,
HOWEVER, that any Lender must submit a demand for payment pursuant to this
provision within six (6) months after such Lender has first conclusively
determined that such reimbursement or compensation is due such Lender under
this and similar agreements.
(e) MITIGATION. Any Lender which becomes aware of (i) any Change of
Law which will make it unlawful or impossible for such Lender to make or
maintain any LIBOR Loan or (ii) any Change of Law or other event or
condition which will obligate Borrower to pay any amount pursuant to
SUBPARAGRAPH 2.10(c) or SUBPARAGRAPH 2.10(d) shall notify Borrower and
Agent thereof as promptly as practical. If any Lender has given notice of
any such Change of Law or other event or condition and thereafter becomes
aware that such Change of Law or other event or condition has ceased to
exist, such Lender shall notify Borrower and Agent thereof as promptly as
practical. Each Lender affected by any Change of Law which makes it
unlawful or impossible for such Lender to make or maintain any LIBOR Loan
or to which Borrower is obligated to pay any amount pursuant to
SUBPARAGRAPH 2.10(c) or SUBPARAGRAPH 2.10(d) shall use reasonable
commercial efforts (including changing the jurisdiction of its Applicable
Lending Office) to avoid the effect of such Change of Law or to avoid or
materially reduce any amounts which Borrower is obligated to pay pursuant
to SUBPARAGRAPH 2.10(c) or SUBPARAGRAPH 2.10(d) if, in the reasonable
opinion of such Lender, such efforts would not be disadvantageous to such
Lender or contrary to such Lender's normal banking practices.
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2.11. TAXES ON PAYMENTS.
(a) PAYMENTS FREE OF TAXES. All payments made by Borrower under this
Agreement and the other Credit Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority (except net
income taxes and franchise taxes in lieu of net income taxes imposed on
Agent or any Lender by its jurisdiction of incorporation or the
jurisdiction in which its Applicable Lending Office is located) (all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "TAXES"). If any Taxes are required
to be withheld from any amounts payable to Agent or any Lender hereunder or
under the other Credit Documents, the amounts so payable to Agent or such
Lender shall be increased to the extent necessary to yield to Agent or such
Lender (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this
Agreement and the other Credit Documents. Whenever any Taxes are payable
by Borrower, as promptly as possible thereafter, Borrower shall send to
Agent for its own account or for the account of such Lender, as the case
may be, a certified copy of an original official receipt received by
Borrower showing payment thereof. If Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to Agent the
required receipts or other required documentary evidence, Borrower shall
indemnify Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by Agent or any Lender as a result of any
such failure. The obligations of Borrower under this SUBPARAGRAPH 2.11(a)
shall survive the payment and performance of the Obligations and the
termination of this Agreement; PROVIDED, HOWEVER, that any Lender must
submit a demand for payment pursuant to this provision within six (6)
months after such Lender has first conclusively determined that such
reimbursement or compensation is due such Lender under this and similar
agreements.
(b) WITHHOLDING EXEMPTION CERTIFICATES. On or prior to the date of
the initial Borrowing or, if such date does not occur within thirty (30)
days after the date of this Agreement, by the end of such 30-day period,
each Lender which is not incorporated under the laws of the United States
of America or a state thereof shall deliver to Borrower and Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224 (or successor applicable form), as the case may be, certifying in each
case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes.
Each Lender which delivers to Borrower and Agent a Form 1001 or 4224
pursuant to the immediately preceding sentence further undertakes to
deliver to Borrower and Agent two further copies of Form 1001 or 4224 (or
successor applicable forms), or other manner of certification or procedure,
as the case may be, on or before the date that any such form expires or
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becomes obsolete or after the occurrence of any event requiring a change in
the most recent form previously delivered by it to Borrower and Agent, and
such extensions or renewals thereof as may reasonably be requested by
Borrower or Agent, certifying in the case of a Form 1001 or 4224 that the
Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, unless
in any such cases an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent a Lender from duly completing and
delivering any such form with respect to it and such Lender advises
Borrower and Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
(c) MITIGATION. If Agent or any Lender claims any additional amounts
to be payable to it pursuant to this PARAGRAPH 2.11, such Person shall use
reasonable commercial efforts to file any certificate or document requested
in writing by Borrower (including without limitation copies of Internal
Revenue Service Form 1001 (or successor forms) reflecting a reduced rate of
withholding) or to change the jurisdiction of its Applicable Lending Office
if the making of such a filing or such change in the jurisdiction of its
Applicable Lending Office would avoid the need for or materially reduce the
amount of any such additional amounts which may thereafter accrue and if,
in the reasonable opinion of such Person, in the case of a change in the
jurisdiction of its Applicable Lending Office, such change would not be
disadvantageous to such Person or contrary to such Person's normal banking
practices.
(d) TAX RETURNS. Nothing contained in this PARAGRAPH 2.11 shall
require Agent or any Lender to make available any of its tax returns (or
any other information relating to its taxes which it deems to be
confidential).
2.12. FUNDING LOSS INDEMNIFICATION. If Borrower shall (a) repay,
prepay or convert any LIBOR Loan on any day other than the last day of an
Interest Period therefor (whether a scheduled payment, an optional prepayment or
conversion, a mandatory prepayment or conversion, a payment upon acceleration or
otherwise), (b) fail to borrow any LIBOR Loan for which a Notice of Borrowing
has been delivered to Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) or (c) fail to convert any Loans into LIBOR
Loans in accordance with a Notice of Conversion delivered to Agent (whether as a
result of the failure to satisfy any applicable conditions or otherwise),
Borrower shall, upon demand by any Lender, reimburse such Lender for and hold
such Lender harmless from all costs and losses incurred by such Lender as a
result of such repayment, prepayment, conversion or failure. Borrower
understands that such costs and losses may include, without limitation, losses
incurred by a Lender as a result of funding and other contracts entered into by
such Lender to fund a LIBOR Loan. Each Lender demanding payment under this
PARAGRAPH 2.12 shall deliver to Borrower, with a copy to Agent, a certificate
setting forth the amount of costs and losses for
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which demand is made, which certificate shall set forth in reasonable detail the
calculation of the amount demanded. Such a certificate so delivered to Borrower
shall constitute PRIMA FACIE evidence of such costs and losses. The obligations
of Borrower under this PARAGRAPH 2.12 shall survive the payment and performance
of the Obligations and the termination of this Agreement; PROVIDED, HOWEVER,
that any Lender must submit a demand for payment pursuant to this provision
within six (6) months after such Lender has first conclusively determined that
such reimbursement or compensation is due such Lender under this and similar
agreements.
2.13. REPLACEMENT OF LENDERS. If any Lender shall (a) become a
Defaulting Lender more than two (2) times in a period of twelve (12) consecutive
months, (b) continue as a Defaulting Lender for more than five (5) Business Days
at any time, (c) suspend its obligation to make or maintain LIBOR Loans pursuant
to SUBPARAGRAPH 2.10(a) OR 2.10(b) for a reason which is not applicable to any
other Lender or (d) demand any payment under SUBPARAGRAPH 2.10(c), 2.10(d) OR
2.11(a) for a reason which is not applicable to any other Lender, then Agent may
(or upon the written request of Borrower, shall) replace such Lender (the
"affected Lender"), or cause such affected Lender to be replaced, with another
lender (the "replacement Lender") satisfying the requirements of an Assignee
Lender under SUBPARAGRAPH 8.05(c), by having the affected Lender sell and assign
all of its rights and obligations under this Agreement and the other Credit
Documents to the replacement Lender pursuant to SUBPARAGRAPH 8.05(c); PROVIDED,
HOWEVER, that if Borrower seeks to exercise such right, it must do so within
sixty (60) days after it first knows or should have known of the occurrence of
the event or events giving rise to such right, and neither Agent nor any Lender
shall have any obligation to identify or locate a replacement Lender for
Borrower. Upon receipt by any affected Lender of a written notice from Agent
stating that Agent is exercising the replacement right set forth in this
PARAGRAPH 2.13, such affected Lender shall sell and assign all of its rights and
obligations under this Agreement and the other Credit Documents to the
replacement Lender pursuant to an Assignment Agreement and SUBPARAGRAPH 8.05(c)
for a purchase price equal to the sum of the principal amount of the affected
Lender's Loans so sold and assigned, all accrued and unpaid interest thereon,
and its ratable share of all fees to which it is entitled at such time. Agent
shall endeavor to effect any assignment from an affected Lender to a replacement
Lender as promptly as possible and shall keep Borrower regularly informed of the
timing of any such assignment.
SECTION III. CONDITIONS PRECEDENT.
3.01. INITIAL CONDITIONS PRECEDENT. The obligations of the Lenders to
make the Loans comprising the initial Borrowing and of Issuing Bank to issue the
initial Letter of Credit are subject to receipt by Agent, on or prior to the
Closing Date, of each item listed in SCHEDULE 3.01, each in form and substance
satisfactory to Agent, and with sufficient copies for, Agent and each Lender.
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3.02. CONDITIONS PRECEDENT TO EACH CREDIT EVENT. The occurrence of
each Credit Event (including the initial Borrowing and the initial Letter of
Credit) is subject to the further conditions that:
(a) Borrower shall have delivered to Agent (and Issuing Bank, in the
case of an LC Application) the Notice of Borrowing, Notice of Conversion,
Notice of Interest Period Selection or LC Application, as the case may be,
for such Credit Event in accordance with this Agreement; and
(b) On the date such Credit Event is to occur and after giving effect
to such Credit Event, the following shall be true and correct:
(i) The representations and warranties of Borrower and its
Subsidiaries set forth in PARAGRAPH 4.01 and in the other Credit
Documents are true and correct in all material respects as if made on
such date (except for representations and warranties expressly made as
of a specified date, which shall be true as of such date);
(ii) No Default or Event of Default has occurred and is
continuing or will result from such Credit Event; and
(iii) All of the Credit Documents are in full force and effect.
The submission by Borrower to Agent of each Notice of Borrowing, each
Notice of Conversion (other than a notice for a conversion to a Base Rate
Loan), each Notice of Interest Period Selection and each LC Application
shall be deemed to be a representation and warranty by Borrower that each
of the statements set forth above in this SUBPARAGRAPH 3.02(b) is true and
correct as of the date of such notice.
3.03. COVENANT TO DELIVER. Borrower agrees (not as a condition but as
a covenant) to deliver to Agent each item required to be delivered to Agent as a
condition to the occurrence of any Credit Event if such Credit Event occurs.
Borrower expressly agrees that the occurrence of any such Credit Event prior to
the receipt by Agent of any such item shall not constitute a waiver by Agent or
any Lender of Borrower's obligation to deliver such item.
SECTION IV. REPRESENTATIONS AND WARRANTIES.
4.01. BORROWER'S REPRESENTATIONS AND WARRANTIES. In order to induce
Agent and the Lenders to enter into this Agreement, Borrower hereby represents
and warranties to Agent and the Lenders as follows:
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(a) DUE INCORPORATION, QUALIFICATION, ETC. Each of Borrower and
Borrower's Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation;
(ii) has the power and authority to own, lease and operate its properties
and carry on its business as now conducted; and (iii) is duly qualified,
licensed to do business and in good standing as a foreign corporation in
each jurisdiction where the failure to be so qualified or licensed is
reasonably likely to have a Material Adverse Effect.
(b) AUTHORITY. The execution, delivery and performance by Borrower
of each Credit Document executed, or to be executed, by Borrower and the
consummation of the transactions contemplated thereby (i) are within the
power of Borrower and (ii) have been duly authorized by all necessary
actions on the part of Borrower.
(c) ENFORCEABILITY. Each Credit Document executed, or to be
executed, by Borrower has been, or will be, duly executed and delivered by
Borrower and constitutes, or will constitute, a legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and general principles of equity.
(d) NON-CONTRAVENTION. The execution and delivery by Borrower of the
Credit Documents executed by Borrower and the performance and consummation
of the transactions contemplated thereby do not (i) violate any Requirement
of Law applicable to Borrower; (ii) violate any provision of, or result in
the breach or the acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or both),
any Contractual Obligation of Borrower; or (iii) result in the creation or
imposition of any Lien (or the obligation to create or impose any Lien)
upon any property, asset or revenue of Borrower (except such Liens as may
be created in favor of Agent pursuant to this Agreement or the other Credit
Documents).
(e) APPROVALS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or
other Person (including, without limitation, the shareholders of any
Person) is required in connection with the execution and delivery of the
Credit Documents executed by Borrower and the performance and consummation
of the transactions contemplated thereby, except such as have been made or
obtained and are in full force and effect.
(f) NO VIOLATION OR DEFAULT. Neither Borrower nor any of its
Subsidiaries is in violation of or in default with respect to (i) any
Requirement of Law applicable to such Person; (ii) any Contractual
Obligation of such Person (nor is there any waiver in effect which, if not
in effect, would result in such a violation or default), where, in each
case, such violation or default is reasonably likely to have a Material
Adverse Effect. Without
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limiting the generality of the foregoing, neither Borrower nor any of its
Subsidiaries (A) has violated any Environmental Laws, (B) has any liability
under any Environmental Laws or (C) has received notice or other
communication of an investigation or is under investigation by any
Governmental Authority having authority to enforce Environmental Laws,
where such violation, liability or investigation is reasonably likely to
have a Material Adverse Effect. No Event of Default or Default has
occurred and is continuing.
(g) LITIGATION. No actions (including, without limitation,
derivative actions), suits, proceedings or investigations are pending or,
to the knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries at law or in equity in any court or before any other
Governmental Authority which (i) is reasonably likely (alone or in the
aggregate) to have a Material Adverse Effect or (ii) seeks to enjoin,
either directly or indirectly, the execution, delivery or performance by
Borrower of the Credit Documents or the transactions contemplated thereby.
(h) TITLE; POSSESSION UNDER LEASES. Borrower and its Subsidiaries
(i) own and have good and marketable title (without regard to minor defects
of title) to the real property owned by Borrower and its Subsidiaries, as
reflected in the most recent Financial Statements delivered to Agent
(except those assets and properties disposed of since the date of such
Financial Statements in compliance with this Agreement), (ii) have valid
leasehold interests in all real property leased by Borrower and its
Subsidiaries, (iii) own and have good title (without regard to minor
defects of title) to all their other respective properties and assets which
are material to the business of Borrower and its Subsidiaries, as reflected
in the most recent Financial Statements delivered to Agent (except those
assets and properties disposed of since the date of such Financial
Statements in compliance with this Agreement) and (iv) own and have good
title (without regard to minor defects of title) to all respective
properties and assets acquired by Borrower and its Subsidiaries since such
date which are material to the business of Borrower and its Subsidiaries
(except those assets and properties disposed of in compliance with this
Agreement). Such assets and properties are subject to no Lien, except for
Permitted Liens. Each of Borrower and its Subsidiaries enjoys peaceful and
undisturbed possession under all leases, except for any failure to enjoy
such possession which (alone or in the aggregate with any other such
failures) is not reasonably likely to have a Material Adverse Effect.
