SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K / A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 3, 1994
QUANTUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-12390 94-2665054
(Commission File No.) (IRS Employer Identification No.)
500 McCarthy Boulevard
Milpitas, CA 95035
(Address of principal executive offices and zip code)
Registrant's telephone number,
including area code: (408) 894-4000
<PAGE>
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Current
Report on Form 8-K dated October 3, 1994 which was filed
on October 17, 1994 as set forth below.
ITEM 7. Financial Statements and Exhibits
Amended to file previously omitted financial statements and pro forma
financial information and exhibits.
(a) Audited Statements of Assets Sold and Liabilities
Assumed of the Disks, Heads and Tapes Business of the
Storage Business Unit of Digital Equipment Corporation,
as of July 2, 1994 and July 3, 1993 and Statements of
Operations for fiscal years ended July 2, 1994, July 3, 1993,
and June 27, 1992.
Unaudited Statement of Assets Sold and Liabilities
Assumed of the Disks, Heads and Tapes Business of the
Storage Business Unit of Digital Equipment Corporation,
as of October 1, 1994 and Unaudited Statements of
Operations for the three months ended October 1, 1994
and October 2, 1993.
(b) Unaudited Pro Forma Condensed Consolidated Balance Sheet of
Registrant as of October 2, 1994 and Unaudited Pro Forma Condensed
Consolidated Statement of Operations of Registrant for the
year ended March 31, 1994 and for the period from April 1, 1994
to October 2, 1994.
(c) Exhibits
8. Supply Agreement between Digital Equipment Corporation
(Buyer) and Quantum Corporation (Seller) for Storage Devices,
dated as of October 3, 1994.
9. Credit Agreement among Quantum Corporation and The Banks
named herein and ABN AMRO BANK N.V., San Francisco International
Branch, BARCLAYS BANK PLC and CIBC INC. as Managing Agents for
the Banks, and CANADIAN IMPERIAL BANK OF COMMERCE as Administrative
Agent and Collateral Agent for the Banks dated as of October 3,
1994.
10. Consent of Independent Accountants
<PAGE>
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 hereunto duly authorized.
QUANTUM CORPORATION
Dated: January 30, 1995
By: /s/ JOSEPH T. RODGERS
Executive VP Finance,
Chief Financial Officer
and Secretary
<PAGE>
INDEX TO EXHIBITS
Page No.
8. Supply Agreement between Digital Equipment Corporation
(Buyer) and Quantum Corporation (Seller) for Storage
Devices, dated as of October 3, 1994.
9. Credit Agreement among Quantum Corporation and The Banks
named herein and ABN AMRO BANK N.V., San Francisco
International Branch, BARCLAYS BANK PLC and CIBC INC. as
Managing Agents for the Banks, and CANADIAN IMPERIAL BANK
OF COMMERCE as Administrative Agent and Collateral Agent
for the Banks dated as of October 3, 1994.
10. Consent of Independent Accountants, dated as of January 30,
1995.
<PAGE>
The Disks, Heads and Tapes Business
of the Storage Business Unit
of Digital Equipment Corporation
*****
Statements of Assets Sold and Liabilities Assumed as of
July 2, 1994 and July 3, 1993 and
Statements of Operations for Fiscal Years Ended
July 2, 1994, July 3, 1993 and June 27, 1992
<PAGE>
Page 1
THE "DISKS, HEADS AND TAPES BUSINESS"
OF THE STORAGE BUSINESS UNIT OF
DIGITAL EQUIPMENT CORPORATION
STATEMENTS OF ASSETS SOLD AND LIABILITIES ASSUMED
(Dollars in Thousands)
July 2, 1994 July 3, 1993
------------ ------------
ASSETS SOLD
Inventory (Note 3) $141,215 $111,783
Net Property, Plant and Equipment 123,336 121,855
(Note 5)
Investments in and Advances to Joint
Venture and Subsidiary 16,573 7,816
(Note 10)
Advance to Affiliate 5,296 -
-------- --------
Total $286,420 $241,454
======== ========
LIABILITIES ASSUMED
Other Assets and Liabilities (Note 4) (237) -
-------- --------
Total ($237) -
======= ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 2
THE "DISKS, HEADS AND TAPES BUSINESS"
OF THE STORAGE BUSINESS UNIT OF
DIGITAL EQUIPMENT CORPORATION
STATEMENTS OF OPERATIONS
(Dollars in Thousands)
-------------- Year Ended ---------------
July 2,1994 July 3,1993 June 27,1992
Revenue
External $334,887 $ 169,500 $ 62,700
Affiliates 419,253 979,500 948,700
--------- ---------- ---------
Total Revenue 754,140 1,149,000 1,011,400
--------- ---------- ---------
Costs and Expenses
Cost of External Sales 330,825 192,187 79,306
Cost of Affiliated Sales 368,682 509,504 575,542
Research & Development 90,494 111,798 120,700
Selling, General &
Administrative 46,798 342,437 535,211
Restructuring Costs (Note 9) - - 85,360
-------- --------- -------
Net Operating Loss (82,659) (6,926) (384,719)
Interest Expense (Note 7) 1,835 1,078 743
-------- ---------- -------
Loss before cumulative effect
of change in accounting
principle (84,494) (8,004) (385,462)
Cumulative effect of change
in accounting principle net
of tax (Note 6) - - 16,749
----------- --------- --------
Net Loss ($84,494) ($8,004) ($402,211)
========== ========= ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 3
THE "DISKS, HEADS AND TAPES BUSINESS"
OF THE STORAGE BUSINESS UNIT OF
DIGITAL EQUIPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. Background and Basis of Presentation
Pursuant to a Stock and Asset Purchase Agreement (the "Agreement") dated
July 18,1994, between Digital Equipment Corporation ("Digital") and
Quantum Corporation ("Quantum"), Digital agreed to sell to Quantum
effective October 3, 1994, tangible assets consisting principally of
inventory, property, plant and equipment, plus certain contract rights
and intellectual property (carried at zero value) of the Disks, Heads
and Tapes Business (the "Business") of the Storage Business Unit of
Digital in exchange for consideration totaling $360,000. Included in
the sale is Digital's interest in Digital Equipment Storage Products
(Malaysia) Sdn. Bhd. and its 81% interest in Rocky Mountain Magnetics,
Inc. (see Note 10). Digital and Quantum are also entering into certain
related service, leasing and supply agreements. The Business is
involved in the design, manufacture and marketing of computer disk
drive, tape drive, tape media, solid state memory device and magnetic
recording head products and optical storage devices and related
technology other than CD-ROM.
The Statements of Assets Sold and Liabilities Assumed and the Statements
of Operations ("the financial statements") are derived from the
historical books and records of the Storage Business Unit of Digital and
present assets sold and liabilities assumed and the results of
operations of the Business. Certain costs and expenses presented in
these financial statements have been allocated based on management's
estimates of the cost of services provided to the Business by Digital.
Management believes that these allocations are based on assumptions that
are reasonable under the circumstances. The historical operating
results may not be indicative of the results after the acquisition by
Quantum.
The Statements of Operations have different affiliated revenue
recognition and pricing policies and selling, general and administrative
("SG&A") expense allocation methodologies in fiscal year 1994 as
compared to fiscal years 1993 and 1992. Management believes these
different policies reflect the transition from a proprietary business
model in the earlier fiscal years presented to that of a stand-alone
component manufacturer in the most recent fiscal year. As a result, the
financial statements presented may not be indicative of the results of
operations that would have been achieved had the Business been operated
as a non-affiliated entity.
<PAGE>
Page 4
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
1. Background and Basis of Presentation, continued
Fiscal Year 1994
Revenue from affiliates was recognized at the point of transfer to
affiliates at an amount determined by management to approximate an
external sales price for component parts. SG&A included allocated sales
and marketing costs that were directly related to external sales; no
allocation was made for sales and marketing costs for downstream revenue
recognized by affiliates.
Fiscal Years 1993 and 1992
Revenue from affiliates was recognized based on an allocation of the
complete system revenue recognized by Digital upon shipment to its
customers. In fiscal year 1993, SG&A expense included an allocation of
total Digital sales and marketing costs based on amounts negotiated
between the Storage Business Unit and Digital and in fiscal year 1992, a
percentage of Digital total sales and marketing costs were allocated to
the Business.
The following policies were followed in each year presented on the
Statements of Operations:
Revenue
External revenue was recognized at the time products were shipped.
Cost of Sales
Cost of Sales includes an allocation of corporate manufacturing costs.
Research and Development
Research and development expense includes an allocation of corporate
research and development expense.
SG&A
Different allocation methods apply to the various components of SG&A
expense. These allocation methods were primarily derived from
negotiated amounts between business units, relative revenue and relative
cost. The components of SG&A expense include the costs of selling,
marketing, administrative and corporate functions.
<PAGE>
Page 5
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
1. Background and Basis of Presentation, continued
The amounts allocated to the Business in each of the fiscal years
presented for cost of sales, research and development and SG&A are as
follows:
1994 1993 1992
Cost of Sales $86,381 $229,891 $212,447
Research and Development 15,494 15,098 80,300
S G & A 20,098 329,537 483,411
Management believes these allocations reflect the change in the business
model as described above over the course of the three fiscal years
presented.
2. Summary of Significant Accounting Policies
Fiscal Year
The fiscal year of Digital is the fifty-two/fifty-three week period
ending the Saturday nearest the last day of June. The fiscal years
ended July 2, 1994 and June 27, 1992 included 52 weeks. The fiscal year
ended July 3, 1993 included 53 weeks.
Translation of Foreign Currencies
For non-U.S. operations, the U.S. dollar is the functional
currency. Monetary assets and liabilities are translated into U.S.
dollars at current exchange rates. Nonmonetary assets such as
inventories and property, plant and equipment are translated at
historical rates.
Income and expense items are translated at average exchange rates
prevailing during the year, except that inventories and depreciation
charged to operations are translated at historical rates. Exchange
gains and losses arising from translation are included in current
income.
Digital enters into foreign exchange option and forward contracts to
hedge the impact of exchange rate movements on operations and the asset
and liability positions of non-U.S. subsidiaries. The impact of
exchange rate movements on contracts used to hedge transactions is
included in income when the operating revenues and expenses are
recognized and, for contracts used to hedge assets and liabilities, in
the period in which the exchange rates change.
<PAGE>
Page 6
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
2. Summary of Significant Accounting Policies, continued
Inventories
Inventories are stated at the lower of cost (first-in, first-out)
or market.
Advance to Affiliate
Advance to affiliate represents the net intercompany balance with
Digital's Indonesian affiliate that is being transferred to Quantum.
Research and Development Costs
Research and development costs are charged to expense when
incurred.
Property Plant and Equipment
Property, plant and equipment is recorded at cost. Expenditures
for maintenance and repairs are charged to expense while the costs of
significant improvements are capitalized.
Upon retirement or sale, the cost of assets disposed and the
related accumulated depreciation are eliminated and related gains or
losses are reflected in income. Depreciation expense is computed
principally on the following bases:
Classification Depreciation Lives and Methods
Buildings ............ 33 1/3 Years (straight line)
Leasehold Life of assets or term of lease,
Improvements ......... whichever is shorter (straight line)
Production and
Other Equipment ...... 3 to 10 years (accelerated methods)
Product Warranty Costs
Estimated warranty costs are provided for at the point of sale.
<PAGE>
Page 7
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
3. Inventories
Inventories are comprised of:
July 2, 1994 July 3, 1993
Raw materials ................ $ 37,135 $ 18,074
Work in progress ............. 90,319 86,862
Finished goods ............... 13,761 6,847
-------- --------
Total $141,215 $111,783
======= =======
4. Other Assets and Liabilities
Other assets and liabilities are primarily comprised of:
July 2, 1994 July 3, 1993
Prepaid Expenses $314 -
Accounts Payable (610) -
Other 59 -
-------- --------
Total ($237) -
======= ========
5. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
July 2, 1994 July 3, 1993
Land..................... $783 $3,596
Leasehold improvements .. 1,907 699
Buildings and improvements .. 59,719 83,318
Production and other equipment 187,145 224,611
Construction in progress .... 26,143 7,409
-------- --------
275,697 319,633
Less: accumulated depreciation 152,361 197,778
-------- --------
$123,336 $121,855
======= =======
Depreciation expense was approximately $40,000, $41,000 and $53,000 for
the years ended July 2, 1994, July 3, 1993 and June 27, 1992,
respectively.
<PAGE>
Page 8
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
6. Postretirement and Other Postemployment Benefits
Pension Plans - The Business participates in Digital's defined benefit
and defined contribution pension plans (the "Retirement Plan") covering
substantially all employees. Those Digital Employees who accept
employment with Quantum will terminate from Digital and will maintain
their vested rights in the Retirement Plan, with liability remaining
with Digital. The benefits are based on years of service and
compensation during the employee's career. Pension cost is based on
estimated benefit payment formulas. It is Digital's policy to make tax-
deductible contributions to the plans in accordance with local laws.
Contributions are intended to provide benefits for service to date and
benefits expected to be earned in the future. The projected benefit
obligation was determined using discount rates of 8.0%, 8.0% and 8.5%
for the fiscal years ending July 2, 1994, July 3, 1993 and June 27,
1992, respectively. For the U.S. pension plan, there were no
contributions in the fiscal years 1994, 1993 or 1992 due to the full
funding limit of the Omnibus Budget Reconciliation Act of 1987. The
assets of the plans include corporate equity and debt securities,
government securities and real estate.
The Statements of Operations include allocated costs as fringe benefits
based upon an average cost per employee for the Retirement Plan of
approximately $4,777, $5,121 and $5,026 for the years ended July 2,
1994, July 3, 1993 and June 27, 1992, respectively. These costs are
reported as Cost of Sales for direct labor and Selling, General and
Administrative for indirect labor. The measurement dates for all plans
were within 90 days of year end. Digital recognized a one time charge
in fiscal year 1992 for special early retirement pension benefits as a
component of restructuring costs.
Postretirement Benefits Other Than Pensions - The Business participates
in Digital's defined benefit postretirement plans that provide medical
and dental benefits for U.S. retirees and their eligible dependents.
Substantially all of Digital's U.S. employees may become eligible for
postretirement benefits if they reach retirement age while working for
Digital. The majority of Digital's non-U.S. subsidiaries do not offer
postretirement benefits other than pensions to retirees.
Digital's postretirement benefit plans other than pensions are funded as
costs are incurred. The postretirement benefit obligation was
determined using discount rates of 8.0%, 8.0% and 8.5% for the fiscal
years ending July 2, 1994, July 3, 1993 and June 27, 1992, respectively.
Fiscal year 1993 expense reflects a reduction from the prior year
resulting from cost sharing changes. Retiree contributions for the U.S.
medical plan are based on length of service for employees retiring after
fiscal year 1993.
<PAGE>
Page 9
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
6. Postretirement and Other Postemployment Benefits, continued
The Statements of Operations include allocated costs as fringe benefits
based upon an average cost per employee for the postretirement benefit
costs of approximately $2,928, $2,639 and $2,251 for the years ended
July 2, 1994, July 3, 1993 and June 27, 1992, respectively.
Digital also recognized a one-time charge in fiscal year 1992 for
special early postretirement benefits other than pensions as a component
of restructuring costs.
Digital adopted Statement of Financial Accounting Standards No. 106 -
Employers' Accounting for Postretirement Benefits Other Than Pensions in
fiscal year 1992 and elected to recognize the cumulative effect
immediately for its U.S. and material non-U.S. plans in its fiscal year
1992 results. This cost was allocated to the Business based upon the
estimated number of employees impacted.
Postemployment Benefits - In the fourth quarter of fiscal year 1994,
Digital adopted Statement of Financial Accounting Standards No. 112 -
Employers' Accounting for Postemployment Benefits ("SFAS No. 112"),
effective as of the beginning of the fiscal year. This standard
requires the accrual of benefits provided to former or inactive
employees, after employment but before retirement. These benefits
include, but are not limited to, salary continuation, supplemental
unemployment benefits, severance benefits, disability-related benefits
and continuation of benefits such as health care benefits and life
insurance coverage. The cumulative impact of adoption of SFAS No. 112
was immaterial to the Business.
7. Interest Expense
There was no direct interest expense incurred by the Business. However,
the interest expense reflected in the Statements of Operations is an
allocation of Digital's worldwide interest expense based upon the ratio
of the Business' inventory and property, plant and equipment to total
Digital assets. Management believes that this method provides a
reasonable basis for allocation within the Business' historical
Statements of Operations.
<PAGE>
Page 10
NOTES TO FINANCIAL STATEMENTS, Continued
(Dollars in Thousands)
8. Income Taxes
The Business is not a separate taxable entity for federal, state or
local income tax purposes. The Business' operations are included in the
consolidated Digital tax returns. No income tax provision has been
calculated on a separate return basis because net losses were realized
in each of the years presented.
9. Business Restructuring
Digital provided for restructuring in fiscal year 1992 to cover costs
associated with reorganizing into market-focused business units,
reducing the size of its workforce and closing certain facilities. The
restructuring charge includes the cost of involuntary employee
termination benefits, facility closures and related costs associated
with restructuring actions. Employee termination benefits include
severance, wage continuation, notice pay, medical and other benefits.
Facility closures and related costs include gains and losses on disposal
of property, plant and equipment, lease payments and related costs.
10. Investments in and Advances to Joint Venture and Subsidiary
On August 19, 1992, Digital entered into a joint venture agreement with
Storage Technologies, Corp. to form a venture called Rocky Mountain
Magnetics, Inc. ("RMMI"). Pursuant to the agreement Digital holds an
81% equity interest in RMMI. Summarized financial information for RMMI
is as follows:
July 2, 1994 July 3, 1993
Assets $23,031 $17,777
Liabilities 8,202 3,890
Net Loss (26,058) (18,407)
Digital owns 100% of Digital Equipment Storage Products (Malaysia) Sdn
Bhd. The Statements of Operations include a loss of $1,322 for the year
ended July 2, 1994. The net liabilities were $(862) for the year ended
July 2, 1994.
The advances consist of net intercompany balances with Digital that are
being transferred to Quantum.
11. Purchase Commitments
The Business has approximately $122,000 of non-cancelable commitments to
purchase inventory and equipment as of July 2, 1994.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors of Digital Equipment Corporation:
We have audited the accompanying Statements of Assets Sold and
Liabilities Assumed of the Disks, Heads and Tapes Business of the
Storage Business Unit of Digital Equipment Corporation (the "Business")
as of July 2, 1994 and July 3, 1993, and the related Statements of
Operations, for each of the three fiscal years in the period ended July
2, 1994. These financial statements are the responsibility of Digital
Equipment Corporation's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
The accompanying financial statements were prepared to present the
assets sold to and the liabilities assumed by Quantum Corporation of the
Business and the results of operations of the Business pursuant to the
acquisition agreement described in Note 1, and are not intended to be a
complete presentation of the Business' financial position or cash flows.
As discussed in Note 1, management's decision regarding revenue pricing
and recognition, and allocation of certain selling, general and
administrative expenses in fiscal 1994 reflect management's view of the
transition from a propriety business model in prior years to that of a
stand-alone component manufacturer in the most recent fiscal year. As a
result, the financial statements presented may not be indicative of the
results of operations that would have been achieved had the Business
operated as a non-affiliated entity.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the assets sold and liabilities
assumed of the Business as of July 2, 1994 and July 3, 1993, and the
results of its operations for each of the three fiscal years in the
period ended July 2, 1994 in conformity with generally accepted
accounting principles.
<PAGE>
As discussed in Note 6, the Business changed its method of accounting
for postretirement benefits other than pensions in the year ended
June 27, 1992.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 29, 1994
<PAGE>
THE "DISKS HEAD AND TAPES BUSINESS"
OF THE STORAGE BUSINESS UNIT OF
DIGITAL EQUIPMENT CORPORATION
UNAUDITED STATEMENT OF ASSETS SOLD AND LIABILITIES ASSUMED
AS OF OCTOBER 1, 1994
(DOLLARS IN THOUSANDS)
As Reported
By Digital Quantum
Equipment Reclass- Acquired
Corporation ifications Business
----------- ---------- --------
ASSETS SOLD
Cash and cash equivalents $ - $ 624 $ 624
Inventory 152,804 14,367 167,171
Other current assets - 37 37
Net Property, Plant and
and Equipment 120,673 33,502 154,175
Investments in and
Advances to Joint Venture 43,299 (43,299) -
and Subsidiary
Other Assets 1,239 - 1,239
----------- ---------- --------
Total $ 318,015 $ 5,231 $323,246
========== ========= ========
LIABILITIES ASSUMED
Liabilities 1,166 5,234 6,400
----------- ---------- --------
Total $ 1,166 $ 5,234 $ 6,400
========== ========= ========
Quantum reclassifications of the accounts as reported by Digital
Equipment Corporation consist of amounts to consolidate a 100% owned
subsidiary and 81% of Rocky Mountain Magnetics, Inc. accounted for
under the equity method.
<PAGE>
THE "DISKS HEAD AND TAPES BUSINESS"
OF THE STORAGE BUSINESS UNIT OF
DIGITAL EQUIPMENT CORPORATION
UNAUDITED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
As Reported by Digital Equipment Corporation
Quarter Ended Quarter Ended
October 1, 1994 October 2, 1993
--------------- ---------------
REVENUE
Revenue 161,000 135,526
COSTS AND EXPENSES
Cost of Sales 201,600 130,439
Research & Development 24,500 20,881
Selling, General & Administrative 13,700 12,674
--------- -------
Net Operating (Loss) (78,800) (28,468)
Interest Expense 600 367
--------- -------
Net Loss $(79,400) $(28,835)
========= ========
<PAGE>
THE "DISKS HEAD AND TAPES BUSINESS"
OF THE STORAGE BUSINESS UNIT OF
DIGITAL EQUIPMENT CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of presentation
The accompanying unaudited condensed financial statements reflect all
adjustments, consisting only of normal recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of the results for
the periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for the full fiscal year. The
accompanying financial statements should be read in conjunction with the audited
financial statements of the "Disks, Head and Tapes Business" of the Storage
Business Unit of Digital Equipment Corporation for the fiscal year ended July 2,
1994.
Quantum reclassifications of the accounts as reported by Digital
Equipment Corporation consist of amounts to consolidate a 100% owned
subsidiary and 81% of Rocky Mountain Magnetics, Inc. accounted for
under the equity method.
2. Inventories
Inventories as of October 1, 1994 consisted of the following:
(In thousands)
As Reported
By Digital Quantum
Equipment Reclass- Acquired
Corporation ifications Business
----------- ---------- --------
Materials and purchased parts $ 57,276 $ 8,089 $ 65,365
Work in process 54,663 5,406 60,069
Finished goods 40,865 872 41,737
-------- ------- --------
$152,804 $14,367 $167,171
======== ======= ========
<PAGE>
Pro Forma Condensed Consolidated Financial Information
(Unaudited) of Quantum Corporation (the "Company")
On October 3, 1994, Quantum Corporation (Quantum or the
Company) acquired the Disks, Heads, and Tapes Business
of the Storage Business Unit of Digital Equipment
Corporation (the Acquired Business), in a transaction which
is being accounted for as a purchase. The accompanying unaudited
pro forma condensed balance sheet gives effect to the purchase
as if it had occurred on the balance sheet date. The annual
and interim period unaudited pro forma statements of operations
give effect to the transaction as if it had occurred on April 1,
1993, the beginning of Quantum's most recently completed fiscal
year. Quantum's fiscal year end is March 31; the fiscal year end
for the acquired Business is June 30. For the interim period, the
Acquired Business' fourth quarter ended July 2, 1994 and their
quarter ended October 1, 1994 has been combined with the Company's
six months ended October 2, 1994. For the annual period the Acquired
Business' fourth quarter ended July 3, 1993 and the first three quarters
ended April 2, 1994 have been combined with Quantum's fiscal year ended
March 31, 1994.
The pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results that
would have occurred had the transaction been completed at the
beginning of the period indicated, nor is it necessarily indicative
of future operating results. The Company retained independent valuation
professionals to assist it in the final determination of the value to be
assigned to the individual assets acquired, including intangibles and in-
process research and development. The results of this valuation are
included in the pro forma adjustments to the condensed balance sheet.
However, the final purchase price allocation is not yet complete as the
Company's management is still awaiting certain information related to
the purchase. While the pro forma information has been presented based on
the best information currently available to Company's management, the final
allocation could change, and the change could affect the pro forma
financial information. The types of information that the Company is
awaiting include:
* Determination of the final purchase price - The purchase
agreement contained several adjustment provisions related to the
level and value of inventory and property, plant and equipment, and such
adjustment provisions are still being negotiated.
* Management's plans regarding utilization and redeployment of
the Acquired Business' assets and operations - Management is
still evaluating the utility and deployment of the assets and
operations acquired in this transaction. The magnitude of costs to be
incurred or asset impairments related to "exiting" any of the acquired
operations are still being assessed.
Company management expects that the final purchase price will be known
by the time the Company's March 31, 1995 10K is filed. Finalization of
management's plans regarding utility and deployment of assets and
operations acquired is expected by March 31, 1995.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
QUANTUM CORPORATION AND SUBSIDIARIES
(in thousands)
-----------------October 2, 1994-----------------
Quantum Acquired Pro Forma Pro Forma
Corporation Business Adjustments Consolidated
(as reported)
Assets
Current assets:
Cash and cash equivalents $316,851 $624 ($107,750)(a) $209,725
Short-term investments 19,208 - - 19,208
Accounts receivable 436,168 - - 436,168
Inventories 200,878 167,171 (20,519)(d) 347,530
Deferred taxes 37,835 - - 37,835
Other current assets 45,800 1,276 (25,000)(a) 22,076
--------- -------- --------- ----------
Total current assets 1,056,740 169,071 (153,269) 1,072,542
Property and equipment 108,611 154,175 (49,828)(d) 212,958
Other assets 15,905 - 5,250 (a) 21,155
Intangibles - - 106,164 (d) 106,164
--------- -------- --------- ----------
$1,181,256 $323,246 ($ 91,683) $1,412,819
========= ======== ========= ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $310,447 $2,854 $ - $313,301
Accrued liabilities 120,057 3,546 2,500 (a) 195,450
4,672 (b)
64,675 (c)
Income taxes payable 11,826 - - 11,826
Current portion of
long-term debt - - 95,000 (a) 95,000
--------- -------- --------- ----------
Total current liabilities 442,330 6,400 166,847 615,577
Long-term debt - - 125,500 (a) 125,500
Subordinated debentures 212,500 - 212,500
Minority interest
Divisional Equity - 316,846 (350,500)(a) -
(4,672)(b)
(64,675)(c)
103,001 (d)
Shareholders' equity:
Common stock 132,840 - 132,840
Retained earnings 393,586 - (67,184)(d) 326,402
--------- -------- --------- ----------
Total shareholders' equity 526,426 - (67,184) 459,242
--------- -------- --------- ----------
$1,181,256 $323,246 ($ 91,683) $1,412,819
========= ======== ========= ==========
<PAGE>
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
QUANTUM CORPORATION
(in thousands except share and per share data)
<CAPTION>
Year Ended Year Ended
3/31/94 4/2/94 -------Six Months Ended October 2, 1994-------
------------------------------------------------ ----------------------------------------------
Quantum Acquired Pro Forma Pro Forma Quantum Acquired Pro Forma Pro Forma
Corporation Business Adjustments Consolidated Corporation Business Adjustments Consolidated
------------------------------------------------ ----------------------------------------------
(as reported) (as reported)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $2,131,054 $1,637,806 ($36,553)(e) $3,732,307 $1,451,473 $426,334 ($3,549)(e) $1,874,258
Cost of sales 1,892,211 1,159,250 (36,553)(e) 3,014,908 1,172,666 443,548 (3,549)(e) 1,612,665
---------- ---------- ------------ ----------- ---------- --------- ----------- ----------
Gross profit 238,843 478,556 - 717,399 278,807 (17,214) - 261,593
Operating expenses:
Research and develop-
ment 89,837 178,157 - 267,994 57,153 48,635 - 105,788
Selling, general and
administrative 115,925 380,905 - 496,830 67,550 22,030 - 89,580
Restructuring and non-
recurring charges 22,753 - - 22,753 - - - -
Depreciation and
amortization - - 26,541 (g) 15,653 - - 13,271 (g) 7,827
(10,888)(h) (5,444)(h)
---------- ---------- ------------ ----------- ---------- --------- ----------- ----------
228,515 559,062 15,653 803,230 124,703 70,665 7,827 203,195
Income (loss) from
operations 10,328 (80,506) (15,653) (85,831) 154,104 (87,879) (7,827) 58,398
Other (income) expense,
net 6,665 2,362 25,995 (f) 35,022 1,469 1,151 12,997 (f) 15,617
---------- ---------- ------------ ----------- ---------- --------- ----------- ----------
Income (loss) before
income taxes 3,663 (82,868) (41,648) (120,853) 152,635 (89,030) (20,824) 42,781
Income tax provision
(benefit) 989 - (33,619)(i) (32,630) 45,790 - (32,956)(i) 12,834
---------- ---------- ------------ ----------- ---------- --------- ----------- ----------
Net income (loss) $2,674 ($82,868) ($8,029) ($88,223) $106,845 ($ 89,030) $12,132 $29,947
========== ========== ======= ======== ========= ========= ======= =======
Net income (loss) per share:
Primary $0.06 ($2.04) $2.27 $0.64
Fully diluted $0.06 ($2.04) $1.87 $0.58
Weighted average common and common
equivalent shares:
Primary 44,967,000 (1,625,515)(j) 43,341,485 47,090,888 - 47,090,888
Fully diluted 44,967,000 (1,625,515)(j) 43,341,485 58,800,191 - 58,800,191
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
QUANTUM CORPORATION
Note 1--Financial information of Acquired Business
The unaudited Statements of Assets Sold and Liabilities Assumed exclude
all assets and liabilities of the Acquired Business that were not acquired
or assumed by Quantum. Divisional equity represents the net effect of
those exclusions and does not represent the "equity" of the Acquired
Business while it was owned by Digital Equipment Corporation.
Note 2--Purchase price allocation
As indicated in the introduction to the unaudited pro forma financial
information, certain items affecting purchase price and the allocation
thereof remain unresolved at this time. For purposes of the accompanying
pro forma financial statements, the Company has assumed a purchase price of
$350.5 million, and direct costs of the transaction for investment banker
and professional fees and other direct incremental transaction costs of
$4.7 million for a total purchase price of $355.2 million. Additionally
the Company has estimated "exit" costs of $64.7 million.