(i) FINANCIAL STATEMENTS. The Financial Statements of Borrower and
its Subsidiaries which have been delivered to Agent, (i) are in accordance
with the books and records of Borrower and its Subsidiaries, which have
been maintained in accordance with good business practice; (ii) have been
prepared in conformity with GAAP; and (iii) fairly present the financial
conditions and results of operations of Borrower and its Subsidiaries as of
the date thereof and for the period covered thereby. Neither Borrower nor
any of its Subsidiaries has any contingent obligations, liability for taxes
or other outstanding
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obligations which are material in the aggregate, except as disclosed in the
audited Financial Statements of Borrower and its Subsidiaries for the
fiscal year ending June 30, 1995, and the unaudited Financial Statements of
Borrower and its Subsidiaries for the fiscal quarter ending September 30,
1995, furnished by Borrower to Agent prior to the date hereof, or in the
Financial Statements delivered to Agent and Lenders pursuant to
SUBPARAGRAPH 5.01(a)(i) OR (ii).
(j) EQUITY SECURITIES. As of the Closing Date, the authorized Equity
Securities of Borrower consist of ninety million (90,000,000) shares of
common stock. All outstanding Equity Securities of Borrower are duly
authorized, validly issued, fully paid and non-assessable. Other than
Borrower's $66,000,000 Six Percent (6%) Convertible Subordinated Debentures
due 2003, there are no outstanding subscriptions, options, conversion
rights, warrants or other agreements or commitments of any nature
whatsoever (firm or conditional) obligating Borrower to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional Equity
Securities of Borrower, or obligating Borrower to grant, extend or enter
into any such agreement or commitment. All Equity Securities of Borrower
have been offered and sold in compliance with all federal and state
securities laws and all other Requirements of Law.
(k) NO AGREEMENTS TO SELL ASSETS, ETC. Neither Borrower nor any of
its Subsidiaries has any legal obligation, absolute or contingent, to any
Person to sell the assets of Borrower or any of its Subsidiaries (other
than sales in the ordinary course of business), or to effect any merger,
consolidation or other reorganization of Borrower or any of its
Subsidiaries or to enter into any agreement with respect thereto.
(l) EMPLOYEE BENEFIT PLANS.
(i) Based on the latest valuation of each Employee Benefit Plan
that either Borrower or any ERISA Affiliate maintains or contributes
to, or has any obligation under (which occurred within twelve months
of the date of this representation), the aggregate benefit liabilities
of such plan within the meaning of Section 4001 of ERISA did not
exceed the aggregate value of the assets of such plan. Neither
Borrower nor any ERISA Affiliate has any liability with respect to any
post-retirement benefit under any Employee Benefit Plan which is a
welfare plan (as defined in section 3(1) of ERISA), other than
liability for health plan continuation coverage described in Part 6 of
Title I(B) of ERISA, which liability for health plan contribution
coverage is not reasonably likely to have a Material Adverse Effect.
(ii) Each Employee Benefit Plan complies, in both form and
operation, in all material respects, with its terms, ERISA and the
Code, and no condition exists or event has occurred with respect to
any such plan which would result in the
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incurrence by either Borrower or any ERISA Affiliate of any material
liability, fine or penalty. Each Employee Benefit Plan, related trust
agreement, arrangement and commitment of Borrower or any ERISA
Affiliate is legally valid and binding and in full force and effect.
No Employee Benefit Plan is being audited or investigated by any
government agency or is subject to any pending or threatened claim or
suit. Neither Borrower nor any ERISA Affiliate nor any fiduciary of
any Employee Benefit Plan has engaged in a prohibited transaction
under section 406 of ERISA or section 4975 of the Code.
(iii) Neither Borrower nor any ERISA Affiliate contributes to or
has any material contingent obligations to any Multiemployer Plan.
Neither Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer
Plan under Section 4201 of ERISA or as a result of a sale of assets
described in Section 4204 of ERISA. Neither Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of
Section 4241 or Section 4245 of ERISA or that any Multiemployer Plan
intends to terminate or has been terminated under Section 4041A of
ERISA.
(m) OTHER REGULATIONS. Borrower is not subject to regulation under
the Investment Company Act of 1940, the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or to any other Governmental Rule limiting its
ability to incur indebtedness.
(n) PATENT AND OTHER RIGHTS. Borrower and its Subsidiaries own or
license under validly existing agreements, and have the full right to
license without the consent of any other Person, all patents, licenses,
trademarks, trade names, trade secrets, service marks, copyrights and all
rights with respect thereto, which are required to conduct their businesses
as now conducted.
(o) GOVERNMENTAL CHARGES AND OTHER INDEBTEDNESS. Borrower and its
Subsidiaries have filed or caused to be filed all tax returns which are
required to be filed by them. Borrower and its Subsidiaries have paid, or
made provision for the payment of, all taxes and other Governmental Charges
which have or may have become due pursuant to said returns or otherwise and
all other indebtedness, except such Governmental Charges or indebtedness,
if any, which are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided or which
are not reasonably likely to have a Material Adverse Effect if unpaid.
(p) MARGIN STOCK. Borrower owns no Margin Stock which, in the
aggregate, would constitute a substantial part of the assets of Borrower,
and no proceeds of any Loan
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and no Letter of Credit will be used to purchase or carry, directly or
indirectly, any Margin Stock or to extend credit, directly or indirectly,
to any Person for the purpose of purchasing or carrying any Margin Stock.
(q) SUBSIDIARIES, ETC. Set forth in SCHEDULE 4.01(q) (as
supplemented by Borrower from time to time in a written notice to Agent and
the Lenders) is a complete list of all of Borrower's Subsidiaries, the
jurisdiction of incorporation of each, and the percentage of shares of such
Subsidiary owned directly or indirectly by Borrower (which in the event
there is more than one class of Equity Securities and/or Borrower, directly
or indirectly, owns less than 100% of any Equity Securities of such
Subsidiary, such information shall list the classes of Equity Securities
and/or the number and percentage of Equity Securities owned directly or
indirectly by Borrower). Except for such Subsidiaries, Borrower has no
Subsidiaries, is not a partner in any partnership or a joint venturer in
any joint venture.
(r) CATASTROPHIC EVENTS. Neither Borrower nor any of its
Subsidiaries and none of their properties is or has been affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or other casualty that is
reasonably likely to have a Material Adverse Effect. There are no disputes
presently subject to grievance procedure, arbitration or litigation under
any of the collective bargaining agreements, employment contracts or
employee welfare or incentive plans to which Borrower or any of its
Subsidiaries is a party, and there are no strikes, lockouts, work stoppages
or slowdowns, or, to the best knowledge of Borrower, jurisdictional
disputes or organizing activities occurring or threatened which alone or in
the aggregate are reasonably likely to have a Material Adverse Effect.
(s) BURDENSOME CONTRACTUAL OBLIGATIONS, ETC. Neither Borrower nor
any of its Subsidiaries and none of their properties is subject to any
Contractual Obligation or Requirement of Law which is reasonably likely to
have a Material Adverse Effect.
(t) NO MATERIAL ADVERSE EFFECT. No event has occurred and no
condition exists which is reasonably likely to have a Material Adverse
Effect.
(u) ACCURACY OF INFORMATION FURNISHED. None of the Credit Documents
and none of the other certificates, statements or information furnished to
Agent or any Lender by or on behalf of Borrower or any of its Subsidiaries
in connection with the Credit Documents or the transactions contemplated
thereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
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4.02. REAFFIRMATION. Borrower shall be deemed to have reaffirmed, for
the benefit of the Lenders and Agent, each representation and warranty contained
in PARAGRAPH 4.01 on and as of the date of each Credit Event (except for
representations and warranties expressly made as of a specified date, which
shall be true as of such date).
SECTION V. COVENANTS.
5.01. AFFIRMATIVE COVENANTS. Until the termination of this Agreement
and the satisfaction in full by Borrower of all Obligations, Borrower will
comply, and will cause compliance, with the following affirmative covenants,
unless Required Lenders shall otherwise consent in writing:
(a) FINANCIAL STATEMENTS, REPORTS, ETC. Borrower shall furnish to
Agent for each Lender the following, each in such form and such detail as
Agent shall reasonably request (copies of which Agent shall promptly
deliver to each Lender):
(i) As soon as available and in no event later than fifty (50)
days after the last day of each fiscal quarter of Borrower, a copy of
the Financial Statements of Borrower and its Subsidiaries (prepared on
a consolidated basis) for such quarter and for the fiscal year to
date, certified by the president or chief financial officer of
Borrower to present fairly the financial condition, results of
operations and other information reflected therein and to have been
prepared in accordance with GAAP (subject to normal year-end audit
adjustments);
(ii) As soon as available and in no event later than one hundred
(100) days after the close of each fiscal year of Borrower, (A) copies
of the audited Financial Statements of Borrower and its Subsidiaries
(prepared on a consolidated basis) for such year, prepared by
independent certified public accountants of recognized national
standing acceptable to Agent, and (B) copies of the unqualified
opinions (or qualified opinions reasonably acceptable to Agent) and
management letters delivered by such accountants in connection with
all such Financial Statements;
(iii) Contemporaneously with the quarterly and year-end Financial
Statements required by the foregoing CLAUSES (i) AND (ii), a
compliance certificate (the "COMPLIANCE CERTIFICATE") of the president
or chief financial officer of Borrower which (A) states that no Event
of Default and no Default has occurred and is continuing, or, if any
such Event of Default or Default has occurred and is continuing, a
statement as to the nature thereof and what action Borrower proposes
to take with respect thereto, and (B) sets forth, for the quarter or
year covered by such Financial Statements or as of the last day of
such quarter or year (as the case may be), the calculation of the
financial ratios and tests provided in
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SUBPARAGRAPH 5.02(l) and the calculation of the Applicable Margins,
Commitment Fee percentages and LC Usage Fee percentages for such
quarter determined in accordance with the Pricing Grid;
(iv) As soon as possible and in no event later than five (5)
Business Days after any officer of Borrower knows of the occurrence or
existence of (A) any Reportable Event under any Employee Benefit Plan
or Multiemployer Plan; (B) any actual litigation or threatened
litigation which has a reasonable likelihood of leading to actual
litigation, suits, claims or disputes against Borrower or any of its
Subsidiaries involving potential monetary damages payable by Borrower
or its Subsidiaries of $5,000,000 or more alone and/or $10,000,000 or
more in the aggregate; (C) any other event or condition which is
reasonably likely to have a Material Adverse Effect; or (D) any
Default or Event of Default; the statement of the president or chief
financial officer of Borrower setting forth details of such event,
condition, Default or Event of Default and the action which Borrower
proposes to take with respect thereto;
(v) As soon as available and in no event later than five (5)
Business Days after they are sent, made available or filed, copies of
(a) all registration statements and reports filed by Borrower or any
of its Subsidiaries with any securities exchange or the Securities and
Exchange Commission (including, without limitation, all 10-Q, 10-K and
8-Q reports); (B) all reports, proxy statements and financial
statements sent or made available by Borrower or any of its
Subsidiaries to its security holders; and (C) all press releases and
other similar public concerning any material developments in the
business of Borrower or any of its Subsidiaries made available by
Borrower or any of its Subsidiaries to the public generally; and
(vi) Such other instruments, agreements, certificates, opinions,
statements, documents and information relating to the operations or
condition (financial or otherwise) of Borrower or its Subsidiaries,
and compliance by Borrower with the terms of this Agreement and the
other Credit Documents as Agent may from time to time reasonably
request.
(b) BOOKS AND RECORDS. Borrower and its Subsidiaries shall at all
times keep proper books of record and account in which full, true and
correct entries will be made of their transactions in accordance with GAAP,
or if, with respect to any Subsidiary for which United States accounting
principles are inapplicable, generally accepted accounting principles in
the jurisdiction in which such Subsidiary is organized.
(c) INSPECTIONS. Borrower and its Subsidiaries shall permit any
Person designated by Agent or any Lender, upon reasonable notice and during
normal business hours, to visit and inspect any of the properties and
offices of Borrower and its
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Subsidiaries, to examine the books and records of Borrower and its
Subsidiaries and make copies thereof and to discuss the affairs, finances
and accounts of Borrower and its Subsidiaries with, and to be advised as to
the same by, their officers, auditors and accountants, all at such times
and intervals as Agent or any Lender may reasonably request; PROVIDED,
HOWEVER, so long as no Default or Event of Default has occurred and is
continuing, such inspection and examination by any Lender (other than
Agent) shall be at the expense of such Lender.
(d) INSURANCE. Borrower and its Subsidiaries shall:
(i) Carry and maintain insurance of the types and in the amounts
customarily carried from time to time during the term of this
Agreement by others engaged in substantially the same business as such
Person and operating in the same geographic area as such Person,
including, but not limited to, fire, public liability, property damage
and worker's compensation; and
(ii) Deliver to Agent from time to time, as Agent may request,
schedules setting forth all insurance then in effect.
(e) GOVERNMENTAL CHARGES AND OTHER INDEBTEDNESS. Borrower and its
Subsidiaries shall promptly pay and discharge when due (i) all taxes and
other Governmental Charges prior to the date upon which penalties accrue
thereon, (ii) all indebtedness which, if unpaid, could become a Lien upon
the property of Borrower or its Subsidiaries and (iii) all other
Indebtedness which, if unpaid, is reasonably likely to have a Material
Adverse Effect, except such Indebtedness as may in good faith be contested
or disputed, or for which arrangements for deferred payment have been made,
provided that in each such case appropriate reserves are maintained to the
reasonable satisfaction of Agent.
(f) USE OF PROCEEDS. Borrower shall use the proceeds of the Loans
only for the purposes set forth in SUBPARAGRAPH 2.01(g) and any Letters of
Credit only for the purposes set forth in SUBPARAGRAPH 2.02(g). Borrower
shall not use any part of the proceeds of any Loan or any Letter of Credit,
directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock or for the purpose of purchasing or carrying or trading in any
securities under such circumstances as to involve Borrower, any Lender or
Agent in a violation of Regulations G, T, U or X issued by the Federal
Reserve Board.
(g) GENERAL BUSINESS OPERATIONS. Except as permitted in SUBPARAGRAPH
5.02(d), each of Borrower and its Subsidiaries shall (i) preserve and
maintain its corporate existence and all of its rights, privileges and
franchises reasonably necessary to the conduct of its business; PROVIDED,
HOWEVER, that from time to time, Borrower may, in the ordinary course of
business, dissolve any Subsidiary which is not a Material
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Subsidiary, so long as both immediately before and after giving effect to
such dissolution, no Default or Event of Default shall have occurred and be
continuing, (ii) conduct its business activities in compliance with all
Requirements of Law and Contractual Obligations applicable to such Person,
the violation of which is reasonably likely to have a Material Adverse
Effect, and (iii) keep all property useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted.