Recap of purchase price allocation:
(in millions)
Inventories $146.7
Property and equipment 104.3
Intangible assets 106.1
"Exit" cost accrual (64.7)
Other assets/liabilities, net (4.4)
In-process research and development (expense) 67.2
------
$355.2
======
Intangible assets include completed technology, workforce in place, supply
agreement and customer list. The estimated useful lives are expected to
range from 3 to 10 years. For presentation purposes, purchased intangibles
have been amortized using a four year life.
The $67.2 million allocated to in-process research and development is
required to be immediately expensed under generally accepted accounting
principles. Such amount is a non-recurring charge related to the
acquisition and as such is not reflected in the pro forma Statement of
Operations pursuant to Regulation S-X.
The approximate effect of decreasing a combination of the purchase
price and "exit" costs by $15 million would be to reduce the depreciation
and amortization of property and equipment/intangibles for the pro forma
year ended March 31, 1994 by approximately $4 million.
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
QUANTUM CORPORATION
NOTE 3--PRO FORMA ADJUSTMENTS
Adjustments to the Pro Forma Condensed Consolidated Balance Sheet
were made to:
(a) to record cash paid for the acquisition, net of deposit
previously made, and to record debt incurred including loan
origination fees and balance due to Digital Equipment
Corporation for an adjustment for capital equipment purchases
(b) to accrue direct transaction costs (primarily investment banker,
legal, valuation and accounting services)
(c) to accrue for estimated "exit" costs
(d) to allocate purchase price based on appraised fair values,
including the retained earnings effect of the in-process research
and technology
Adjustments to the Pro Forma Condensed Consolidated Statements of
Operations were made to:
(e) eliminate intercompany sales and cost of sales (intercompany
profit in ending inventory was immaterial)
(f) record the amortization of loan origination fees on a straight
line basis over three years, the interest expense on the new
debt incurred, and reduce interest income earned on the cash
paid as part of the acquisition
(g) record the amortization of the purchased intangibles
(h) adjust depreciation on property and equipment arising from the
new basis and difference in lives and depreciation methods
utilized by Quantum
(i) to adjust the tax provision to reflect the effects of the
acquisition adjustments
(j) to adjust the earnings per share calculation for the effects of
the pro forma results being a loss as opposed to the gain
originally reported by Quantum
CREDIT AGREEMENT
EXECUTION COPY
- -----------------------------------------------------------------
- -----------------------------------------------------------------
CREDIT AGREEMENT
among
QUANTUM CORPORATION
and
THE BANKS NAMED HEREIN
and
ABN AMRO BANK N.V., San Francisco International Branch
BARCLAYS BANK PLC
and
CIBC INC.,
as Managing Agents for the Banks
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent and
Collateral Agent for the Banks
October 3, 1994
- -----------------------------------------------------------------
- -----------------------------------------------------------------
<PAGE>
CREDIT AGREEMENT
Table of Contents
Page
SECTION I. INTERPRETATION 1
1.01. Definitions 1
1.02. GAAP 32
1.03. Headings 32
1.04. Plural Terms 32
1.05. Time 32
1.06. Governing Law 32
1.07. Construction 32
1.08. Entire Agreement 32
1.09. Calculation of Interest and Fees 33
1.10. Other Interpretive Provisions 33
SECTION II. CREDIT FACILITIES 33
2.01. Revolving Loan Facility 33
2.02. Term Loan Facility 37
2.03. Additional Amount Limitations,
Commitment Reductions, Etc. 41
2.04. Fees 43
2.05. Prepayments 43
2.06. Other Payment Terms 46
2.07. Notes and Interest Account 47
2.08. Loan Funding, Etc 48
2.09. Pro Rata Treatment 49
2.10. Change of Circumstances 50
2.11. Taxes on Payments 54
2.12. Funding Loss Indemnification 56
2.13. Security 56
2.14. Replacement of Banks 58
SECTION III. CONDITIONS PRECEDENT 58
3.01. Initial Conditions Precedent 58
3.02. Conditions Precedent to Each Credit Event 59
SECTION IV. REPRESENTATIONS AND WARRANTIES 59
4.01. Borrower's Representations and Warranties 59
4.02. Reaffirmation 66
SECTION V. COVENANTS 66
5.01. Affirmative Covenants 66
5.02. Negative Covenants 72
SECTION VI. DEFAULT 86
6.01. Events of Default 86
6.02. Remedies 89
<PAGE>
SECTION VII. AGENTS AND RELATIONS AMONG BANKS 90
7.01. Appointment, Powers and Immunities 90
7.02. Reliance by Agents 90
7.03. Defaults 91
7.04. Indemnification 91
7.05. Non-Reliance 92
7.06. Resignation or Removal of Administrative
Agent 92
7.07. Removal of Managing Agents 93
7.08. Authorization 93
7.09. Agents in Their Individual Capacities 94
7.10. Agents' Communications Binding Upon Banks 94
7.11. No Obligations of Borrower 94
7.12. Co-Agents 94
SECTION VIII. MISCELLANEOUS 95
8.01. Notices 95
8.02. Expenses 96
8.03. Indemnification 96
8.04. Waivers; Amendments 97
8.05. Successors and Assigns 98
8.06. Setoff; Security Interest102
8.07. No Third Party Rights103
8.08. Partial Invalidity103
8.09. Jury Trial103
8.10. Counterparts103
8.11. Confidentiality103
<PAGE>
SCHEDULES
I Banks (Preamble)
3.01 Initial Conditions Precedent
4.01(e) Required Approvals, Etc.
4.01(h) Borrower's Real Property
4.01(q) Borrower's Subsidiaries
5.02(a) Existing Indebtedness
5.02(b) Existing Liens
5.02(e) Existing Investments
EXHIBITS
A Notice of Revolving Loan Borrowing (2.01(b))
B Notice of Revolving Loan Conversion (2.01(d))
C Notice of Revolving Loan Interest Period Selection (2.01(e))
D Notice of Term Loan Borrowing (2.02(b))
E Notice of Term Loan Conversion (2.02(d))
F Notice of Term Loan Interest Period Selection (2.02(e))
G Revolving Loan Note (2.07(a))
H Term Loan Note (2.07(b))
I Borrower Mortgage (2.13(a))
J Borrower Security Agreement (2.13(a))
K Borrower Intellectual Property Security Agreement (2.13(a))
L Borrower Pledge Agreement (2.13(a))
M Subsidiary Security Agreement (2.13(a))
N Lien Acknowledgment Agreement (2.13(a))
O Compliance Certificate (5.01(a))
P Borrowing Base Certificate (5.01(a))
Q Insurance Endorsements (5.01(d), Schedule 3.01)
R MKE Subordinated Debt Terms (5.02(a))
S Assignment Agreement (8.05(c))
T Solvency Certificate (Schedule 3.01)
U Quantum Europe Note (Schedule 3.01)
<PAGE>
THIS CREDIT AGREEMENT, dated as of October 3, 1994, is entered
into by and among:
(1) QUANTUM 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
"Banks");
(3) ABN AMRO BANK N.V., San Francisco International Branch
("ABN"), BARCLAYS BANK PLC ("Barclays") and CIBC INC. ("CIBC"), as
managing agents for the Banks (collectively in such capacity, the
"Managing Agents");
(4) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
THE FIRST NATIONAL BANK OF BOSTON, CHEMICAL BANK and THE INDUSTRIAL
BANK OF JAPAN, LIMITED, as co-agents for the Banks; and
(5) CANADIAN IMPERIAL BANK OF COMMERCE, as administrative
and collateral agent for the Banks (in such capacities, the
"Administrative Agent"); ABN, as syndication agent for the Banks;
and Barclays, as documentation agent for the Banks.
RECITALS
A. In connection with its agreement to purchase certain assets
from Digital Equipment Corporation, Borrower has requested the Banks to
provide certain credit facilities to Borrower.
B. The Banks 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 Credit Document referenced below:
<PAGE>
"ABN" shall have the meaning given to that term in clause (3)
of the introductory paragraph hereof.
"Adjusted Net Income" 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 after provision for income
taxes;
plus
(b) The sum (to the extent deducted in calculating net
income or loss in clause (a) above) of (i) all depreciation
and amortization of such Person and its Subsidiaries accruing
during such period and (ii) with respect to Borrower and its
Subsidiaries for any of the four (4) quarters during the
period October 1, 1994 through September 30, 1995 only, the
after-tax cost of the Restructuring Charges incurred or
accrued during such quarter to the extent such Restructuring
Charges do not exceed in aggregate $125,000,000 for all four
(4) quarters combined on a pre-tax basis;
plus
(c) With respect to Borrower and its Subsidiaries for
any period ending on or prior to December 31, 1995 only, the
lesser on the last day of such period of (i) the amount by
which Borrower's cash on such day exceeds $120,000,000 and
(ii) $10,000,000.
"Administrative Agent" shall have the meaning given to that
term in clause (5) of the introductory paragraph hereof.
"Administrative Agent's Fee Letter" shall mean the letter
agreement dated September 28, 1994 between Borrower and
Administrative Agent.
"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 the Equity Securities of such Person having
voting power, (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 and directors;
provided, however, that in no case shall any Agent or any Bank 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.
"Agents" shall mean Administrative Agent and Managing Agents.
"Agents' Fee Letters" shall mean the Administrative Agent's
Fee Letter and the Managing Agents' Fee Letter.
"Aggregate Credit Facilities" shall mean, at any time, the
sum at such time of the Total Revolving Loan Commitment and the
aggregate principal amount of all Term Loans then outstanding.
"Agreement" shall mean this Credit Agreement.
"Applicable Lending Office" shall mean, with respect to any
Bank, (a) initially, its office designated as such in Schedule I
(or, in the case of any Bank which becomes a Bank 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 Bank may designate to
Administrative Agent as the office at which such Bank's Loans will
thereafter be maintained and for the account of which all payments
of principal of, and interest on, such Bank's Loans will thereafter
be made.
"Applicable Margin" shall mean:
(a) With respect to each Revolving Base Rate Loan,
one-half of one percent (0.50%);
(b) With respect to each Revolving LIBOR Loan, one
and three-fourths percent (1.75%);
(c) With respect to each Term Base Rate Loan Portion,
one-half of one percent (0.50%); and
(d) With respect to each Term LIBOR Loan Portion, one
and three-fourths percent (1.75%);
Provided, however, that each of the Applicable Margins set forth
above (i) shall be reduced by one-half of one percent (0.50%)
during each Pricing Reduction Period and(ii) shall be increased by
two percent (2.00%) on the date an Event of Default occurs and
shall continue at such increased rate until such Event of Default
is waived by the Banks. (Borrower shall have no obligation to pay
interest at an increased rate as a result of the occurrence of any
Event of Default unless notified in writing by Administrative Agent
of such obligation but shall, upon receipt of such notice, be
obligated to pay interest at such increased rate for the period
from the date the applicable Event of Default occurred until such
Event of Default is waived by the Banks.)
"Assignee Bank" 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.
"Assignor Bank" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Authorized Financial Officer" shall mean, with respect to
Borrower, the Chief Financial Officer or Treasurer of Borrower or
any Director of Finance of Borrower.
"Banks" shall have the meaning given to that term in clause
(2) of the introductory paragraph hereof.
"Barclays" shall have the meaning given to that term in
clause (3) of the introductory paragraph hereof.
"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%).
"Borrower" shall have the meaning given to that term in
clause (1) of the introductory paragraph hereof.
"Borrower Intellectual Property Security Agreement" shall
have the meaning given to such term in Subparagraph 2.13(a).
"Borrower Mortgage" shall have the meaning given to such term
in Subparagraph 2.13(a).
<PAGE>
"Borrower Pledge Agreement" shall have the meaning given to
such term in Subparagraph 2.13(a).
"Borrower Security Agreement" shall have the meaning given to
such term in Subparagraph 2.13(a).
"Borrowing" shall mean a Revolving Loan Borrowing or the Term
Loan Borrowing.
"Borrowing Base" shall have the meaning given to that term in
Subparagraph 2.03(a).
"Borrowing Base Certificate" shall have the meaning given to
that term in Subparagraph 5.01(a).
"Business Day" shall mean any day on which (a) commercial
banks are not authorized or required to close in San Francisco,
California or New York, New York and (b) if such Business Day is
related to a Loan or Portion which bears or is to bear interest
based on a LIBO Rate, dealings in Dollar deposits are carried out
in the London or other applicable interbank eurodollar 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,
tangible property owned or leased (in the case of a Capital Lease)
by such Person, or any expense incurred by any 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 Control" shall mean (a) with respect to Borrower,
the occurrence of any of the following events: (i) any person or
group of persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended) shall (A) acquire
beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of forty percent (40%) or more of
the outstanding Equity Securities of Borrower entitled to vote for
members of the board of directors, or (B) acquire all or
substantially all of the assets of Borrower and its Subsidiaries
taken as a whole, or (ii) during any period of fifteen (15)
consecutive calendar months, individuals who are directors of
Borrower on the first day of such period ("Initial Directors") and
any directors of Borrower who are specifically approved by
two-thirds of the Initial Directors and previously-approved
Approved Directors ("Approved Directors") shall cease to constitute
a majority of the Board of Directors of Borrower before the end of
such period; (b) with respect to any Material Subsidiary other than
Rocky Mountain, Borrower shall cease to own one hundred percent
(100%) of the Equity Securities of such Subsidiary except for
nominal amounts of director stock necessary to do business in
certain jurisdictions outside the United States; and (c) with
respect to Rocky Mountain, Borrower shall cease to own at least
fifty-one percent (51%) of the common stock (and fifty-one (51%) of
any other Equity Securities) of Rocky Mountain.
"Change of Law" shall have the meaning given to that term in
Subparagraph 2.10(b).
"CIBC" shall have the meaning given to that term in clause
(3) of the introductory paragraph hereof.
"Closing Date" shall mean the date the Term Loans are made.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all property in which any Agent or
Bank has a Lien to secure the Obligations.
"Commitments" shall mean, collectively, the Revolving Loan
Commitments and the Term Loan Commitments.
"Commitment Fee Percentage" shall mean, with respect to the
Unused Commitment at any time, a per annum rate of one-half percent
(0.50%); provided, however, that the Commitment Fee Percentage
shall be reduced by one-eighth of one percent (0.125%) during each
Pricing Reduction Period.
"Commitment Fees" shall have the meaning given to that term
in Subparagraph 2.04(c).
"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
letter of credit 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 general partner or joint
venturer in any partnership or joint venture, (iii) to purchase any
materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other
related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall
be made regardless of whether delivery of such materials, supplies
or other property is ever made or tendered, or such services are
ever performed or tendered, or (iv) 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 be deemed
equal to the liability in respect thereof reasonably anticipated in
accordance with GAAP.
"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.
"Convertible Subordinated Debentures" shall mean the 6 3/8%
convertible subordinated debentures in the original principal
amount of $212,500,000 issued by Borrower pursuant to the Indenture
dated April 1, 1992 between Borrower and LaSalle National Bank, as
Trustee.
"Credit Documents" shall mean and include this Agreement, the
Notes, the Security Documents, the Agents' Fee Letters; all
documents, instruments and agreements delivered to any Agent or any
Bank pursuant to Paragraph 3.01; and all other documents,
instruments and agreements delivered by Borrower or any of its
Subsidiaries to any Agent or Bank in connection with this Agreement
on or after the date of this Agreement.
"Credit Event" shall mean the making of any Loan, the
conversion of any Revolving Base Rate Loan or Term Base Rate
Borrowing Portion into a Revolving LIBOR Loan or Term LIBOR
Borrowing Portion or the selection of a new Interest Period for any
Revolving LIBOR Loan or Term LIBOR Borrowing Portion.
<PAGE>
"Debt Service 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;
(a) The Adjusted Net Income of such Person and its
Subsidiaries for such period;
to
(b) The sum of (i) all principal payments on
Indebtedness for borrowed money of such Person and its
Subsidiaries scheduled for payment during such period, (ii)
all Capital Expenditures of such Person and its Subsidiaries
for such period, and (iii) all dividends paid by such Person
and its Subsidiaries during such period (excluding any
dividends paid to such Person).
(In calculating the Debt Service Coverage Ratio of Borrower for any
period, the principal payments "scheduled for payment during such
period" on the Term Loans shall be the Term Loan principal payments
actually scheduled for payment during such period pursuant to
Subparagraph 2.02(f), except that, for the period January 1, 1995
through December 31, 1995, the principal payments "scheduled for
payment during such period" on the Term Loans shall be deemed to be
the principal payment due on the Term Loans on September 30, 1995
and one-half of the principal payment due on the Term Loans on
March 31, 1996.)
"DEC" shall mean Digital Equipment Corporation, a
Massachusetts corporation.
"DEC Acquisition" shall mean the acquisition by Borrower from
DEC pursuant to the DEC Purchase Agreement of certain stock and
assets owned by DEC.
"DEC Loan" shall mean the Indebtedness of Borrower evidenced
by the DEC Note.
"DEC Note" shall mean a promissory note executed by Borrower
in favor of DEC as a part of the purchase price for the DEC
Acquisition.
"DEC Purchase Agreement" shall mean the Stock and Asset
Purchase Agreement dated as of July 18, 1994 among DEC, Borrower
and Quantum Europe, as amended by Amendment No. 1 thereto dated as
of October 3, 1994.
"DEC Purchase Documents" shall mean the DEC Purchase
Agreement, the DEC Note, the DEC Supply Agreement and all other
documents, instruments and agreements delivered by Borrower,
Quantum Europe or DEC in connection with the DEC Acquisition.
"DEC Supply Agreement" shall mean the Supply Agreement for
Storage Devices to be dated the Closing Date between DEC and
Borrower.
"Default" shall have the meaning given to that term in
Paragraph 6.01.
"Defaulting Bank" shall mean a Bank 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 Administrative Agent.
"Designated Asset Sale Proceeds" shall mean, for any fiscal
year of Borrower, the Net Proceeds payable to Borrower and its
Subsidiaries (to the extent of Borrower's ownership interest
therein) from the sale of assets (including the direct or indirect
sale of any stock or other Equity Securities of any Subsidiary)
during such year, other than any sale permitted by clause (i),
(ii), (iii), (iv) or (vi) of Subparagraph 5.02(c) or any license
permitted by clause (v) of Subparagraph 5.02(c).
"Disclosure Letter" shall mean the letter from Borrower to
Administrative Agent, dated the date of this Agreement, which
identifies itself as the "Disclosure Letter" under this Agreement.
"Dollars" and "$" shall mean the lawful currency of the
United States of America.
"Domestic Subsidiary" shall mean, with respect to any Person,
any Subsidiary of such Person which is created or organized in the
United States or under the laws of the United States or any state
of the United States.
"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;
Provided, however, that, in calculating EBIT of Borrower for any
period which includes the quarter in which the DEC Acquisition
occurs, pre-tax Restructuring Charges related to the DEC
Acquisition of not more than $125,000,000 incurred in such quarter
shall be disregarded (or, if GAAP requires that such pre-tax
Restructuring Charges be accrued in more than one quarter, in
calculating EBIT of Borrower for any period which includes the
quarter in which the DEC Acquisition occurs or any of the first
three (3) quarters thereafter, pre-tax Restructuring Charges
related to the DEC Acquisition accruing in such quarter in
accordance with GAAP shall be disregarded, provided that the
aggregate amount of such Restructuring Charges so disregarded shall
not exceed $125,000,000).
"EBITDA" 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) The sum (to the extent deducted in calculating net
income or loss in clause (a) above) of (i) all Interest
Expenses of such Person and its Subsidiaries accruing during
such period and (ii) all depreciation and amortization of
such Person and its Subsidiaries accruing during such period;
Provided, however, that, in calculating EBITDA of Borrower for any
period which includes the quarter in which the DEC Acquisition
occurs, pre-tax Restructuring Charges related to the DEC
Acquisition of not more than $125,000,000 incurred in such quarter
shall be disregarded (or, if GAAP requires that such pre-tax
Restructuring Charges be accrued in more than one quarter, in
calculating EBITDA of Borrower for any period which includes the
quarter in which the DEC Acquisition occurs or any of the first
three (3) quarters thereafter, pre-tax Restructuring Charges
related to the DEC Acquisition accruing in such quarter in
accordance with GAAP shall be disregarded, provided that the
aggregate amount of such Restructuring Charges so disregarded shall
not exceed $125,000,000).
"Eligible Borrower Accounts" shall mean, with respect to
Borrower, the aggregate net amount of all accounts (as defined in
the California Uniform Commercial Code) of Borrower, except, to the
extent not already deducted, the following:
(a) Any account which does not arise from the sale or
lease of goods or services rendered to the account debtor
thereon in the ordinary course of Borrower's business, or
which arises from a sale, lease or service which has not been
fully performed by Borrower;
(b) Any account or portion thereof to the extent the
same is subject to any right of discount, credit, allowance,
rescission, setoff, claim or defense or which is otherwise
not valid and enforceable against the account debtor thereon;
(c) Any account which is not subject to a first
priority perfected security interest (or Similar Lien) in
favor of Administrative Agent for the benefit of the Agents
and Banks;
(d) Any account which is not owned by Borrower free
and clear of all Liens, rights and interests of all other
Persons except for Permitted Liens;
(e) Any account which is unpaid more than ninety (90)
days after the invoice date therefor;
(f) Any account arising from a consignment by
Borrower as consignee or a COD shipment;
(g) Any account payable by (i) the United States
government or any department, agency or other subdivision
thereof (except to the extent Borrower complies with the
Federal Assignment of Claims Act of 1940, as amended), (ii) a
Person located in any jurisdiction outside the United States
or, if Administrative Agent is satisfied that it has a first
priority perfected security interest (or Similar Lien) in
such account, Canada (except to the extent secured by a
letter of credit acceptable to Agents or covered by credit
insurance issued by the FCIA on a policy acceptable to
Agents) or (iii) an Affiliate of Borrower;
(h) Any account payable by an account debtor
(i) which is the subject of any bankruptcy, insolvency,
liquidation or similar proceeding, (ii) which has made an
assignment for the benefit of its creditors, (iii) for which
a receiver has been appointed or (iv) which has admitted in
writing its inability to pay its debts as such debts become
due;
(i) All accounts payable by an account debtor which
has failed to pay within ninety (90) days of their invoice
date twenty percent (20%) or more of its total accounts
payable owed to Borrower;
(j) Accounts owed by an account debtor having either
(i) a long-term debt rating of at least BBB (or its
equivalent) from Standard and Poor's Ratings Group or Baa2
(or its equivalent) from Moody's Investors Service, Inc. or
(ii) a short-term debt rating of at least A-1 (or its
equivalent) from Standard and Poor's Ratings Group or P-1 (or
its equivalent) from Moody's Investors Service, Inc., to the
extent the total accounts owed by such account debtor to
Borrower exceed thirty percent (30%) of Borrower's total
accounts;
(k) Accounts owed by an account debtor not satisfying
the requirements set forth in clause (j) above to the extent
the total accounts owed by such account debtor to Borrower
exceed twenty-five percent (25%) of Borrower's total
accounts; and
(l) Any other account which Agents reasonably determine is not
likely to be paid in full within 90 days after the invoice
date.
(As used in clauses (a)-(l) of this definition, the term "account"
when used in the singular form shall mean an account arising from a
single invoice.)
"Eligible Borrower Inventory" shall mean, with respect to
Borrower, the net book value of all inventory (as defined in the
California Uniform Commercial Code) of Borrower, except the
following:
(a) Any inventory which is not held by or on behalf
of Borrower for sale or lease in the ordinary course of its
business;
(b) Any inventory consisting of raw materials or
work-in-process or any other inventory not constituting
finished inventory;
(c) Any inventory which is not subject to a first
priority perfected security interest (or Similar Lien) in
favor of Administrative Agent for the benefit of the Agents
and Banks;
(d) Any inventory which is not owned by Borrower free
and clear of all Liens, rights and interests of all other
Persons except for Permitted Liens;
(e) Any inventory which is obsolete, unsaleable or
damaged; and
(f) The portion of any inventory shown on the books
of Borrower representing any purchase price discount earned
by Borrower.
"Eligible Quantum Europe Accounts" shall mean, with respect
to Quantum Europe, the aggregate net amount of all accounts (as
defined in the California Uniform Commercial Code) of Quantum
Europe, except, to the extent not already deducted, the following:
(a) Any account which does not arise from the sale or
lease of goods or services rendered to the account debtor
thereon in the ordinary course of Borrower's business, or
which arises from a sale, lease or service which has not been
fully performed by Quantum Europe;
(b) Any account or portion thereof to the extent the
same is subject to any right of discount, credit, allowance,
rescission, setoff, claim or defense or which is otherwise
not valid and enforceable against the account debtor thereon;
(c) Any account which is not subject to a first
priority perfected security interest (or Similar Lien) in
favor of Borrower as security for the Quantum Europe Note and
assigned as security to Administrative Agent for the benefit
of the Agents and Banks;
(d) Any account which is not owned by Quantum Europe
free and clear of all Liens, rights and interests of all
other Persons except for Permitted Liens;
(e) Any account which is unpaid more than ninety (90)
days after the invoice date therefor;
(f) Any account arising from a consignment by Quantum
Europe as consignee or a COD shipment;
(g) Any account payable by (i) a government or any
department, agency or other subdivision thereof, (ii) a
Person located in any jurisdiction in which Borrower's
security interest in Quantum Europe's accounts is not
enforceable in a manner reasonably satisfactory to Agents
(except to the extent secured by a letter of credit
acceptable to Agents) or (iii) an Affiliate of Quantum
Europe;
(h) Any account payable by an account debtor
(i) which is the subject of any bankruptcy, insolvency,
liquidation or similar proceeding, (ii) which has made an
assignment for the benefit of its creditors, (iii) for which
a receiver has been appointed or (iv) which has admitted in
writing its inability to pay its debts as such debts become
due;
(i) All accounts payable by an account debtor which
has failed to pay within ninety (90) days of their invoice
date twenty percent (20%) or more of its total accounts
payable owed to Quantum Europe;
(j) Accounts owed by an account debtor having either
(i) a long-term debt rating of at least BBB (or its
equivalent) from Standard and Poor's Ratings Group or Baa2
(or its equivalent) from Moody's Investors Service, Inc. or
(ii) a short-term debt rating of at least A-1 (or its
equivalent) from Standard and Poor's Ratings Group or P-1 (or
its equivalent) from Moody's Investors Service, Inc., to the
extent the total accounts owed by such account debtor to
Quantum Europe exceed thirty percent (30%) of Quantum
Europe's total accounts;
(k) Accounts owed by an account debtor not satisfying
the requirements set forth in clause (j) above to the extent
the total accounts owed by such account debtor to Quantum
Europe exceed twenty-five percent (25%) of Quantum Europe's
total accounts; and
(l) Any other account which Agents reasonably determine is not
likely to be paid in full within 90 days after the invoice
date.
(As used in clauses (a)-(l) of this definition, the term "account"
when used in the singular form shall mean an account arising from a
single invoice.)
"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, 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 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.
"Excluded Accounts" shall have the meaning given to that term
in the Borrower Security Agreement.
"Excluded Foreign Subsidiary Equipment Transfers" shall mean
production equipment used in the manufacture or testing of heads
and disk drives which is transferred to a wholly-owned Subsidiary
of Borrower if (a) Administrative Agent has a perfected first
priority security interest in the stock of each such Subsidiary to
the extent provided in the Borrower Security Agreement with respect
to Equity Securities of Foreign Subsidiaries and (b) the net book
value of such equipment so transferred during the term of this
Agreement does not exceed $80,000,000 in the aggregate.
"Executive Officer" shall mean, with respect to Borrower, the
Chairman, Chief Executive Officer, Chief Operating Officer,
President, Chief Financial Officer, Treasurer, General Counsel,
Vice President of Human Resources or Vice President of Corporate
Development and Planning of Borrower or any division President or
Executive Vice President of Borrower (or, if the titles are
changed, the persons having similar responsibilities for Borrower).
"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
Administrative Agent on and for such day by three (3) Federal funds
brokers of recognized standing selected by Administrative Agent).
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System.
"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.
"Fixed Charge 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;
(a) The remainder of (i) EBITDA 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.
"Foreign Subsidiary" shall mean, with respect to any Person,
any Subsidiary of such Person which is not a Domestic Subsidiary.
"Funding Losses" shall mean, with respect to any repayment,
prepayment or conversion of any Revolving LIBOR Loan or Term LIBOR
Loan Portion as set forth in clause (a) of Paragraph 2.12, any
failure to borrow any Revolving LIBOR Loan or Term LIBOR Loan
Portion as set forth in clause (b) of Paragraph 2.12 or any failure
to convert into any Revolving LIBOR Loan or Term LIBOR Loan Portion
as set forth in clause (c) of Paragraph 2.12, the amount (which
shall not be less than zero) computed in accordance with the
following formula:
Funding Losses = (R-T) x P x D
360
where R = the interest rate that was or would have been
applicable to such Revolving LIBOR Loan or Term
LIBOR Loan Portion;
T= the LIBO Rate for the date of such repayment,
prepayment, conversion, failure to borrow or
failure to convert for new Revolving LIBOR Loans
or Term LIBOR Loan Portions, as applicable, of
the same principal amount made for an assumed
Interest Period (the "Remaining Period") which
begins on the date of such repayment, prepayment,
conversion, failure to borrow or failure to
convert and ends on the last day of the actual
Interest Period that was or would have been
applicable to the Revolving LIBOR Loan or the
Term LIBOR Loan Portion that was repaid, prepaid
or converted or that was not borrowed or
converted;
P = the principal amount of the Revolving LIBOR Loan
or the Term LIBOR Loan Portion that was repaid,
prepaid or converted or that was not borrowed or
converted; and
D = the number of days in the Remaining Period.
"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, letter of credit 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 liability in respect thereof reasonably
anticipated under GAAP.