Borrower shall maintain its chief executive office and principal place of
business in the United States.
(h) PARI PASSU RANKING. Borrower shall take, or cause to be taken,
all actions necessary to ensure that the Obligations of Borrower are and
continue to rank at least PARI PASSU in right of payment with all other
unsecured Senior Indebtedness of Borrower.
5.02. NEGATIVE COVENANTS. Until the termination of this Agreement and
the satisfaction in full by Borrower of all Obligations, Borrower will comply,
and will cause compliance, with the following negative covenants, unless
Required Lenders shall otherwise consent in writing:
(a) INDEBTEDNESS. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Indebtedness except for the
following ("PERMITTED INDEBTEDNESS"):
(i) The Obligations of Borrower under the Credit Documents;
(ii) Indebtedness of Borrower and its Subsidiaries listed in
SCHEDULE 5.02(a) and existing on the date of this Agreement;
(iii) Indebtedness of Borrower and its Subsidiaries arising from
the endorsement of instruments for collection in the ordinary course
of Borrower's or a Subsidiary's business;
(iv) Indebtedness of Borrower and its Subsidiaries for trade
accounts payable, provided that (A) such accounts arise in the
ordinary course of business and (B) no material part of such account
is more than ninety (90) days past due (unless subject to a bona fide
dispute and for which adequate reserves have been established);
(v) Indebtedness of Borrower and its Subsidiaries under interest
rate protection, currency swap and foreign exchange arrangements,
provided that all such arrangements are entered into in connection
with bona fide hedging operations and not for speculation;
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(vi) Indebtedness of Borrower and its Subsidiaries under purchase
money loans (including any synthetic leases) and Capital Leases
incurred by Borrower or any of its Subsidiaries to finance the
acquisition by such Person of real property, fixtures or equipment
provided that in each case, (A) such Indebtedness is incurred by such
Person at the time of, or not later than ninety (90) days after, the
acquisition by such Person of the property so financed and (B) such
Indebtedness does not exceed the purchase price of the property so
financed;
(vii) Indebtedness of Borrower and its Subsidiaries under initial
or successive refinancings of any Indebtedness permitted by CLAUSE
(ii) above, provided that (A) the principal amount of any such
refinancing does not exceed the principal amount of the Indebtedness
being refinanced and (B) the material terms and provisions of any such
refinancing (including maturity, redemption, prepayment, default and
subordination provisions) are no less favorable to the Lenders than
the Indebtedness being refinanced;
(viii) Indebtedness of Borrower and its Subsidiaries with respect
to surety, appeal, indemnity, performance or other similar bonds in
the ordinary course of business;
(ix) Guaranty Obligations of Borrower in respect of Permitted
Indebtedness of its Subsidiaries;
(x) Indebtedness of Borrower to any of its Subsidiaries,
Indebtedness of any of Borrower's Subsidiaries to Borrower or
Indebtedness of any of Borrower's Subsidiaries to any of Borrower's
other Subsidiaries, provided that any Indebtedness of Borrower to any
of its Subsidiaries and any Indebtedness of any of Borrower's
Subsidiaries to Borrower shall be subject to SUBPARAGRAPH 5.02;
(xi) unsecured Indebtedness of Borrower which is subordinated to
the Obligations, provided that the payment terms, interest rate and
subordination provisions of such Indebtedness are reasonably
acceptable to Required Lenders;
(xii) Indebtedness of Borrower and its Subsidiaries with respect
to the sale, transfer or assignment of accounts receivable of Borrower
and its Subsidiaries and certain rights and property related to the
collection of or constituting proceeds of such accounts receivable,
provided that such sale, assignment or transfer is (A) in the ordinary
course of business, (B) for cash, (C) with recourse to Borrower or
such Subsidiary in an amount not to exceed the aggregate face amount
of the accounts receivable sold and certain additional interest
charges with respect to such Indebtedness, (D) otherwise permitted
under SUBPARAGRAPH 5.02(c)(vii), and
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(E) both immediately before and after giving effect to such
Indebtedness, no Default or Event of Default shall have occurred and
be continuing; and
(xiii) Other unsecured Senior Indebtedness of Borrower and its
Subsidiaries in addition to that otherwise permitted above, provided
that both immediately before incurring and after giving effect to such
unsecured Senior Indebtedness, Borrower shall be in compliance with
the financial covenants set forth in SUBPARAGRAPH 5.02(l) and no other
Default or Event of Default shall have occurred and be continuing.
(b) LIENS. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Lien on or with respect to any
of its assets or property of any character, whether now owned or hereafter
acquired, except for the following ("PERMITTED LIENS"):
(i) Liens in favor of Agent or any Lender securing the
Obligations;
(ii) Liens listed in SCHEDULE 5.02(b) and existing on the date of
this Agreement;
(iii) Liens for taxes or other Governmental Charges not at the
time delinquent or thereafter payable without penalty or being
contested in good faith, provided that adequate reserves for the
payment thereof have been established in accordance with GAAP;
(iv) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords and other similar Liens imposed by law incurred
in the ordinary course of business for sums not overdue or being
contested in good faith, provided that adequate reserves for the
payment thereof have been established in accordance with GAAP;
(v) Deposits under workers' compensation, unemployment insurance
and social security laws or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or
leases, or to secure statutory obligations of surety or appeal bonds
or to secure indemnity, performance or other similar bonds in the
ordinary course of business;
(vi) Zoning restrictions, easements, rights-of-way, title
irregularities and other similar encumbrances, which alone or in the
aggregate are not substantial in amount and do not materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of Borrower or any of its
Subsidiaries;
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(vii) Banker's Liens and similar Liens (including set-off rights)
in respect of bank deposits;
(viii) Liens on property or assets of any corporation which becomes
a Subsidiary of Borrower after the date of this Agreement, provided
that (A) such Liens exist at the time the stock of such corporation is
acquired by Borrower and (B) such Liens were not created in
contemplation of such acquisition by Borrower;
(ix) Judgement Liens, provided that such Liens do not have a
value in excess of $5,000,000 or such Liens are released, stayed,
vacated or otherwise dismissed within sixty (60) days after issue or
levy and, if so stayed, such stay is not thereafter removed;
(x) Rights of vendors or lessors under conditional sale
agreements, Capital Leases or other title retention agreements
(including synthetic leases), provided that, in each case, (A) such
rights secure or otherwise relate to Permitted Indebtedness, (B) such
rights do not extend to any property other than property acquired with
the proceeds of such Permitted Indebtedness (other than cash pledged
to secure obligations under synthetic leases in an amount not to
exceed, together with any amounts pledged under CLAUSE (xiii),
$70,000,000 in the aggregate during the term of this Agreement,
provided that both immediately before and after giving effect to any
such cash collateralization, Borrower shall be in compliance with the
financial covenants set forth in SUBPARAGRAPH 5.02(l) and no other
Default or Event of Default shall have occurred and be continuing) and
(C) such rights do not secure any Indebtedness other than such
Permitted Indebtedness;
(xi) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties and in connection
with the importation of goods in the ordinary course of Borrower's and
its Subsidiaries' businesses;
(xii) Liens securing Indebtedness which constitutes Permitted
Indebtedness under CLAUSE (vi) OF SUBPARAGRAPH 5.02(a) provided that,
in each case, such Lien (A) covers only those assets, the acquisition
of which was financed by such Permitted Indebtedness, and (B) secures
only such Permitted Indebtedness;
(xiii) Liens securing Indebtedness which constitutes Permitted
Indebtedness under CLAUSE (xii) OF SUBPARAGRAPH 5.02(a) provided that,
in each case, such Lien (A) secures only such Permitted Indebtedness,
and (B) such Liens do not extend to any assets or property other than
the assets or property sold (other than cash
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pledged under certain circumstances to secure such Permitted
Indebtedness in an aggregate amount not to exceed, together with any
amounts pledged under CLAUSE (x), $70,000,000 in the aggregate during
the term of this Agreement, provided that both immediately before and
after giving effect to any such cash collateralization, Borrower shall
be in compliance with the financial covenants set forth in
SUBPARAGRAPH 5.02(1) and no other Default or Event of Default shall
have occurred and be continuing);
(xiv) Liens on the property or assets of any Subsidiary of
Borrower in favor of Borrower or any other Subsidiary of Borrower;
(xv) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by the Liens described in
CLAUSE (ii) OR (xii) above, provided that any extension, renewal or
replacement Lien (A) is limited to the property covered by the
existing Lien and (B) secures Indebtedness which is no greater in
amount and has material terms no less favorable to the Lenders than
the Indebtedness secured by the existing Lien; and
(xvi) Liens on insurance proceeds in favor of insurance companies
with respect to the financing of insurance premiums.
(c) ASSET DISPOSITIONS. Neither Borrower nor any of its Subsidiaries
shall sell, lease, transfer or otherwise dispose of any of its assets or
property, whether now owned or hereafter acquired, except for the
following:
(i) Sales of inventory by Borrower and its Subsidiaries in the
ordinary course of their businesses;
(ii) Sales of surplus, damaged, worn or obsolete equipment or
inventory for not less than fair market value;
(iii) Sales or other dispositions of Investments permitted by
CLAUSE (i) OF SUBPARAGRAPH 5.02(e) for not less than fair market
value;
(iv) Sales or assignments of defaulted receivables to a
collection agency in the ordinary course of business;
(v) Licenses by Borrower or its Subsidiaries of its patents,
copyrights, trademarks, trade names and service marks in the ordinary
course of its business;
(vi) Sales or other dispositions of assets and property by
Borrower to any of Borrower's Subsidiaries or by any of Borrower's
Subsidiaries to Borrower or any
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of its other Subsidiaries, provided that the terms of any such sales
or other dispositions by or to Borrower are terms which are no less
favorable to Borrower then would prevail in the market for similar
transactions between unaffiliated parties dealing at arm's length;
(vii) Sales, for cash, in the ordinary course of business of
(A) accounts receivable of Borrower's foreign Subsidiaries and certain
rights and property of Borrower's foreign Subsidiaries related to the
collection of or constituting proceeds of such accounts receivable,
and (B) accounts receivable of Borrower and certain rights and
property of Borrower related to the collection of or constituting
proceeds of such accounts receivable in an aggregate amount not to
exceed at any time fifteen percent (15%) of Borrower's aggregate
accounts receivable, as measured at the end of each fiscal quarter of
Borrower, and in each case with respect to the foregoing (A) and (B),
with or without recourse, at a discount rate not to exceed twenty
percent (20%); and
(viii) Other sales, leases, transfers and disposals of assets and
property (other than sales, leases, transfers and disposals of
accounts receivable and related rights and property which shall be
permitted only as expressly set forth in CLAUSE (vii) above), provided
that the aggregate value of all such assets and property (based upon
the greater of the fair market or book value of such assets and
property) so sold, leased, transferred or otherwise disposed of in any
fiscal year on a rolling aggregate basis does not exceed ten percent
(10%) of Borrower's Tangible Net Worth as measured at the end of each
fiscal quarter of Borrower.
(d) MERGERS, ACQUISITIONS, ETC. Neither Borrower nor any of its
Subsidiaries shall consolidate with or merge into any other Person or
permit any other Person to merge into it, acquire or establish any
Subsidiary or acquire all or substantially all of the assets of any other
Person, except for the following:
(i) any wholly-owned Subsidiary of Borrower may merge into any
other wholly-owned Subsidiary of Borrower; and
(ii) Borrower or any wholly-owned Subsidiary of Borrower may (A)
acquire all or substantially all of the assets of any Person, (B) any
Person may merge into Borrower or any other wholly-owned Subsidiary of
Borrower, and (C) Borrower or any wholly-owned Subsidiary of Borrower
may establish or acquire Subsidiaries, provided that:
(1) in the event of any merger by any Person into Borrower
or any wholly-owned Subsidiary of Borrower, Borrower or such
wholly-owned Subsidiary is the surviving entity; and
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(2) both immediately prior to and after giving effect to
such merger, acquisition or establishment of a Subsidiary (y) the
aggregate cost of any such merger, acquisition or establishment
of a Subsidiary shall not exceed the amounts permitted under
SUBPARAGRAPH 5.02(e)(ii) and (z) no Default or Event of Default
shall have occurred and be continuing.
(e) INVESTMENTS. Neither Borrower nor any of its Subsidiaries shall
make any Investment except for Investments in the following:
(i) Investments in accordance with the terms of Borrower's Cash
Investment Guidelines as in effect on the Closing Date; and
(ii) Other Investments, provided that the aggregate amount of
such other Investments plus the aggregate cost of assets acquired,
mergers consummated and Subsidiaries established or acquired by
Borrower and its Subsidiaries pursuant to SUBPARAGRAPH 5.02(d) does
not exceed in any fiscal year (a) $50,000,000 for any amounts paid in
cash and (B) $100,000,000 for any amounts paid with shares of common
stock of Borrower (as determined according to the stock price of such
shares on the date of transfer).
(f) DIVIDENDS, REDEMPTIONS, ETC. Neither Borrower nor any of its
Subsidiaries shall pay any dividends or make any distributions on its
Equity Securities; purchase, redeem, retire, defease or otherwise acquire
for value any of its Equity Securities; return any capital to any holder of
its Equity Securities as such; make any distribution of assets, Equity
Securities, obligations or securities to any holder of its Equity
Securities as such; or set apart any sum for any such purpose; EXCEPT
Borrower may repurchase its Equity Securities from management pursuant to
valid stock repurchase arrangements, provided that the aggregate amount of
such repurchases does not exceed $10,000,000 in any fiscal year.
(g) CHANGE IN BUSINESS. Neither Borrower nor any of its Subsidiaries
shall engage, either directly or indirectly through Affiliates, in any
business substantially different from its present business; PROVIDED,
HOWEVER, that Subsidiaries which are not Material Subsidiaries may operate
as holding companies or special tax purpose entities as may be necessary
for the overall operation of the business of Borrower and its Subsidiaries,
so long as the terms of this Agreement and the other Credit Documents would
not otherwise be violated.
(h) INDEBTEDNESS PAYMENTS, ETC. Neither Borrower nor any of its
Subsidiaries shall amend, modify or otherwise change any of the
subordination or other provisions of any document, instrument or agreement
evidencing Subordinated Debt in a manner which
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adversely affects the material rights of the Agent and Lenders. Neither
the Borrower nor any Subsidiary shall purchase, redeem or prepay any
Subordinated Debt, now or hereafter outstanding, except for any DE MINIMIS
redemption required in connection with the conversion of any class of
Subordinated Debt into equity.