"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:
(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 letters of credit and other credit facilities which
secured or financed such purchase price), 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, contingent or
otherwise, under or with respect to letters of credit,
acceptances or other similar facilities;
(f) All obligations of such Person, contingent or
otherwise, under or with respect to interest rate swap, cap
or collar agreements, interest rate future or option
contracts, currency swap agreements, currency future or
option contracts or other similar agreements;
(g) All Contingent Obligations of such Person with
respect to the obligations of such Person or other Persons of
the types described in clauses (a) - (f) above; and
(h) All obligations of other Persons of the types
described in clauses (a) - (f) above to the extent secured by
(or for which any holder of such obligations 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 obligations.
"Interest Account" shall have the meaning given to that term
in Subparagraph 2.07(c).
"Interest Expenses" shall mean, with respect to any Person
for any period, the sum, determined on a consolidated basis in
accordance with GAAP, of (a) all interest accruing on the
indebtedness of such Person during such period (including interest
attributable to Capital Leases) and (b) all letter of credit fees
payable by such Person accruing during such period.
"Interest Period" shall mean, with respect to any Revolving
LIBOR Loan or Term LIBOR Borrowing Portion, the time periods
selected by Borrower pursuant to Subparagraph 2.01(b), Subparagraph
2.01(d), Subparagraph 2.02(b) or Subparagraph 2.02(d) which
commences on the first day of such Loan or Portion 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) or Subparagraph 2.02(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 for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of
business or the purchase by such Person in the ordinary course of
business of residences for employees in connection with the
relocation by such Person of such employees), 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 (h) 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 or (b) prepaid expenses of such Person
incurred and prepaid in the ordinary course of business.
"La Cie" shall mean La Cie, Ltd., an Oregon corporation.
"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 difference between (i) the total liabilities
of such Person and its Subsidiaries at such time and
(ii) with respect to Borrower, all Subordinated Debt of
Borrower at such time;
to
(b) The sum of (i) the Net Worth of such Person and
its Subsidiaries at such time and (ii) with respect to
Borrower, all Subordinated Debt of Borrower at such time.
"LIBO Rate" shall mean, with respect to any Interest Period
for the Revolving LIBOR Loans in any Revolving Loan Borrowing
consisting of Revolving LIBOR Loans or the Term LIBOR Loan Portions
in any Term LIBOR Borrowing Portion, a rate per annum equal to the
quotient of (a) the arithmetic mean (rounded upward if necessary to
the nearest 1/16 of one percent) of the rates per annum appearing
on the Reuters screen LIBO page (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 Administrative Agent's discretion, (i) the rate per annum at
which Dollar deposits are offered to the Administrative Agent in
the London interbank eurodollar currency market or (ii) the rate at
which Dollar deposits are offered to the Administrative Agent in,
or by the Administrative Agent to major banks in, any offshore
interbank eurodollar market selected by the Administrative 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 or Portion to be made or funded by
the Administrative Agent as part of such Revolving Loan Borrowing
or Term Loan Portion.
"Lien" shall mean, with respect to any property, any security
interest, mortgage, 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.
"Lien Acknowledgment Agreements" shall have the meaning
given to that term in Subparagraph 2.13(a).
"Loan" shall mean a Revolving Loan or Term Loan.
"Managing Agents" shall have the meaning given to that term
in clause (3) of the introductory paragraph hereof.
"Managing Agents' Fee Letter" shall mean the letter agreement
dated September 28, 1994 among Borrower and the Managing Agents.
"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 or
other condition of Borrower and its Subsidiaries taken as a whole;
(b) the business, assets, operations, prospects or financial or
other condition of Rocky Mountain as a result of any limitation or
restriction on the ownership or right to use any patents, other
intellectual property or technology which Rocky Mountain owns, has
the right to use or uses as of the Closing Date; (c) the ability of
Borrower or any of its Material Subsidiaries to pay or perform the
Obligations in accordance with the terms of this Agreement and the
other Credit Documents; (d) the rights and remedies of the Agents
and the Banks under this Agreement or any other Credit Documents
taken as a whole; or (e) the value of the Collateral, any Agent's
or Bank's security interest in the Collateral or the perfection or
priority of such security interests.
"Material Subsidiaries" shall mean (a) Quantum Europe, Rocky
Mountain, Quantum Malaysia and Quantum Holdings and (b) each other
Subsidiary of Borrower which has assets with a total book value
greater than $50,000,000; provided, however, that, if Borrower
sells all of the Equity Securities held by Borrower in any
Subsidiary set forth in clause (a) above pursuant to the terms of
this Agreement, such Subsidiary shall cease to be a Material
Subsidiary.
"maturity" shall mean, with respect to any Loan, interest,
fee or other amount payable by Borrower under this Agreement or the
other Credit Documents, the date such Loan, interest, fee or other
amount becomes due, whether upon the stated maturity or due date,
upon acceleration or otherwise.
"Maturity Date" shall have the meaning given to that term in
Subparagraph 2.01(a).
"MKE" shall mean Matsushita-Kotobuki Electronics Industries,
Ltd., a Japanese corporation.
"MKE Subordinated Debt" shall mean subordinated Indebtedness
issued by Borrower to MKE pursuant to clause (viii) of Subparagraph
5.02(a).
"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:
(a) With respect to any sale of any asset by any
Person, the aggregate consideration received by such Person
from such sale less the sum of (i) the amount of liabilities
for taxes incurred by such Person in connection with such
sale (after taking into account available deductions,
credits, carry-backs, carry-forwards or similar items) based
on the overall effective tax rate payable by the Borrower for
the tax year in question, (ii) the sum of the actual amount
of fees and commissions payable to Persons other than such
Person or any Affiliate of such Person, legal expenses and
other costs and expenses reasonably related to such sale that
are to be paid by such Person, (iii) the amount of any
indebtedness (other than the Obligations) which is secured by
such asset and is required to be repaid or prepaid by such
Person as a result of such sale and (iv) appropriate amounts
provided by such Person as a reserve or other liability in
accordance with GAAP against any liabilities incurred in
connection with such sale and retained by such Person after
such sale, including pension and post-employment benefit
liabilities, environmental liabilities and liabilities under
related indemnification obligations; and
(b) With respect to any sale or issuance of any
Equity Security or other security by any Person (including in
the case of Borrower, any sale or issuance of any
Subordinated Debt), the aggregate consideration received
by such Person from such sale or issuance less the actual
amount of fees and commissions payable to Persons other than
such Person or any Affiliate of such Person.
"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 and (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).
"Note" shall mean a Revolving Loan Note or a Term Loan Note.
"Notice of Borrowing" shall mean a Notice of Revolving Loan
Borrowing or the Notice of Term Loan Borrowing.
"Notice of Interest Period Selection" shall mean a Notice of
Revolving Loan Interest Period Selection or Notice of Term Loan
Interest Period Selection.
"Notice of Loan Conversion" shall mean a Notice of Revolving
Loan Conversion or Notice of Term Loan Conversion.
"Notice of Revolving Loan Borrowing" shall have the meaning
given to that term in Subparagraph 2.01(b).
"Notice of Revolving Loan Conversion" shall have the meaning
given to that term in Subparagraph 2.01(d).
"Notice of Revolving Loan Interest Period Selection" shall
have the meaning given to that term in Subparagraph 2.01(e).
"Notice of Term Loan Borrowing" shall have the meaning given
to that term in Subparagraph 2.02(b).
"Notice of Term Loan Conversion" shall have the meaning given
to that term in Subparagraph 2.02(d).
"Notice of Term Loan Interest Period Selection" shall have
the meaning given to that term in Subparagraph 2.02(e).
"Obligations" shall mean and include, with respect to
Borrower, all loans, advances, debts, liabilities, and obligations,
howsoever arising, owed by Borrower to any Agent or any Bank 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.
"Origination Fees" shall have the meaning given to that term
in Subparagraph 2.04(b).
"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.
"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 joint venture, a trust or other
entity or a Governmental Authority.
"Portion" shall mean (a) with respect to the Term Loan
Borrowing, a Term Base Rate Borrowing Portion or Term LIBOR
Borrowing Portion, and (b) with respect to any Term Loan, a Term
Base Rate Loan Portion or Term LIBOR Loan Portion.
"Pricing Reduction Period" shall mean a period which:
(a) Commences on a day which is:
(i) The date (the "Commitment Reduction Date")
the sum of the Total Revolving Loan Commitment and the
outstanding principal amount of the Term Loans is
reduced to $250,000,000 or less if (A) Borrower's Fixed
Charge Coverage Ratio for the consecutive two-quarter
period which ended immediately prior to the Commitment
Reduction Date was 3.00 to 1.00 or more, (B) the
Administrative Agent has received prior to the
Commitment Reduction Date all Financial Statements
necessary to show that such Fixed Charge Coverage Ratio
for such period is 3.00 to 1.00 or more and (C) no
Event of Default has occurred and is continuing on the
Commitment Reduction Date; or
(ii) If any of the conditions set forth in clause (i) above is
not satisfied on the Commitment Reduction Date, the first
date thereafter on which (A) Borrower's Fixed Charge
Coverage Ratio for the consecutive two-quarter period
which ended immediately prior to such date was 3.00 to
1.00 or more, (B) the Administrative Agent has received
prior to such date all Financial Statements necessary
to show that such Fixed Charge Coverage Ratio for such
period is 3.00 to 1.00 or more and (C) no Event of
Default has occurred and is continuing on such date;
and
(b) Ends on the date any Event of Default occurs.
"Prime Rate" shall mean the per annum rate publicly announced
by the Administrative Agent from time to time at its New York
Branch. The Prime Rate is determined by the Administrative 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 the Administrative 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 Bank,
the percentage set forth under the caption "Proportionate Share"
opposite such Bank's name on Schedule I, or, if changed, such
percentage as may be set forth for such Bank in the Register.
"Quantum Europe" shall mean Quantum Peripherals (Europe)
S.A., a Swiss corporation.
"Quantum Europe Deposit Accounts" shall mean those certain
accounts numbered 600837058022 and 600837058014 maintained with
Bank of America National Trust and Savings Association, London
Branch.
"Quantum Europe Loan" shall mean the loan to be made by
Borrower to Quantum Europe on the Closing Date in the original
principal amount of $50,000,000.
"Quantum Europe Loan Documents" shall mean the Quantum Europe
Note, the Quantum Europe Security Documents and all other
documents, instruments and agreements delivered by Quantum Europe
or Borrower in connection with the Quantum Europe Loan.
"Quantum Europe Note" shall have the meaning given to that
term in Schedule 3.01.
"Quantum Europe Security Documents" shall mean the instruments,
agreements, filings, notices, registrations, certificates and other
documents delivered to Administrative Agent pursuant to item
E.(4)(b) of Schedule 3.01 and all other instruments, agreements,
filings, notices, registrations, certificates and other documents
delivered to Borrower, Administrative Agent, any other Agent or any
Bank in connection with or to secure the Quantum Europe Loan or the
Quantum Europe Note.
"Quantum Holdings" shall mean Quantum Data Storage B.V., a
Netherlands corporation.
"Quantum Malaysia" shall mean Quantum Peripherals (Malaysia)
Sdn. Bhd., a Malaysia corporation.
"Quantum/Quantum Europe Stock Transfer" shall mean the
transfer by Borrower to Quantum Europe of the stock of Digital
Equipment Storage Products (Malaysia), Sdn. Bhd., a Malaysian
corporation, to be acquired by Borrower from DEC in the DEC
Acquisition on the Closing Date.
"Quantum/Quantum Holdings Stock Transfer" shall mean the
transfer by Borrower to Quantum Holdings of the stock of the
following Subsidiaries of Borrower owned by Borrower on the Closing
Date:
(a) Quantum Europe;
(b) Quantum Malaysia;
(c) Quantum Foreign Sales Corporation, a Barbados corporation;
(d) Quantum GmbH, a German corporation;
(e) Quantum Peripheral Products, Ltd., a United
Kingdom corporation;
(f) Quantum France SARL, a French corporation;
(g) Quantum Asia Pacific Pte., Ltd., a Singapore corporation;
(h) Quantum Japan Corporation, a Japanese corporation;
(i) Quantum Peripheral Products (Ireland), Ltd., an
Ireland corporation;
(j) Quantum Korea Corporation, a Korean corporation;
(k) Quantum Hong Kong, Ltd., a Hong Kong corporation;
and
(l) PT Digital Equipment Storage Indonesia (to be
renamed PT Quantum Peripherals Indonesia), an Indonesian
corporation.
"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 sum at such time of all cash and accounts
receivable of such Person and its Subsidiaries (less all
reserves therefor);
to
(b) The current liabilities of such Person and its
Subsidiaries at such time.
"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 Banks" shall mean (a) at any time Revolving Loans
or Term Loans are outstanding, Banks holding sixty-six and two-
thirds percent (66 2/3%) or more of the aggregate principal amount
of such Loans and (b) at any time no Revolving Loans or Term Loans
are outstanding, Banks 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 binding upon
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 final 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 Revolving LIBOR Loan or Term LIBOR
Portion, 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 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 Bank by
any Governmental Authority.
"Restructuring Charges" shall mean all charges in connection
with restructuring or integration arising out of or related to the
DEC Acquisition.
"Revolving Base Rate Loan" shall mean, at any time, a
Revolving Loan which then bears interest as provided in clause (i)
of Subparagraph 2.01(c).
"Revolving LIBOR Loan" shall mean, at any time, a Revolving
Loan which then bears interest as provided in clause (ii) of
Subparagraph 2.01(c).
"Revolving Loan" shall have the meaning given to that term in
Subparagraph 2.01(a).
"Revolving Loan Borrowing" shall mean a borrowing by Borrower
consisting of the Revolving Loans made by each of the Banks on the
same date and of the same Type pursuant to a single Notice of
Revolving Loan Borrowing.
"Revolving Loan Commitment" shall mean, with respect to any
Bank at any time, such Bank's Proportionate Share at such time of
the Total Revolving Loan Commitment at such time.
"Revolving Loan Note" shall have the meaning given to that
term in Subparagraph 2.07(a).
"Rocky Mountain" shall mean Rocky Mountain Magnetics, Inc., a
Delaware corporation.
"Rocky Mountain Stockholders Agreement" shall mean that
certain Stockholders Agreement dated August 19, 1992 between DEC
and Storage Tech relating to their ownership of Rocky Mountain.
"Security Documents" shall mean and include the Borrower
Mortgages, the Borrower Security Agreement, the Borrower Pledge
Agreement, the Borrower Intellectual Property Security Agreement,
the Subsidiary Mortgages, the Subsidiary Security Agreements, the
Lien Acknowledgment Agreements and all other instruments,
agreements, certificates, opinions and documents (including Uniform
Commercial Code financing statements and fixture filings and
landlord waivers) delivered to Administrative Agent, any other
Agent or any Bank in connection with any Collateral or to secure
the Obligations.
"Silicon Storage Technology" shall mean Silicon Storage
Technology, Inc., a California corporation.
"Similar Lien" shall mean, when used in reference to a first
priority perfected security interest, a Lien, governed by the laws
of a jurisdiction or jurisdictions other than California, which
provides to the holder of such Lien rights and remedies similar to
the rights and remedies provided to a secured party having a first
priority perfected security interest under California law.
"Solvent" shall mean, with respect to any Person on any date,
that on such date (a) the fair value of the property of such Person
is greater than the fair value of the liabilities (including,
without limitation, contingent liabilities) of such Person, (b) the
present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature and (d) such
Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such
Person's property would constitute an unreasonably small capital.
"Storage Tech" shall mean Storage Technology Corporation, a
Delaware corporation.
"Subordinated Debt" shall mean the Convertible Subordinated
Debentures, the DEC Loan, any MKE Subordinated Debt and any other
subordinated debt permitted by Subparagraph 5.02(a).
"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 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.
"Subsidiary Security Agreement" shall have the meaning given
to such term in Subparagraph 2.13(a).
"Taxes" shall have the meaning given to such term in
Subparagraph 2.11(a).
"Term Base Rate Borrowing Portion" shall mean, at any time,
any portion of the Term Loan Borrowing which then bears interest at
a rate specified in clause (i) of Subparagraph 2.02(c).
"Term Base Rate Loan Portion" shall mean, at any time, any
portion of a Term Loan which then bears interest at a rate
specified in clause (i) of Subparagraph 2.02(c).
"Term LIBOR Borrowing Portion" shall mean, at any time, any
portion of the Term Loan Borrowing which then bears interest at a
rate specified in clause (ii) of Subparagraph 2.02(c).
"Term LIBOR Loan Portion" shall mean, at any time, any
portion of a Term Loan which then bears interest at a rate
specified in clause (ii) of Subparagraph 2.02(c).
"Term Loan" shall have the meaning given to that term in
Subparagraph 2.02(a).
"Term Loan Borrowing" shall mean the borrowing by Borrower
consisting of the Term Loans made by each of the Banks.
"Term Loan Commitment" shall mean, with respect to any Bank
at any time, such Bank's Proportionate Share at such time of the
Total Term Loan Commitment at such time.
"Term Loan Installment Date" shall have the meaning given to
that term in Subparagraph 2.02(f).
"Term Loan Note" shall have the meaning given to that term in
Subparagraph 2.07(b).
"Total Revolving Loan Commitment" shall have the meaning
given to that term in Subparagraph 2.01(a).
"Total Term Loan Commitment" shall have the meaning given to
that term in Subparagraph 2.02(a).
"Type" shall mean, with respect to any Loan, Borrowing or
Portion at any time, the classification of such Loan, Borrowing or
Portion by the type of interest rate it then bears, whether an
interest rate based on the Base Rate or the LIBO Rate.
"Unused Commitment" shall mean, at any time after this
Agreement is executed by Borrower, the Agents and Banks, the
remainder of (a) the Total Revolving Loan Commitment at such time
minus (b) the sum of the aggregate principal amount of all
Revolving Loans 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 Banks and Agents
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 Banks and Agents 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 New York 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 Bank, each 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 Bank or any Agent.
1.08. Entire Agreement. This Agreement, the Agents' Fee Letters
and each of the other Credit Documents, taken together, constitute and
contain the entire agreement of Borrower, the Banks and Agents 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 August 18, 1994 among Borrower and the Managing
Agents).
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. 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. 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.
SECTION II. CREDIT FACILITIES.
2.01. Revolving Loan Facility.
(a) Revolving Loan Availability. Subject to the terms and
conditions of this Agreement (including the amount limitations set
forth in Paragraph 2.03), each Bank severally agrees to advance to
Borrower from time to time during the period beginning on the
Closing Date and ending on September 30, 1997 (the "Maturity Date")
such revolving loans as Borrower may request under this Paragraph
2.01 (individually, a "Revolving Loan"); provided, however, that
(i) the aggregate principal amount of all Revolving Loans made by
such Bank at any time outstanding shall not exceed such Bank's
Revolving Loan Commitment at such time and (ii) the aggregate
principal amount of all Revolving Loans made by all Banks at any
time outstanding shall not exceed Two Hundred Twenty-Five Million
Dollars ($225,000,000) (such amount, as reduced from time to time
pursuant to this Agreement, to be referred to herein as the "Total
Revolving Loan Commitment"). All Revolving Loans shall be made on a
pro rata basis by the Banks in accordance with their respective
Proportionate Shares, with each Revolving Loan Borrowing to be
comprised of a Revolving Loan by each Bank equal to such Bank's
Proportionate Share of such Revolving Loan Borrowing. Except as
otherwise provided herein, Borrower may borrow, repay and reborrow
Revolving Loans until the Maturity Date.
(b) Notice of Revolving Loan Borrowing. Borrower shall
request each Revolving Loan Borrowing by delivering to
Administrative Agent an irrevocable written notice in the form of
Exhibit A, appropriately completed (a "Notice of Revolving Loan
Borrowing"), which specifies, among other things:
(i) The principal amount of the requested Revolving
Loan Borrowing, which shall be in the amount of (A)
$1,000,000 or an integral multiple of $500,000 in excess
thereof in the case of a Borrowing consisting of Revolving
Base Rate Loans or (B) $10,000,000 or an integral multiple of
$500,000 in excess thereof in the case of a Borrowing
consisting of Revolving LIBOR Loans;
(ii) Whether the requested Revolving Loan Borrowing
is to consist of Revolving Base Rate Loans or Revolving LIBOR
Loans;
(iii) If the requested Revolving Loan Borrowing is to
consist of Revolving LIBOR Loans, the initial Interest Period
selected by Borrower for such Revolving Loans in accordance
with Subparagraph 2.01(e); and
(iv) The date of the requested Revolving Loan
Borrowing, which shall be a Business Day.
Borrower shall give each Notice of Revolving Loan Borrowing to
Administrative Agent at least three (3) Business Days before the
date of the requested Revolving Loan Borrowing in the case of a
Revolving Loan Borrowing consisting of Revolving LIBOR Loans and at
least one (1) Business Day before the date of the requested
Revolving Loan Borrowing in the case of a Revolving Loan Borrowing
consisting of Revolving Base Rate Loans. Each Notice of Revolving
Loan Borrowing shall be delivered by first-class mail or facsimile
to Administrative Agent at the office or facsimile number and
during the hours specified in Paragraph 8.01; provided, however,
that Borrower shall promptly deliver to Administrative Agent the
original of any Notice of Revolving Loan Borrowing initially
delivered by facsimile. Borrower may request that one or more
Revolving Loan Borrowings be made on the same day. Administrative
Agent shall promptly notify each Bank of the contents of each
Notice of Revolving Loan Borrowing and of the amount and Type of
(and, if applicable, the Interest Period for) each Revolving Loan
to be made by such Bank as part of the requested Revolving Loan
Borrowing.
(c) Revolving Loan Interest Rates. Borrower shall pay
interest on the unpaid principal amount of each Revolving Loan from
the date of such Revolving Loan until the maturity thereof, at one
of the following rates per annum:
(i) During such periods as such Revolving Loan is a
Revolving 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; and
(ii) During such periods as such Revolving Loan is a
Revolving LIBOR Loan, at a rate per annum equal at all times
during each Interest Period for such Revolving 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;
Provided, however, that (A) all Revolving Loans outstanding during
the period commencing on the Closing Date and ending three (3)
Business Days after the Closing Date shall be Revolving Base Rate
Loans, and (B) all Revolving Loans outstanding during the period
commencing on the fourth (4th) Business Day after the Closing Date
and ending on the earlier of (1) three (3) Business Days after the
date Administrative Agent notifies Borrower that syndication has
been completed or (2) thirty (30) days after the Closing Date,
shall be either Revolving Base Rate Loans or Revolving LIBOR Loans
with an Interest Period of one (1) week. All Revolving Loans in
each Revolving Loan Borrowing shall, at any given time prior to
maturity, bear interest at one, and only one, of the above rates.
The number of Revolving Loan Borrowings consisting of Revolving
LIBOR Loans plus the number of Term LIBOR Borrowing Portions shall
not exceed twenty (20) at any time.
(d) Conversion of Revolving Loans. Borrower may convert
any Revolving Loan Borrowing from one Type of Revolving Loan
Borrowing to the other Type. Borrower shall request such a
conversion by an irrevocable written notice to Administrative Agent
in the form of Exhibit B, appropriately completed (a "Notice of
Revolving Loan Conversion"), which specifies, among other things:
(i) The Revolving Loan Borrowing which is to be
converted;
(ii) The Type of Loans into which such Revolving Loans
are to be converted;
(iii) If such Revolving Loans are to be converted into
Revolving LIBOR Loans, the initial Interest Period selected
by Borrower for such Revolving 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 Revolving Loan Conversion to
Administrative Agent at least three (3) Business Days before the
date of the requested conversion in the case of a conversion into
Revolving LIBOR Loans and at least one (1) Business Day before the
date of the requested conversion in the case of a conversion into
Revolving Base Rate Loans. Each Notice of Revolving Loan
Conversion shall be delivered by first-class mail or facsimile to
Administrative 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 Administrative Agent the
original of any Notice of Revolving Loan Conversion initially
delivered by facsimile. Administrative Agent shall promptly notify
each Bank of the contents of each Notice of Revolving Loan
Conversion.
(e) Revolving LIBOR Loan Interest Periods.
(i) The initial and each subsequent Interest Period
selected by Borrower for a Revolving LIBOR Loan shall be one
(1), three (3) or six (6) months (or, during the period
referred to in clause (B) of the proviso in Subparagraph
2.01(c) only, one (1) week) as Borrower may specify;
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 Interest
Period shall end after the Maturity Date.
(ii) Borrower shall notify Administrative Agent by an
irrevocable written notice in the form of Exhibit C,
appropriately completed (a "Notice of Revolving Loan Interest
Period Selection"), at least three (3) Business Days prior to
the last day of each Interest Period for Revolving LIBOR
Loans of the Interest Period selected by Borrower for the
next succeeding Interest Period for such Revolving LIBOR
Loans. Each Notice of Revolving Loan 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 Administrative Agent the original
of any Notice of Revolving Loan Interest Period Selection
initially delivered by facsimile. If Borrower fails to
notify Administrative Agent of the next Interest Period for
Revolving LIBOR Loans in accordance with this Subparagraph
2.01(e), such Revolving LIBOR Loans shall automatically
convert to Revolving Base Rate Loans on the last day of the
current Interest Period therefor.
(f) Scheduled Revolving Loan Payments. Borrower shall
repay the unpaid principal amount of all Revolving Loans on the
Maturity Date. Borrower shall pay accrued interest on the unpaid
principal amount of the Revolving Loans in arrears (i) in the case
of Revolving Base Rate Loans, on the last Business Day in each
calendar quarter; (ii) in the case of Revolving LIBOR Loans, 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 after the first day of such Interest Period); and (iii) in
the case of all Revolving Loans, upon prepayment (to the extent
thereof) and at maturity.
(g) Purpose. Borrower shall use the proceeds of the
Revolving Loans solely to finance (i) the DEC Acquisition
(including payment of the DEC Note), (ii)the Quantum Europe Loan or
(iii) Borrower's working capital and general corporate needs.
2.02. Term Loan Facility.
(a) Term Loan Availability. Subject to the terms and
conditions of this Agreement (including the amount limitations set
forth in Paragraph 2.05), each Bank severally agrees to advance to
Borrower on or prior to October 31, 1994, a term loan under this
Paragraph 2.02 (individually, a "Term Loan") in the principal
amount of such Bank's Term Loan Commitment; provided, however,
that the aggregate principal amount of all Term Loans made by all
Banks shall not exceed One Hundred Twenty-Five Million Dollars
($125,000,000) (such amount to be referred to herein as the "Total
Term Loan Commitment"). The Term Loans shall be made on a pro rata
basis by the Banks in accordance with their respective
Proportionate Shares, with the Term Loan Borrowing to be comprised
of a Term Loan by each Bank equal to such Bank's Proportionate
Share of the Term Loan Borrowing. Each Bank shall advance its Term
Loan in a single advance. Borrower may not reborrow the principal
amount of a Term Loan after repayment or prepayment thereof.
(b) Notice of Term Loan Borrowing. Borrower shall request
the Term Loan Borrowing by delivering to Administrative Agent an
irrevocable written notice in the form of Exhibit D, appropriately
completed (a "Notice of Term Loan Borrowing"). Borrower shall give
the Notice of Term Loan Borrowing to Administrative Agent at least
one (1) Business Day before the Closing Date. The Notice of Term
Loan Borrowing shall be delivered by first-class mail or facsimile
to Administrative Agent at the office or facsimile number and
during the hours specified in Paragraph 8.01; provided, however,
that Borrower shall promptly deliver to Administrative Agent the
original of the Notice of Term Loan Borrowing if initially
delivered by facsimile. Administrative Agent shall promptly notify
each Bank of the contents of the Notice of Term Loan Borrowing.
(c) Term Loan Interest Rates. Borrower shall pay interest
on the unpaid principal amount of each Term Loan from the date of
such Term Loan until the maturity thereof, at the following rates
per annum:
(i) During such periods as any Portion of such Term
Loan is a Term Base Rate Loan Portion, at a rate per annum on
such Portion 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; and
(ii) During such periods as any Portion of such Term
Loan is a Term LIBOR Loan Portion, at a rate per annum on
such Portion equal at all times during each Interest Period
for such Portion to the LIBO Rate for such Interest Period
plus the Applicable Margin therefor, such rate to change from
time to time as the Applicable Margin shall change;
Provided, however, that (A) all Portions of the Term Loans outstanding
during the period commencing on the Closing Date and ending three
(3) Business Days after the Closing Date shall be Term Base Rate
Loan Portions, and (B) all Portions of the Term Loans
outstanding during the period commencing on the fourth (4th)
Business Day after the Closing Date and ending on the earlier of
(1) three (3) Business Days after the date Administrative Agent
notifies Borrower that syndication has been completed or (2) thirty
(30) days after the Closing Date shall be either Term Base Rate
Loan Portions or Term LIBOR Loan Portions with an Interest Period
of one (1) week. Each Term Base Rate Borrowing Portion shall be in
a minimum amount of $1,000,000 or an integral multiple of $500,000
in excess thereof, and each Term LIBOR Borrowing Portion shall be
in a minimum amount of $10,000,000 or an integral multiple of
$500,000 in excess thereof (except to the extent that any lesser
Portion results from a mandatory prepayment of the Term Loan
Borrowing pursuant to Subparagraph 2.05(c)). The number of
Revolving Loan Borrowings consisting of Revolving LIBOR Loans plus
the number of Term LIBOR Borrowing Portions shall not exceed twenty
(20) at any time.
(d) Conversion of Term Loans. Borrower may convert any
Portion of the Term Loan Borrowing from one Type of Portion to
another Type. Borrower shall request such a conversion by an
irrevocable written notice to Administrative Agent in the form of
Exhibit E, appropriately completed (a "Notice of Term Loan
Conversion"), which specifies, among other things:
(i) The Portion of the Term Loan Borrowing which is
to be converted;
(ii) The amount and Type of each Portion of the Term
Loan Borrowing into which it is to be converted;
(iii) If any Portion of the Term Loan Borrowing is to
be converted into a Term LIBOR Borrowing Portion, the initial
Interest Period selected by Borrower for such Portion in
accordance with Subparagraph 2.02(e); and
(iv) The date of the requested conversion, which
shall be a Business Day.
Borrower shall give each Notice of Term Loan Conversion to
Administrative Agent at least three (3) Business Days before the
date of the requested conversion in the case of any conversion into
Term LIBOR Loan Portions and at least one (1) Business Day before
the date of the requested conversion in the case of any conversion
into Term Base Rate Loan Portions. Each Notice of Term Loan
Conversion shall be delivered by first-class mail or facsimile to
Administrative 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 Administrative Agent the
original of any Notice of Term Loan Conversion initially delivered
by facsimile. Administrative Agent shall promptly notify each Bank
of the contents of each Notice of Term Loan Conversion.