(i) ERISA. Neither Borrower nor any ERISA Affiliate shall (i) adopt
or institute any Employee Benefit Plan that is an employee pension benefit
plan within the meaning of Section 3(2) of ERISA, (ii) take any action
which will result in the partial or complete withdrawal, within the
meanings of sections 4203 and 4205 of ERISA, from a Multiemployer Plan,
(iii) engage or permit any Person to engage in any transaction prohibited
by section 406 of ERISA or section 4975 of the Code involving any Employee
Benefit Plan or Multiemployer Plan which would subject either Borrower or
any ERISA Affiliate to any tax, penalty or other liability including a
liability to indemnify, (iv) incur or allow to exist any accumulated
funding deficiency (within the meaning of section 412 of the Code or
section 302 of ERISA), (v) fail to make full payment when due of all
amounts due as contributions to any Employee Benefit Plan or Multiemployer
Plan, (vi) fail to comply with the requirements of section 4980B of the
Code or Part 6 of Title I(B) of ERISA, or (vii) adopt any amendment to any
Employee Benefit Plan which would require the posting of security pursuant
to section 401(a)(29) of the Code, where singly or cumulatively, the above
would have a Material Adverse Effect.
(j) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any of its
Subsidiaries shall enter into any Contractual Obligation with any Affiliate
or engage in any other transaction with any Affiliate except upon terms at
least as favorable to Borrower or such Subsidiary as an arms-length
transaction with unaffiliated Persons.
(k) ACCOUNTING CHANGES. Neither Borrower nor any of its Subsidiaries
shall change (i) its fiscal year (currently July 1 through June 30) or (ii)
its accounting practices except as required by GAAP.
(l) FINANCIAL COVENANTS.
(i) Borrower shall not permit its Quick Ratio during any period
set forth below to be less than the ratio set forth opposite such
period below:
The date of this Agreement -
December 31, 1996 . . . . . . . . . . . . . . . . 1.05;
Thereafter . . . . . . . . . . . . . . . . . . . . . . 1.10.
(ii) Borrower shall not permit its Interest Coverage Ratio for
each period set forth below to be less than the ratio set forth
opposite such period below:
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Each consecutive four quarter
period ending December 31, 1995,
March 31, 1996, June 30, 1996,
September 30, 1996, and December
31, 1996 . . . . . . . . . . . . . . . . . . . . . . 5.00;
Each consecutive four quarter
period ending on the last day
of each quarter thereafter . . . . . . . . . . . . . 6.00.
(iii) Borrower shall not permit its Leverage Ratio during any
period set forth below to be greater than the ratio set forth opposite
such period below:
The date of this Agreement -
December 31, 1996 . . . . . . . . . . . . . . . . 1.20;
January 1, 1997 -
December 31, 1997 . . . . . . . . . . . . . . . . 1.00;
Thereafter . . . . . . . . . . . . . . . . . . . . . . 0.85.
(iv) Borrower shall not permit its Senior Indebtedness Ratio
during any period set forth below to be greater than the ratio set
forth opposite such period below:
The date of this Agreement -
December 31, 1996 . . . . . . . . . . . . . . . . 0.40;
January 1, 1997 -
December 31, 1997 . . . . . . . . . . . . . . . . 0.37;
Thereafter . . . . . . . . . . . . . . . . . . . . . . 0.34.
(v) Borrower shall not permit its Tangible Net Worth on any date
of determination (such date to be referred to herein as a
"determination date") which occurs after June 30, 1995 (such date to
be referred to herein as the "base date") to be less than the sum on
such determination date of the following:
(a) $375,000,000;
(B) Seventy-five percent (75%) of the sum of Borrower's
consolidated quarterly net income (ignoring any quarterly losses)
for each quarter ending after the base date through and including
the quarter ending immediately prior to the determination date;
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(C) One hundred percent (100%) of the Net Proceeds of all
Equity Securities issued by Borrower and its Subsidiaries during
the period commencing on the base date and ending on the
determination date; and
(D) One hundred percent (100%) of the aggregate decrease in
the total liabilities of Borrower and its Subsidiaries resulting
from conversions of convertible Subordinated Indebtedness or
other liabilities of Borrower and its Subsidiaries into Equity
Securities of Borrower and its Subsidiaries during the period
commencing on the base date and ending on the determination date.
(vi) Borrower shall not permit (A) its net income for more than
two quarters in any consecutive four-quarter period to be a loss,
(B) its net income for any one or two quarters in any consecutive
four-quarter period to be a loss exceeding an aggregate amount of
$15,000,000 for any one or both such quarters together, or (C) its
cumulative net income for any consecutive four-quarter period to be a
loss.
SECTION VI. DEFAULT.
6.01. EVENTS OF DEFAULT. The occurrence or existence of any one or
more of the following shall constitute an "EVENT OF DEFAULT" hereunder:
(a) Borrower (i) shall fail to pay when due any principal or interest
on the Loans or any Reimbursement Payment or interest thereon or (ii) shall
fail to pay when due any other payment required under the terms of this
Agreement or any of the other Credit Documents and such failure shall
continue for five (5) Business Days after such other payment was due; or
(b) Borrower or any of its Subsidiaries shall fail to observe or
perform any covenant, obligation, condition or agreement set forth in
SUBPARAGRAPH 5.01(d) or PARAGRAPH 5.02; or
(c) Borrower or any of its Subsidiaries shall fail to observe or
perform any other covenant, obligation, condition or agreement contained in
this Agreement or the other Credit Documents and such failure shall
continue for fifteen (15) days or, provided that Borrower or such
Subsidiary is making good faith efforts to cure such failure and such
failure can be cured within thirty (30) days, such failure shall continue
for thirty (30) days; or
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(d) Any representation, warranty, certificate, information or other
statement (financial or otherwise) made or furnished by or on behalf of
Borrower or any of its Subsidiaries to Agent or any Lender in or in
connection with this Agreement or any of the other Credit Documents, or as
an inducement to Agent or any Lender to enter into this Agreement, shall be
false, incorrect, incomplete or misleading in any material respect when
made or furnished; or
(e) Borrower or any of its Subsidiaries (i) shall fail to make any
payment when due under the terms of any bond, debenture, note or other
evidence of Indebtedness in an amount of $10,000,000 or more to be paid by
such Person (excluding this Agreement and the other Credit Documents but
including any other evidence of Indebtedness of Borrower or any of its
Subsidiaries to Agent or any Lender) and such failure shall continue beyond
any period of grace provided with respect thereto, or shall default in the
observance or performance of any other agreement, term or condition
contained in any such bond, debenture, note or other evidence of
Indebtedness, and the effect of such failure or default is to cause, or
permit the holder or holders thereof to cause such Indebtedness to become
due prior to its stated date of maturity, (ii) shall fail to pay on its
stated date of maturity Indebtedness in an amount of $10,000,000 or more
under any such bond, debenture, note or other evidence of Indebtedness and
such failure shall continue beyond any period of grace provided with
respect thereto, or (iii) there occurs any termination, liquidation, unwind
or similar event under any agreement or instrument relating to the purchase
of receivables of Borrower or its Subsidiaries and as a result Borrower or
such Subsidiary is required to repurchase sold receivables in an amount of
$10,000,000 or more; or
(f) Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian
of itself or of all or a substantial part of its property, (ii) be unable,
or admit in writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated in full or in part,
(v) become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of
or taking possession of its property by any official in an involuntary case
or other proceeding commenced against it, or (vi) take any action for the
purpose of effecting any of the foregoing; or
(g) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of Borrower or any of its Subsidiaries or of all or
a substantial part of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with
respect to Borrower or any of its Subsidiaries or the
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debts thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within sixty (60) days
of commencement; or
(h) (i) A final judgment or order for the payment of money in excess
of $10,000,000 (exclusive of amounts covered by insurance issued by an
insurer not an Affiliate of Borrower and otherwise satisfying the
requirements set forth in SUBPARAGRAPH 5.01(d)) shall be rendered against
Borrower or any of its Subsidiaries and the same shall remain undischarged
for a period of sixty (60) days during which execution shall not be
effectively stayed or (ii) any judgment, writ, assessment, warrant of
attachment, tax lien or execution or similar process shall be issued or
levied against a substantial part of the property of Borrower or any of its
Subsidiaries and such judgment, writ, or similar process shall not be
released, stayed, vacated or otherwise dismissed within sixty (60) days
after issue or levy; or
(i) Any Credit Document or any material term thereof shall cease to
be, or be asserted by Borrower or any of its Subsidiaries not to be, a
legal, valid and binding obligation of Borrower or any of its Subsidiaries
enforceable in accordance with its terms; or
(j) Any Reportable Event which constitutes grounds for the
termination of any Employee Benefit Plan by the PBGC or for the appointment
of a trustee by the PBGC to administer any Employee Benefit Plan shall
occur, or any Employee Benefit Plan shall be terminated within the meaning
of Title IV of ERISA or a trustee shall be appointed by the PBGC to
administer any Employee Benefit Plan; or
(k) a Change of Control shall occur. A "Change of Control"
shall mean (i) the acquisition of beneficial ownership by any "person"
or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, of a direct or indirect
interest in more than thirty-three percent (33%) of the voting power
of the then outstanding capital stock of the Borrower; or (ii) a
merger or consolidation of the Borrower with any other Person or the
merger of any other Person into the Borrower or any other transaction,
as a result of which the stockholders of the Borrower immediately
prior to such transaction own, in the aggregate, less than a majority
of the voting power of the outstanding capital stock of the surviving
or resulting entity; or (iii) the first day on which a majority of the
members of the Board of Directors of the Borrower are not Continuing
Directors. A "Continuing Director" shall mean any director of the
Board of Directors of the Borrower who is either (A) a member of such
Board of Directors on the Closing Date or (B) nominated or elected to
such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at
the time of such nomination or elections; or
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(l) Any event(s) or condition(s) which is(are) reasonably likely to
have a Material Adverse Effect shall occur or exist.
6.02. REMEDIES. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in SUBPARAGRAPH 6.01(f) or
6.01(g)) and at any time thereafter during the continuance of such Event of
Default, Agent may, with the consent of the Required Lenders, or shall, upon
instructions from the Required Lenders, by written notice to Borrower,
(a) terminate the Commitments and the obligations of the Lenders to make Loans
and to participate in Letters of Credit and of Issuing Bank to issue Letters of
Credit, (b) declare all outstanding Obligations payable by Borrower to be
immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the Notes to the contrary notwithstanding, and/or (c) direct
Borrower to deliver to Agent funds in an amount equal to the aggregate stated
amount of all Letters of Credit. Borrower immediately shall deliver to Agent
all funds directed by Agent pursuant to CLAUSE (c) above, and Agent shall hold
such funds in an interest bearing account as collateral for the Obligations.
Borrower hereby grants to Agent, for the benefit of Agent and the Lenders, a
security interest in such funds and such account. Upon the occurrence or
existence of any Event of Default described in SUBPARAGRAPH 6.01(f) or 6.01(g),
immediately and without notice, (1) the Commitments, the obligations of the
Lenders to make Loans and to participate in Letters of Credit, and of the
Issuing Bank to issue Letters of Credit shall automatically terminate and
(2) all outstanding Obligations payable by Borrower hereunder and an amount
equal to the aggregate stated amount of all outstanding Letters of Credit shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein, in the Notes or in the Letters of Credit to
the contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, Agent may, with the consent of
the Required Lenders, or shall, upon the instructions of the Required Lenders,
exercise any right, power or remedy permitted to it by law, either by suit in
equity or by action at law, or both. Immediately after taking any action under
this PARAGRAPH 6.02, Agent shall notify each Lender of such action.
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SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS.
7.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby appoints
and authorizes Agent to act as its agent hereunder and under the other Credit
Documents with such powers as are expressly delegated to Agent by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in any
other Credit Document, be a trustee for any Lender or have any fiduciary duty to
any Lender. Notwithstanding anything to the contrary contained herein Agent
shall not be required to take any action which is contrary to this Agreement or
any other Credit Document or applicable law. Neither Agent nor any Lender shall
be responsible to any other Lender for any recitals, statements, representations
or warranties made by Borrower or any of its Subsidiaries contained in this
Agreement or in any other Credit Document, for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Credit Document or for any failure by Borrower or any of its
Subsidiaries to perform their respective obligations hereunder or thereunder.
Agent may employ agents and attorneys-in-fact and shall not be responsible to
any Lender for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither Agent nor any of
its directors, officers, employees, agents or advisors shall be responsible to
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Credit Document or in connection herewith or therewith,
except for its or their own gross negligence or wilful misconduct. Except as
otherwise provided under this Agreement, Agent shall take such action with
respect to the Credit Documents as shall be directed by the Required Lenders.
7.02. RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, facsimile
or telex) believed by it in good faith to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent with reasonable care. As to any other matters not
expressly provided for by this Agreement, Agent shall not be required to take
any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions of the Required Lenders and shall in all
cases be fully protected by the Lenders in acting, or in refraining from acting,
hereunder or under any other Credit Document in accordance with the instructions
of the Required Lenders, and such instructions of the Required Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.
7.03. DEFAULTS. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default unless Agent has received a
notice from a Lender or Borrower, referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "Notice of
Default". If Agent receives such a notice of the occurrence of a Default or
Event of Default, Agent shall give prompt notice thereof to the Lenders. Agent
shall
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take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; PROVIDED, HOWEVER, that until Agent
shall have received such directions, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders.
7.04. INDEMNIFICATION. Without limiting the Obligations of Borrower
hereunder, each Lender agrees to indemnify Agent, ratably in accordance with
their Proportionate Shares, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of this
Agreement or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or the enforcement of any of the
terms hereof or thereof or of any such other documents; PROVIDED, HOWEVER, that
no Lender shall be liable for any of the foregoing to the extent they arise from
Agent's gross negligence or wilful misconduct. Agent shall be fully justified
in refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The obligations of each Lender under this
PARAGRAPH 7.04 shall survive the payment and performance of the Obligations, the
termination of this Agreement and any Lender ceasing to be a party to this
Agreement.
7.05. NON-RELIANCE. Each Lender represents that it has, independently
and without reliance on Agent, or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of Borrower and the Subsidiaries and its own
decision to enter into this Agreement and agrees that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
appraisals and decisions in taking or not taking action under this Agreement.
Neither Agent nor any Lender shall be required to keep any other Lender informed
as to the performance or observance by Borrower or any of its Subsidiaries of
the obligations under this Agreement or any other document referred to or
provided for herein or to make inquiry of, or to inspect the properties or books
of Borrower or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
Agent hereunder, neither Agent nor any Lender shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning Borrower or any of its Subsidiaries which may come into the
possession of Agent or such Lender or any of its or their Affiliates.
7.06. RESIGNATION OF AGENT. Subject to the appointment and acceptance
of a successor Agent as provided below, Agent may resign at any time by giving
notice thereof to the Lenders. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent, which Agent shall be
reasonably acceptable to Borrower. If no successor Agent shall
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have been appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a bank having a combined capital, surplus and
retained earnings of not less than U.S. $500,000,000 and which shall be
reasonably acceptable to Borrower; PROVIDED, HOWEVER, that Borrower shall have
no right to approve a successor Agent which is a Lender if an Event of Default
has occurred and is continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this SECTION VII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
7.07. AUTHORIZATION. Agent is hereby authorized by the Lenders to
execute, deliver and perform, each of the Credit Documents to which Agent is or
is intended to be a party and each Lender agrees to be bound by all of the
agreements of Agent contained in the Credit Documents.
7.08. AGENT IN ITS INDIVIDUAL CAPACITY. Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with Borrower and its Subsidiaries and affiliates as though Agent were not Agent
hereunder. With respect to Loans, if any, made by Agent in its capacity as a
Lender and Letters of Credit, if any, issued by Agent in its capacity as Issuing
Bank, Agent shall have the same rights and powers under this Agreement and the
other Credit Documents as any other Lender and as Issuing Bank and may exercise
the same as though it were not Agent, and the terms "Lender", "Lenders" and
"Issuing Bank" shall include Agent in its capacity as a Lender and as Issuing
Bank, respectively.
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SECTION VIII. MISCELLANEOUS.
8.01. NOTICES. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Borrower, any Lender, Issuing Bank or Agent under this Agreement or the other
Credit Documents shall be in writing and faxed, mailed or delivered, if to
Borrower, Agent or Issuing Bank, at its respective facsimile number or address
set forth below or, if to any Lender, at the address or facsimile number
specified beneath the heading "Address for Notices" under the name of such
Lender in SCHEDULE I (or to such other facsimile number or address for any party
as indicated in any notice given by that party to the other parties). All such
notices and communications shall be effective (a) when sent by Federal Express
or other overnight service of recognized standing, on the Business Day following
the deposit with such service; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation
of receipt; PROVIDED, HOWEVER, that any notice delivered to Agent or Issuing
Bank under SECTION II shall not be effective until received by Agent or Issuing
Bank.
Agent: ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robin S. Yim
Telephone: (415) 984-3710
Fax No: (415) 362-3524
with a copy to:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 10017
Attn: Linda Boardman
Telephone: (212) 370-8509
Fax No: (212) 682-0364
Issuing Bank: ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robin S. Yim
Telephone: (415) 984-3710
Fax No: (415) 362-3524
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with a copy to:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 10017
Attn: Linda Boardman
Telephone: (212) 370-8509
Fax No: (212) 682-0364
Borrower: Lam Research Corporation
47300 Bayside Parkway
Fremont, CA 94538-6517
Attn: Yuko Hashimoto
Telephone: (510) 572-4887
Fax No: (510) 572-1586
Each Notice of Borrowing, Notice of Conversion, Notice of Interest Period
Selection and LC Application shall be given by Borrower to Agent, and in the
case of an LC Application, to Issuing Bank, as the case may be, to the office of
such Person located at the addresses referred to above during such Person's
normal business hours; PROVIDED, HOWEVER, that any such notice received by any
such Person after 10:00 a.m. on any Business Day shall be deemed received by
such Person on the next Business Day. In any case where this Agreement
authorizes notices, requests, demands or other communications by Borrower to
Agent, Issuing Bank or any Lender to be made by telephone or facsimile, Agent,
Issuing Bank or any Lender may conclusively presume that anyone purporting to be
a person designated in any incumbency certificate or other similar document
received by Agent, Issuing Bank or a Lender is such a person.
8.02. EXPENSES. Borrower shall pay on demand, whether or not any Loan
is made or Letter of Credit is issued hereunder, (A) all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by Agent
in connection with the preparation, negotiation, execution and delivery of, and
the exercise of its duties under, this Agreement and the other Credit Documents,
and the preparation, negotiation, execution and delivery of amendments and
waivers hereunder and thereunder and (b) all reasonable fees and expenses,
including reasonable attorneys' fees and expenses, incurred by Agent and the
Lenders in the enforcement or attempted enforcement of any of the Obligations or
in preserving any of Agent's or the Lenders' rights and remedies (including,
without limitation, all such fees and expenses incurred in connection with any
"workout" or restructuring affecting the Credit Documents or the Obligations or
any bankruptcy or similar proceeding involving Borrower or any of its
Subsidiaries). As used in this Agreement and the other Credit Documents, the
term "reasonable attorneys' fees and expenses" shall include, without
limitation, allocable costs and expenses of Agent's and Lenders' in-house legal
counsel and staff. The obligations of Borrower under this PARAGRAPH 8.02 shall
survive the payment and performance of the Obligations and the termination of
this Agreement.
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8.03. INDEMNIFICATION. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and hold harmless Agent, the
Lenders and their Affiliates and their respective directors, officers,
employees, agents and advisors ("INDEMNITEES") from and against any and all
liabilities, losses, damages or expenses of any kind or nature and from any
suits, claims or demands (including in respect of or for reasonable attorney's
fees and other expenses) arising on account of or in connection with any matter
or thing or action or failure to act by Indemnitees, or any of them, arising out
of or relating to the Credit Documents or any transaction contemplated thereby,
including without limitation any use by Borrower of any proceeds of the Loans or
any Letter of Credit, except to the extent such liability arises from the
willful misconduct or gross negligence of such Indemnitee. Upon receiving
knowledge of any suit, claim or demand asserted by a third party that Agent or
any Lender believes is covered by this indemnity, Agent or such Lender shall
give Borrower notice of the matter and an opportunity to defend it, at
Borrower's sole cost and expense, with legal counsel reasonably satisfactory to
Agent or such Lender, as the case may be. Agent or such Lender may also require
Borrower to defend the matter. Any failure or delay of Agent or any Lender to
notify Borrower of any such suit, claim or demand shall not relieve Borrower of
its obligations under this PARAGRAPH 8.03 but shall reduce such obligations to
the extent of any increase in those obligations caused solely by any such
failure or delay which is unreasonable. The obligations of Borrower under this
PARAGRAPH 8.03 shall survive the payment and performance of the Obligations and
the termination of this Agreement.
8.04. WAIVERS; AMENDMENTS. Any term, covenant, agreement or condition
of this Agreement or any other Credit Document may be amended or waived if such
amendment or waiver is in writing and is signed by Borrower and the Required
Lenders; PROVIDED, HOWEVER that:
(a) Any amendment, waiver or consent which (i) increases the Total
Commitment or the LC Commitment, (ii) extends the Maturity Date,
(iii) reduces the principal of or interest on any Loan or Reimbursement
Obligation or any fees or other amounts payable for the account of the
Lenders hereunder, (iv) postpones any date fixed for any payment of the
principal of or interest on any Loans or Reimbursement Obligations or any
fees or other amounts payable for the account of the Lenders hereunder or
thereunder, (v) amends this PARAGRAPH 8.04, or (vi) amends the definition
of Required Lenders, must be in writing and signed or approved in writing
by all Lenders;
(b) Any amendment, waiver or consent which increases the LC
Commitment or otherwise affects the rights or obligations of the Issuing
Bank must be signed by the Issuing Bank;
(c) Any amendment, waiver or consent which increases or decreases the
Proportionate Share of any Lender must be in writing and signed by such
Lender; and
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(d) Any amendment, waiver or consent which affects the rights or
obligations of Agent must be in writing and signed by Agent.
No failure or delay by Agent or any Lender in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
8.05. SUCCESSORS AND ASSIGNS.
(a) BINDING EFFECT. This Agreement and the other Credit Documents
shall be binding upon and inure to the benefit of Borrower, the Lenders,
Agent, all future holders of the Notes and their respective successors and
permitted assigns, except that Borrower may not assign or transfer any of
its rights or obligations under any Credit Document without the prior
written consent of Agent and each Lender. All references in this Agreement
to any Person shall be deemed to include all successors and assigns of such
Person.
(b) PARTICIPATIONS. Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any
time sell to one or more banks or other financial institutions
("PARTICIPANTS") participating interests in any Loan owing to such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender under this Agreement and the other Credit
Documents; PROVIDED, HOWEVER, that unless such sale is to an Affiliate of
such Lender, (i) no Lender may sell a participating interest in its Loans
or Commitment in a principal amount of less than Five Million Dollars
($5,000,000), and (ii) each Lender shall retain an interest in its Loans or
Commitment which is not participated in a minimum principal amount of Five
Million Dollars ($5,000,000). In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Note for all
purposes under this Agreement and Borrower and Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement; PROVIDED, HOWEVER, that any
agreement pursuant to which any Lender sells a participating interest to a
Participant may require the selling Lender to obtain the consent of such
Participant in order for such Lender to agree in writing to any amendment
of a type specified in CLAUSE (i), (ii), (iii) OR (iv) OF SUBPARAGRAPH
8.04(a). Borrower agrees that if amounts outstanding under this Agreement
and the other Credit Documents are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an
Event of
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Default, each Participant shall, to the fullest extent permitted by law, be
deemed to have the right of setoff in respect of its participating interest
in amounts owing under this Agreement and any other Credit Documents to the
same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement or any other Credit
Documents; PROVIDED, HOWEVER, that (i) no Participant shall exercise any
rights under this sentence without the consent of Agent, (ii) no
Participant shall have any rights under this sentence which are greater
than those of the selling Lender and (iii) such rights of setoff shall be
subject to the obligation of such Participant to share with the Lenders,
and the Lenders agree to share with such Participant, as provided in
SUBPARAGRAPH 2.09(b). Borrower also agrees that any Lender which has
transferred all or part of its interests in the Commitments and the Loans
to one or more Participants shall, notwithstanding any such transfer, be
entitled to the full benefits accorded such Lender under PARAGRAPH 2.10,
PARAGRAPH 2.11, and PARAGRAPH 2.12, as if such Lender had not made such
transfer.
(c) ASSIGNMENTS. Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any
time, sell and assign to any Lender, any affiliate of a Lender or any other
bank or financial institution (individually, an "ASSIGNEE LENDER") all or a
portion of its rights and obligations under this Agreement and the other
Credit Documents (such a sale and assignment to be referred to herein as an
"ASSIGNMENT") pursuant to an assignment agreement in the form of EXHIBIT E
(an "ASSIGNMENT AGREEMENT"), executed by each Assignee Lender and such
assignor Lender (an "ASSIGNOR LENDER") and delivered to Agent for its
acceptance and recording in the Register; PROVIDED, HOWEVER, that
(i) Without the written consent of Borrower, Issuing Bank and
Agent (which consent of Borrower, Issuing Bank and Agent shall not be
unreasonably withheld), no Lender may make any Assignment to any
Assignee Lender which is not, immediately prior to such Assignment, a
Lender hereunder or an Affiliate thereof; or
(ii) Without the written consent of Borrower and Agent (which
consent of Borrower and Agent shall not be unreasonably withheld), no
Lender may make any Assignment to any Assignee Lender if, after giving
effect to such Assignment, the Commitment of such Lender or such
Assignee Lender would be less than Ten Million Dollars ($10,000,000)
(except that a Lender may make an Assignment which reduces its
Commitment to zero without the written consent of Borrower and Agent
if such assignment would otherwise be permitted under this
SUBPARAGRAPH 8.05(c)); or
(iii) Without the written consent of Borrower, Issuing Bank and
Agent (which consent of Borrower, Issuing Bank and Agent shall not be
unreasonably
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withheld), no Lender may make any Assignment which does not assign and
delegate an equal pro rata interest in such Lender's Loans,
Commitments and all other rights, duties and obligations of such
Lender under this Agreement and the other Credit Documents.
Upon such execution, delivery, acceptance and recording of each Assignment
Agreement, from and after the Assignment Effective Date determined pursuant
to such Assignment Agreement, (A) each Assignee Lender thereunder shall be
a Lender hereunder with a Proportionate Share as set forth on ATTACHMENT 1
TO SUCH ASSIGNMENT AGREEMENT and shall have the rights, duties and
obligations of such a Lender under this Agreement and the other Credit
Documents, and (B) the Assignor Lender thereunder shall be a Lender with a
Proportionate Share as set forth on ATTACHMENT 1 TO SUCH ASSIGNMENT
AGREEMENT, or, if the Proportionate Share of the Assignor Lender has been
reduced to 0%, the Assignor Lender shall cease to be a Lender; PROVIDED,
HOWEVER, that any such Assignor Lender which ceases to be a Lender shall
continue to be entitled to the benefits of any provision of this Agreement
which by its terms survives the termination of this Agreement. Each
Assignment Agreement shall be deemed to amend SCHEDULE I to the extent, and
only to the extent, necessary to reflect the addition of each Assignee
Lender, the deletion of each Assignor Lender which reduces its
Proportionate Share to 0% and the resulting adjustment of Proportionate
Shares arising from the purchase by each Assignee Lender of all or a
portion of the rights and obligations of an Assignor Lender under this
Agreement and the other Credit Documents. On or prior to the Assignment
Effective Date determined pursuant to each Assignment Agreement, Borrower,
at its own expense, shall execute and deliver to Agent, in exchange for the
surrendered Note of the Assignor Lender thereunder, a new Note to the order
of each Assignee Lender thereunder (with each new Note to be in an amount
equal to the Commitment assumed by such Assignee Lender) and, if the
Assignor Lender is continuing as a Lender hereunder, a new Note to the
order of the Assignor Lender (with the new Note to be in an amount equal to
the Commitment retained by it). Each such new Note shall be dated the
Closing Date and shall otherwise be in the form of the Note replaced
thereby. The Notes surrendered by the Assignor Lender shall be returned by
Agent to Borrower marked "replaced". Each Assignee Lender which was not
previously a Lender hereunder and which is not incorporated under the laws
of the United States of America or a state thereof shall, within three (3)
Business Days of becoming a Lender, deliver to Borrower and Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224 (or successor applicable form), as the case may be, certifying in each
case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes.
(d) REGISTER. Agent shall maintain at its address referred to in
PARAGRAPH 8.01 a copy of each Assignment Agreement delivered to it and a
register (the "REGISTER") for the recordation of the names and addresses of
the Lenders and the Proportionate Shares of
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each Lender from time to time. The entries in the Register shall be
conclusive in the absence of manifest error, and Borrower, Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loans recorded therein for all purposes of this Agreement.
The Register shall be available for inspection by Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) REGISTRATION. Upon its receipt of an Assignment Agreement
executed by an Assignor Lender and an Assignee Lender (and, to the extent
required by SUBPARAGRAPH 8.05(c), by Borrower, Agent and Issuing Bank)
together with payment to Agent by Assignor Lender of a registration and
processing fee of $2,500, Agent shall (i) promptly accept such Assignment
Agreement and (ii) on the Effective Date determined pursuant thereto record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and Borrower. Agent may, from
time to time at its election, prepare and deliver to the Lenders and
Borrower a revised SCHEDULE I reflecting the names, addresses and
respective Proportionate Shares of all Lenders then parties hereto.