(e) Term LIBOR Loan Portion Interest Periods.
(i) The initial and each subsequent Interest Period
selected by Borrower for all Term LIBOR Loan Portions in a
Term LIBOR Borrowing Portion shall be one (1), three (3) or
six (6) months (or, during the period referred to in clause
(B) of the proviso in Subparagraph 2.02(c) only, one (1)
week) as Borrower may specify; 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 Interest Period shall end after
the Maturity Date.
(ii) Borrower shall notify Administrative Agent by an
irrevocable written notice in the form of Exhibit F,
appropriately completed (a "Notice of Term Loan Interest
Period Selection"), at least three (3) Business Days prior to
the last day of each Interest Period for the Term LIBOR Loan
Portions in a Term LIBOR Borrowing Portion of the Interest
Period selected by Borrower for the next succeeding Interest
Period for such Portions. Each Notice of Term Loan 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 Administrative Agent
the original of any Notice of Term Loan Interest Period
Selection initially delivered by facsimile. If Borrower
fails to notify Administrative Agent of the next Interest
Period for the Term LIBOR Loan Portions in a Term LIBOR
Borrowing Portion in accordance with this Subparagraph
2.02(e), such Portions shall automatically convert to Term
Base Rate Loan Portions on the last day of the current
Interest Period therefor.
(f) Scheduled Term Loan Payments. Subject to Subparagraph
2.05(d), Borrower shall repay the principal amount of the Term
Loans in five (5) equal installments of $25,000,000 each payable on
the last day of each March and September, commencing September 30,
1995 and ending on the Maturity Date (each such date to be referred
to herein as a "Term Loan Installment Date"); provided, however,
that the principal payment due on the Maturity Date shall be in the
amount necessary to pay all remaining unpaid principal on all Term
Loans. Borrower shall pay accrued interest on the unpaid principal
amount of the Term Loans in arrears (i) in the case of Term Base
Rate Loan Portions, on the last Business Day in each calendar
quarter, (ii) in the case of Term LIBOR Loan Portions, 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
after the first day of such Interest Period); and (iii) in the case
of all Term Loans, upon prepayment (to the extent thereof) and at
maturity.
(g) Purpose. Borrower shall use the proceeds of the Term
Loans solely to finance (i) the DEC Acquisition (including payment
of the DEC Note), (ii) the Quantum Europe Loan or (iii) Borrower's
working capital and general corporate needs.
2.03. Additional Amount Limitations, Commitment Reductions, Etc.
(a) Borrowing Base.
(i) The aggregate principal amount of all Revolving
Loans outstanding at any time shall not exceed an amount (the
"Borrowing Base") equal to the remainder at such time of:
(A) The lesser of:
(1) The Total Revolving Loan Commitment; and
(2) The sum at such time of:
(x) Eighty percent (80%) of
Eligible Borrower Accounts;
(y) The lesser at such time of (I)
thirty percent (30%) of Eligible Borrower
Inventory and (II) $50,000,000; and
(z) If the Quantum Europe Note and
Borrower's Lien in the accounts of Quantum
Europe securing the Quantum Europe Note are
then subject to a first priority perfected
security interest (or Similar Lien) in
favor of Administrative Agent for the
benefit of the Agents and Banks, the lesser
at such time of (I) the outstanding
principal amount of the Quantum Europe Note
and (II) sixty percent (60%) of the
Eligible Quantum Europe Accounts securing
the Quantum Europe Note;
minus
(B) The outstanding principal amount of the DEC
Note at such time.
(ii) For the purposes of this Agreement, the Borrowing Base on
any
date of determination shall be presumed to be the Borrowing
Base determined pursuant to the most recent of (A) the latest
Borrowing Base Certificate delivered by Borrower prior to
such date of determination and (B) the latest audit conducted
by or on behalf of an Agent or Bank prior to such date of
determination.
(b) Optional Reduction or Cancellation of Commitments.
Borrower may, upon three (3) Business Days written notice to
Administrative Agent, permanently reduce the Total Revolving Loan
Commitment by the amount of $5,000,000 or integral multiples of
$1,000,000 in excess thereof or cancel the Total Revolving Loan
Commitment in its entirety; provided, however, that:
(i) Borrower may not reduce the Total Revolving Loan
Commitment if, after giving effect to such reduction, the
aggregate principal amount of all Revolving Loans then
outstanding would exceed the Total Revolving Loan Commitment
as so reduced; and
(ii) Borrower may not cancel the Total Revolving Loan
Commitment if, after giving effect to such cancellation, any
Revolving Loan would remain outstanding.
(c) Automatic Cancellation of Commitments. If, at any time
Storage Tech exercises its right of first refusal under the Rocky
Mountain Stockholders Agreement with respect to the pledge by
Borrower of its shares in Rocky Mountain, the Total Revolving Loan
Commitment shall be automatically and permanently cancelled
immediately after the satisfaction of the conditions necessary for
such exercise.
(d) Effect of Commitment Reductions. From the effective
date of any reduction of the Total Revolving Loan Commitment, the
Commitment Fees payable pursuant to Subparagraph 2.04(c) shall be
computed on the basis of the Total Revolving Loan Commitment as so
reduced. Any reduction of the Total Revolving Loan Commitment
pursuant to this Paragraph 2.03 shall be applied ratably to reduce
each Bank's Revolving Loan Commitment in accordance with clause (i)
of Subparagraph 2.09(a).
2.04. Fees.
(a) Agents' Fees. Borrower shall pay to Agents, for their
own accounts, the fees in the amounts and at the times set forth in
the Agents' Fee Letters.
(b) Origination Fees. Borrower shall pay to Administrative
Agent, for payment to the Banks as directed by the Managing Agents,
nonrefundable origination fees (the "Origination Fees") in amounts
and at the times set forth in the Managing Agents' Fee Letter.
(c) Commitment Fees. Borrower shall pay to Administrative
Agent, for the ratable benefit of the Banks as provided in
clause (iv) 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. Borrower
shall pay the Commitment Fees quarterly in arrears on the last day
in each calendar quarter (commencing December 31, 1994) and on the
Maturity Date (or if the Total Revolving Loan Commitment is
cancelled on a date prior to the Maturity Date, on such prior
date).
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 Administrative Agent for the benefit of
the Bank 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 Revolving LIBOR Loan or a Term
LIBOR Loan Portion on a day other than the last day of an Interest
Period for such Loan or Portion, all amounts payable to such Bank
pursuant to Paragraph 2.12.
(b) Optional Prepayments. At its option, Borrower may,
upon three (3) Business Days notice to Administrative Agent for
Revolving LIBOR Loans and Term LIBOR Loan Portions and one (1)
Business Day notice to Administrative Agent for Revolving Base Rate
Loans and Term Base Rate Loan Portions, prepay any Borrowing in
part, in an aggregate principal amount of $1,000,000 or more in the
case of the Term Loan Borrowing or $500,000 or more in the case of
a Revolving Loan Borrowing, or in whole.
(c) Mandatory Prepayments. Borrower shall prepay the Loans
as follows:
(i) If, at any time, the aggregate principal amount
of all Revolving Loans outstanding exceeds the Borrowing Base
at such time, Borrower shall immediately prepay Revolving
Loans in an aggregate principal amount equal to such excess.
(ii) If, for Borrower's fiscal year ending March 31,
1995 or any fiscal year thereafter, Designated Asset Sale
Proceeds exceed $20,000,000, Borrower shall, immediately
after the completion of each sale which results in such an
excess or an increase in such an excess, prepay Term Loans in
an aggregate principal amount equal to seventy-five percent
(75%) of such excess or such increase in such excess, subject
however to the qualification in the next succeeding sentence.
If, at the time any mandatory prepayment would otherwise
become payable pursuant to the immediately preceding sentence
as a result of Designated Asset Sale Proceeds for any fiscal
year exceeding $20,000,000, the Designated Asset Sale
Proceeds for such year received by Borrower and its
Subsidiaries in the form of cash or cash equivalents is
insufficient to make such mandatory prepayment in full,
Borrower shall make such mandatory prepayment (A) at that
time only to the extent of such cash or cash equivalents and
(B) thereafter as and when Borrower and its Subsidiaries
receive Designated Asset Sale Proceeds for such fiscal year
in the form of cash or cash equivalents (or Designated Asset
Sale Proceeds previously received by Borrower and its
Subsidiaries for such fiscal year in any other form are paid
in or converted to cash or cash equivalents).
(iii) If, at any time within twelve (12) months after
the Closing Date, Borrower issues or sells any MKE
Subordinated Debt, Borrower shall, immediately after such
issuance or sale, prepay Term Loans in an aggregate principal
amount equal to fifty percent (50%) of the Net Proceeds of
such debt.
(iv) If, at any time on or after twelve (12) months
from the Closing Date, Borrower issues or sells any MKE
Subordinated Debt, Borrower shall, immediately after such
issuance or sale, prepay Term Loans in an aggregate principal
amount equal to one hundred percent (100%) of the Net
Proceeds of such debt.
(v) If, at any time after the Closing Date, Borrower
issues or sells any other Subordinated Debt (other than any
MKE Subordinated Debt), Borrower shall, immediately after
such issuance or sale, prepay Term Loans in an aggregate
principal amount equal to one hundred percent (100%) of the
Net Proceeds of such debt.
(vi) If, at any time after the Closing Date, Borrower
issues or sells any other Indebtedness for borrowed money,
including Indebtedness evidenced by notes, bonds, debentures
or other similar instruments (other than Subordinated Debt),
Borrower shall, immediately after such issuance or sale,
prepay Term Loans in an aggregate principal amount equal to
one hundred percent (100%) of the Net Proceeds of such debt.
(vii) If, at any time after the Closing Date, Borrower
issues or sells any Equity Securities, Borrower shall,
immediately after such issuance or sale, prepay Term Loans in
an aggregate principal amount equal to fifty percent (50%) of
the Net Proceeds of such Equity Securities.
(viii) If, at any time Storage Tech exercises its right
of first refusal under the Rocky Mountain Stockholders
Agreement with respect to the pledge by Borrower of its
shares in Rocky Mountain, Borrower shall, immediately after
the satisfaction of the conditions necessary for such
exercise, prepay all outstanding Term Loans and all Revolving
Loans in full.
(d) Application of Loan Prepayments. All optional
prepayments of Term Loan Borrowings made by Borrower pursuant to
Subparagraph 2.05(b) shall reduce the aggregate principal payable
by Borrower on the then remaining Term Loan Installment Dates pro
rata. All mandatory prepayments of Term Loan Borrowings made by
Borrower pursuant to Subparagraph 2.05(c) shall (i) in the case of
prepayments made pursuant to clause (ii) or (iii) thereof, reduce
the aggregate principal amount payable by Borrower on the then
remaining Term Loan Installment Dates pro rata and (ii) in the case
of prepayments made pursuant to clause (iv), (v), (vi) or (vii)
thereof, reduce the aggregate principal amount payable by Borrower
on the then remaining Term Loan Installment Dates in inverse order
commencing with the Maturity Date. Without modifying the order of
application of prepayments set forth above, (A) all prepayments of
the Revolving Loans shall, to the extent possible, be first applied
to prepay Revolving Base Rate Loans and then, if any funds remain,
to prepay Revolving LIBOR Loans and (B) all prepayments of the Term
Loans shall, to the extent possible, be first applied to prepay
Term Base Rate Loan Portions and then, if any funds remain, to
prepay Term LIBOR Loan Portions.
2.06. Other Payment Terms.
(a) Place and Manner. Except as otherwise expressly
provided herein, Borrower shall make all payments due to each Bank
hereunder by payments to Administrative Agent, for the account of
such Bank and such Bank's Applicable Lending Office, at
Administrative 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. Administrative Agent shall promptly disburse to each
Bank each such payment received by Administrative Agent for such
Bank.
(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 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 and one-half percent (2.50%), 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 and finally to reduce the principal
amount of outstanding Loans.
(e) Failure to Pay Administrative Agent. Unless
Administrative Agent shall have received notice from Borrower prior
to the date on which any payment is due to any Banks hereunder that
Borrower will not make such payment in full, Administrative Agent
may assume that Borrower has made such payment in full to
Administrative Agent on such date and Administrative Agent may, in
reliance upon such assumption, cause to be distributed to the
appropriate Banks on such due date an amount equal to the amount
then due such Banks. If and to the extent Borrower shall not have
so made such payment in full to Administrative Agent, each such
Bank shall repay to Administrative Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to Administrative
Agent, at (i) the Federal Funds Rate for the first three (3) days
and (ii) the per annum rate applicable to Revolving Base Rate Loans
thereafter. A certificate of Administrative Agent submitted to any
Bank with respect to any amounts owing by such Bank under this
Subparagraph 2.06(e) shall be conclusive absent manifest error.
2.07. Notes and Interest Account.
(a) Revolving Loan Notes. The obligation of Borrower to
repay the Revolving Loans made by each Bank and to pay interest
thereon at the rates provided herein shall be evidenced by a
promissory note in the form of Exhibit G (individually, a
"Revolving Loan Note") which note shall be (i) payable to the order
of such Bank, (ii) in the amount of such Bank's Revolving Loan
Commitment, (iii) dated the Closing Date and (iv) otherwise
appropriately completed. Borrower authorizes each Bank to record
on the schedule annexed to such Bank's Revolving Loan Note the date
and amount of each Revolving Loan made by such Bank 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. Borrower further authorizes each
Bank to attach to and make a part of such Bank's Revolving Loan
Note continuations of the schedule attached thereto as necessary.
(b) Term Loan Notes. The obligation of Borrower to repay
the Term Loan made by each Bank and to pay interest thereon at the
rates provided herein shall be evidenced by a promissory note in
the form of Exhibit H (individually, a "Term Loan Note") which note
shall be (i) payable to the order of such Bank, (ii) in the amount
of such Bank's Term Loan, (iii) dated the Closing Date and
(iv) otherwise appropriately completed.
(c) Interest Account. Borrower authorizes Administrative
Agent to record in an account or accounts maintained by
Administrative Agent on its books (the "Interest Account") (i) the
interest rates applicable to all Loans and Portions and the
effective dates of all changes thereto, (ii) the Interest Period
for each Revolving LIBOR Loan and Term LIBOR Portion, (iii) the
date and amount of each principal and interest payment on each Loan
and Portion and (iv) such other information as Administrative Agent
may determine is necessary for the computation of interest payable
by Borrower hereunder.
2.08. Loan Funding, Etc.
(a) Bank Funding and Disbursement to Borrower. Each Bank
shall, before 11:00 A.M. on the date of each Revolving Loan
Borrowing and the Term Loan Borrowing, make available to
Administrative Agent at its office specified in Paragraph 8.01, in
same day or immediately available funds, such Bank's Proportionate
Share of such Borrowing. After Administrative Agent's receipt of
such funds and upon fulfillment of the applicable conditions set
forth in Section III, Administrative Agent will promptly disburse
such funds in same day or immediately available funds to Borrower.
Unless otherwise directed by Borrower, Administrative Agent shall
disburse the proceeds of each Revolving Loan Borrowing and the Term
Loan Borrowing to Borrower by disbursement to the account or
accounts specified in the applicable Notice of Borrowing.
(b) Bank Failure to Fund. Unless Administrative Agent
shall have received notice from a Bank prior to the date of any
Revolving Loan Borrowing or the Term Loan Borrowing that such Bank
will not make available to Administrative Agent such Bank's
Proportionate Share of such Borrowing, Administrative Agent may
assume that such Bank has made such portion available to
Administrative Agent on the date of such Borrowing in accordance
with Subparagraph 2.08(a), and Administrative Agent may, in
reliance upon such assumption, make available to Borrower (or
otherwise disburse) on such date a corresponding amount. If any
Bank does not make the amount of its Proportionate Share of any
Revolving Loan Borrowing or the Term Loan Borrowing available to
Administrative Agent on or prior to the date of such Borrowing,
such Bank shall pay to Administrative Agent, on demand, interest
which shall accrue on such amount until made available to
Administrative 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 Base Rate thereafter. A
certificate of Administrative Agent submitted to any Bank with
respect to any amounts owing under this Subparagraph 2.08(b) shall
be conclusive absent manifest error. If any Bank's Proportionate
Share of any Revolving Loan Borrowing or the Term Loan Borrowing is
not in fact made available to Administrative Agent by such Bank
within three (3) Business Days after the date of such Borrowing,
Borrower shall pay to Administrative 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 Administrative
Agent, at the interest rate applicable at the time to the Loans
comprising such Borrowing.
(c) Banks' Obligations Several. The failure of any Bank to
make the Loan to be made by it as part of any Revolving Loan
Borrowing or the Term Loan Borrowing shall not relieve any other
Bank of its obligation hereunder to make its Loan on the date of
such Borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on
the date of any Borrowing.
2.09. Pro Rata Treatment.
(a) Borrowings, Commitment Reductions, Etc. Except as
otherwise provided herein:
(i) Each Revolving Loan Borrowing, each reduction of
the Total Revolving Loan Commitment and the Term Loan
Borrowing shall be made or shared among the Banks pro rata
according to their respective Proportionate Shares;
(ii) Each payment of principal of Loans in any
Borrowing shall be shared among the Banks 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 Banks;
(iii) Each payment of interest on Loans in any
Borrowing shall be shared among the Banks 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 Banks and (B) the dates on which such Banks
so made or funded such Loans;
(iv) Each payment of Commitment Fees shall be shared
among the Banks pro rata according to (A) their respective
Proportionate Shares and (B) in the case of each Bank which
becomes a Bank hereunder after the date hereof, the date upon
which such Bank so became a Bank;
(v) Each payment of interest (other than interest on
Loans) shall be shared among the Banks and Agents owed the
amount upon which such interest accrues pro rata according to
(A) the respective amounts so owed such Banks and (B) the
dates on which such amounts became owing to such Banks; and
(vi) 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 Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise) on account of Loans owed to it
in excess of its ratable share of payments on account of such Loans
obtained by all Banks entitled to such payments, such Bank shall
forthwith purchase from the other Banks such participations in the
Loans as shall be necessary to cause such purchasing Bank 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 Bank, such purchase shall be
rescinded and each other Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery together with an
amount equal to such other Bank's ratable share (according to the
proportion of (i) the amount of such other Bank's required
repayment to (ii) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered.
Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Subparagraph 2.09(b) may, to the
fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff, but only as provided in
Paragraph 8.06) with respect to such participation as fully as if
such Bank 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 Revolving LIBOR Loan or
Term LIBOR Borrowing Portion, Agents shall determine that (i) 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) the rates of interest for such Revolving LIBOR Loans or Term
LIBOR Borrowing Portions, as the case may be, do not adequately and
fairly reflect the cost to the Banks of making or maintaining such
Revolving LIBOR Loans or Term LIBOR Borrowing Portions,
Administrative Agent shall immediately give notice of such
condition to Borrower and the Banks. After the giving of any such
notice and until Administrative 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 Banks' obligations to make or convert to
Revolving LIBOR Loans or Term LIBOR Borrowing Portions shall be
suspended. Any Revolving LIBOR Loans or Term LIBOR Borrowing
Portions outstanding at the commencement of any such suspension
shall, unless fully repaid, be converted at the end of the then
current Interest Period for such Revolving LIBOR Loans or Term
LIBOR Borrowing Portions into Revolving Base Rate Loans or Term
Base Rate Borrowing Portions, as the case may be, 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 Bank 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 Bank to make or maintain any
Revolving LIBOR Loan or Term LIBOR Loan Portion, such Bank shall
immediately notify Administrative 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 Bank's obligation
to make or convert to, Revolving LIBOR Loans or Term LIBOR Loan
Portions shall be terminated, and (ii) Borrower shall, at the
request of such Bank, either (A) pursuant to Subparagraph 2.01(d)
or Subparagraph 2.02(d), as the case may be, convert any such then
outstanding Revolving LIBOR Loans or Term LIBOR Loan Portions of
such Bank into Revolving Base Rate Loans or Term Base Rate Loan
Portions, as the case may be, at the end of the current Interest
Period for such Revolving LIBOR Loans or Term LIBOR Loan Portions,
or (B) immediately repay or convert any such Revolving LIBOR Loans
or Term LIBOR Loan Portions if such Bank shall notify Borrower that
such Bank may not lawfully continue to fund and maintain such
Revolving LIBOR Loans or Term LIBOR Loan Portions. Any conversion
or prepayment of Revolving LIBOR Loans or Term LIBOR Loan Portions
made pursuant to the preceding sentence prior to the last day of an
Interest Period for such Revolving LIBOR Loans or Term LIBOR Loan
Portions shall be deemed a prepayment thereof for purposes of
Paragraph 2.12. After any Bank notifies Administrative Agent and
Borrower of such a Change of Law and until such Bank notifies
Administrative Agent and Borrower that it is no longer unlawful or
impossible for such Bank to make or maintain any Revolving LIBOR
Loan or Term LIBOR Loan Portion, all Revolving Loans and all
Portions of the Term Loan of such Bank shall be Revolving Base Rate
Loans and Term Base Rate Loan Portions, respectively.
(c) Increased Costs. If, after the date of this Agreement,
any Change of Law:
(i) Shall subject any Bank to any tax, duty or other
charge with respect to any Revolving LIBOR Loan or Term LIBOR
Borrowing Portion, or shall change the basis of taxation of
payments by Borrower to any Bank on such a Revolving LIBOR
Loan or Term LIBOR Borrowing Portion or in respect to such a
Revolving LIBOR Loan or Term LIBOR Borrowing Portion under
this Agreement (except for changes in the rate of taxation on
the overall net income of any Bank 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 or Portions), 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 Bank for any
Revolving LIBOR Loan or Term LIBOR Borrowing Portion; or
(iii) Shall impose on any Bank any other condition related to any
Revolving LIBOR Loan or Term LIBOR Borrowing Portion or such
Bank's Commitments;
And the effect of any of the foregoing is to increase the cost to
such Bank of making, renewing, or maintaining any such Revolving
LIBOR Loan or Term LIBOR Borrowing Portion or such Bank's
Commitments or to reduce any amount receivable by such Bank
hereunder, then Borrower shall from time to time, within five (5)
days after demand by such Bank (which demand shall be accompanied
by a statement setting forth in reasonable detail the basis for the
calculation of the amount demanded), pay to such Bank additional
amounts sufficient to reimburse such Bank for such increased costs
or to compensate such Bank for such reduced amounts; provided,
however, that Borrower shall not be obligated to pay any Bank for
any such increased costs or reduced amounts incurred more than
sixty (60) days prior to the date of such Bank's demand for payment
if such demand was made more than sixty (60) days after the latest
of (A) the date such Bank received actual notice of such increased
cost or reduced amount, (B) the effective date of such Change in
Law, or (C) the date such Change in Law occurred or was enacted. A
certificate as to the amount of such increased costs or reduced
amounts submitted by such Bank to Borrower shall constitute prima
facie evidence of such increased costs or reduced amounts. 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.
(d) Capital Requirements. If, after the date of this
Agreement, any Bank determines that (i) any Change of Law affects
the amount of capital required or expected to be maintained by such
Bank or any Person controlling such Bank (a "Capital Adequacy
Requirement") and (ii) the amount of capital maintained by such
Bank or such Person which is reasonably attributable to or based
upon the Loans, the Commitments or this Agreement must be increased
as a result of such Capital Adequacy Requirement (taking into
account such Bank's or such Person's policies with respect to
capital adequacy), Borrower shall pay to such Bank or such Person,
within five (5) days after demand of such Bank (which demand shall
be accompanied by a statement setting forth in reasonable detail
the basis for the calculation of the amount demanded), such amounts
as such Bank or such Person shall reasonably determine are
necessary to compensate such Bank or such Person for the increased
costs to such Bank or such Person of such increased capital. A
certificate of any Bank setting forth in reasonable detail the
computation of any such increased costs delivered by such Bank to
Borrower shall constitute prima facie evidence of such increased
costs. 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.
(e) Mitigation. As promptly as practical after any Bank
becomes aware of (i) any Change of Law which will make it unlawful
or impossible for such Bank to make or maintain any Revolving LIBOR
Loan or Term LIBOR Loan Portion or (ii) any obligation by Borrower
to pay any amount pursuant to Subparagraph 2.10(c) or Subparagraph
2.10(d), such Bank shall notify Borrower and Administrative Agent
(and, if any Bank has given notice of any such event described in
clause (i) or (ii) above and thereafter such event ceases to exist,
such Bank shall promptly so notify Borrower and Administrative
Agent). Each Bank affected by any Change of Law which makes it
unlawful or impossible for such Bank to make or maintain any
Revolving LIBOR Loan or Term LIBOR Loan Portion 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 Bank, such efforts would not be
disadvantageous to such Bank or contrary to such Bank's normal
banking practices.
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 (i) net income taxes and
franchise taxes in lieu of net income taxes imposed on any Agent or
Bank by its jurisdiction of incorporation or the jurisdiction in
which its Applicable Lending Office is located and (ii) withholding
taxes required to be paid for Banks who do not comply with
Subparagraph 2.11(b) at the time they first become Banks hereunder)
(all such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions and withholdings being hereinafter called
"Taxes"). Subject to Subparagraph 2.11(c), if any Taxes are
required to be withheld from any amounts payable to any Agent or
any Bank hereunder or under the other Credit Documents, the amounts
so payable to such Agent or such Bank shall be increased to the
extent necessary to yield to such Agent or such Bank (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 Administrative Agent for its own account or for the account of
such other Agent or such Bank, 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
Administrative Agent the required receipts or other required
documentary evidence, Borrower shall indemnify Agents and the Banks
for any incremental taxes, interest or penalties that may become
payable by any Agent or any Bank 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.
(b) Withholding Exemption Certificates. On or prior to the
Closing Date, each Bank which is not incorporated under the laws of
the United States of America or a state thereof shall deliver to
Borrower and Administrative Agent either 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 Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal taxes. Each Bank which delivers to Borrower and
Administrative Agent a Form 1001 or 4224 pursuant to the
immediately preceding sentence further undertakes to deliver to
Borrower and Administrative 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 letter or form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most
recent letter and form previously delivered by it to Borrower and
Administrative Agent, and such extensions or renewals thereof as
may reasonably be requested by Borrower or Administrative Agent,
certifying in the case of a Form 1001 or 4224 that such Bank is
entitled to receive payments under this Agreement without deduction
or withholding of any United States federal 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 Bank from duly
completing and delivering any such letter or form with respect to
it and such Bank advises Borrower and Administrative Agent that it
is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
(c) Mitigation. Any Agent or Bank claiming any additional
amounts payable pursuant to this Paragraph 2.11 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 Agent or Bank in the case
of a change in the jurisdiction of its Applicable Lending Office,
such change would not be disadvantageous to such Agent or Bank or
contrary to such Agent's or Bank's normal banking practices.
(d) Tax Returns. Nothing contained in this Paragraph 2.11
shall require any Agent or Bank 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 Revolving LIBOR Loan or Term LIBOR Loan Portion 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 Revolving LIBOR Loan or Term LIBOR Loan Portion
for which a Notice of Borrowing has been delivered to Administrative
Agent (whether as a result of the failure to satisfy any applicable
conditions or otherwise) or (c) fail to convert any Revolving Loans into
Revolving LIBOR Loans or any Portion of any Term Loan into a Term LIBOR
Loan Portion in accordance with a Notice of Loan Conversion delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise), Borrower shall, upon demand by any
Bank, reimburse such Bank for and hold such Bank harmless from all
Funding Losses and all related incidental costs and expenses (such as
administrative costs and expenses) incurred by such Bank as a result of
such repayment, prepayment or failure. Each Bank demanding payment
under
this Paragraph 2.12 shall deliver to Borrower, with a copy to
Administrative Agent, a certificate setting forth the amount of Funding
Losses and related incidental costs and expenses for 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 Funding Losses
and
related incidental costs and expenses. The obligations of Borrower
under
this Paragraph 2.12 shall survive the payment and performance of the
Obligations and the termination of this Agreement.
2.13. Security.
(a) Mortgages, Security Agreements, Etc. The Obligations
shall be secured by the following:
(i) A Mortgage, Security Agreement and Financing
Statement in the form of Exhibit I covering the real property
located in Shrewsbury, Massachusetts to be acquired by
Borrower from DEC in the DEC Acquisition, duly executed by
Borrower (the "Borrower Mortgage");
(ii) A Security Agreement in the form of Exhibit J,
duly executed by Borrower (the "Borrower Security
Agreement");
(iii) An Intellectual Property Security Agreement in
the form of Exhibit K, duly executed by Borrower (the
"Borrower Intellectual Property Security Agreement");
(iv) A Pledge Agreement in the form of Exhibit L, duly
executed by Borrower (the "Borrower Pledge Agreement");
(v) Security Agreements in the form of Exhibit M,
duly executed by La Cie and each other Domestic Subsidiary of
Borrower (other than Rocky Mountain) which is a Material
Subsidiary (individually, a "Subsidiary Security Agreement");
and
(vi) Lien Acknowledgment Agreements in the form of
Exhibit N, one appropriately completed and duly executed by
Borrower, Quantum Europe and Administrative Agent and one
appropriately completed and duly executed by Borrower,
Quantum Holdings and Administrative Agent (collectively, the
"Lien Acknowledgment Agreements").
(b) Further Assurances. Borrower shall deliver, and shall
cause its Material Subsidiaries to deliver, to Administrative Agent
such additional mortgages, deeds of trust, security agreements,
pledge agreements, lessor consents and estoppels (containing
appropriate mortgagee and lender protection language) and other
instruments, agreements, certificates, opinions and documents
(including Uniform Commercial Code financing statements and fixture
filings and landlord waivers) as Administrative Agent may
reasonably request to:
(i) Grant, perfect, maintain, protect and evidence
security interests in favor of Administrative Agent, for the
benefit of the Agents and Banks, in any or all present and
future real and personal property of Borrower and the
Material Subsidiaries (except Rocky Mountain and Foreign
Subsidiaries) prior to the Liens or other interests of any
Person, except for Permitted Liens;
(ii) Grant, perfect, maintain, protect and evidence
security interests in favor of Borrower, as security for the
Quantum Europe Loan, in any or all present and future real
and personal property of Quantum Europe prior to the Liens or
other interests of any Person, except for Permitted Liens; or
(iii) Otherwise establish, maintain, protect and
evidence the rights provided to Administrative Agent, for the
benefit of the Agents and Banks, pursuant to the Security
Documents (including the rights provided to Administrative
Agent in the Quantum Europe Loan and the Quantum Europe Loan
Documents).