(f) CONFIDENTIALITY. Agent and each Lender agrees to take and to
cause its Affiliates to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of all information identified as
"confidential" or "secret" by Borrower and provided to it by the Borrower
or any Subsidiary, or by Agent on the Borrower's or such Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with Borrower or any Subsidiary, except to the extent such
information (i) was or becomes generally available to the public other than
as a result of disclosure by Agent or such Lender, or (ii) was or becomes
available on a non-confidential basis from a source other than Borrower,
provided that such source is not bound by a confidentiality agreement with
the Borrower known to Agent or such Lender; PROVIDED, HOWEVER, that Agent
or any Lender may disclose such information (A) at the request or pursuant
to any requirement of any Governmental Authority to which Agent or such
Lender is subject or in connection with an examination of Agent or such
Lender by any such authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which Agent, any Lender or
their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under
any other Loan Document; (F) to Agent or such Lender's independent auditors
and other professional advisors; (G) to any Participant or Assignee, actual
or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Lenders
hereunder; (H) as to Agent, any Lender or and of their respective
Affiliates, as expressly permitted under the terms of any
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other document or agreement regarding confidentiality to which Borrower or
any Subsidiary is party or is deemed party with Agent, such Lender or such
Affiliate; and (I) to its Affiliates.
(g) Notwithstanding any other provision of this Agreement, any
Lender may at any time create a security interest in, or pledge, all
or any portion of its rights under and interest in this Agreement and
the other Credit Documents in favor of any Federal Reserve Bank in
accordance with (i) Regulation A of the Board of Governors of the
Federal Reserve System, and any Governmental Authority succeeding to
any of its principal functions or (ii) U.S. Treasury Regulation 31 CFR
Section 203.14, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.
8.06. SETOFF. In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, with the prior consent of
Agent but without prior notice to or consent of Borrower, any such notice and
consent being expressly waived by Borrower to the extent permitted by applicable
law, upon the occurrence and during the continuance of an Event of Default, to
set-off and apply against the Obligations, whether matured or unmatured, any
amount owing from such Lender to Borrower, at or at any time after, the
occurrence of such Event of Default. The aforesaid right of set-off may be
exercised by such Lender against Borrower or against any trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors, receiver or
execution, judgment or attachment creditor of Borrower or against anyone else
claiming through or against Borrower or such trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Lender prior to the occurrence of
a Default or an Event of Default. Each Lender agrees promptly to notify
Borrower after any such set-off and application made by such Lender, PROVIDED
that the failure to give such notice shall not affect the validity of such
set-off and application.
8.07. NO THIRD PARTY RIGHTS. Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give, any
Person, other than the parties hereto and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.
8.08. PARTIAL INVALIDITY. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
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8.09. JURY TRIAL. EACH OF BORROWER, THE LENDERS AND AGENT, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT.
8.10. COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
[The first signature page follows.]
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IN WITNESS WHEREOF, Borrower, the Lenders and Agent have caused this
Agreement to be executed as of the day and year first above written.
BORROWER: LAM RESEARCH CORPORATION
By:___________________________
Name:______________________
Title:_____________________
AGENT: ABN AMRO BANK N.V., San Francisco International
Branch,
As Agent
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
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LENDERS: ABN AMRO BANK N.V., San Francisco International
Branch,
As a Lender and as Issuing Bank
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
As a Lender
By:___________________________
Name:______________________
Title:_____________________
BANQUE NATIONALE DE PARIS, San
Francisco Branch
As a Lender
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
COMERICA BANK-CALIFORNIA,
As a Lender
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By:___________________________
Name:______________________
Title:_____________________
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<PAGE>
FIRST INTERSTATE BANK OF CALIFORNIA,
As a Lender
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
THE FIRST NATIONAL BANK OF BOSTON,
As a Lender
By:___________________________
Name:______________________
Title:_____________________
UNION BANK,
As a Lender
By:___________________________
Name:______________________
Title:_____________________
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SCHEDULE I
LENDERS
LENDERS PROPORTIONATE SHARE
ABN AMRO BANK N.V. 23.80952381%
Applicable Lending Office:
ABN AMRO Bank N.V.
San Francisco International Branch
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robin S. Yim
Telephone: (415) 984-3712
Facsimile: (415) 362-3524
Addresses for Notices:
ABN AMRO Bank N.V.
San Francisco International Branch
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robin S. Yim
Telephone: (415) 984-3712
Facsimile: (415) 362-3524
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 10017
Attn: Linda Boardman
Telephone: (212) 370-8509
Facsimile: (212) 682-0364
Wiring Instructions:
(VIA CHIPS)
ABN AMRO Bank N.V., New York Branch
335 Madison Avenue
New York, NY 10017
I-1
<PAGE>
ABA #: 958
For further credit to:
ABN AMRO San Francisco
Account #: 651-001-0545-41
Reference: Lam Research
I-2
<PAGE>
(VIA FED)
Federal Reserve Bank of New York
For Account:
ABN AMRO Bank N.V., New York Branch
Fed. Routing #: 026009580
335 Madison Avenue
New York, NY 10017
For further credit to:
ABN AMRO San Francisco
Account #: 651-001-0545-41
Reference: Lam Research
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION 14.28571429%
Applicable Lending Office:
Bank of America National Trust
and Savings Association
530 Lytton Avenue
Palo Alto, CA 94301
Attn: Christopher Gernhard
Telephone: (415) 853-4458
Facsimile: (415) 853-4476
Addresses for Notices:
PERIODIC REPORTS:
Bank of America National Trust
and Savings Association
530 Lytton Avenue
Palo Alto, CA 94301
Attn: Christopher Gernhard
Telephone: (415) 853-4458
Facsimile: (415) 853-4476
OPERATIONAL MATTERS:
Bank of America National Trust
I-3
<PAGE>
and Savings Association
1850 Gateway Boulevard, 4th Floor
Concord, CA 94520
Attn: Georg Korolkov
Telephone: (510) 675-7335
Facsimile: (510) 675-7519
I-4
<PAGE>
Wiring Instructions:
Bank of America National Trust
and Savings Association
San Francisco, CA
ABA #: 121000358
Account #: 12331-83980
BANQUE NATIONALE DE PARIS 11.90476190%
Applicable Lending Office:
Banque Nationale de Paris
San Francisco Branch
180 Montgomery Street
San Francisco, CA 94104
Attn: Rafael Lumanlan
Telephone: (415) 956-0707
Facsimile: (415) 296-8954
Addresses for Notices:
ALL NOTICES:
Banque Nationale de Paris
San Francisco Branch
180 Montgomery Street
San Francisco, CA 94104
Attn: Rafael Lumanlan, Vice President
Telephone: (415) 956-0707
Facsimile: (415) 296-8954
OPERATIONAL MATTERS:
Banque Nationale de Paris
San Francisco Branch
180 Montgomery Street
San Francisco, CA 94104
Attn: Donald A. Hart, Treasurer
Telephone: (415) 956-2511
Facsimile: (415) 989-9041
Wiring Instructions:
I-5
<PAGE>
(VIA FED)
Federal Reserve Bank of San Francisco
For Account:
Banque Nationale de Paris
San Francisco Branch
ABA #: 121027234
Reference: Lam Research REVOLVER
COMERICA BANK-CALIFORNIA 11.90476190%
Applicable Lending Office:
Comerica Bank-California
333 W. Santa Clara Street
San Jose, CA 95113
Attn: Lori Edwards
Telephone: (408) 556-5235
Facsimile: (408) 556-5292
Addresses for Notices:
ALL NOTICES:
Comerica Bank-California
333 W. Santa Clara Street
San Jose, CA 95113
Attn: Lori Edwards
Telephone: (408) 556-5235
Facsimile: (408) 556-5292
OPERATIONAL MATTERS:
Comerica Bank-California
333 W. Santa Clara Street
San Jose, CA 95113
Attn: Jan Green
Telephone: (408) 556-5237
Facsimile: (408) 556-5292
Wiring Instructions:
I-6
<PAGE>
Comerica Bank-California
San Jose, CA
ABA #: 121137522
Attn: Jan Green x5237
FIRST INTERSTATE BANK OF CALIFORNIA 14.28571429%
Applicable Lending Office:
First Interstate Bank of California
177 Park Avenue
San Jose, CA 95113
Attn: Dean J. Chu, Vice President
Mary Lennihan, Vice President
Telephone: (408) 971-5793
Facsimile: (408) 971-5888
OPERATIONAL MATTERS:
First Interstate Bank of California
177 Park Avenue
San Jose, CA 95113
Attn: Eileen Keran, Assistant Vice President
Backup Name: Lenita Prodigue
Telephone: (408) 971-5719
Facsimile: (408) 971-5888
PERIODIC REPORTS:
Dean J. Chu, VP
Mary Lennihan, VP
177 Park Ave., San Jose, CA 95113
San Jose, CA 95113
Telephone: (408) 971-5793
Facsimile: (408) 971-5888
Wiring Instructions:
First Interstate Bank of California
Los Angeles, CA
ABA #: 122000218
For credit to account number 303098989
Attn: Commercial Loan Service Center
I-7
<PAGE>
Ref: LAM Research Corporation
THE FIRST NATIONAL BANK OF BOSTON 11.90476190%
Applicable Lending Office:
The First National Bank of Boston
435 Tasso Street
Palo Alto, CA 94301
Attn: Lee A. Merkle
Telephone: (415) 853-0370
Facsimile: (415) 853-1425
Addresses for Notices:
PERIODIC REPORTS:
The First National Bank of Boston
435 Tasso Street
Palo Alto, CA 94301
Attn: Chris McCabe
Telephone: (415) 853-0350
Facsimile: (415) 853-1425
OPERATIONAL MATTERS:
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
Attn: Michael Walker
Telephone: (617) 434-9625
Facsimile: (617) 434-9820
Wiring Instructions:
The First National Bank of Boston
Boston, MA
ABA #: 011-000-390
Attn: Comml Loan SVC Adm 50 High Tech
Reference: Lam Research Corp.
UNION BANK 11.90476190%
Applicable Lending Office:
I-8
<PAGE>
Union Bank
350 California Street (H-1040)
San Francisco, CA 94104
Attn: Wade Schlueter
Telephone: (415) 705-7022
Facsimile: (415) 705-7127
Addresses for Notices:
Union Bank
350 California Street (H-1040)
San Francisco, CA 94104
Attn: Wade Schlueter
Telephone: (415) 705-7022
Facsimile: (415) 705-7127
Union Bank
Note Department
1980 Saturn Street
P.O. Box 30770
Monterey Park, CA 90030-0866
Attn: Mercy Martinez
Telephone: (213) 720-2687
Facsimile: (213) 724-6198
Wiring Instructions:
Union Bank-L.A.
Los Angeles, CA
ABA #: 11-49/1210
Fed Routing #: 122000496
Reference: Lam Research
I-9
<PAGE>
SCHEDULE 1.01(a)
PRICING GRID
LEVEL 1 LEVEL 2
APPLICABLE MARGINS:
Base Rate Loans 0.00% 0.00%
LIBOR Loans 0.70% 0.90%
COMMITMENT FEE PERCENTAGE: 0.25% 0.35%
LC USAGE FEE PERCENTAGE:
Non-Financial Performance
Letters of Credit 0.35%* 0.45%*
Financial Performance
Letters of Credit 0.70%* 0.90%*
* Does not include LC Issuance Fees payable to Issuing Bank
EXPLANATION
1. The Applicable Margin for each Borrowing and Loan, the Commitment Fee
Percentage, and the LC Usage Fee Percentage will be determined as provided
below and will vary depending upon whether Level 1 pricing or Level 2
pricing is applicable.
2. From the Closing Date until the date that either PARAGRAPH 3 or PARAGRAPH 4
below is applicable, Level 1 pricing shall apply.
3. At all times that PARAGRAPH 4 does not apply, commencing on the fifteenth
day following the date Borrower is first required to deliver the Financial
Statements and information under SUBPARAGRAPHS 5.01(a)(i) AND (iii) of the
Credit Agreement, pricing will vary depending upon Borrower's Senior
Indebtedness Ratio as set forth in such Financial Statements and
information:
(a) If the Senior Indebtedness Ratio is less than 0.25, Level 1 pricing
will apply.
1.01(a)-1
<PAGE>
(b) If the Senior Indebtedness Ratio is 0.25 or greater, Level 2 pricing
will apply.
4. On and after the fifteenth day following the Borrower's failure to
deliver to Agent the Financial Statements and information required under
SUBPARAGRAPHS 5.01(a)(i) AND (iii) of the Credit Agreement within the
time periods set forth therein, and until the fifteenth day following
receipt by Agent of such Financial Statements and information (at which
time PARAGRAPH 3 above will apply), Level 2 pricing will apply.
5. Examples:
(a) The Senior Indebtedness Ratio for the fiscal quarter ending December
31, 1995 is 0.24. Assuming the Financial Statements and information are
delivered within the time periods required under the Credit Agreement,
commencing March 6, 1996, Level 1 pricing will apply.
(b) The Senior Indebtedness Ratio for the fiscal quarter ending March 31,
1996 is 0.26. Assuming the Financial Statements and information are
delivered within the time periods set forth in the Credit Agreement,
commencing June 4, 1996, Level 2 pricing will apply.
1.01(a)-2
<PAGE>
SCHEDULE 3.01
INITIAL CONDITIONS PRECEDENT
A. PRINCIPAL CREDIT DOCUMENTS.
(1) The Credit Agreement, duly executed by Borrower, each Lender and
each Agent; and
(2) A Note payable to each Lender, each duly executed by Borrower.
B. BORROWER CORPORATE DOCUMENTS.
(1) The Certificate or Articles of Incorporation of Borrower,
certified as of a recent date prior to the Closing Date by the Secretary of
State (or comparable official) of its jurisdiction of incorporation;
(2) A Certificate of Good Standing including tax good standing (or
comparable certificate) for Borrower, certified as of a recent date prior
to the Closing Date by the Secretary of State (or comparable official) of
its jurisdiction of incorporation;
(3) A certificate of the Secretary or an Assistant Secretary of
Borrower, dated the Closing Date, certifying (a) that attached thereto is a
true and correct copy of the Bylaws of Borrower as in effect on the Closing
Date; (b) that attached thereto are true and correct copies of resolutions
duly adopted by the Board of Directors of Borrower and continuing in
effect, which authorize the execution, delivery and performance by Borrower
of this Agreement and the other Credit Documents executed or to be executed
by Borrower and the consummation of the transactions contemplated hereby
and thereby; and (c) that there are no proceedings for the dissolution or
liquidation of Borrower;
(4) A certificate of the Secretary or an Assistant Secretary of
Borrower, dated the Closing Date, certifying the incumbency, signatures and
authority of the officers of Borrower authorized to execute, deliver and
perform this Agreement, the other Credit Documents and all other documents,
instruments or agreements related thereto executed or to be executed by
Borrower; and
(5) Certificates of Good Standing (including tax good standing for
California) (or comparable certificates) for Borrower, certified as of a
recent date prior to the Closing Date by the Secretaries of State (or
comparable official) of California and Massachusetts.