Borrower shall fully cooperate with the Agents and the Banks and
perform all additional acts reasonably requested by any Agent or
Bank to effect the purposes of this Paragraph 2.13.
2.14. Replacement of Banks. If any Bank shall (a) become a
Defaulting Bank more than two (2) times in a period of twelve (12)
consecutive months, (b) continue as a Defaulting Bank for more than five
(5) Business Days at any time, (c) suspend its obligation to make or
maintain Revolving LIBOR Loans or Term LIBOR Loan Portions pursuant to
Subparagraph 2.10(b) for a reason which is not applicable to the Banks
(or a material number of the Banks) generally, 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 the Banks (or a material number of Banks) generally, then
Administrative Agent may (or upon the written request of Borrower
or Agents, shall) replace such Bank (the "affected Bank"), or cause such
affected Bank to be replaced, with another bank (the "replacement bank")
satisfying the requirements of an Assignee Bank under Subparagraph
8.05(c)., by having the affected Bank sell and assign all of its rights
and obligations under this Agreement and the other Credit Documents to
the replacement bank 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
Administrative
Agent nor any Agent nor any Bank shall have any obligation to identify
or
locate a replacement bank for Borrower. Upon receipt by any affected
Bank of a written notice from Administrative Agent stating that
Administrative Agent is exercising the replacement right set forth in
this Paragraph 2.14, such affected Bank shall sell and assign all of its
rights and obligations under this Agreement and the other Credit
Documents to the replacement bank 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 Bank's Loans so sold and assigned, all
accrued and unpaid interest thereon and its ratable share of all fees to
which it is entitled.
SECTION III. CONDITIONS PRECEDENT.
3.01. Initial Conditions Precedent. The obligations of the Banks
to make the Loans comprising the initial Borrowing are subject to
receipt
by Administrative Agent, on or prior to the Closing Date, of each item
listed in Schedule 3.01, each in form and substance reasonably
satisfactory to the Banks, and with sufficient copies for,
Administrative
Agent and each Bank.
3.02. Conditions Precedent to Each Credit Event. The occurrence
of
each Credit Event (including the initial Borrowing) is subject to the
further conditions that:
(a) Borrower shall have delivered to Administrative Agent
the Notice of Borrowing, Notice of Conversion or Notice of Interest
Period Selection, as the case may be, for such Credit Event in
accordance with this Agreement;
(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) In the case of Credit Events with respect to
Revolving Loan Borrowings, no adverse change in the Borrowing
Base shall have occurred since the date of the most recent
Borrowing Base Certificate; and
(c) On the date such Credit Event is to occur and after
giving effect to such Credit Event, all of the Credit Documents are
in full force and effect.
The submission by Borrower to Administrative Agent of each Notice of
Borrowing, each Notice of Conversion (other than a notice for a
conversion to a Revolving Base Rate Loan or a Term Base Rate Loan
Portion) and each Notice of Interest Period Selection shall be deemed to
be a representation and warranty by Borrower as of the date thereon as
to
the above.
SECTION IV. REPRESENTATIONS AND WARRANTIES.
4.01. Borrower's Representations and Warranties. In order to
induce the Agents and Banks to enter into this Agreement, Borrower
hereby
represents and warranties to the Agents and Banks as follows:
(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 jurisdiction 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 and its Material Subsidiaries of each Credit Document,
Quantum Europe Loan Document and DEC Purchase Document executed, or
to be executed, by such Person and the consummation of the
transactions contemplated thereby (i) are within the corporate
power of such Person and (ii) have been duly authorized by all
necessary corporate actions on the part of such Person.
(c) Enforceability. Each Credit Document, Quantum Europe
Loan Document and DEC Purchase Document executed, or to be
executed, by Borrower or any Material Subsidiary has been, or will
be, duly executed and delivered by such Person and constitutes, or
will constitute, a legal, valid and binding obligation of such
Person, enforceable against such Person 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
(regardless of whether considered in a proceeding in equity or at
law).
(d) Non-Contravention. The execution and delivery by
Borrower and its Subsidiaries of the Credit Documents, Quantum
Europe Loan Documents and DEC Purchase Documents executed by such
Persons and the performance and consummation of the transactions
contemplated thereby do not (i) violate any Requirement of Law
applicable to such Persons; (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 Obligations of such Persons which
could reasonably be expected to have a Material Adverse Effect; 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 such Persons (except such Liens as may be created in
favor of Administrative Agent pursuant to this Agreement or the
other Credit Documents).
(e) Approvals. No material consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority or other Person (including the shareholders
of any Person) is required in connection with the execution and
delivery of the Credit Documents, the Quantum Europe Loan Documents
or the DEC Purchase Documents executed by Borrower or any Material
Subsidiary or the performance and consummation of the transactions
contemplated thereby except for:
(i) Filings necessary to perfect the security
interests granted pursuant to the Credit Documents; and
(ii) Consents, approvals, orders, authorizations,
registrations, declarations or filings set forth in Schedule
4.01(e), all of which have been obtained or made or which
will have been obtained or made as of the Closing Date and
the date of each subsequent Credit Event unless, in the case
of any such consents, approvals, orders, authorizations,
registrations, declarations or filings required in connection
with the execution, delivery and performance of the DEC
Purchase Documents, the failure to obtain or make any such
consents, approvals, orders, authorizations, registrations,
declarations or filings is not reasonably likely to have a
Material Adverse Effect.
(f) No Violation or Default. Neither Borrower nor any of
Borrower's Subsidiaries is in violation of or in default with
respect to (i) any Requirement of Law applicable to such Person or
(ii) any Contractual Obligation of such Person, where, in each
case, such violation or default is reasonably likely to have a
Material Adverse Effect. Without limiting the generality of the
foregoing, after giving effect to the DEC Acquisition, neither
Borrower nor any of Borrower's Subsidiaries (A) is in violation of
any Environmental Laws, (B) has any liability or potential
liability under any Environmental Laws or (C) has received written
notice or other written communication of an investigation or is
under investigation by any Governmental Authority having authority
to enforce Environmental Laws, where, in each case, such violation,
liability or investigation could reasonably be expected to have a
Material Adverse Effect, nor have any Hazardous Materials been
released or disposed of on any of the properties owned by Borrower
or its Subsidiaries (including, to Borrower's knowledge, properties
acquired from DEC) which, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. No
Event of Default or Default has occurred and is continuing.
(g) Litigation. Except as set forth in the Disclosure
Letter, 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
Borrower's 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 of the Credit Documents or the DEC Purchase
Documents or the transactions contemplated thereby.
(h) Title; Possession Under Leases. Set forth in Part A of
Schedule 4.01(h) (as supplemented by Borrower from time to time in
a written notice to Administrative Agent pursuant to clause (viii)
of Subparagraph 5.01(a) or otherwise) is a complete list of all
real property owned by Borrower or any of its Material
Subsidiaries, with the owner of such property, the location of such
property, a brief description of such property and the use of such
property. Set forth in Part B of Schedule 4.01(h) (as supplemented
by Borrower from time to time in a written notice to Administrative
Agent pursuant to clause (viii) of Subparagraph 5.01(a) or
otherwise) is a complete list of all real property (other than
sales offices) leased by Borrower or any of its Material
Subsidiaries as lessee or sublessee, with the lessee or sublessee
of such property, the location of such property, a brief
description of such property, the use of such property, the owner
of such property and the date and title of and parties to the lease
for such property (including all amendments thereof). Borrower and
Borrower's Subsidiaries (i) own and have good and marketable title
(without regard to minor defects of title) to the real property
referred to in Part A of Schedule 4.01(h), (ii) have valid
leasehold interests in the real property referred to in Part B of
Schedule 4.01(h), (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 taken as a whole, as reflected in the most recent
Financial Statements delivered to Administrative 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
Borrower's Subsidiaries since such date which are material to the
business of Borrower and its Subsidiaries taken as a whole (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 Borrower's
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
which have been delivered to Administrative Agent, (i) are in
accordance with the books and records of Borrower, which have been
maintained in accordance with good business practice; (ii) have
been prepared in conformity with GAAP; and (iii) fairly present the
financial condition and results of operations of Borrower as of the
date thereof and for the periods covered thereby. As of the date
of each of the Financial Statements of Borrower delivered pursuant
to Paragraph 3.01 or clause (i) or (ii) of Subparagraph 5.01(a),
neither Borrower nor any of Borrower's Subsidiaries has any
contingent obligations, liability for taxes or other outstanding
obligations which are reasonably likely, in the aggregate, to have
a Material Adverse Effect, except as disclosed in such Financial
Statements.
(j) [Reserved].
(k) No Agreements to Sell Assets; Etc. As of the Closing
Date, neither Borrower nor any of Borrower's Subsidiaries has any
legal obligation, absolute or contingent, to any Person to sell all
or any material part of the assets of Borrower or any of Borrower's
Subsidiaries (other than sales in the ordinary course of business),
or to effect any merger, consolidation or other reorganization of
Borrower or any of Borrower's 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 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 has
nor, to the knowledge of Borrower or any ERISA Affiliate,
has any fiduciary of any Employee Benefit Plan engaged in a
prohibited transaction under section 406 of ERISA or section
4975 of the Code.
(iii) Neither Borrower nor any ERISA Affiliate 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. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company
Act of 1940, the Public Utility Holding Company Act of 1935, the
Federal Power 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 Borrower's
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 material to conduct the businesses of Borrower
and its Subsidiaries (taken as a whole) as now conducted.
(o) Governmental Charges. Borrower and Borrower's
Subsidiaries have filed or caused to be filed all material tax
returns which are required by law to be filed by them. Borrower
and Borrower's Subsidiaries have paid, or made provision for the
payment of, all taxes and other Governmental Charges which have
become due pursuant to said returns or otherwise, except such
Governmental Charges, 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 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
Administrative Agent) is a complete list of all of Borrower's
Subsidiaries, the jurisdiction of incorporation of each, the
classes of Equity Securities of each and the percentages of shares
of each such class 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. On the date of this Agreement, Borrower has no Domestic
Subsidiary which is a Material Subsidiary, and, on the Closing
Date, Borrower will have no Domestic Subsidiary which is a Material
Subsidiary other than Rocky Mountain.
(r) Solvency, Etc. Borrower and each of its Subsidiaries
is Solvent and, after the execution and delivery of the Credit
Documents, the Quantum Loan Documents and the DEC Purchase
Documents and the consummation of the transactions contemplated
thereby, will be Solvent.
(s) Catastrophic Events. Neither Borrower nor any of
Borrower's Subsidiaries and none of their properties is affected by
any fire, explosion, strike, lockout or other labor dispute,
earthquake, embargo or other casualty that is reasonably likely to
have a Material Adverse Effect. As of the Closing Date, 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 Borrower's 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.
(t) DEC Acquisition. All of the representations and
warranties made by Borrower or, to Borrower's actual knowledge on
the Closing Date, DEC in the DEC Purchase Agreement and the other
DEC Purchase Documents are true and correct in all material
respects.
(u) No Material Adverse Effect. No event has occurred and
no condition exists which could reasonably be expected to have a
Material Adverse Effect.
(v) Accuracy of Information Furnished. None of the Credit
Documents and none of the other certificates, statements or
information furnished to Bank 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.
4.02. Reaffirmation. Borrower shall be deemed to have reaffirmed,
for the benefit of the Agents and Banks, 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 Banks shall otherwise consent in
writing:
(a) Financial Statements, Reports, etc. Borrower shall
furnish to Administrative Agent (and Administrative Agent shall
promptly thereupon furnish to each Bank) the following, each in
such form and such detail as Administrative Agent shall reasonably
request:
(i) As soon as available and in no event later than
forty-five (45) days after the last day of each fiscal
quarter of Borrower which is not a fiscal year end, a copy of
the unaudited Financial Statements of Borrower and Borrower's
Subsidiaries for such quarter and for the fiscal year to date
(prepared on a consolidated and consolidating basis),
certified by an Executive 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
ninety (90) days after the close of each fiscal year of
Borrower, (A) copies of the audited consolidated Financial
Statements of Borrower and Borrower's Subsidiaries for such
fiscal year, audited by a nationally recognized accounting
firm, (B) copies of the unqualified opinions (or qualified
opinions reasonably acceptable to Agents), (C) certificates
of all such accountants to Administrative Agent stating that,
in making the examination necessary for their audit, nothing
has come to their attention that would lead or cause them to
believe that Borrower has failed to comply with the
provisions of Subparagraph 5.02(g) or 5.02(m), with the
understanding that such audit was not directed toward
obtaining knowledge of any such non-compliance, or if any
such non-compliance has come to their attention, a statement
as to the nature thereof and (D) a copy of the unaudited,
internally prepared consolidating balance sheet of Borrower
and Borrower's Subsidiaries as of the last day of such fiscal
year, certified by an Executive Officer of Borrower to have
been prepared in accordance with Borrower's standard
accounting practices and policies;
(iii) Contemporaneously with the quarterly and year-end
Financial Statements required by the foregoing clauses (i)
and (ii), (A) a certificate of an Executive Officer of
Borrower in the form of Exhibit O, appropriately completed,
together with such financial computations as Agents may
request to determine compliance with the terms of this
Agreement (a "Compliance Certificate") and (B) management's
discussion of Borrower's operations for the period covered by
such Financial Statements in the form supplied to Borrower's
stockholders, including a comparison with Borrower's
operations for the corresponding quarter in the immediately
preceding fiscal year or with the immediately preceding
fiscal year, as the case may be;
(iv) As soon as possible and in no event later than
five (5) Business Days after any Executive Officer of
Borrower knows of the occurrence or existence of (A) any
Reportable Event under any Employee Benefit Plan or
Multiemployer Plan, (B) any litigation, suits or claims
against Borrower or its Subsidiaries involving claimed
monetary damages payable by Borrower or any of its
Subsidiaries of $10,000,000 or more not covered by insurance,
(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 an Executive 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; (B) all reports, proxy statements and financial
statements sent or made available by Borrower or any of its
Subsidiaries to its public security holders generally; and
(C) all press releases and other similar public statements
concerning any material developments in the business of
Borrower or any of Borrower's Subsidiaries made available by
Borrower or any of Borrower's Subsidiaries to the public
generally;
(vi) No later than thirty (30) days after the first
day of each fiscal year of Borrower, the consolidated plan
and forecast of Borrower and its Subsidiaries for such fiscal
year, including quarterly cash flow projections and quarterly
projections of Borrower's compliance with each of the
covenants set forth in Subparagraph 5.02(g) and Subparagraph
5.02(m);
(vii) Within twenty (20) days after the last day of
each fiscal month, a certificate in the form of Exhibit P (or
other form acceptable to the Agents), appropriately completed
(a "Borrowing Base Certificate"), which sets forth the
calculation of the Borrowing Base as of such last day of such
month, certified by an Authorized Financial Officer of
Borrower;
(viii) At least thirty (30) days prior to the
acquisition by Borrower of any leasehold or ownership
interest in real property consisting of 60,000 or more square
feet, a written supplement to Schedule 4.01(h);
(ix) As soon as possible and in no event later than
five (5) Business Days after the issuance or sale of any
Equity Securities, any Subordinated Debt or any other
Indebtedness which requires a prepayment pursuant to
Subparagraph 2.05(c), or the sale of any assets which
generates Designated Asset Sale Proceeds for any year in
excess of $20,000,000, the statement of an Executive Officer
of Borrower setting forth the details of such issuance or
sale;
(x) Contemporaneously with the year-end Financial
Statements required by the foregoing clause (ii), a report,
certified by an Authorized Financial Officer of Borrower,
which sets forth (A) the total Designated Asset Sales
Proceeds for the year covered by such Financial Statements;
(B) if the total Designated Asset Sales Proceeds for such
year exceed $20,000,000, a description of such Designated
Asset Sales Proceeds (including the amount and form of all
cash and non-cash consideration) and (C) if any mandatory
prepayment required by clause (ii) of Subparagraph 2.05(c) as
a result of annual excess Designated Asset Sales Proceeds
prior to such year has not been paid in full prior to such
year, a summary of all cash and non-cash payments and other
proceeds received by Borrower and its Subsidiaries in
connection with such earlier Designated Asset Sales Proceeds
and all payments, if any, made by Borrower to the Banks
therefrom;
(xi) Not later than (A) thirty (30) days prior to the
establishment or acquisition by Borrower or any of its
Subsidiaries of any Domestic Subsidiary of Borrower which
will be a Material Subsidiary (other than Rocky Mountain) and
(B) thirty (30) days after the date any existing Domestic
Subsidiary of Borrower (other than Rocky Mountain) becomes a
Material Subsidiary, written notice thereof; and
(xii) Such other certificates, opinions, statements,
documents and information relating to the operations or
condition (financial or otherwise) of Borrower or any of its
Subsidiaries, and compliance by Borrower and the Material
Subsidiaries with the terms of this Agreement and the other
Credit Documents as any Bank through Administrative Agent may
from time to time reasonably request.
Notwithstanding the foregoing, it is understood and agreed that to
the extent Borrower files Forms 10-K and 10-Q (or any successor
forms) with the Securities and Exchange Commission (or any
successor agency) and such forms are required to contain the same
information as required by clauses (i) and (ii) of Subparagraphs
5.01(a), Borrower may deliver copies of such forms with respect to
the relevant time periods in lieu of the deliveries specified in
clauses (i) and (ii) of Subparagraphs 5.01(a).
(b) Books and Records. Borrower and its Subsidiaries shall
at all times keep proper books of record and account in accordance
with good business practices and GAAP (and, in the case of Foreign
Subsidiaries, local accounting rules or GAAP to the extent
required).
(c) Inspections. Borrower and its Subsidiaries shall permit
personnel of Administrative Agent and, if no Default or Event of
Default has occurred and is continuing, with the consent of
Borrower (which consent shall not be unreasonably withheld or
delayed), any Person designated by Administrative Agent, upon
reasonable notice and during normal business hours, to visit and
inspect any of the properties and offices of Borrower and its
Subsidiaries, to conduct audits of any or all of the Collateral at
Borrower's expense, 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 Administrative
Agent may reasonably request; provided, however, that, so long as
no Default or Event of Default has occurred and is continuing,
audits of the Collateral shall be conducted at reasonable cost and
shall not be conducted at Borrower's expense more than twice in any
twelve (12) month period.
(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;
(ii) Carry and maintain each policy for such insurance
with (A) a company which is rated A or better by A.M. Best
and Company at the time such policy is placed and at the time
of each annual renewal thereof or (B) any other insurer which
is reasonably satisfactory to the Agents;
(iii) Obtain and maintain endorsements for such
insurance as specified in Exhibit Q; and
(iv) Deliver to Administrative Agent from time to
time, as Administrative Agent may request, schedules setting
forth all insurance then in effect.
(e) Governmental Charges. Borrower and its Subsidiaries
shall promptly pay and discharge when due all taxes and other
Governmental Charges prior to the date upon which penalties accrue
thereon which, if unpaid, are reasonably likely to have a Material
Adverse Effect, except such taxes and other Governmental Charges 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 in accordance
with GAAP.
(f) Use of Proceeds. Borrower shall use the proceeds of
the Loans only for the respective purposes set forth in
Subparagraph 2.01(g) and Subparagraph 2.02(g). Borrower shall not
use any part of the proceeds of any Loan, 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 Bank or any
Agent in a violation of Regulations G, T, U or X issued by the
Federal Reserve Board.
(g) General Business Operations. Each of Borrower and its
Subsidiaries shall (i) preserve and maintain its corporate
existence and all of its material rights, privileges and franchises
reasonably necessary to the conduct of its business, (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, (iii) keep all property useful and necessary in its
business in good working order and condition, ordinary wear and
tear excepted, and (iv) pay all Contractual Obligations as and when
due (except to the extent disputed in good faith by Borrower or the
appropriate Subsidiary and where non-payment could not have a
Material Adverse Effect). Borrower shall maintain its chief
executive office and principal place of business in the United
States and shall not relocate its chief executive office or
principal place of business outside of California except upon not
less than ninety (90) days prior written notice to Administrative
Agent.
(h) DEC Note. Borrower shall prepay the DEC Note in full
not later than 180 days after the date of issuance of the DEC Note.
(i) Quantum Europe Loan. Until the Quantum Europe Loan is
repaid in full, Borrower shall at all times maintain a first
priority perfected security interest (or Similar Lien) on all of
Quantum Europe's property (including all of Quantum Europe's
accounts) pursuant to the Quantum Europe Security Documents as
security for the Quantum Europe Loan. Borrower shall cause Quantum
Europe to direct all of its account debtors to make all payments of
or on Quantum Europe's accounts to the Quantum Europe Deposit
Accounts and shall not permit, cause or suffer Quantum Europe to
change such direction to its account debtors without the prior
written consent of the Administrative Agent.
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 Banks shall otherwise consent in writing:
(a) Indebtedness. Neither Borrower nor any of its
Subsidiaries shall create, incur, assume or permit to exist any
Indebtedness or any Guaranty Obligations except for the following
("Permitted Indebtedness"):
(i) The Obligations of Borrower under the Credit
Documents;
(ii) Indebtedness listed in Schedule 5.02(a) existing
on the date of this Agreement;
(iii) Indebtedness under purchase money loans 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 (A) in
each case, (y) such Indebtedness is incurred by such Person
at the time of, or not later than thirty (30) days after, the
acquisition by such Person of the property so financed and
(z) such Indebtedness does not exceed the purchase price of
the property so financed and (B) the aggregate amount of such
Indebtedness outstanding at any time does not exceed
$30,000,000;
(iv) Indebtedness arising from the endorsement of
instruments for collection in the ordinary course of
Borrower's or a Subsidiary's business;
(v) Indebtedness of Borrower under the Convertible
Subordinated Debentures;
(vi) Indebtedness of Borrower under the DEC Note,
provided that (A) such Indebtedness does not exceed
$70,000,000 in principal amount, (B) such Indebtedness bears
interest at a per annum rate of twelve percent (12%) or less,
(C) such Indebtedness permits prepayment without penalty at
any time up to 180 days after its date of issuance, (D) such
Indebtedness is fully subordinated to the Obligations on
terms acceptable to the Agents on the Closing Date and (E)
the terms of such Indebtedness are otherwise acceptable to
the Agents on the Closing Date;
(vii) Indebtedness of Rocky Mountain to Borrower
exclusively or to Borrower, Storage Tech and/or MKE jointly,
provided that (A) any such Indebtedness to Borrower, Storage
Tech and/or MKE jointly is on a pro rata basis in proportion
to their respective ownership interests in Rocky Mountain as
permitted by this Agreement and (B) any Indebtedness of Rocky
Mountain to MKE does not exceed $10,000,000 at any one time;
(viii) Indebtedness of Borrower to MKE, provided that
such Indebtedness is subordinated to the Obligations on terms
and conditions no less favorable to the Agents and Banks than
those set forth on Exhibit R or as otherwise approved by the
Required Banks;
(ix) 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;
(x) Indebtedness of Borrower and its Subsidiaries
with respect to surety, appeal, indemnity, performance or
other similar bonds in the ordinary course of business;
(xi) Indebtedness of Borrower and its Subsidiaries
under initial or successive refinancings of any Indebtedness
permitted by clause (ii) or (iii) 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 Banks
than the Indebtedness being refinanced;
(xii) 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);
(xiii) Indebtedness of Borrower and its Subsidiaries for
expense accruals in the ordinary course of business;
(xiv) Guaranty Obligations of Borrower in respect of
Permitted Indebtedness of its Subsidiaries;
(xv) Indebtedness of Borrower to any of Borrower's
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 any of Borrower's Foreign Subsidiaries to
Borrower or to any of Borrower's Domestic Subsidiaries shall
be subject to the limitations set forth in clause (x) of
Subparagraph 5.02(e);
(xvi) Indebtedness of Borrower's Foreign Subsidiaries
to Persons other than Borrower or Borrower's Subsidiaries,
provided that (A) any such Indebtedness of Quantum Europe
(including any such Indebtedness listed in Schedule 5.02(a))
is unsecured and (B) the aggregate principal amount of all
such Indebtedness (including any such Indebtedness listed in
Schedule 5.02(a)) does not exceed $60,000,000 at any time;
(xvii) Indebtedness of Borrower (other than MKE
Subordinated Debt) which is subordinated to the Obligations,
provided that (A) the payment terms, interest rate and
subordination provisions of such Indebtedness are reasonably
acceptable to Required Banks and (B) all Net Proceeds of such
Indebtedness are applied to prepay the Term Loans pursuant to
clause (v) of Subparagraph 2.05(c); and
(xviii) Other Indebtedness of Borrower and its
Subsidiaries, provided that the aggregate principal amount of
all such Indebtedness does not exceed $25,000,000 at any
time.
(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 any Agent or any Bank securing
the Obligations;
(ii) Liens listed in Schedule 5.02(b) 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;
(vii) Liens securing Indebtedness which constitutes
Permitted Indebtedness under clause (iii) 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;
(viii) Liens on the property or assets of any Subsidiary
of Borrower in favor of Borrower or any other Subsidiary of
Borrower;
(ix) Liens on the property or assets of a Foreign
Subsidiary of Borrower (other than Quantum Europe) securing
Indebtedness permitted under clause (xvi) of
Subparagraph 5.02(a);
(x) Banker's Liens and similar Liens (including set-
off rights) in respect of bank deposits;
(xi) Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by the
Liens described in clause (ii) or (vii) 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 Banks than the Indebtedness
secured by the existing Lien;
(xii) 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;
(xiii) Judgment 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
thirty (30) days after issue or levy and, if so stayed, such
stay is not thereafter removed;
(xiv) Rights of vendors or lessors under conditional
sale agreements, Capital Leases or other title retention
agreements, 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 and
(C) such rights do not secure any Indebtedness other than
such Permitted Indebtedness;
(xv) 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; 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
all or any substantial part 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 clauses (i)-(vi) and (ix)-(xiv) 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 provided that,
in each case, (A) the terms of the transaction are terms
which then would prevail in the market for similar
transactions between unaffiliated parties dealing at arm's
length and (B) all steps necessary to perfect Administrative
Agent's security interest in the license agreement, royalty
payments and other rights of Borrower in connection therewith
have been taken;
(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 of its
other Subsidiaries, provided that (A) any such assets or
property which are subject to a Lien in favor of
Administrative Agent (except for Excluded Foreign Subsidiary
Equipment Transfers) continue to be subject to such Lien with
no loss of priority or perfection, (B) Quantum Europe does
not sell or dispose of any assets or property to any of
Borrower's other Subsidiaries except as otherwise permitted
by this Agreement (including the preceding clause (A)), (C)
in the case of any sale or disposition of assets and property
by Borrower or any of its Domestic Subsidiaries to any of
Borrower's Foreign Subsidiaries which is made in connection
with any Investment in such Foreign Subsidiary, such
Investment is permitted by this Agreement (including clause
(x) of Subparagraph 5.02(e)) and (D) in the case of the
Quantum/Quantum Europe Stock Transfer and the Quantum/Quantum
Holdings Stock Transfer, such transfers do not occur prior to
the grant and perfection of a security interest in favor of
Administrative Agent in the stock transferred to Quantum
Europe and Quantum Holdings in connection therewith;
(vii) Sales or other dispositions of the assets which
are designated for sale in the Disclosure Letter (including
the assets and property acquired from DEC in connection with
the DEC Acquisition which are so listed) for not less than
fair market value;
(viii) Sale by Borrower to MKE of a portion of
Borrower's eighty-one percent (81%) ownership interest in
Rocky Mountain, provided that (A) Borrower retains not less
than a fifty-one percent (51%) ownership interest in Rocky
Mountain and (B) the terms of any such sale are reasonably
acceptable to Required Banks; and
(ix) Other sales, leases, transfers and disposals of
assets and property, 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 does not exceed $25,000,000 per year;
Provided, however, that the non-cash consideration (including the
deferred portion of any purchase price) received by Borrower and
its Subsidiaries at the time of any sale permitted above (other
than sales permitted by clauses (i), (ii), (iii), (iv) and (vi) or
licenses permitted by clause (v)) in connection with any such sale
of assets and property having an aggregate value of $5,000,000 or
more (based upon the greater of the fair market or book value of
such assets and property) does not exceed thirty percent (30%) of
the aggregate consideration or total purchase price received or
receivable by Borrower and its Subsidiaries in connection with such
sale.
(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 that:
(i) Borrower may effect the DEC Acquisition;
(ii) Any Subsidiary of Borrower may merge into any
other Subsidiary of Borrower if, after giving effect to the
merger, the surviving Subsidiary is a wholly-owned Subsidiary
of Borrower;
(iii) Any Subsidiary may merge into Borrower provided
that Borrower is the surviving corporation;
(iv) Borrower and its Subsidiaries may acquire assets
of other Persons to the extent such acquisitions constitute
Capital Expenditures and such Capital Expenditures are
otherwise permitted under the terms of this Agreement; and
(v) In addition to the transactions permitted by
clauses (i)-(iv), Borrower and its Subsidiaries may acquire
other assets of other Persons and establish or acquire
Subsidiaries, provided that (A) in the case of the
establishment or acquisition of any Subsidiary, Borrower or
one of its Domestic Subsidiaries establishes or acquires such
Subsidiary and grants to Administrative Agent a first priority
perfected security interest (or Similar Lien) in the stock of
such Subsidiary (to the extent provided in the Borrower
Pledge Agreement with respect to Equity Securities of Foreign
Subsidiaries) and (B) the aggregate cost of all such assets
so acquired and all such Subsidiaries so established or
acquired plus the aggregate amount of Investments made by
Borrower and its Subsidiaries pursuant to clause (xiv) of
Subparagraph 5.02(e) during the term of this Agreement does
not exceed $25,000,000.
(e) Investments. Neither Borrower nor any of its
Subsidiaries shall make any Investment except the following:
(i) Direct obligations of, or obligations the
principal and interest on which are unconditionally
guaranteed by, the United States of America or obligations of
any agency of the United States of America to the extent such
obligations are backed by the full faith and credit of the
United States of America, in each case maturing within one
year from the date of acquisition thereof;
(ii) Certificates of deposit maturing within one year
from the date of acquisition thereof issued by a commercial
bank or trust company organized under the laws of the United
States of America or a state thereof or that is a Bank,
provided that (A) such deposits are denominated in Dollars,
(B) such bank or trust company has capital, surplus and
undivided profits of not less than $100,000,000 and (C) such
bank or trust company has certificates of deposit or other
debt obligations rated at least A-1 (or its equivalent) by
Standard and Poor's Ratings Group or P-1 (or its equivalent)
by Moody's Investors Service, Inc.;
(iii) Open market commercial paper maturing within 270
days from the date of acquisition thereof issued by a
corporation organized under the laws of the United States of
America or a state thereof, provided such commercial paper is
rated at least A-1 (or its equivalent) by Standard and Poor's
Ratings Group or P-1 (or its equivalent) by Moody's Investors
Service, Inc.;
(iv) Any repurchase agreement entered into with a
commercial bank or trust company organized under the laws of
the United States of America or a state thereof or that is a
Bank, provided that (A) such bank or trust company has
capital, surplus and undivided profits of not less than
$100,000,000, (B) such bank or trust company has certificates
of deposit or other debt obligations rated at least A-1 (or
its equivalent) by Standard and Poor's Ratings Group or P-1
(or its equivalent) by Moody's Investors Service, Inc., (C)
the repurchase obligations of such bank or trust company
under such repurchase agreement are fully secured by a
perfected security interest in a security or instrument of
the type described in clause (i), (ii) or (iii) above and (D)
such security or instrument so securing the repurchase
obligations has a fair market value at the time such
repurchase agreement is entered into of not less than 100% of
such repurchase obligations;
(v) Any transaction permitted by Subparagraph 5.02(a)
or Subparagraph 5.02(d);
(vi) Money market mutual funds registered with the
Securities and Exchange Commission, meeting the requirements
of Rule 2a-7 promulgated under the Investment Company Act of
1940;
(vii) Investments listed in Schedule 5.02(e) existing
on the date of this Agreement;
(viii) Investments received by Borrower and its
Subsidiaries in connection with the bankruptcy or
reorganization of customers and suppliers and in settlement
of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of
business;
(ix) Investments arising from rights received by
Borrower and its Subsidiaries upon the required payment of
any permitted Contingent Obligations of Borrower and its
Subsidiaries;
(x) Investments by Borrower and its Subsidiaries in
each other, except that Investments by Borrower and its
Domestic Subsidiaries in Foreign Subsidiaries shall be
limited to the following:
(A) The Quantum Europe Loan, provided that (1)
such loan is evidenced by the Quantum Europe Note, (2)
the outstanding principal amount of such loan does not
exceed $50,000,000 at any time, (3) Borrower has a
first priority perfected security interest (or Similar
Lien) in the accounts of Quantum Europe, the Quantum
Europe Deposit Accounts, inventory of Quantum Europe
held by other Subsidiaries of Borrower and all other
assets of Quantum Europe as security for such loan, (4)
Administrative Agent has a first priority perfected
security interest (or Similar Lien) in such loan and,
to the extent it secures such loan, the security
therefor for the benefit of the Banks and Agents as
security for the Obligations and (5) the terms of such
loan and the security therefor are otherwise reasonably
acceptable to the Agents on the Closing Date; and
(B) Other Investments by Borrower and its
Domestic Subsidiaries in Foreign Subsidiaries (in
addition to the Quantum Europe Loan), provided that (1)
the aggregate amount of all such Investments
constituting Indebtedness for borrowed money of Foreign
Subsidiaries, purchases of Equity Securities of Foreign
Subsidiaries and other capital contributions to Foreign
Subsidiaries does not exceed $350,000,000 at any time
and (2) if at the end of any fiscal quarter the
Indebtedness for borrowed money owed by any Foreign
Subsidiary to Borrower and its Domestic Subsidiaries
exceeds $10,000,000, (I) such Subsidiary immediately
delivers to Borrower a promissory note evidencing such
Indebtedness, which note is in the amount of such
Indebtedness and in a form reasonably acceptable to the
Agents and (II) all steps necessary to grant to
Administrative Agent a first priority perfected
security interest (or Similar Lien) in each such note
for the benefit of the Banks and Agents as security for
the Obligations are taken;
Provided, however, that any Investment in the Equity
Securities of any existing or new Subsidiary otherwise
permitted by clause (B) (including capital contributions)
shall be permitted only if (1) such Investment is made by
Borrower or one of its Domestic Subsidiaries which is a
Material Subsidiary (other than Rocky Mountain) and (2) at
the time of such Investment, Administrative Agent is granted
(or then has) a first priority perfected security interest
(or Similar Lien) in such Equity Securities (to the extent
provided in the Borrower Pledge Agreement with respect to
Equity Securities of Foreign Subsidiaries);
(xi) Investments consisting of loans to employees,
officers and directors, the proceeds of which shall be used
to purchase equity securities of Borrower or its Subsidiaries
and other loans to employees, officers and directors;
(xii) Investments of Borrower and its Subsidiaries in
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;;
(xiii) Deposit accounts; and
(xiv) Other Investments, provided that the aggregate
amount of such other Investments plus the aggregate cost of
assets acquired and Subsidiaries established or acquired by
Borrower and its Subsidiaries pursuant to clause (v) of
Subparagraph 5.02(d) does not exceed $25,000,000 during the
term of this Agreement.
(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 as follows:
(i) Either Borrower or any of its Subsidiaries may
pay dividends on its capital stock payable solely in such
Person's own capital stock, provided that, in the case of any
such dividend payable by a Subsidiary to Borrower or another
Subsidiary, such dividend is delivered and pledged to
Administrative Agent; and
(ii) Any Subsidiary of Borrower may pay dividends to
Borrower, Quantum Holdings or Quantum Europe;
(iii) Rocky Mountain may pay dividends to Storage Tech
and, if applicable, MKE, provided that such dividends are
paid pro rata to Borrower, Storage Tech and MKE according to
their respective ownership interests in Rocky Mountain; and
(iv) 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 $3,000,000 in any fiscal year.
(g) Capital Expenditures. Borrower and its Subsidiaries
shall not pay or incur (without duplication) in any of the periods
set forth below Capital Expenditures in an aggregate amount which
exceeds the amount set forth opposite such period below (plus,
during the first sixty (60) days of any such period, any portion of
such permitted amounts of Capital Expenditures not paid or incurred
during the immediately preceding period):
Closing Date -
March 31, 1995 ......... $100,000,000;
April 1, 1995 -
March 31, 1996 $225,000,000;
April 1, 1996 -
March 31, 1997 $225,000,000;
April 1, 1997 -
Maturity Date $100,000,000.
(h) Change in Business. Neither Borrower nor any of its
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any business different in any material respect from
its present business or businesses incidental or ancillary thereto.
(i) Certain Indebtedness Payments, Etc. Neither Borrower
nor any of its Subsidiaries shall (i) pay, prepay, redeem,
purchase, defease or otherwise satisfy in any manner prior to the
scheduled payment thereof any Subordinated Debt, (ii)amend, modify
or otherwise change the terms of any document, instrument or
agreement evidencing Subordinated Debt so as to increase its
obligations thereunder or accelerate the scheduled payment thereof
or (iii) amend, modify or otherwise change any of the subordination
or other provisions of any document, instrument or agreement
evidencing Subordinated Debt in a manner which adversely affects
the material rights of the Agents and Banks; provided, however,
that Borrower shall prepay the DEC Note as required under
Subparagraph 5.01(h).
(j) ERISA. Neither Borrower nor any ERISA Affiliate shall
(i) adopt or institute any defined benefit 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), excluding all extensions permitted by law or contract,
(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, if any of such
actions or inactions described in clauses (i) - (vii), either
individually or cumulatively, would have a Material Adverse Effect.
(k) 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.
(l) Accounting Changes. Neither Borrower nor any of its
Subsidiaries shall change (i) its fiscal year (currently April 1 -
March 31) or (ii) its accounting practices except as permitted by
GAAP.
(m) Financial Covenants.
(i) Borrower shall not permit its cumulative Fixed
Charge Coverage Ratio for each period set forth below to be
less than the ratio set forth opposite such period below:
October 1, 1994 - December 31, 1994 .......... 1.50;
October 1, 1994 - March 31, 1995 .......... 1.50;
October 1, 1994 - June 30, 1995 .......... 2.00;
Each consecutive four-quarter
period ending on the last day
of each quarter thereafter .......... 2.50.
(ii) Borrower shall not permit its cumulative Debt
Service Coverage Ratio for each period set forth below to be
less than the ratio set forth opposite such period below:
October 1, 1994 - March 31, 1995 .......... 1.00;
October 1, 1994 - June 30, 1995 1.00;
Each consecutive four-quarter
period ending on the last day
of each quarter thereafter 1.00.
(iii) Borrower shall not permit its Net Worth on any
date of determination (such date to be referred to herein as
a "determination date") which occurs after the last day of
the quarter in which the DEC Acquisition is effected (such
last day to be referred to herein as the "base date") to be
less than the sum on such determination date of the
following:
(A) Eighty-five percent (85%) of Borrower's Net
Worth on the base date (plus, to the extent the pre-tax
Restructuring Charges for the quarter ending on the
base date exceed $125,000,000, the amount of such
excess);
(B) Seventy-five percent (75%) of the sum of
Borrower's consolidated quarterly net income (ignoring
any quarterly losses) for each quarter after the base
date through and including the quarter ending
immediately prior to the determination date;
(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 Net
Proceeds derived from the conversion of the Convertible
Subordinated Debentures;
Provided, however, that, if GAAP requires the Restructuring
Charges to be accrued in more than one quarter, any quarterly
loss incurred by Borrower in any of the first three (3)
quarters after the quarter in which the DEC Acquisition
occurs shall not be ignored for purposes of clause (B) above
to the extent (1) any such loss in any such quarter results
from the required accrual of the Restructuring Charges in
such quarter and (2) the aggregate amount of the pre-tax
Restructuring Charges taken by Borrower in the quarter in
which the DEC Acquisition occurs and each of the first three
(3) quarters thereafter does not exceed $125,000,000.
(iv) Borrower shall not permit its Leverage Ratio
during any period set forth below to be more than the ratio
set forth opposite such period below:
From the Closing Date to
the earlier of
(A) March 31, 1996 and
(B) the date Borrower
issues MKE Subordinated Debt
of $100,000,000 or more 1.50;
If Borrower issues MKE
Subordinated Debt of
$100,000,000 or more
prior to March 31, 1996,
from the date of such
issuance to March 31, 1996 1.35;
Thereafter 1.10.
(v) Borrower shall not permit (A) its EBIT for more
than two quarters in any consecutive four-quarter period to
be losses or (B) its cumulative EBIT quarterly losses
(ignoring any EBIT quarterly profits) for any consecutive
four-quarter period to exceed $25,000,000.
(vi) Borrower shall not permit its Quick Ratio to be
less than 0.75 at any time.
(n) Rocky Mountain Financing. Borrower shall not cause,
permit or suffer Rocky Mountain to obtain any financing or incur,
sell or issue any Indebtedness except solely (i) in the case of
debt financing or incurrence, sale or issuance of Indebtedness,
from or to Borrower exclusively or jointly with Storage Tech and
MKE on a pro rata basis in proportion to their respective ownership
interests in Rocky Mountain permitted by this Agreement, provided
that any Indebtedness of Rocky Mountain to MKE shall not exceed
$10,000,000 at any time; and (ii) in the case of equity
contribution or the sale or issuance of Equity Securities, from or
to Borrower exclusively or jointly with Storage Tech and, if
applicable, MKE on a pro rata basis in proportion to their
respective ownership interests, and not from any loans or equity
contributions from or the sale or issuance of any Equity Securities
or Indebtedness to any other Persons.
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 (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 two
(2) Business Days after notice thereof has been given to Borrower
by any Agent; or
(b) Borrower shall fail to observe or perform any covenant,
obligation, condition or agreement set forth in clauses (i) or
(iii) of Subparagraph 5.01(d), in Subparagraph 5.01(h) or in
Paragraph 5.02; or
(c) Borrower or any Material Subsidiary 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) Business Days
after the earlier of the date Borrower obtains knowledge or notice
of such failure or the date Administrative Agent gives Borrower
notice of such failure; or
(d) Any written representation, warranty, certificate,
information or other statement (financial or otherwise) made or
furnished by Borrower or any of its Subsidiaries to any Agent or
any Bank in or in connection with this Agreement or any of the
other Credit Documents shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished; or
(e) Borrower or any of Borrower's Subsidiaries (i) shall
fail to make a payment or payments in an aggregate amount of
$1,000,000 or more when due under the terms of any bond, debenture,
note or other evidence of indebtedness to be paid by such Person
(excluding this Agreement and the other Credit Documents or any
intercompany Indebtedness between Borrower and any of its
Subsidiaries, but including any other evidence of indebtedness of
Borrower or any of its Subsidiaries to any Bank) and such failure
shall continue beyond any period of grace provided with respect
thereto, or (ii) shall fail to make any other payment or payments
when due under or otherwise 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 indebtedness in an aggregate
amount of $5,000,000 or more to become due prior to its stated date
of maturity; or
(f) Borrower or any of Borrower's Material Subsidiaries
shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in
writing its inability, to pay its debts generally as they mature,
(iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated in full or in part,
(v) become insolvent (as such term may be defined or interpreted
under any applicable statute), (vi) commence a voluntary case or
other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case
or other proceeding commenced against it, or (vii) take any action
for the purpose of effecting any of the foregoing; or
(g) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of Borrower or any of Borrower's
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 Borrower's Subsidiaries or the debts thereof
under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief
entered or such proceeding shall not be dismissed or discharged
within sixty (60) days of commencement; or
(h) (i) A final judgment or order for the payment of money
in excess of $5,000,000 (exclusive of amounts which are covered by
insurance issued by an insurer 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 thirty (30) 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
having a value in excess of $5,000,000 shall be issued or levied
against 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 thirty (30) 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, the
effect of which is or could reasonably be expected to be to
interfere with, hinder or impair in any material respect the
practical or effective realization of the rights, benefits or
remedies of the Agents or the Banks under any Credit Documents
taken as a whole; or
(j) Any Reportable Event occurs 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, or any Employee Benefit Plan shall be terminated with
unfunded liabilities within the meaning of Title IV of ERISA or a
trustee shall be appointed by the PBGC to administer any Employee
Benefit Plan, in each case which could reasonably be expected to
have a Material Adverse Effect; or
(k) Any Change of Control shall occur; or
(l) Any event or condition which Required Banks determine
is reasonably likely to have a Material Adverse Effect shall occur
or exist and Administrative Agent shall notify Borrower in writing
of such determination and the basis therefor.
(Any of the events or conditions set forth in Subparagraphs 6.01(a)-(l),
prior to the giving of any required notice or the expiration of any
specified grace period, shall constitute a "Default" hereunder.)
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, Administrative Agent may, with the consent of the
Required Banks, or shall, upon instructions from the Required Banks, by
written notice to Borrower, (a) terminate the Commitments and the
obligations of the Banks to make Loans and/or (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. 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 and the obligations
of the Banks to make Loans shall automatically terminate and (2) all
outstanding Obligations payable by Borrower hereunder 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 or in the Notes to the contrary
notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, Administrative Agent
may
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, Administrative Agent shall notify
each Bank of such action.
SECTION VII. AGENTS AND RELATIONS AMONG BANKS.
7.01. Appointment, Powers and Immunities. Each Bank hereby
appoints and authorizes Administrative Agent and the Managing Agents to
act as its agents hereunder and under the other Credit Documents with
such powers as are expressly delegated to Administrative Agent and the
Managing Agents by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Neither Administrative Agent nor any Managing Agent shall have
any duties or responsibilities except those expressly set forth in this
Agreement or in any other Credit Document, be a trustee for any Bank or
have any fiduciary duty to any Bank. Notwithstanding anything to the
contrary contained herein, neither Administrative Agent nor any Managing
Agent shall be required to take any action which is contrary to this
Agreement or any other Credit Document or applicable law. Neither
Administrative Agent nor any Managing Agent nor any Bank shall be
responsible to any other Agent or Bank for any recitals, statements,
representations or warranties made by Borrower or any of Borrower's
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 to perform its obligations
hereunder or thereunder. Administrative Agent and the Managing Agents
may employ agents and attorneys-in-fact and shall not be responsible to
any Bank for the negligence or misconduct of any such agents or
attorneys-in-fact selected by them with reasonable care. None of the
Administrative Agent, the Managing Agents or their directors, officers,
employees or agents shall be responsible to any Bank 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 willful misconduct. Except as
otherwise provided under this Agreement, Administrative Agent shall take
such action with respect to the Credit Documents as shall be directed by
the Required Banks. The Administrative Agent shall promptly furnish to
each Bank copies of all material documents, reports, certificates,
financial statements and notices furnished to Administrative Agent by
Borrower; provided, however, that Administrative Agent shall not be
liable to any Bank for its failure to provide copies of such material
documents, reports, certificates, financial statements and notices
unless such failure constitutes gross negligence or willful misconduct
by the Administrative Agent.
7.02. Reliance by Agents. Administrative Agent and the Managing
Agents shall be entitled to rely upon any certificate, notice or other
document (including any cable, telegram, facsimile or telex) believed by
them 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 Administrative Agent and the Managing Agents with
reasonable care. As to any other matters not expressly provided for by
this Agreement, neither Administrative Agent nor any Managing Agent
shall be required to take any action or exercise any discretion, but
Administrative Agent shall be required to act or to refrain from acting
upon instructions of the Required Banks and shall in all cases be fully
protected by the Banks in acting, or in refraining from acting,
hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto
shall be binding on the Administrative Agent and all of the Managing
Agents and Banks.
7.03. Defaults. Neither Administrative Agent nor any Managing
Agent shall be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default unless Administrative Agent and the
Managing Agents have received a notice from a Bank or Borrower,
referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "Notice of Default". If
Administrative Agent receives such a notice of the occurrence of a
Default or Event of Default, Administrative Agent shall give prompt
notice thereof to the Managing Agents and the Banks. Administrative
Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; provided,
however, that until Administrative Agent shall have received such
directions, Administrative 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 Banks.
7.04. Indemnification. Without limiting the Obligations of
Borrower hereunder, each Bank agrees to indemnify Administrative Agent
and the Managing Agents, ratably in accordance with such Bank's
Proportionate Share, 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 Administrative Agent and the
Managing Agents 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 Bank shall be liable for any of the foregoing to the
extent they arise from Administrative Agent and the Managing Agents'
gross negligence or willful misconduct. Administrative Agent and the
Managing Agents 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 Banks 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 Bank under
this Paragraph 7.04 shall survive the payment and performance of the
Obligations, the termination of this Agreement and any Bank ceasing to
be
a party to this Agreement.
7.05. Non-Reliance. Each Bank represents that it has,
independently and without reliance on Administrative Agent, any Managing
Agent or any other Bank, 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 Administrative Agent, any
Managing Agent or any Bank, 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 Administrative Agent nor any Managing Agent nor any
Bank shall be required to keep any other Agent or Bank informed as to
the performance or observance by Borrower or 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 Banks by Administrative Agent hereunder, neither any
Administrative Agent nor any Managing Agent nor any Bank shall have any
duty or responsibility to provide any Agent or Bank with any credit or
other information concerning Borrower or its Subsidiaries, which may
come into the possession of any Agent or Bank or any of its or their
Affiliates.
7.06. Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as
provided below, Administrative Agent may resign at any time by giving
notice thereof to the Banks, and Administrative Agent may be removed at
any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Required Banks shall have the right to
appoint a successor Administrative Agent, which Administrative Agent
shall be reasonably acceptable to Borrower. If no successor
Administrative Agent shall have been appointed by the Required Banks and
shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent's giving of notice of resignation or the
Required Banks' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be (a) a bank having a
combined capital, surplus and retained earnings of not less than U.S.
$500,000,000 and (b) shall be reasonably acceptable to Borrower;
provided, however, that Borrower shall have no right to approve a
successor Agent which is a Bank if an Event of Default has occurred and
is continuing. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative 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 Administrative Agent.
7.07. Removal of Managing Agents. If, at any time, any Managing
Agent's share of the total credit facilities provided by all Banks
hereunder is less than seven percent (7%), such Managing Agent may be
removed by Borrower upon thirty (30) days prior written notice from
Borrower to Administrative Agent and such Managing Agent. Upon any such
removal, Borrower shall, at its election, have the right to appoint
another Bank as successor to such removed Managing Agent, which
successor Managing Agent shall be reasonably acceptable to the Required
Banks. If no successor Managing Agent is appointed for any removed
Managing Agent, all rights, powers and privileges vested in the Agents
hereunder shall be exercised by Administrative Agent and the remaining
Managing Agent(s) or, if no Managing Agent remains, by Administrative
Agent alone. Upon the acceptance of any appointment as a Managing Agent
hereunder by a successor Managing Agent, such successor Managing Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the removed Managing Agent, and the
removed Managing Agent shall be discharged from its duties and
obligations hereunder. After any Managing Agent's removal hereunder as
a Managing 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 a Managing Agent. For the purposes
of this Paragraph 7.07, a Managing Agent's share of the total credit
facilities provided by all Banks hereunder at any time shall be (a) if
Loans are then outstanding, (i) the aggregate principal amount of all
Loans then outstanding which are held by such Managing Agent and its
Affiliates as a Bank or as Banks hereunder, divided by (ii) the
aggregate principal amount of all Loans then outstanding held by all
Banks or (b) if no Loans are then outstanding, the aggregate
Proportionate Share at such time of such Managing Agent and its
Affiliates as a Bank or as Banks hereunder.
7.08. Authorization. Administrative Agent is hereby authorized by
the Banks to execute, deliver and perform, each of the Credit Documents
to which Administrative Agent is or is intended to be a party and each
Bank agrees, subject to the terms of this Agreement, to be bound by all
of the agreements of Administrative Agent contained in the Credit
Documents.
7.09. Agents in Their Individual Capacities. Each 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 such Agent were not an Agent hereunder. With
respect to Loans made by ABN, Barclays and CIBC as Banks, ABN, Barclays
and CIBC shall have the same rights and powers under this Agreement and
the other Credit Documents as any other Bank and may exercise the same
as though they were not Agents.
7.10. Agents' Communications Binding Upon Banks. Subject to the
terms of this Agreement, the Banks agree that written communications
from Administrative Agent and the Managing Agents to Borrower on behalf
of the Banks shall be binding upon the Banks.
7.11. No Obligations of Borrower. Nothing contained in this
Article VII shall be deemed to impose upon Borrower any obligation in
respect of the due and punctual performance by any Agent of its
obligations to the Banks under any provision of this Agreement, and
Borrower shall have no liability to any Agent or Bank in respect of any
failure by any Agent or Bank to perform any of their respective
obligations to each other under this Agreement. Without limiting the
generality of the foregoing sentence, where any provision of this
Agreement relating to the payment of any amounts due and owing under the
Loan Documents provides that such payments shall be made by Borrower to
the Administrative Agent for the account of the Banks, Borrower's
obligations to the Banks in respect of such payments shall be deemed to
be satisfied upon the making of such payments to Administrative Agent in
the manner provided by this Agreement.
7.12. Co-Agents. None of the Banks identified herein as a "co-
agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement or any other Credit Document
other than those applicable to all Banks as such. Without limiting the
foregoing, none of the Banks so identified as a "co-agent" shall have or
be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the
Banks identified as "co-agent" in deciding to enter into this Agreement
or in taking or not taking action hereunder.
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 Bank or any Agent under this Agreement or the other
Credit Documents shall be in writing and faxed, mailed or delivered, if
to Borrower or Administrative Agent at its respective facsimile number
or address set forth below or, if to any Bank, at the address or
facsimile number specified beneath the heading "Address for Notices"
under the name of such Bank 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 second 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 Administrative Agent under Section II shall not be
effective until received by such Person.
Administrative Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
Telephone: (212) 856-3695
Facsimile: (212) 856-3799
Borrower: Quantum Corporation
500 McCarthy Boulevard
Milpitas, CA 95035
Attn: Joseph T. Rodgers,
Executive Vice President Finance
and Secretary
Telephone: (408) 894-4212
Facsimile: (408) 894-3223
Each Notice of Borrowing, Notice of Loan Conversion and Notice of
Interest Period Selection shall be given by Borrower to Administrative
Agent to the office of Administrative Agent located at the address
referred to above during such Administrative Agent's normal business
hours; provided, however, that any such notice received by any such
Person after 1:00 P.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 any Agent or any Bank to be made by telephone or facsimile, any Agent
or any Bank may conclusively presume that anyone purporting to be a
person designated in any incumbency certificate or other similar
document received by such Agent or Bank is such a person.
8.02. Expenses. Borrower shall pay on demand, whether or not any
Loan is made hereunder, (a) all reasonable fees and expenses payable to
third parties, including each Agent's out-of-pocket expenses and
reasonable attorneys' fees and expenses, incurred by Agents in
connection with the preparation, negotiation, execution and delivery of,
and the exercise of their duties under, the commitment letter dated as
of August 18, 1994 among Borrower and the Managing Agents and the
Agents' Fee Letters and their structuring of, due diligence relating to
and syndication of the credit facilities set forth in this Agreement;
(b) all reasonable fees and expenses payable to third parties, including
each Agent's out-of-pocket expenses and reasonable attorneys' fees and
expenses, incurred by Agents in connection with the preparation,
negotiation, execution, delivery and syndication of this Agreement and
the other Credit Documents, and the preparation, negotiation, execution
and delivery of amendments and waivers hereunder and thereunder; (c) all
reasonable fees and expenses payable to third parties, including
reasonable attorneys' fees and expenses, incurred by Agents in
connection with the exercise of their rights or duties under this
Agreement and the other Credit Documents; and (d) all reasonable fees
and expenses payable to third parties, including each Agent's and Bank's
out-of-pocket expenses and reasonable attorneys' fees and expenses,
incurred by any Agent or Bank in the enforcement or attempted
enforcement of any of the Obligations or in preserving any of Agents' or
the Banks' rights and remedies (including 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). The
obligations of Borrower under this Paragraph 8.02 shall survive the
payment and performance of the Obligations and the termination of this
Agreement.
8.03. Indemnification. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and hold harmless Agents,
the Banks 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 (a) any use by Borrower of any proceeds of the Loans,
(b) any violation or alleged violation of any Requirement of Law by
Borrower or any of its Affiliates, (c) any Default or Event of Default,
(d) the DEC Acquisition or any other acquisition or proposed acquisition
by Borrower or any of its Subsidiaries of the stock or assets (in whole
or in part) of any other Person or (e) the execution, delivery and
performance of this Agreement and the other Credit Documents by any of
the Indemnitees (unless arising out of any violation by any of the
Agents, the Banks or any of their Affiliates of any applicable law
governing its banking powers), 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 any Agent or any Bank believes is covered
by this indemnity, such Agent or such Bank shall give Borrower prompt
written notice of the matter (specifying with reasonable particularity
the basis therefor) and an opportunity (but not the obligation) to
participate in and defend it, at Borrower's sole cost and expense, with
legal counsel reasonably satisfactory to such Agent or such Bank, as the
case may be. Any failure or delay of any Agent or any Bank to notify
Borrower of any such suit, claim or demand as required by this Paragraph
8.03 or to cooperate in the defense thereof 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 Banks; provided, however that:
(a) Any amendment, waiver or consent which (i) increases the
Total Revolving Loan Commitment or the Total Term Loan Commitment,
(ii) extends the Maturity Date, (iii) reduces the principal of or
interest on any Loan or any fees or other amounts payable for the
account of the Banks hereunder, (iv) postpones any date fixed for
any payment of the principal of or interest on any Loans or any
fees or other amounts payable for the account of the Banks
hereunder or thereunder, (v) amends this Paragraph 8.04, (vi)
releases any substantial part of the Collateral (other than sales
or dispositions of assets permitted under Subparagraph 5.02(c)) or
(vii) amends the definition of Required Banks must be in writing
and signed or approved in writing by all Banks;
(b) Any amendment, waiver or consent which increases or
decreases the Proportionate Share of any Bank must be in writing
and signed by such Bank; and
(c) Any amendment, waiver or consent which affects the
rights or obligations of any Agent must be in writing and signed by
such Agent.
No failure or delay by any Agent or any Bank 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 Banks, Agents, 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 Agents and each Bank. All references in this Agreement
to any Person shall be deemed to include all successors and assigns
of such Person.
(b) Participations. Any Bank 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 Bank, any Note held by such Bank, any
Commitment of such Bank or any other interest of such Bank under
this Agreement and the other Credit Documents. In the event of any
such sale by a Bank of participating interests to a Participant,
such Bank's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Bank shall remain
solely responsible for the performance thereof, such Bank shall
remain the holder of any such Note for all purposes under this
Agreement and Borrower, such Bank shall retain the right to approve
amendments and waivers and other voting rights hereunder and Agents
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement; provided, however, that any agreement pursuant to which
any Bank sells a participating interest to a Participant may
require the selling Bank to obtain the consent of such Participant
in order for such Bank 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 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 Bank 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
Administrative Agent, (ii) no Participant shall have any rights
under this sentence which are greater than those of the selling
Bank and (iii) such rights of setoff shall be subject to the
obligation of such Participant to share with the Banks, and the
Banks agree to share with such Participant, as provided in
Subparagraph 2.09(b). Borrower also agrees that any Bank 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 Bank under
Paragraph 2.10, Paragraph 2.11, and Paragraph 2.12, as if such Bank
had not made such transfer.