3.01-1
<PAGE>
C. FINANCIAL STATEMENTS, FINANCIAL CONDITION, ETC.
(1) A copy of the audited consolidated Financial Statements of
Borrower for the fiscal year ended June 30, 1995, prepared by Ernst & Young
and a copy of the unqualified opinion delivered by such accountants in
connection with such Financial Statements;
(2) A copy of the 10-Q report filed by Borrower with the Securities
and Exchange Commission for the quarter ended September 30, 1995;
(3) A copy of the 10-K report filed by Borrower with the Securities
and Exchange Commission for the fiscal year ended June 30, 1995;
(4) A certificate of an Executive Officer of Borrower, dated the
Closing Date, certifying thats attached thereto is a true and correct copy
of the Cash Investment Guidelines of Borrower as in effect on the Closing
Date; and
(5) Such other financial, business and other information regarding
Borrower, or any of its Subsidiaries as Agent may reasonably request,
including information as to possible contingent liabilities, tax matters,
environmental matters and obligations for employee benefits and
compensation.
D. OPINIONS. Favorable written opinions from each of the following counsel
for Borrower, each dated the Closing Date, addressed to Agent and the Lenders,
covering such legal matters as Agent may reasonably request and otherwise in
form and substance satisfactory to Agent:
(1) Jan Kang, in-house counsel for Borrower and its Subsidiaries; and
(2) Sheppard, Mullin, Richter & Hampton, outside counsel for Borrower
and its Subsidiaries.
E. OTHER ITEMS.
(1) A certificate of an Executive Officer of Borrower, addressed to
Agent and dated the Closing Date, certifying that:
(a) The representations and warranties set forth in PARAGRAPH
4.01 and in the other Credit Documents are true and correct in all
material respects as of
3.01-2
<PAGE>
such date (except for such representations and warranties made as of a
specified date, which shall be true as of such date); and
(b) No Event of Default or Default has occurred and is
continuing as of such date;
(2) All fees and expenses payable to Agent and the Lenders on or
prior to the Closing Date (including all fees payable to Agent pursuant to
the Agent's Fee Letter);
(3) All fees and expenses of Agent's counsel through the Closing
Date; and
(4) Such other evidence as Agent or any Lender may reasonably request
to establish the accuracy and completeness of the representations and
warranties and the compliance with the terms and conditions contained in
this Agreement and the other Credit Documents.
3.01 - 3
<PAGE>
SCHEDULE 4.01(Q)
SUBSIDIARIES
[To be provided by Borrower]
4.01(q)-1
<PAGE>
SCHEDULE 5.02(a)
PERMITTED INDEBTEDNESS
[To be provided by Borrower]
5.02(a)-1
<PAGE>
SCHEDULE 5.02(E)
PERMITTED LIENS
[To be provided by Borrower]
5.02(e)-1
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
[Date]
ABN AMRO Bank N.V.,
as Agent
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robert N. Hartinger
1. Reference is made to that certain Credit Agreement, dated as of
December 20, 1995 (the "CREDIT AGREEMENT"), among Lam Research Corporation
("BORROWER"), the financial institutions listed in SCHEDULE I to the Credit
Agreement (the "LENDERS") and ABN AMRO Bank N.V., as agent for the Lenders (in
such capacity, "AGENT"). Unless otherwise indicated, all terms defined in the
Credit Agreement have the same respective meanings when used herein.
2. Pursuant to SUBPARAGRAPH 2.01(b) of the Credit Agreement, Borrower
hereby irrevocably requests a Borrowing upon the following terms:
(a) The principal amount of the requested Borrowing is to be
$__________;
(b) The requested Borrowing is to consist of ["Base Rate" or "LIBOR"]
Loans;
(c) If the requested Borrowing is to consist of LIBOR Loans, the
initial Interest Period for such Loans will be __________ months; and
(d) The date of the requested Borrowing is to be __________, ____.
3. Borrower hereby certifies to Agent and the Lenders that, on the date
of this Notice of Borrowing and after giving effect to the requested Borrowing:
(a) The representations and warranties of Borrower set forth in
PARAGRAPH 4.01 of the Credit Agreement and in the other Credit Documents
are true and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a specified
date, which shall be true as of such date);
(b) No Default or Event of Default has occurred and is continuing;
and
A-1
<PAGE>
(c) All of the Credit Documents are in full force and effect.
4. Please disburse the proceeds of the requested Borrowing to
____________________________________________
______________________________________________________________.
IN WITNESS WHEREOF, Borrower has executed this Notice of Borrowing on the
date set forth above.
LAM RESEARCH CORPORATION
By:___________________________
Name:_______________________
Title:______________________
A-2
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION
[Date]
ABN AMRO Bank N.V.,
as Agent
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robert N. Hartinger
1. Reference is made to that certain Credit Agreement, dated as of
December 20, 1995 (the "CREDIT AGREEMENT"), among Lam Research Corporation
("BORROWER"), the financial institutions listed in SCHEDULE I to the Credit
Agreement (the "LENDERS") and ABN AMRO Bank N.V., as agent for the Lenders (in
such capacity, "AGENT"). Unless otherwise indicated, all terms defined in the
Credit Agreement have the same respective meanings when used herein.
2. Pursuant to SUBPARAGRAPH 2.01(d) of the Credit Agreement, Borrower
hereby irrevocably requests to convert a Borrowing as follows:
(a) The Borrowing to be converted consists of ["Base Rate" or
"LIBOR"] Loans in the aggregate principal amount of $__________ which were
initially advanced to Borrower on __________, ____;
(b) The Loans in the Borrowing are to be converted into ["Base Rate"
or "LIBOR"] Loans;
(c) If such Loans are to be converted into LIBOR Loans, the initial
Interest Period for such Loans commencing upon conversion will be
__________ months; and
(d) The date of the requested conversion is to be __________, ____.
3. Borrower hereby certifies to Agent and the Lenders that, on the date
of this Notice of Conversion, and after giving effect to the requested
conversion:
(a) The representations and warranties of Borrower set forth in
PARAGRAPH 4.01 of the Credit Agreement and in the other Credit Documents
are true and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a specified
date, which shall be true as of such date);
B-1
<PAGE>
(b) No Default or Event of Default has occurred and is continuing;
and
(c) All of the Credit Documents are in full force and effect.
IN WITNESS WHEREOF, Borrower has executed this Notice of Conversion on the
date set forth above.
LAM RESEARCH CORPORATION
By:___________________________
Name:_______________________
Title:______________________
B-2
<PAGE>
EXHIBIT C
NOTICE OF INTEREST PERIOD SELECTION
[Date]
ABN AMRO Bank N.V.
as Agent
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robert N. Hartinger
1. Reference is made to that certain Credit Agreement, dated as of
December 20, 1995 (the "CREDIT AGREEMENT"), among Lam Research Corporation
("BORROWER"), the financial institutions listed in SCHEDULE I to the Credit
Agreement (the "LENDERS") and ABN AMRO Bank N.V., as agent for the Lenders (in
such capacity, "AGENT"). Unless otherwise indicated, all terms defined in the
Credit Agreement have the same respective meanings when used herein.
2. Pursuant to SUBPARAGRAPH 2.01(e) of the Credit Agreement, Borrower
hereby irrevocably selects a new Interest Period for a Borrowing as follows:
(a) The Borrowing for which a new Interest Period is to be selected
consists of ["Base Rate" or "LIBOR"] Loans in the aggregate principal
amount of $__________ which were initially advanced to Borrower on
__________, ____;
(b) The last day of the current Interest Period for such Loans is
___________, ____; and
(c) The next Interest Period for such Loans commencing upon the last
day of the current Interest Period is to be _________ months.
3. Borrower hereby certifies to the Agents and the Lenders that, on the
date of this Notice of Interest Period Selection, and after giving effect to the
requested selection:
(a) The representations and warranties of Borrower set forth in
PARAGRAPH 4.01 of the Credit Agreement and in the other Credit Documents
are true and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a specified
date, which shall be true as of such date);
(b) No Default or Event of Default has occurred and is continuing;
and
C-1
<PAGE>
(c) All of the Credit Documents are in full force and effect.
IN WITNESS WHEREOF, Borrower has executed this Notice of Interest Period
Selection on the date set forth above.
LAM RESEARCH CORPORATION
By:___________________________
Name:_______________________
Title:______________________
C-2
<PAGE>
EXHIBIT D
NOTE
$______________ ____________________, __________
________________, ____
FOR VALUE RECEIVED, LAM RESEARCH CORPORATION, a Delaware corporation
("BORROWER"), hereby promises to pay to the order of ____________________, a
____________________ ("LENDER"), the principal sum of
______________________________ DOLLARS ($__________) or such lesser amount as
shall equal the aggregate outstanding principal balance of the Loans made by
Lender to Borrower pursuant to the Credit Agreement referred to below (as
amended from time to time, the "CREDIT AGREEMENT"), on or before the Maturity
Date specified in the Credit Agreement; and to pay interest on said sum, or such
lesser amount, at the rates and on the dates provided in the Credit Agreement.
Borrower shall make all payments hereunder, for the account of Lender's
Applicable Lending Office, to Agent as indicated in the Credit Agreement, in
lawful money of the United States and in same day or immediately available
funds.
Borrower hereby authorizes Lender to record on the schedule(s) annexed to
this note the date and amount of each Loan and of each payment or prepayment of
principal made by Borrower and agrees that all such notations shall constitute
prima facie evidence of the matters noted; PROVIDED, HOWEVER, that the failure
of Lender to make any such notation shall not affect Borrower's obligations
hereunder.
This note is one of the Notes referred to in the Credit Agreement, dated as
of December 20, 1995, among Borrower, Lender and the other financial
institutions from time to time parties thereto (collectively, the "LENDERS") and
ABN AMRO Bank N.V., as agent for the Lenders. This note is subject to the terms
of the Credit Agreement, including the rights of prepayment and the rights of
acceleration of maturity set forth therein. Terms used herein have the meanings
assigned to those terms in the Credit Agreement, unless otherwise defined
herein.
The transfer, sale or assignment of any rights under or interest in this
note is subject to certain restrictions contained in the Credit Agreement,
including Paragraph 8.05 thereof.
Borrower shall pay all reasonable fees and expenses, including reasonable
attorneys' fees, incurred by Lender in the enforcement or attempt to enforce any
of Borrower's obligations hereunder not performed when due. Borrower hereby
waives notice of presentment, demand,
D-1
<PAGE>
protest or notice of any other kind. This note shall be governed by and
construed in accordance with the laws of the State of California.
LAM RESEARCH CORPORATION
By:___________________________
Name:______________________
Title:_____________________
D-2
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
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Date Type of Amount of Interest Amount of Unpaid Notation
Loan Loan Period Principal Paid Principal Made By
or Prepaid Balance
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
D-3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
D-4
<PAGE>
EXHIBIT E
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of
ATTACHMENT 1 hereto, by and among:
(1) The bank designated under item A of ATTACHMENT I hereto as the
Assignor Lender ("ASSIGNOR LENDER"); and
(2) Each bank designated under item B of ATTACHMENT I hereto as an
Assignee Lender (individually, an "ASSIGNEE LENDER").
RECITALS
A. Assignor Lender is one of the banks which is a party to the Credit
Agreement dated as of December 20, 1995, by and among Lam Research Corporation
("BORROWER,") Assignor Lender and the other financial institutions parties
thereto (collectively, the "LENDERS") and ABN AMRO Bank N.V., as agent for the
banks (in such capacity, "AGENT"). (Such credit agreement, as amended,
supplemented or otherwise modified in accordance with its terms from time to
time to be referred to herein as the "CREDIT AGREEMENT").
B. Assignor Lender wishes to sell, and Assignee Lender wishes to
purchase, a portion of Assignor Lender's rights under the Credit Agreement
pursuant to SUBPARAGRAPH 8.05(c) of the Credit Agreement.
AGREEMENT
Now, therefore, the parties hereto hereby agree as follows:
1. DEFINITIONS. Except as otherwise defined in this Assignment
Agreement, all capitalized terms used herein and defined in the Credit Agreement
have the respective meanings given to those terms in the Credit Agreement.
2. SALE AND ASSIGNMENT. Subject to the terms and conditions of this
Assignment Agreement, Assignor Lender hereby agrees to sell, assign and delegate
to each Assignee Lender and each Assignee Lender hereby agrees to purchase,
accept and assume an undivided interest in and share of Assignor Lender's
rights, obligations and duties under the Credit Agreement and the
E-1
<PAGE>
other Credit Documents equal to the Proportionate Share set forth under the
caption "Proportionate Share" opposite such Assignee Lender's name on
ATTACHMENT I hereto.
3. ASSIGNMENT EFFECTIVE UPON NOTICE. Upon (a) receipt by Agent of five
(5) counterparts of this Assignment Agreement (to each of which is attached a
fully completed ATTACHMENT I), each of which has been executed by Assignor
Lender and each Assignee Lender (and, to the extent required by SUBPARAGRAPH
8.05(c), by Borrower and Agent) and (b) payment to Agent of the registration and
processing fee specified in SUBPARAGRAPH 8.05(e) by Assignor Lender, Agent will
transmit to Borrower, Assignor Lender and each Assignee Lender an Assignment
Effective Notice substantially in the form of ATTACHMENT II hereto (an
"ASSIGNMENT EFFECTIVE NOTICE"). Such Assignment Effective Notice shall set
forth the date on which the assignment effected by this Assignment Agreement
shall become effective (the "ASSIGNMENT EFFECTIVE DATE"), which date shall be
the fifth Business Day following the date of such Assignment Effective Notice.
4. ASSIGNMENT EFFECTIVE DATE. At or before 12:00 noon (local time of
Assignor Lender) on the Assignment Effective Date, each Assignee Lender shall
pay to Assignor Lender, in immediately available or same day funds, an amount
equal to the purchase price, as agreed between Assignor Lender and such Assignee
Lender (the "PURCHASE PRICE"), for the Proportionate Share purchased by such
Assignee Lender hereunder. Effective upon receipt by Assignor Lender of the
Purchase Price payable by each Assignee Lender, the sale, assignment and
delegation to such Assignee Lender of such Proportionate Share as described in
PARAGRAPH 2 hereof shall become effective.