(c) Assignments. Any Bank may, in the ordinary course of
its commercial banking business and in accordance with applicable
law, at any time, sell and assign to any Bank, any affiliate of a
Bank or any other bank or financial institution (individually, an
"Assignee Bank") 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 S (an
"Assignment Agreement"), executed by each Assignee Bank and such
assignor Bank (an "Assignor Bank") and delivered to Administrative
Agent for its acceptance and recording in the Register; provided,
however, that:
(i) Without the written consent of Borrower and
Administrative Agent (which consent of Borrower and
Administrative Agent shall not be unreasonably withheld), no
Bank may make any Assignment to any Assignee Bank which is
not, immediately prior to such Assignment, a Bank hereunder
or an affiliate which controls, is controlled by or is under
common control with a Bank hereunder;
(ii) Without the written consent of Borrower and
Administrative Agent (which consent of Borrower may be
withheld in its sole and absolute discretion but which
consent of Administrative Agent shall not be unreasonably
withheld), no Bank may make any Assignment to any Assignee
Bank which is not, immediately prior to such Assignment, a
Bank hereunder or an affiliate which controls, is controlled
by or is under common control with a Bank hereunder if
(A) the principal amount of such Assignment is less than the
lesser of 4.29% of the Aggregate Credit Facilities at the
time of such Assignment or all of the Assignor Bank's Loans
and Commitments hereunder or (B) if, after giving effect to
such Assignment, the sum of the Assignor Bank's Revolving
Loan Commitment and Term Loan would be greater than zero but
less than 4.29% of the Aggregate Credit Facilities at the
time of such Assignment;
(iii) Without the written consent of Borrower and
Administrative Agent (which consent of Borrower and
Administrative Agent shall not be unreasonably withheld), no
Bank may make any Assignment to any Assignee Bank which is,
immediately prior to such Assignment, a Bank hereunder or an
affiliate which controls, is controlled by or is under common
control with a Bank hereunder if the principal amount of such
Assignment is less than the lesser of Five Million Dollars
($5,000,000) or all of the Assignor Bank's Loans and
Commitments hereunder; and
(iv) No Bank may make any Assignment which does not
assign and delegate an equal pro rata interest in such Bank's
Revolving Loans, Term Loans, Commitments and all other
rights, duties and obligations of such Bank 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
Bank thereunder shall be a Bank 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 Bank under
this Agreement and the other Credit Documents, and (B) the
Assignor Bank thereunder shall be a Bank with a Proportionate Share
as set forth on Attachment 1 to such Assignment Agreement, or, if
the Proportionate Share of the Assignor Bank has been reduced to
0%, the Assignor Bank shall cease to be a Bank; provided, however,
that any such Assignor Bank which ceases to be a Bank 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 Bank, the deletion of each
Assignor Bank which reduces its Proportionate Share to 0% and the
resulting adjustment of Proportionate Shares arising from the
purchase by each Assignee Bank of all or a portion of the rights
and obligations of an Assignor Bank 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 Administrative Agent,
in exchange for the surrendered Revolving Loan Note and Term Loan
Note of the Assignor Bank thereunder, a new Revolving Loan Note and
Term Loan Note to the order of each Assignee Bank thereunder (with
each new Revolving Loan Note to be in an amount equal to the
Revolving Loan Commitment assumed by such Assignee Bank and each
new Term Loan Note to be in the original principal amount of the
Term Loan then held by such Assignee Bank) and, if the Assignor
Bank is continuing as a Bank hereunder, a new Revolving Loan Note
and Term Loan Note to the order of the Assignor Bank (with the new
Revolving Loan Note to be in an amount equal to the Revolving Loan
Commitment retained by it and the new Term Loan Note to be in the
original principal amount of the Term Loan retained by it). Each
such new Note shall be dated the Closing Date and otherwise be in
the form of the Note replaced thereby (provided that Borrower shall
not be obligated to pay any additional interest to any Assignee
Bank in respect to any principal payments made prior to the
Effective Date of the Assignment to such Assignee Bank). The Notes
surrendered by the Assignor Bank shall be returned by
Administrative Agent to Borrower marked "replaced". Each Assignee
Bank which was not previously a Bank 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
Bank, deliver to Borrower and Administrative Agent either 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 Bank is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes.
(d) Register. Administrative 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 Banks and the
Proportionate Shares of each Bank from time to time. The entries
in the Register shall be conclusive in the absence of manifest
error, and Borrower, Agents and the Banks 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 Bank 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 Bank and an Assignee Bank (and,
to the extent required by Subparagraph 8.05(c), by Borrower and
Administrative Agent), together with payment to Administrative
Agent by Assignor Bank of a registration and processing fee of
$3,500 if such assignment occurs more than thirty (30) days after
the Closing Date, Administrative 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
Banks and Borrower. Administrative Agent may, from time to time at
its election, prepare and deliver to the Banks and Borrower a
revised Schedule I reflecting the names, addresses and respective
Proportionate Shares of all Banks then parties hereto.
8.06. Setoff; Security Interest.
(a) Setoff. In addition to any rights and remedies of the
Banks provided by law, each Bank shall have the right, with the
prior consent of Administrative Agent, but without prior notice to
or consent from Borrower, any such notice or 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, or to authorize or direct such Bank
to set-off and apply, against any indebtedness, whether matured or
unmatured, of Borrower to such Bank, any amount owing from such
Bank to Borrower (except for the Excluded Accounts), at or at any
time after, the happening of any of the above mentioned events, and
as security for such indebtedness, Borrower hereby grants to
Administrative Agent and each Bank a continuing security interest
in any and all deposits, accounts or moneys of Borrower then or
thereafter maintained with such Bank (except for the Excluded
Accounts), subject in each case to Subparagraph 2.09(b). The
aforesaid right of set-off may be exercised by any Bank 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 Bank prior to the occurrence of an Event of
Default. Any Bank which exercises its right of setoff agrees
promptly to notify Borrower after any such set-off and application
made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
(b) Security Interest. As security for the Obligations,
Borrower hereby grants to each Bank, for the benefit of all Agents
and Banks, a continuing security interest in any and all deposit
accounts or moneys of Borrower now or hereafter maintained with such
Bank (except for the Excluded Accounts). Each Bank shall have all
of the rights of a secured party with respect to such security
interest.
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.
8.09. Jury Trial. EACH OF BORROWER, THE BANKS AND AGENTS, 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.
8.11. Confidentiality. None of the Banks and Agents shall
disclose
to any Person any information with respect to Borrower or any of its
Subsidiaries which is furnished pursuant to this Agreement, except that
any Bank or Agent may disclose any such information (a) to its own
directors, officers, employees, auditors, counsel and other professional
advisors and to its Affiliates if such Bank or Agent or such Bank's or
such Agent's holding or parent company in its sole discretion determines
that any such party should have access to such information; (b) to
another Bank or Agent; (c) if generally available to the public; (d) if
required or appropriate in any report, statement or testimony submitted
to any Governmental Authority having or claiming to have jurisdiction
over such Bank or Agent; (e) if required or appropriate in response to
any summons or subpoena or in connection with any litigation, to the
extent permitted or deemed advisable by counsel; (f) to comply with any
Requirement of Law applicable to such Bank or Agent; (g) to any
Participant or Assignee Bank or any prospective Participant or Assignee
Bank, provided that such Participant or Assignee or prospective
Participant or Assignee agrees in writing to be bound by this
Paragraph 8.12 prior to disclosure; or (h) otherwise with the prior
consent of Borrower; provided, however, that any disclosure made in
violation of this Agreement shall not affect the obligations of Borrower
and its Subsidiaries under this Agreement and the other Credit
Documents.
[The next page is the first signature page.]
IN WITNESS WHEREOF, Borrower, the Banks and Agents have caused
this
Agreement to be executed as of the day and year first above written.
BORROWER: QUANTUM CORPORATION
By:/s/ JOSEPH T. RODGERS
Title: EXECUTIVE VICE PRESIDENT, FINANCE
AND SECRETARY
MANAGING AGENTS: ABN AMRO BANK N.V., San Francisco
International Branch,
AS a Managing Agent
By:/s/ ROBERT HARTINGER
Title:GROUP VICE PRESIDENT
By:/s/ ROBIN S. YIM
Title: VICE PRESIDENT
BARCLAYS BANK PLC,
As a Managing Agent
By:/s/ JAMES K. ZACK
Title: DIRECTOR
CIBC INC.,
As a Managing Agent
By:/s/ STAN SAKAI
Title:VICE PRESIDENT
<PAGE>
ADMINISTRATIVE AGENT: CANADIAN IMPERIAL BANK OF COMMERCE,
As Administrative Agent
By:/s/ STAN SAKAI
Title: VICE PRESIDENT
BANKS: ABN AMRO BANK N.V., San Francisco
International Branch,
As a Bank
By:/s/ ROBERT HARTINGER
Title:GROUP VICE PRESIDENT
By:/s/ ROBIN S. YIM
Title: VICE PRESIDENT
BARCLAYS BANK PLC,
As a Bank
By:/s/ JOHN B. ALTER
Title: ASSOCIATE DIRECTOR
By:/s/ JAMES K. ZACK
Title:DIRECTOR
CIBC INC.,
As a Bank
By:/s/ STAN SAKAI
Title:VICE PRESIDENT
<PAGE>
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
As a co-agent and as a Bank
By:/s/ KEVIN MCMAHON
Title:VICE PRESIDENT
CHEMICAL BANK,
As a co-agent and as a Bank
By:/s/ TERRENCE J. ANDERSON
Title:VICE PRESIDENT
THE FIRST NATIONAL BANK OF BOSTON,
As a co-agent and as a Bank
By:/s/ ELIZABETH C. EVERETT
Title:VICE PRESIDENT
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
As a co-agent and as a Bank
By:/s/ MAKOTO MASUDA
Title:DEPUTY GENERAL MANAGER
<PAGE>
THE BANK OF NOVA SCOTIA,
As a Bank
By:/s/ CHRIS JOHNSON
Title:REPRESENTATIVE
FLEET BANK OF MASSACHUSETTS, N.A.,
As a Bank
By:/s/ THOMAS W. DAVIES
Title:VICE PRESIDENT
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
As a Bank
By:/s/ YUTAKA KAMISAWA
Title:DEPUTY GENERAL MANAGER
THE NIPPON CREDIT BANK, LTD.,
As a Bank
By:/s/ KENNETH W. MCNERNEY
Title:VICE PRESIDENT & SENIOR MANAGER
By:/s/ AKIHIRO YAMASAKI
Title:VICE PRESIDENT
SANWA BANK CALIFORNIA,
As a Bank
By:/s/ ROBERT R. SHUTT
Title:VICE PRESIDENT
SHAWMUT BANK, N.A.,
As a Bank
By:/s/ FRANK BENESH
Title: DIRECTOR
THE SUMITOMO BANK, LIMITED,
As a Bank
By:/s/ KAZUAKI KAWAKATSU
Title: GENERAL MANAGER
By:/s/ HERMAN WHITE JR.
Title:VICE PRESIDENT
UNION BANK,
As a Bank
By:/s/ NANCI BRUSATI DIAS
Title:VICE PRESIDENT AND DISTRICT MANAGER
20819542-
121594-
<PAGE>
EXHIBIT A
NOTICE OF REVOLVING LOAN BORROWING
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement,
dated as of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative 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 irrevocably hereby requests a Revolving Loan
Borrowing upon the following terms:
(a) The principal amount of the requested Revolving Loan
Borrowing is to be $----------;
(b) The requested Revolving Loan Borrowing is to consist
of Revolving ["Base Rate" or "LIBOR"] Loans;
(c) If the requested Revolving Loan Borrowing is to
consist of Revolving LIBOR Loans, the initial Interest Period for such
Revolving Loans will be [---------- month[s]][one week]; and
(d) The date of the requested Revolving Loan Borrowing is
to be ----------, ----.
3. Borrower hereby certifies to the Agents and the Banks
that, on the date of this Notice of Revolving Loan Borrowing and after
giving effect to the requested Revolving Loan Borrowing:
(a) The representations and warranties of Borrower and its
Subsidiaries 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 are true as of such date);
and
(b) No Default or Event of Default has occurred and is
continuing or will result from the requested Borrowing.
4. Please disburse the proceeds of the requested
Revolving Loan Borrowing to --------------------------------------------
- -
- --------------------------------------------------------------.
IN WITNESS WHEREOF, Borrower has executed this Notice of Revolving
Loan Borrowing on the date set forth above.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT B
NOTICE OF REVOLVING LOAN CONVERSION
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement,
dated as of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative 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 Revolving
Loan Borrowing as follows:
(a) The Revolving Loan Borrowing to be converted consists
of Revolving ["Base Rate" or "LIBOR"] Loans in the aggregate principal
amount of $---------- which were initially advanced to Borrower on -----
- -----, ----;
(b) The Revolving Loans in the Revolving Loan Borrowing
are to be converted into Revolving ["Base Rate" or "LIBOR"] Loans;
(c) If such Revolving Loans are to be converted into
Revolving LIBOR Loans, the initial Interest Period for such Revolving
Loans commencing upon conversion will be [---------- month[s]][one
week]; and
(d) The date of the requested conversion is to be --------
- --, ----.
3. If the requested conversion constitutes a Credit
Event, Borrower hereby certifies to the Agents and the Banks that, on
the date of this Notice of Revolving Loan Conversion, and after giving
effect to the requested conversion:
(a) The representations and warranties of Borrower and its
Subsidiaries 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 are true as of such date);
and
(b) No Default or Event of Default has occurred and is
continuing or will result from the requested conversion.
IN WITNESS WHEREOF, Borrower has executed this Notice of Revolving
Loan Conversion on the date set forth above.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT C
NOTICE OF REVOLVING LOAN INTEREST PERIOD SELECTION
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement,
dated as of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative 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 Revolving Loan Borrowing as follows:
(a) The Revolving Loan Borrowing for which a new Interest
Period is to be selected consists of Revolving 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
Revolving Loans is , ; and
(c) The next Interest Period for such Revolving Loans
commencing upon the last day of the current Interest Period is to be [--
- ------- month[s]][one week].
3. Borrower hereby certifies to the Agents and the Banks
that, on the date of this Notice of Revolving Loan Interest Period
Selection, and after giving effect to the requested selection:
(a) The representations and warranties of Borrower and its
Subsidiaries 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 are true as of
such date); and
(b) No Default or Event of Default has occurred and is
continuing or will result from the requested selection.
IN WITNESS WHEREOF, Borrower has executed this Notice of Revolving
Loan Interest Period Selection on the date set forth above.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT D
NOTICE OF TERM LOAN BORROWING
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement,
dated as of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, the "Administrative Agent").
Unless otherwise indicated, all terms defined in the Credit Agreement
have the same respective meanings when used herein.
2. Pursuant to Subparagraph 2.02(b) of the Credit
Agreement, Borrower hereby requests the Term Loan Borrowing, in the
aggregate principal amount of -------------- Dollars ($------), to be
made on -----------, 1994 (the "Closing Date").
3. Borrower hereby certifies to the Agents and the Banks
that, on the date of this Notice of Term Loan Borrowing and after giving
effect to the requested Term Loan Borrowing:
(a) The representations and warranties of Borrower and its
Subsidiaries 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 are true as of such date);
and
(b) No Default or Event of Default has occurred and is
continuing or will result from the requested Borrowing.
IN WITNESS WHEREOF, Borrower has executed this Notice of Term Loan
Borrowing on the date set forth above.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT E
NOTICE OF TERM LOAN CONVERSION
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement,
dated as of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, the "Administrative Agent").
Unless otherwise indicated, all terms defined in the Credit Agreement
have the same respective meanings when used herein.
2. Pursuant to Subparagraph 2.02(d) of the Credit
Agreement, Borrower hereby requests to convert a Portion of the Term
Loan Borrowing as follows:
(a) The Portion of the Term Loan Borrowing to be converted
is the Term ["Base Rate" or "LIBOR"] Borrowing Portion in the aggregate
principal amount of $---------- [which has a current Interest Period of
- ---- month[s] expiring on ----------, ----];
(b) The Portion to be converted is to be converted into
[a] Portion(s) of [a] Type(s), in [an] amount(s), and, if such
Portion(s) is [are] to include a Term LIBOR Borrowing Portion(s), the
Interest Period(s) therefor is [are] as follows:
Type Amount Interest Period
---- $----- -----------------;
---- $----- -----------------;
---- $----- -----------------;
---- $----- -----------------; and
(c) The date of the requested conversion is to be --------
- --, ----.
3. If the requested conversion constitutes a Credit
Event, Borrower hereby certifies to the Agents and the Banks that, on
the date of this Notice of Term Loan Conversion and after giving effect
to the requested conversion:
(a) The representations and warranties of Borrower and its
Subsidiaries 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 are true as of such date);
and
(b) No Default or Event of Default has occurred and is
continuing or will result from the requested conversion.
IN WITNESS WHEREOF, Borrower has executed this Notice of Term Loan
Conversion on the date set forth above.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT F
NOTICE OF TERM LOAN INTEREST PERIOD SELECTION
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement,
dated as of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Credit Agreement have the
same respective meanings when used herein.
2. Pursuant to Subparagraph 2.02(e) of the Credit
Agreement, Borrower hereby irrevocably selects a new Interest Period for
the Portion of the Term Loan Borrowing as follows:
(a) The Portion of the Term Loan Borrowing for which a new
Interest Period is to be selected consists of Term LIBOR Loans in the
aggregate principal amount of $ which were initially [advanced
to] [converted by] Borrower on , ;
(b) The last day of the current Interest Period for such
Portion of the Term Loan Borrowing is , ; and
(c) The next Interest Period for such Portion of the Term
Loan Borrowing commencing upon the last day of the current Interest
Period is to be [---------- month[s]][one week].
3. Borrower hereby certifies to the Agents and the Banks
that, on the date of this Notice of Term Loan Interest Period Selection,
and after giving effect to the requested selection:
(a) The representations and warranties of Borrower and its
Subsidiaries 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 are true as of such date);
and
(b) No Default or Event of Default has occurred and is
continuing or will result from the requested selection.
IN WITNESS WHEREOF, Borrower has executed this Notice of Term Loan
Interest Period Selection on the date set forth above.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT G
REVOLVING LOAN NOTE
$-------------- ---------, -------
------------, 1994
FOR VALUE RECEIVED, QUANTUM CORPORATION, a Delaware corporation
("Borrower"), hereby promises to pay to the order of -------------------
- -, a -------------------- ("Bank"), the principal sum of ---------------
- --------------- DOLLARS ($----------), or such lesser amount as shall
equal the aggregate outstanding principal balance of the Revolving Loans
made by Bank 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
Bank's Applicable Lending Office, to Administrative 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 Bank to record on the schedule(s)
annexed to this note the date and amount of each Revolving 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 Bank to make any such
notation shall not affect Borrower's obligations hereunder.
This note is one of the Revolving Loan Notes referred to in the
Credit Agreement, dated as of October 3, 1994, among Borrower, Bank and
the other financial institutions from time to time parties thereto
(collectively, the "Banks"), ABN AMRO Bank N.V., San Francisco
International Branch, Barclays Bank PLC and CIBC Inc., as managing
agents for the Banks, and Canadian Imperial Bank of Commerce, as
administrative and collateral agent for the Banks. 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. 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. Terms used herein have the
meanings assigned to those terms in the Credit Agreement, unless
otherwise defined herein.
Borrower shall pay all reasonable fees and expenses payable to
third parties, including reasonable attorneys' fees, incurred by Bank in
the enforcement or attempt to enforce any of Borrower's obligations
hereunder not performed when due. Borrower hereby waives notice of
presentment, demand, 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.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Type of Amount of Interest Principal Paid Principal Notation
Date Loan Loan Period or Prepaid Balance Made By
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
<PAGE>
EXHIBIT H
TERM LOAN NOTE
$----------- --------, -------
------------, 1994
FOR VALUE RECEIVED, QUANTUM CORPORATION, a Delaware corporation
("Borrower"), hereby promises to pay to the order of -------------------
- -, a -------------------- ("Bank"), the principal sum of ---------------
- --------------- DOLLARS ($----------) in installments, payable as
provided in the Credit Agreement referred to below (as amended from time
to time, the "Credit Agreement"), and to pay interest on the outstanding
balance of said sum at the rates and on the dates provided in the Credit
Agreement; provided, however, that all principal and accrued interest
remaining unpaid shall be payable in full on the Maturity Date.
Borrower shall make all payments hereunder, for the account of
Bank's Applicable Lending Office, to Administrative Agent as indicated
in the Credit Agreement, in lawful money of the United States and in
same day or immediately available funds.
This note is one of the Term Loan Notes referred to in the Credit
Agreement, dated as of October 3, 1994, among Borrower, Bank and the
other financial institutions from time to time parties thereto
(collectively, the "Banks"), ABN AMRO Bank N.V., San Francisco
International Branch, Barclays Bank PLC and CIBC Inc., as managing
agents for the Banks, and Canadian Imperial Bank of Commerce, as
administrative and collateral agent for the Banks. 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. 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. Terms used herein have the
meanings assigned to those terms in the Credit Agreement, unless
otherwise defined herein.
Borrower shall pay all reasonable fees and expenses payable to
third parties, including reasonable attorneys' fees, incurred by Bank in
the enforcement or attempt to enforce any of Borrower's obligations
hereunder not performed when due. Borrower hereby waives notice of
presentment, demand, 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.
QUANTUM CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT I
MORTGAGE
RECORDING REQUESTED BY
AND WHEN RECORDED, RETURN TO:
Orrick, Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
Attn: David C. Spielberg
- ----------------------------------------------------------------------
333 South Street
Shrewsbury, Massachusetts
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS AND FIXTURE FILING
THIS MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF
RENTS AND FIXTURE FILING (this "Mortgage"), is executed on September ---
, 1994 to be effective as of October 3, 1994, by QUANTUM CORPORATION, a
Delaware corporation, as mortgagor ("Mortgagor"), to CANADIAN IMPERIAL
BANK OF COMMERCE, as administrative and collateral agent for the ratable
benefit of the Banks and the Agents under the Credit Agreement (as
defined below), as mortgagee ("Mortgagee"). All capitalized terms used
herein and not otherwise defined herein shall have the meanings set
forth in the Credit Agreement.
GRANT
Mortgagor hereby grants, conveys, transfers, and assigns to
Mortgagee with MORTGAGE COVENANTS and power of sale and right of entry
and possession, all of Mortgagor's right, title and interest, whether
now owned or hereafter acquired, in or to the property and rights listed
in paragraphs (a) through (i) below (hereinafter collectively referred
to as the "Property"):
(a) That certain real property located in the Town of
Shrewsbury, County of Worcester, Commonwealth of Massachusetts,
described on Exhibit A attached hereto and by this reference
incorporated herein (the "Site");
(b) All improvements, buildings, and structures, now or
hereafter located in, on, or under the Site, and all additions,
enlargements, extensions, modifications, repairs, replacements
and improvements thereto, now or hereafter located in, on, or under the
Site (collectively, the "Improvements"); and to the extent permitted by
law, the name or names, if any, as may now or hereafter be used for any
or all of the Improvements, and the goodwill associated therewith;
(c) All (i) easements, licenses, rights-of-way, strips and
gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights, development rights,
reversions, remainders, liberties, tenements, hereditaments, and
appurtenances of any nature whatsoever, including without limitation all
licenses, approvals, permits, variances, permissive uses, consents and
other agreements, that now or hereafter in any way belong, relate, or
pertain to the Site or the Improvements, (ii) land lying in the bed of
any street, road or avenue, proposed, opened, or abandoned that street,
road or avenue, proposed, opened, or abandoned that adjoins the Site to
the center line thereof, and (iii) other estates, rights, titles,
interests, property, possessions, claims, and demands whatsoever, both
at law and in equity, which Mortgagor now or hereafter possesses in and
to or relating to all or part of the Site and the Improvements, together
with the appurtenances thereto (collectively, the "Related Rights");
(d) All fixtures, including, but not limited to, all
heating, air conditioning, plumbing, lighting, electrical,
communications and elevator equipment, and all landscaping and office
furnishings and equipment, attached or affixed to the Site or the
Improvements and all accessions thereto, renewals, and replacements
thereof and substitutions therefore, of every kind and nature whatsoever
now or hereafter owned by Mortgagor, or in which Mortgagor now or
hereafter has an interest, which are now or hereafter located in, on, or
under the Site or the Improvements (collectively, the "Fixtures"; and
together with the Site, the Improvements, and the Related Rights, the
"Real Property");
(e) All awards or payments, including interest thereon,
which may heretofore and hereafter be made with respect to the Property
to the extent actually received by Mortgagor, whether from the exercise
of the right of eminent domain (including, but not limited to, any
transfer of the Property or part thereof made in lieu of or in
anticipation of the exercise of said right), or for any other damage to
or decrease in the value of the Property;
(f) All leases, and other agreements of every type and
nature affecting the use, enjoyment, occupancy or ownership of the
Property, or any part thereof, now or hereafter entered into
(collectively, the "Leases and Agreements") and all rents, oil and gas
or other mineral royalties, bonuses, revenues, security deposits, issues
and profits, and other payments and proceeds from the Property
(collectively, the "Rents") and all proceeds from the sale or other
disposition of the Leases and Agreements and the right to receive and
apply the Rents to the payment of the Obligations;
(g) All proceeds of and any unearned premiums on any
insurance policies covering the Property including, without limitation,
the right to receive and apply the proceeds of any insurance, judgments
(including with respect to a casualty thereto or condemnation thereof),
or settlements made in lieu thereof, for damage to the Property;
(h) The right, in the name and on behalf of Mortgagor, to
appear in and defend any action or proceeding brought with respect to
the Property and to commence any action or proceeding to protect the
interest of Mortgagee in the Property; and
(i) Any and all other, further or additional title,
estate, interest or right which may at any time be acquired by Mortgagor
in, to or relating to, and all proceeds of any or all of the property
and rights described in, paragraphs (a) through (h) above.
STATUTORY CONDITION AND POWER OF SALE
This Mortgage is made by the Mortgagor upon the STATUTORY
CONDITION, and upon the further condition that all covenants and
agreements on the part of Mortgagor herein shall be kept and fully and
seasonably performed. For any breach of the STATUTORY CONDITION or any
other condition specified herein, Mortgagee shall have the STATUTORY
POWER OF SALE.
ASSIGNMENT OF RENTS
Mortgagor absolutely and irrevocably assigns to Mortgagee
the Rents upon the terms and conditions hereinafter set forth. The
foregoing assignment shall not impose upon Mortgagee any duty to produce
Rents from the Property, and said assignment shall not cause Mortgagee
to be a "mortgagee in possession" for any purpose. This assignment of
the Rents is intended to be an absolute assignment from Mortgagor to
Mortgagee and not merely the passing of a security interest. Mortgagee
is hereby authorized to collect and receive the Rents to give proper
receipts and acquittances therefor, and to apply the same to the payment
of the Obligations. Nevertheless, Mortgagee hereby grants Mortgagor a
revocable license to collect and receive, and to use in accordance with
the provisions of the Credit Documents the Rents until the occurrence of
both (i) an Event of Default and (ii) delivery of written notice from
Mortgagee to Mortgagor that such license has been revoked. Upon delivery
of such written notice from Mortgagee to Mortgagor that the license has
been revoked, and without the necessity of Mortgagee entering upon and
taking and maintaining full control of the Property in person, by agent
or by a court appointed receiver, Mortgagee shall immediately be
entitled to possession of all Rents as the same shall become due and
payable, including, but not limited to, Rents then due and unpaid. All
such Rents thereafter collected by Mortgagor shall be held by Mortgagor
as trustee in a constructive trust for the benefit of Mortgagee only.
Mortgagor agrees that commencing upon delivery by Mortgagee of written
notice that Mortgagor's license to collect and receive Rents has been
revoked, each tenant of the Property shall make Rents payable to and pay
Rents to Mortgagee or Mortgagee's agents on Mortgagee's written demand
to each tenant, without any liability on the part of said tenant to
inquire further as to the existence of an Event of Default or a
revocation of Mortgagor's license hereunder.
To the extent Mortgagee has not received any security
deposit with respect to any Lease and Agreement, Mortgagee assumes no
responsibility for any such security deposit until such time as such
security deposit (specified as such with specific reference to the Lease
and Agreement pursuant to which deposited) may be unconditionally
transferred to Mortgagee and accepted by Mortgagee by notice to the
lessee under said Lease and Agreement. No judgment or decree which may
be entered on the Obligations shall operate or abrogate the effect of
the assignment of Rents hereby effected, but the same shall continue in
full force and effect until payment, discharge and performance in full
of all of the Obligations, and the assignment of Rents hereby effected
shall further remain in full force and effect during the pendency of any
foreclosure proceedings under this Mortgage, both before and after any
foreclosure sale, until the issuance of a deed pursuant to a foreclosure
decree. The provisions of this assignment shall be deemed a special
remedy given to Mortgagee and shall not be deemed exclusive of any of
the remedies granted elsewhere in this Mortgage but shall be deemed an
additional remedy and shall be cumulative with the remedies elsewhere
granted to Mortgagee, all of which remedies shall be enforceable
concurrently or successively.
OBLIGATIONS SECURED
Mortgagor makes the foregoing grant for the purpose of
securing the following obligations (collectively, the "Obligations"):
1. Payment to Mortgagee of all indebtedness evidenced by
and arising under that certain Credit Agreement dated October 3, 1994
(as amended from time to time, the "Credit Agreement") among Mortgagor
(as Borrower), the financial institutions from time to time parties
thereto (the "Banks"), ABN AMRO Bank, N.V., San Francisco International
Branch, Barclays Bank PLC and CIBC Inc., as managing agents for the
Banks, and Mortgagee (as Administrative Agent), providing for credit
facilities in the principal amount of THREE HUNDRED FIFTY MILLION
DOLLARS ($350,000,000), together with interest thereon as set forth in
the Credit Agreement, all Notes of Mortgagor delivered now and from time
to time pursuant thereto, and any and all amendments, modifications,
extensions or renewals thereof, including without limitation
(i) modifications of the required principal and/or interest payment
dates, deferring or accelerating said payment dates in whole or in part,
and/or (ii) modifications, extensions, renewals or reborrowings at a
different rate of interest or interest periods, whether or not any such
modification, extension or renewal is evidenced by a new or additional
promissory note or notes;
2. The observance and performance by Mortgagor of each
covenant and obligation on the part of Mortgagor to be performed
pursuant to the Credit Agreement and the other Credit Documents as the
same may be amended, modified, restated, or replaced from time to time.
3. Payment of such further sums and/or performance of
such further obligations as the then record owner of the Property
(including, without limitation, Mortgagor) may undertake to pay and/or
perform (whether as principal, surety or guarantor), for the benefit of
Mortgagee, its successors or assigns, when said borrowing and/or
obligation is evidenced by a writing or writings reciting that it or
they are so secured; and
4. The observance and performance of each covenant and
obligation of Mortgagor herein contained or incorporated herein by
reference and payment of each fee, cost and expense by Mortgagor as
herein set forth.