5. PAYMENTS AFTER THE ASSIGNMENT EFFECTIVE DATE. Assignor Lender and
each Assignee Lender hereby agree that Agent shall, and hereby authorize and
direct Agent to, allocate amounts payable under the Credit Agreement and the
other Credit Documents as follows:
(a) All principal payments on outstanding Loans that would otherwise
be payable from and after the Assignment Effective Date to or for the
account of Assignor Lender pursuant to the Credit Agreement and the other
Credit Documents shall, instead, be payable to or for the account of
Assignor Lender and the applicable Assignee Lender, as the case may be, in
accordance with the respective Proportionate Share of each as reflected in
ATTACHMENT I to this Assignment Agreement.
(b) All interest, fees and other amounts accrued (including amounts
accrued prior to the Assignment Effective Date) or payable pursuant to the
Credit Agreement and the other Credit Documents with respect to each
Proportionate Share assigned to an Assignee Lender pursuant to this
Assignment Agreement, shall from and after the Assignment Effective Date be
payable to such Assignee Lender.
E-2
<PAGE>
Assignor Lender and each Assignee Lender have made separate arrangements for
(i) the payment by Assignor Lender to such Assignee Lender of any principal,
interest, fees or other amounts previously received or otherwise payable to
Assignor Lender hereunder if Assignor Lender and such Assignee Lender have
otherwise agreed that such Assignee Lender is entitled to receive any such
amounts and (ii) the payment by such Assignee Lender to Assignor Lender of any
principal, interest, fees or other amounts payable to such Assignee Lender
hereunder if Assignor Lender and such Assignee Lender have otherwise agreed that
Assignor Lender is entitled to receive any such amounts.
6. DELIVERY OF NOTES. On or prior to the Assignment Effective Date,
Assignor Lender will deliver to Agent the Notes payable to Assignor Lender. On
or prior to the Assignment Effective Date, Borrower will deliver to Agent Notes
for each Assignee Lender and Assignor Lender, in each case in principal amounts
reflecting, in accordance with the Credit Agreement, their respective
Commitments (as adjusted pursuant to this Assignment Agreement). As provided in
SUBPARAGRAPH 8.05(c) of the Credit Agreement, each such new Note shall be dated
the Closing Date. Promptly after the Assignment Effective Date, Agent will send
to each of Assignor Lender and the Assignee Lenders its new Notes and will send
to Borrower the superseded Notes of Assignor Lender, marked "Replaced."
7. DELIVERY OF COPIES OF CREDIT DOCUMENTS. Concurrently with the
execution and delivery hereof, Assignor Lender will provide to each Assignee
Lender (if it is not already a Lender party to the Credit Agreement) conformed
copies of all documents delivered to Assignor Lender on or prior to the Closing
Date in satisfaction of the conditions precedent set forth in the Credit
Agreement.
8. FURTHER ASSURANCES. Each of the parties to this Assignment Agreement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment Agreement.
9. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS. Assignor Lender
and each Assignee Lender further represent and warrant to and covenant with each
other, Agent and the Lenders as follows:
(a) Other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned hereby free and clear
of any adverse claim, Assignor Lender makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
other Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement
or the other Credit Documents furnished.
E-3
<PAGE>
(b) Assignor Lender makes no representation or warranty and assumes
no responsibility with respect to the financial condition of Borrower or
any of its obligations under the Credit Agreement or any other Credit
Documents.
(c) Each Assignee Lender confirms that it has received a copy of the
Credit Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement.
(d) Each Assignee Lender will, independently and without reliance
upon Agent, Assignor Lender or any other Lender and based upon such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement and the other Credit Documents.
(e) Each Assignee Lender appoints and authorizes Agent to take such
action as Agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as are delegated to Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto, all in accordance with SECTION VII of the Credit Agreement.
(f) Each Assignee Lender agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement and the other Credit Documents are required to be performed by it
as a Lender.
(g) ATTACHMENT I hereto sets forth the revised Proportionate Shares
of Assignor Lender and each Assignee Lender as well as administrative
information with respect to each Assignee Lender.
10. EFFECT OF THIS ASSIGNMENT AGREEMENT. On and after the Assignment
Effective Date, (a) each Assignee Lender shall be a Lender with a Proportionate
Share as set forth on ATTACHMENT I hereto and shall have the rights, duties and
obligations of such a Lender under the Credit Agreement and the other Credit
Documents and (b) Assignor Lender shall be a Lender with a Proportionate Share
as set forth on ATTACHMENT I hereto, or, if the Proportionate Share of Assignor
Lender has been reduced to 0%, Assignor Lender shall cease to be a Lender.
11. MISCELLANEOUS. This Assignment Agreement shall be governed by, and
construed in accordance with, the laws of the State of California. Paragraph
headings in this Assignment Agreement are for convenience of reference only and
are not part of the substance hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date set forth in ATTACHMENT I hereto.
E-4
<PAGE>
______________________________, as
Assignor Lender
By:___________________________
Name:______________________
Title:_____________________
______________________________, as an
Assignee Lender
By:___________________________
Name:______________________
Title:_____________________
______________________________, as an
Assignee Lender
By:___________________________
Name:______________________
Title:_____________________
______________________________, as an
Assignee Lender
By:___________________________
Name:______________________
Title:_____________________
E-5
<PAGE>
CONSENTED TO AND ACKNOWLEDGED BY:
______________________________
By:___________________________
Name:______________________
Title:_____________________
______________________________,
As Agent
By:___________________________
Name:______________________
Title:_____________________
ACCEPTED FOR RECORDATION
IN REGISTER:
______________________________,
As Agent
By:___________________________
Name:______________________
Title:_____________________
E-6
<PAGE>
ATTACHMENT I
TO ASSIGNMENT AGREEMENT
NAMES, ADDRESSES AND PROPORTIONATE SHARES
OF ASSIGNOR LENDER AND ASSIGNEE LENDERS AFTER ASSIGNMENT
______________, ____
A. ASSIGNOR LENDER PROPORTIONATE SHARE*
______________________________ ____%
Applicable Lending Office:
______________________________
______________________________
______________________________
______________________________
Address for notices:
______________________________
______________________________
______________________________
______________________________
Telephone No: __________
Telecopier No: __________
Wiring Instructions:
______________________________
______________________________
B. ASSIGNEE LENDERS
______________________________
*To be expressed by a percentage rounded to the seventh-
digit to the right of the decimal point.
E(I)-1
<PAGE>
______________________________ ____%
Applicable Lending Office:
______________________________
______________________________
______________________________
______________________________
B. ASSIGNEE LENDERS (cont'd) PROPORTIONATE SHARE
Address for notices:
______________________________
______________________________
______________________________
______________________________
Telephone No: __________
Telecopier No: __________
Wiring Instructions:
______________________________
______________________________
______________________________ ____%
Applicable Lending Office:
______________________________
______________________________
______________________________
______________________________
Address for notices:
______________________________
______________________________
______________________________
E(I)-2
<PAGE>
______________________________
Telephone No: __________
Telecopier No: __________
Wiring Instructions:
______________________________
______________________________
E(I)-3
<PAGE>
ATTACHMENT II
TO ASSIGNMENT AGREEMENT
FORM OF
ASSIGNMENT EFFECTIVE NOTICE
The undersigned, as agent for the banks under the Credit Agreement, dated
as of December 20, 1995 among Lam Research Corporation ("BORROWER"), the
financial institutions parties thereto (the "LENDERS") and ABN AMRO Bank N.V.,
as agent for the Lenders (in such capacity, "AGENT"), acknowledges receipt of
five executed counterparts of a completed Assignment Agreement, a copy of which
is attached hereto. [Note: Attach copy of Assignment Agreement.] Terms
defined in such Assignment Agreement are used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Assignment Effective Date will be __________ [Insert fifth business day
following date of Assignment Effective Notice].
2. Pursuant to such Assignment Agreement, Assignor Lender is required to
deliver to Agent on or before the Assignment Effective Date the Notes payable to
Assignor Lender.
3. Pursuant to such Assignment Agreement, Borrower is required to deliver
to Agent on or before the Assignment Effective Date the following Notes, each
dated _________________ [Insert appropriate date]:
[Describe each new Note for Assignor Lender and each Assignee Lender as to
principal amount.]
4. Pursuant to such Assignment Agreement, each Assignee Lender is
required to pay its Purchase Price to Assignor Lender at or before 12:00 Noon on
the Assignment Effective Date in immediately available funds.
Very truly yours,
ABN AMRO BANK N.V., San Francisco
International Branch
as Agent
By:___________________________
Name:______________________
E(II)-1
<PAGE>
Title:_____________________
E(II)-2
<PAGE>
EXECUTION COPY
_________________________________________________________________
_________________________________________________________________
CREDIT AGREEMENT
among
LAM RESEARCH CORPORATION
and
THE LENDERS NAMED HEREIN
and
ABN AMRO BANK N.V., San Francisco International Branch,
as Agent for the Lenders
<PAGE>
December 20, 1995
_________________________________________________________________
_________________________________________________________________
<PAGE>
CREDIT AGREEMENT
TABLE OF CONTENTS
SECTION I. INTERPRETATION
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.03. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.04. Plural Terms. . . . . . . . . . . . . . . . . . . . . . . . . 18
1.05. Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 18
1.07. Construction. . . . . . . . . . . . . . . . . . . . . . . . . 18
1.08. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 18
1.09. Calculation of Interest and Fees. . . . . . . . . . . . . . . 18
1.10. Other Interpretive Provisions . . . . . . . . . . . . . . . . 19
SECTION II. CREDIT FACILITY
2.01. Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . 19
2.02. Letter of Credit Facility . . . . . . . . . . . . . . . . . . 23
2.03. Amount Limitations, Commitment Reductions, Etc. . . . . . . . 30
2.04. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.05. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.06. Other Payment Terms . . . . . . . . . . . . . . . . . . . . . 33
2.07. Notes and Interest Account. . . . . . . . . . . . . . . . . . 34
2.08. Loan Funding. . . . . . . . . . . . . . . . . . . . . . . . . 35
2.09. Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . 36
2.10. Change of Circumstances . . . . . . . . . . . . . . . . . . . 38
2.11. Taxes on Payments . . . . . . . . . . . . . . . . . . . . . . 41
2.12. Funding Loss Indemnification. . . . . . . . . . . . . . . . . 43
2.13. Replacement of Lenders. . . . . . . . . . . . . . . . . . . . 43
SECTION III. CONDITIONS PRECEDENT
3.01. Initial Conditions Precedent. . . . . . . . . . . . . . . . . 44
3.02. Conditions Precedent to Each Credit Event . . . . . . . . . . 44
3.03. Covenant to Deliver . . . . . . . . . . . . . . . . . . . . . 45
SECTION IV. REPRESENTATIONS AND WARRANTIES
4.01. Borrower's Representations and Warranties . . . . . . . . . . 45
4.02. Reaffirmation . . . . . . . . . . . . . . . . . . . . . . . . 51
i
<PAGE>
SECTION V. COVENANTS
5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . 51
5.02. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . 55
SECTION VI. DEFAULT
6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . 65
6.02. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ii
<PAGE>
SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS
7.01. Appointment, Powers and Immunities. . . . . . . . . . . . . . 68
7.02. Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . 69
7.03. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 70
7.05. Non-Reliance. . . . . . . . . . . . . . . . . . . . . . . . . 70
7.06. Resignation of Agent. . . . . . . . . . . . . . . . . . . . . 70
7.07. Authorization . . . . . . . . . . . . . . . . . . . . . . . . 71
7.08. Agent in its Individual Capacity. . . . . . . . . . . . . . . 71
SECTION VIII. MISCELLANEOUS
8.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.02. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.03. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 73
8.04. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . 74
8.05. Successors and Assigns. . . . . . . . . . . . . . . . . . . . 75
8.06. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.07. No Third Party Rights . . . . . . . . . . . . . . . . . . . . 80
8.08. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . 80
8.09. Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 80
SCHEDULES
I Lenders (Preamble)
1.01(a) Pricing Grid
3.01 Initial Conditions Precedent
4.01(q) Subsidiaries
5.02(a) Existing Indebtedness
5.02(b) Existing Liens
EXHIBITS
A Notice of Borrowing (2.01(b))
B Notice of Conversion (2.01(d))
C Notice of Interest Period Selection (2.01(e))
D Note (2.07(a))
E Assignment Agreement (8.05(c))
iii
<PAGE>
EXHIBIT 11.1
LAM RESEARCH CORPORATION
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
(in thousands except per share data)
-----------------------------------------
December 31, December 31,
1995 1994
------------------- -------------------
Fully Fully
Primary Diluted Primary Diluted
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $33,479 $33,479 $18,931 $18,931
Add interest expense on convertible
subordinated debentures, net of
income tax effect 975 735
-------- -------- -------- --------
$33,479 $34,454 $18,931 $19,666
-------- -------- -------- --------
-------- -------- -------- --------
Average shares outstanding 27,375 27,305 26,708 26,708
Net effect of dilutive
stock options 925 930 1,227 1,227
Assumed conversion of convertible
subordinated debentures 2,640 2,640
-------- -------- -------- --------
28,300 30,875 27,935 30,575
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share $1.18 $1.12 $0.68 $0.64
-------- -------- -------- --------
-------- -------- -------- --------
<CAPTION>
Six Months Ended
(in thousands except per share data)
-----------------------------------------
December 31, December 31,
1995 1994
------------------- -------------------
Fully Fully
Primary Diluted Primary Diluted
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $63,946 $63,946 $33,984 $33,984
Add interest expense on convertible
subordinated debentures, net of
income tax effect 1,748 1,484
-------- -------- -------- --------
$63,946 $65,694 $33,984 $35,468
-------- -------- -------- --------
-------- -------- -------- --------
Average shares outstanding 27,313 27,313 25,206 25,206
Net effect of dilutive
stock options 1,037 1,047 1,144 1,144
Assumed conversion of convertible
subordinated debentures 2,640 2,640
-------- -------- -------- --------
28,350 31,000 26,350 28,990
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share $2.26 $2.12 $1.29 $1.22
-------- -------- -------- --------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED STATEMENT OF OPERATIONS THE CONSOLIDATED BALANCE SHEET
AND THE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, 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> JUN-30-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,785
<SECURITIES> 91,807
<RECEIVABLES> 230,179
<ALLOWANCES> 1,582
<INVENTORY> 220,151
<CURRENT-ASSETS> 604,536
<PP&E> 197,334
<DEPRECIATION> 67,091
<TOTAL-ASSETS> 778,457
<CURRENT-LIABILITIES> 222,118
<BONDS> 66,000
0
0
<COMMON> 27
<OTHER-SE> 460,180
<TOTAL-LIABILITY-AND-EQUITY> 778,457
<SALES> 284,195
<TOTAL-REVENUES> 290,517
<CGS> 148,507
<TOTAL-COSTS> 148,507
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,131
<INCOME-PRETAX> 49,233
<INCOME-TAX> 15,754
<INCOME-CONTINUING> 33,479
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,479
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.12
</TABLE>