This Mortgage secures, inter alia, Revolving Loans to
Mortgagor, subject to the terms and conditions of the Credit Agreement
and the other Credit Documents. Notwithstanding the advance, payment
and readvance of the Revolving Loans from time to time, any Person
taking a junior mortgage or other lien upon the Property shall take such
interest subject to the rights of Mortgagee to make such Revolving Loans
without notice to such junior interest holders and with the lien of this
Mortgage continuing its first priority as to all subsequent advances
evidencing Revolving Loans, up to the maximum principal amount of
$350,000,000 for all Loans, over the rights of any such junior mortgages
or liens.
TO PROTECT THE SECURITY OF THIS MORTGAGE, THE PARTIES AGREE
AS FOLLOWS:
A. RIGHTS AND DUTIES OF THE PARTIES.
1. Title. Mortgagor warrants that (i) it has good,
record marketable, and insurable fee simple title to so much of the
Property as is real property, and good and marketable absolute title to
the balance of the Property, and that there does not exist on or with
respect to the Property any mortgage, deed of trust, security interest,
lien, pledge, or other encumbrance of any character whatsoever other
than the Permitted Liens, and without limitation on the right to
encumber, and (ii) there are no leases, occupancy agreements, tenancies,
options or other agreements, whether oral or in writing, entitling any
party other than Mortgagor to occupy or purchase all or any part of the
Real Property. Mortgagor shall forever warrant, defend and preserve
such title and the validity and priority of the lien of this Mortgage
and shall forever warrant and defend the same to Mortgagee against the
claims of all persons whomsoever.
2. Taxes and Assessments. Mortgagor shall pay, satisfy,
and discharge, at least ten (10) days prior to delinquency, all general
and special taxes, assessments, levies, charges, rents, and premiums
which are or may become a lien upon the Property, or any part thereof or
interest therein. Mortgagor shall also pay, after notice and at least
ten (10) days prior to delinquency, all taxes, assessments, levies and
charges imposed by any public authority upon Mortgagee by reason of its
interest in the Property created hereby or by reason of any payment, or
portion thereof, made to Mortgagee hereunder or pursuant to any of the
Obligations; provided, however, that Mortgagor shall have no obligation
to pay or discharge Mortgagee's business or franchise taxes, federal or
state income taxes or other taxes which are measured by and imposed upon
Mortgagee's net income. If, by virtue of any statute, regulation,
ordinance or judicial decision, Mortgagor is prohibited from paying or
released from the obligation to pay any such taxes to Mortgagee, or
Mortgagee is prohibited or precluded from enforcing any such obligation,
then, at Mortgagee's sole option, all sums and obligations secured
hereby, together with accrued interest, and without deduction or offset,
shall become immediately due and payable, notwithstanding anything
contained herein or in any law heretofore or hereinafter enacted.
3. Insurance. Mortgagor shall provide, maintain and
deliver to Mortgagee such policies of insurance as are required under
the Credit Agreement.
4. Assignments; Subleases.
(a) Mortgagor shall submit to Mortgagee for its prior
written approval any assignment of any lessee's interest under any
Leases and Agreements under which it is lessor or any sublease of all or
any part of its right, title and estate under any of the Leases and
Agreements or any other portion of the Property, including approval of
any tenant thereunder, and no such assignment or sublease shall be
effective unless and until it has been approved by Mortgagee. In the
event Mortgagee approves any such sublease, Mortgagor shall not accept
prepayments of rent for any period in excess of one month and shall
perform all covenants of the lessor under all subleases affecting the
Property or any part thereof. As used herein, "sublease" includes any
extensions or renewals thereof and any amendments thereto to which
Mortgagee has consented. Mortgagor shall not amend or terminate any
subleases without the prior written consent of Mortgagee and shall not
consent to any assignment or subletting under any subleases without the
prior written consent of Mortgagee. Mortgagor shall immediately give
notice to Mortgagee of any default under any lease or other agreement
under which it is lessor or under any of the subleases it receives or
delivers. Mortgagee shall have the right but not the obligation to cure
any default of Mortgagor upon notice under any such leases or subleases
and all amounts disbursed in connection with said cure shall be deemed
to be disbursements under the Credit Agreement and to be secured hereby.
(b) Each lease or sublease of any portion of the Mortgaged
Property shall be absolutely subordinate to the lien of this Mortgage,
but shall contain a provision satisfactory to Mortgagee that, in the
event of the exercise of the private power of sale or a judicial
foreclosure hereunder, such lease or sublease, at the option of the
purchaser at such sale, shall not be terminated, in which event the
lessee or sublessee, as the case may be, thereunder shall attorn to such
purchaser, if requested to do so, and shall enter into a new lease or
sublease, as the case may be, for the balance of the term of such
sublease then remaining upon the same terms and conditions.
5. Liens and Encumbrances. Mortgagor shall pay, at or
prior to maturity, all obligations secured by or reducible to liens and
encumbrances, other than Permitted Liens, which shall now or hereafter
encumber or appear to encumber the Property or any part thereof or
interest therein, whether senior or subordinate hereto, including,
without limitation, all claims for work or labor performed, or materials
or suppliers furnished, in connection with any work of demolition,
alteration, improvement of or construction upon the Site or the
Improvements. Mortgagor shall have the right to contest in good faith
any such obligation or claim provided such contest shall be prosecuted
diligently and in a manner not prejudicial to Mortgagee, and if a
judgment adverse to Mortgagor is obtained, such judgment shall be fully
paid or discharged within thirty (30) days after the entry of such
judgment. Upon demand by Mortgagee, Mortgagor shall defend, indemnify
and hold Mortgagee harmless against any such obligation or claim, so
contested by Mortgagor, and upon demand by Mortgagee, Mortgagor shall
make suitable provision by payment to Mortgagee or by posting a bond or
other security satisfactory to Mortgagee for the possibility that the
contest will be unsuccessful, including, if Mortgagee requests, a
one-and-one half times bond with respect to mechanics' or materialmen's
liens, if available. Such provision shall be made within ten (10) days
after demand therefor and, if made by payment of funds to Mortgagee, the
amount so deposited shall be disbursed in accordance with the resolution
of the contest either to Mortgagor or the adverse claimant. If
Mortgagor fails to post a suitable bond or other acceptable security as
provided, Mortgagee may remove or pay such lien or encumbrance at
Mortgagor's expense. Notwithstanding anything in the foregoing to the
contrary, if the lien or encumbrance to be contested is senior to the
lien of this Mortgage, Mortgagor shall, within ten (10) days after
Mortgagee's demand, remove or pay such lien or encumbrance, and, if
Mortgagor shall fail to do so, Mortgagee may do so at Mortgagor's
expense, and any amount so advanced by Mortgagee will be secured by this
Mortgage.
6. Disposition of Insurance and Condemnation Proceeds.
(a) Mortgagor shall immediately notify Mortgagee, in
writing, of any damage to or loss of any or all of the Real Property,
and if such damage or loss is or may be covered by any insurance policy,
shall immediately notify the appropriate insurance carrier of any such
damage or loss. In connection with any such damage or loss, Mortgagor
hereby irrevocably authorizes Mortgagee, at Mortgagee's sole option and
in Mortgagee's sold discretion, to act as Mortgagor's attorney-in-fact
to establish proof of loss, to adjust, compromise, or settle any claim
under any insurance policies, to appear in, direct, and prosecute any
action arising from, under, or in connection with such insurance
policies, and to collect and receive insurance proceeds. Any costs and
expenses (including without limitation, attorneys' fees) incurred by
Mortgagee in connection with any such insurance claims (whether or not
insurance proceeds are ultimately paid), shall in accordance with
paragraph A.17 below constitute sums advanced or paid by Mortgagee, and,
pursuant to paragraph A.17 below, upon Mortgagee's request, Mortgagor
shall immediately reimburse Mortgagee for all such costs and expenses;
provided, however, that Mortgagee shall be entitled, in its sole
discretion, to deduct any such costs and expenses from any insurance
proceeds. Mortgagor further authorizes Mortgagee, in Mortgagee's sole
discretion, regardless of whether there has been or may be any
impairment of Mortgagee's security under this Mortgage, (i) to the
extent permitted by applicable Requirements of Law, to apply any
insurance proceeds collected, or any portion of them, to any or all of
the Obligations, whether or not then due, in such order or combination
as Mortgagee may determine, in its sole discretion, or (ii) to hold any
insurance proceeds collected, or any portion of them, in an interest
bearing or noninterest bearing account to be used to pay for the cost of
the repair, restoration, or replacement of the Real Property in
accordance with this paragraph A.6(a), or (iii) to release any insurance
proceeds collected, or any portion of them, to Mortgagor. Mortgagor
hereby acknowledges that the lien of this Mortgage attaches to any such
insurance proceeds whether or not held by Mortgagee. If Mortgagee
elects to hold the insurance proceeds used to reimburse Mortgagor for
the costs of the repair, restoration, or replacement of the Real
Property: (i) Mortgagor shall cause the Real Property to be restored to
the equivalent of its condition prior to the applicable damage or loss,
or to such other condition as Mortgagee may approve in writing;
(ii) Mortgagee may, in its sole discretion, condition disbursement of
any or all of the insurance proceeds on Mortgagee's determination that
the value of the Property after such restoration will be equal to or
greater than its value prior to any such damage or loss, and Mortgagee's
approval of such plans and specifications as Mortgagee may require,
prepared by architects and engineers acceptable to Mortgagee,
contractor's cost estimates, architects' and engineers' certificates,
lien waivers, and such other evidence of actual costs, estimated
completion costs, percentage completion, and other items as Mortgagee
may require; (iii) if at any time during the repair, restoration, or
replacement, Mortgagee determines that its security under this Mortgage
is impaired, Mortgagee may, in its sole discretion, immediately apply
the balance of the insurance proceeds to any or all of the Obligations,
whether or not then due, in such order or combination as Mortgagee may
determine in its sole discretion; and (iv) if an Event of Default shall
occur and be continuing, Mortgagee may, in its sole discretion,
immediately apply the balance of insurance proceeds to any or all of the
Obligations, whether or not then due, in such order or combination as
Mortgagee may determine in its sole discretion. Mortgagee shall not be
obligated to oversee, approve, or supervise the application of insurance
proceeds that are released to Mortgagor. The payment or release to
Mortgagor of insurance proceeds shall not constitute a payment or
satisfaction of the Obligations, in whole or in part.
(b) Mortgagor shall immediately notify Mortgagee, in
writing, of the commencement or threatened commencement of any
condemnation action or proceeding or any other action or proceeding
under power of eminent domain. In connection with any such action or
proceeding, Mortgagor hereby irrevocably authorizes Mortgagee, at
Mortgagee's sole option and in Mortgagee's sole discretion, to act as
Mortgagor's attorney-in-fact (such appointment being irrevocable and
coupled with an interest) to commence, defend, appear in, and prosecute,
in the name of Mortgagor or Mortgagee, or both, any action, claim, or
proceeding relating to the condemnation or other taking of any or all of
the Property, and to adjust, compromise, and settle any such action,
claim, or proceeding. Any costs and expenses (including without
limitation, attorneys' fees) incurred by Mortgagee in connection with
any such action, claim, or proceeding shall in accordance with
paragraph A.17. below constitute sums advanced or paid by Mortgagee,
and, pursuant to paragraph A.17. below, upon Mortgagee's request,
Mortgagor shall immediately reimburse Mortgagee for all such costs and
expenses; provided, however, that Mortgagee shall be entitled, in its
sole discretion, to deduct any such costs and expenses from any
condemnation proceeds. In the event of a total taking of the Real
Property, the proceeds from such taking shall be applied to the
Obligations, whether or not then due, in such order or combination as
Mortgagee may determine in its sole discretion, with the excess of such
proceeds, if any, to be paid to Mortgagor. In the event of any partial
taking of the Real Property, Mortgagor further authorizes Mortgagee, in
Mortgagee's sole discretion, regardless of whether there has been or may
be any impairment of Mortgagee's security under this Mortgage, to the
extent permitted by Applicable Law, to apply any proceeds from such
taking, or any portion of them, to any or all of the Obligations,
whether or not then due, in such order or combination as Mortgagee may
determine, in its sole discretion.
7. Maintenance and Preservation of the Property.
(a) Mortgagor covenants: (i) to keep the Property in good
condition and repair; (ii) not to remove or demolish the Property or any
part thereof; (iii) to complete or restore promptly and in good and
workmanlike manner the Property or any part thereof which may be damaged
or destroyed; (iv) to pay when due all claims for work performed and for
materials furnished on or to the Property, and to pay any and all liens
or encumbrances arising out of or resulting from work performed or
materials supplied on or to the Property; (v) to comply with and not
suffer violations of, (x) any and all laws, ordinances, regulations and
standards, (y) any and all covenants, conditions, restrictions and
equitable servitudes, whether public or private, of every kind and
character, and (z) all requirements of insurance companies and any
bureau or agency which establishes standards of insurability, which
laws, covenants or requirements affect the Property and pertain to acts
committed or conditions existing thereon, including, without limitation,
such work of alteration, improvement or demolition as such laws,
covenants or requirements mandate; (vi) subject to paragraph A.5 above,
not to commit or permit waste of the Property or any part thereof;
(vii) to do all other acts which from the character or use of the
Property may be reasonably necessary to maintain, preserve, and enhance
its value; (viii) to perform all obligations required to be performed in
leases, in the Rents and conditional sales contracts or like agreements
affecting the Property or the operation, occupation or use thereof (and
upon the occurrence and continuance of an Event of Default all right,
title and interest of Mortgagor under any such leases, in the Rents and
conditional sales contracts or like agreements shall be automatically
assigned to Mortgagee hereunder, together with any deposits made in
connection therewith); (ix) not to create any deed of trust, mortgage or
other lien or encumbrance upon the Property other than the Permitted
Liens; (x) to make no further assignment of the Rents; and (xi) to
execute and, where appropriate, acknowledge and deliver such further
instruments as Mortgagee deems necessary or appropriate to preserve,
continue, perfect and enjoy the security provided for herein, including,
without limitation, assignments of Mortgagor's interest in the Rents and
leases of the Property.
(b) Without the prior written consent of Mortgagee,
Mortgagor will not seek, make, or consent to any change in the zoning or
conditions of use of the Property or make any alternations or
construction to the Property which would materially impair the ability
of Mortgagor to continue to operate the Property in its present use or
which would adversely affect the compliance of the Property with
Applicable Laws.
8. Defense and Notice of Actions. Mortgagor shall,
without liability, cost or expense to Mortgagee, protect, preserve and
defend (by counsel satisfactory to Mortgagee) title to the Property, the
security hereof and the rights or powers of Mortgagee hereunder. Said
protection, preservation and defense shall include protection,
preservation and defense against all adverse claimants to title or any
possessory or non-possessory interest therein, whether or not such
claimants or encumbrances assert title paramount to that of Mortgagor or
claim their interest on the basis of events or conditions arising
subsequent to the date hereof. Mortgagor shall give Mortgagee prompt
notice in writing of the filing of any such action or proceeding.
9. Books and Records.
(a) Mortgagor will keep adequate books and records of
account of the Property and its own financial affairs sufficient to
permit the preparation of financial statements therefrom in accordance
with generally accepted accounting principles. Mortgagee will have the
right to examine, copy, and audit Mortgagor's records and books of
account at all reasonable times upon prior written notice to Mortgagor.
Mortgagor shall deliver to Mortgagee such records, statements, and
notices as may be required from time to time pursuant to the terms of
the Credit Agreement.
(b) Mortgagor will promptly furnish, within fifteen (15)
days after Mortgagee's written request, a duly acknowledged written
statement setting forth all amounts due on the monetary Obligations
secured by this Mortgage and stating whether, to the best of Mortgagor's
knowledge, any offsets or defenses exist, and containing such other
matters as Mortgagee may reasonably require.
10. Collection of Rents, Issues and Profits. Mortgagee
confers upon Mortgagor the authority to collect and retain Rents as they
become due and payable; provided, however, that Mortgagee may revoke
said authority and collect and retain the Rents assigned herein to
Mortgagee upon the occurrence and continuance of an Event of Default by
Mortgagor by giving written notice to Mortgagor, and without regard to
the adequacy of any security for the Obligations, and without taking
possession of all or any part of the Property or becoming a "mortgagee
in possession." The right to collect Rents as herein provided shall not
grant to Mortgagee the right to possession, except as expressly herein
provided; nor shall said right impose upon Mortgagee the duty to produce
Rents or maintain the Property in whole or in part. Mortgagor hereby
agrees that it will do nothing to impair Mortgagee's ability to collect
and retain the Rents and interests herein assigned and that any tenant
or subtenant occupying the Property or any part thereof may pay any and
all Rents or other charges directly to Mortgagee upon notice from
Mortgagee without the necessity of any notice from Mortgagor. Mortgagee
may apply, in its sole discretion, any Rents so collected by Mortgagee
against any Obligations or any other obligations of Mortgagor to
Mortgagee, whether existing on the date hereof or hereafter arising.
Collection of any Rents by Mortgagee shall not cure or waive any default
or notice of default or Event of Default hereunder or invalidate any
acts done pursuant to such notice.
11. Right of Inspection. Mortgagee, its agents,
contractors and employees, may enter the Property at any reasonable time
upon prior written notice to Mortgagor for the purpose of inspecting the
Property and ascertaining Mortgagor's compliance with the terms of this
Mortgage and the other Credit Documents.
12. Acceleration Upon Sale or Encumbrance. Upon a sale,
assignment or other transfer of all or any part of the Property (except
as permitted under the Credit Agreement), or a Change of Control without
the prior written consent of Mortgagee, Mortgagee may, at its sole
option, accelerate the maturity date of the Notes and other Obligations
and declare the unpaid principal balance of the Notes, together with all
accrued interest thereon, immediately due and payable upon such sale,
assignment or other transfer, except to the extent prohibited by law.
13. Defeasance. Except as otherwise provided in
paragraphs A.15, A.16 and B.2(j) of this Mortgage and any other
provision of this Mortgage or the other Credit Documents which survives
the release of this Mortgage, the discharge of the Obligations or the
repayment of the Loans, if all of the Obligations are paid in full in
cash in accordance with the Credit Documents and all of the covenants,
warranties, conditions, undertakings and agreements made in this
Mortgage and the other Credit Documents are fully kept and performed,
then in that event only, Mortgagee shall release this Mortgage in due
form at Mortgagor's cost. When this Mortgage has been fully discharged
by Mortgagee, the discharge hereof shall operate as a reassignment of
all future Leases and Agreements with respect to the Property, unless
such discharge expressly provides to the contrary. Notwithstanding the
forgoing, this Mortgage shall continue to be effective or be reinstated,
as the case may be, if at any time any amount received by Mortgagee (or
any holder of any Note) in respect of the Obligations is rescinded or
must otherwise be restored or returned by Mortgagee (or any such holder)
upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Mortgagor or upon the appointment of any intervenor or
conservator of, or trustee or similar official for Mortgagor of any
substantial part of its properties, or otherwise, as if such payments
had not been made.
14. Certain Taxes. In the event of the passage, whether
before or after the date of this Mortgage, of any law deducting from the
value of the Property for the purpose of taxation, any lien thereon, or
changing in any way the laws now in force for the taxation of deeds of
trust or debts secured by deeds of trust or similar instruments, or the
manner of the collection of any such taxes, so as to affect this
Mortgage, or imposing payment of the whole or any portion of any taxes,
assessments or other similar charges against the Property upon
Mortgagee, Mortgagor shall pay such tax or increased portion and shall
agree with Mortgagee in writing to pay, or reimburse Mortgagee for the
payment of, any such tax or increased portion thereof when thereafter
levied or assessed against the Property or any portion thereof. The
obligations of Mortgagor under such agreement shall be secured by this
Mortgage.
15. Environmental Matters.
(a) Definitions. The following definitions apply to the
provisions of this paragraph A.15:
(1) The term "Responsible Person" shall mean
Mortgagor, and any other person who owns or acquires any interest in any
part of the Property so long as Mortgagor continues to own the Property,
including, but not limited to, any tenants, easement holders, licensees
or other persons using or occupying the Property or any portion thereof
and all persons in transit across any part of the Property.
(2) The term "Applicable Environmental Law" shall
include, but shall not be limited to, each statute named or referred to
in (3) below, and all rules and regulations thereunder, and any other
local, state and/or federal laws, rules, regulations, by-laws and
ordinances, whether currently in existence or hereafter enacted, which
govern, to the extent applicable to the Property,
(i) the existence, assessment, removal, cleanup
and/or remediation of contamination on property or the payment of costs
or damages in relation thereto;
(ii) the protection of the environment, including
from soil, air or water pollution;
(iii) the Release or Threat of Release of Hazardous
Substances (as defined below) into the environment;
(iv) the control of Hazardous Substances; or
(v) the use, generation, handling, storage,
transport, treatment, disposal, removal or recovery of Hazardous
Substances.
(3) The term "Hazardous Substance" shall mean
(a) any oil, flammable substance, explosives, radioactive materials,
hazardous wastes or substances, toxic wastes or substances or any other
wastes, materials or pollutants which (i) pose a hazard to the Property
or to persons on or about the Property or (ii) cause the Property to be
in violation of any Applicable Environmental Law; (b) asbestos in any
form which is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment which contain dielectric
fluid containing levels of polychlorinated biphenyls, or radon gas;
(c) any chemical, material or substance defined as or included in the
definition of "oil," "waste," "hazardous substance," "hazardous waste,"
"hazardous material," "pollutant," or "toxic substance" or words of
similar import under any Applicable Environmental Law including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 USC Section 9601 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 USC Section 6901 et seq.; the
Hazardous Materials Transportation Act, 49 USC Section 1801 et seq.; the
Federal Water Pollution Control Act, 33 USC Section 1251 et seq.; the
Massachusetts Oil and Hazardous Material Release Prevention Act, M.G.L.
c.21E; the Massachusetts Hazardous Waste Management Act, M.G.L. c.21C;
the Massachusetts Clean Waters Act, M.G.L. c.21, Section 26 et seq., or any
regulation under any of the foregoing laws; (d) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or agency or may or could pose a
hazard to the health and safety of the occupants of the Property or the
owners and/or occupants of property adjacent to or surrounding the
Property, or any other person coming upon the Property or adjacent
property; and (e) any other chemical, materials or substance which may
or could pose a hazard to the environment.
(4) The terms "Release" and "Threat of Release"
shall have the meanings given to them in M.G.L. c.21E, Section 2.
(b) Covenants and Representations.
(1) Mortgagor represents and warrants that there
have not been during the period of Mortgagor's ownership or, to the best
of Mortgagor's knowledge, at any other times (i) any activities
involving, directly or indirectly, the use, generation, handling,
treatment, storage or disposal of any Hazardous Substances in violation
of Applicable Environmental Law at, under, on, or in the Real Property,
whether contained in soil, tanks, sumps, ponds, lagoons, barrels, cans
or other containments, structures or equipment, (ii) any Release or
Threat of Release of any Hazardous Substance at, on, to or from the Real
Property, (iii) any Hazardous Substances incorporated in the
Improvements, including any building materials containing asbestos, or
(iv) except as described in the Credit Agreement (including the
schedules thereto), any Hazardous Substances used in connection with any
operations on or in the Real Property.
(2) Neither Mortgagor nor any other Responsible
Person shall allow any Hazardous Substances to be brought onto,
installed, used, stored, handled, treated, disposed of or transported
to, at, on, in or over the Real Property in violation of Applicable
Environmental Law. Without limiting the generality of the foregoing,
neither Mortgagor nor any Responsible Person shall install, use or
permit to be installed or used any product or substance containing
asbestos, urea formaldehyde foam insulation or polychlorinated biphenyls
(pcb's) on the Real Property in violation of Applicable Environmental
Law. Upon receipt of a request to take any actions described in this
paragraph (b), Mortgagee may, in its sole discretion, assert, withhold,
consent, or condition its consent upon the provision by Mortgagor of
insurance adequate in the reasonable discretion of Mortgagee to cover
fully and protect Mortgagee's interest under this Mortgage.
(3) Mortgagor represents that all activities and
conditions on the Property are currently in compliance with Applicable
Environmental Law. So long as Mortgagor owns the Property, Mortgagor
covenants and agrees that all activities on the Property, whether
conducted by Mortgagor or any other Responsible Person, or by any other
person, shall at all times comply with Applicable Environmental Law.
(4) Within five (5) days after receipt or completion
of any report, citation, order, manifest or other written or oral
communication from any local, state or federal agency or authority
empowered to enforce, investigate or oversee compliance with Applicable
Environmental Law, concerning the Property, any condition thereon, or
the activities of any Responsible Person or any other person on or near
the Property, Mortgagor shall notify Mortgagee in writing of the
contents of such communication, and shall provide Mortgagee with a copy
of all relevant documents relating to such communication.
(5) Notwithstanding any other provision of this
Mortgage, Mortgagor shall immediately notify Mortgagee of the discovery
of any evidence of a Release of a Hazardous Substance at, to, on, or
from the Property in violation of Applicable Environmental Law,
including, without limitation, Hazardous Substances in the soil, surface
water or groundwater at, on or under the Property, Hazardous Substances
that have migrated onto the Property, Hazardous Substances that were
deposited prior to Mortgagor's ownership of the Real Property, and all
Hazardous Substances spilled, discharged or otherwise released or
deposited on the Real Property during Mortgagor's ownership. Mortgagor
shall immediately take all actions necessary to comply with laws
requiring notification of government agencies concerning such Hazardous
Substance and to remedy or correct the violation of Applicable
Environmental Law. Mortgagor shall handle and dispose of such Hazardous
Substances in accordance with Applicable Environmental Law. Mortgagor
shall take any and all actions, including institution of legal action
against third parties, necessary to obtain reimbursement, contribution
or compensation from all Persons liable for the presence or release of
any Hazardous Substance on the Real Property or for the costs of
response thereto. Mortgagee shall be subrogated to Mortgagor's rights
in all such claims.
(6) Mortgagor shall be solely responsible for and
agrees to indemnify Mortgagee, protect and defend with counsel
acceptable to Mortgagee, and hold Mortgagee harmless from and against
any claims (including, without limitation, third party claims for
personal injury or real or personal property damage), actions,
administrative proceedings (including informal proceedings), judgments,
damages, punitive damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims), interest or losses,
attorneys' fees (including any fees and expenses incurred in enforcing
this indemnity), consultant fees, and expert fees that arise directly or
indirectly from or in connection with the presence, suspected presence,
Release, suspected Release or Threat of Release of any Hazardous
Substance at, to, under, on, in, or from the Real Property, or the air,
soil, surface water, or groundwater at the Real Property, or any
violation of Applicable Environmental Law, or any breach of the
foregoing representations and covenants. The provisions of this
paragraph A.15(b)(6) shall survive the termination and reconveyance of
this Mortgage.
(c) Right of Entry. In addition to all rights of entry
contained in this Mortgage, Mortgagee shall have the right, upon prior
written notice to Mortgagor, to enter the Real Property and inspect the
condition of the Property at any time and to conduct, or to designate a
representative to conduct such inspection, testing, environmental audit
or other procedures that Mortgagee reasonably believes are necessary or
desirable to determine current compliance with the covenants and
representations contained in this Mortgage.
(d) Mortgagee's Obligations. Nothing contained in this
paragraph A.15 shall obligate Mortgagee to take any action with respect
to the Property, any Hazardous Substances on the Real Property, or any
condition or activity that is in violation of Applicable Environmental
Law, or to take any action against any person with respect to such
substances, condition, or activity.
16. Wetlands. Mortgagor shall be solely responsible for
and agrees to indemnify Mortgagee, protect and defend with counsel
acceptable to Mortgagee, and hold Mortgagee harmless from and against
any claims (including without limitation third party claims for personal
injury or real or personal property damage), actions, administrative
proceedings (including informal proceedings), judgments, damages,
punitive damages, penalties, fines, costs, liabilities (including sums
paid in settlements of claims), interest or losses, attorneys' fees
(including any fees and expenses incurred in enforcing this indemnity),
consultant fees, and expert fees that arise directly or indirectly from
or in connection with the presence on the Property of any property which
consists of or is classified as wetlands, tidelands, swamp and
overflowed lands, swamp, bank, beach, dune, flat, marsh, meadow, land
under a water body or navigable waters, land subject to tidal action,
coastal storm flowage or flooding, floodplain or great pond
(collectively, "wetlands") under M.G.L. c.131, Section 40, M.G.L. c.91, 33
U.S.C. Section 1344, or any other federal, state or local law, statute,
regulation, by-law, ordinance or judicial decision. The provisions of
this paragraph A.16 shall survive the termination and discharge of this
Mortgage.
17. Mortgagor to Reimburse. At Mortgagee's request,
Mortgagor will immediately reimburse Mortgagee for any sum advanced or
paid by Mortgagee under any provision of this Mortgage. Until so
repaid, all such sums shall be added to, and become a part of, the
Obligations and bear interest from the date of advancement of payment by
Mortgagee at the Default Rate. All sums advanced by Mortgagee under any
provision of this Mortgage, whether or not required to be advanced by
Mortgagee under the terms of this Mortgage, shall conclusively be deemed
to be mandatory advances required for the preservation and protection of
this Mortgage and Mortgagee's security for the performance of the
Obligations, and shall be secured by this Mortgage to the same extent
and with the same priority as the principal and interest payable under
the Note.
B. DEFAULT PROVISIONS.
1. Events of Default. The occurrence of any Event of
Default under and as defined in the Credit Agreement (an "Event of
Default") shall entitle Mortgagee to exercise its remedies under this
Mortgage and as provided by law and the other Credit Documents.
2. Rights and Remedies. At any time after the occurrence
and during the continuance of an Event of Default, Mortgagee shall have
the following rights and remedies:
(a) To declare all the Obligations immediately due and
payable;
(b) To foreclose the lien hereof in accordance with the
laws of the Commonwealth of Massachusetts, including without limitation
the right to exercise the STATUTORY POWER OF SALE and to exercise any
other rights of Mortgagee provided in the Credit Documents or which
Mortgagee may have at law, at equity or otherwise. In any suit to
foreclose the lien hereof, there shall be included as additional
Obligations all expenditures and expenses which may be paid or incurred
by or on behalf of Mortgagee for appraisers' fees, auctioneer's fees,
fees for documentary and expert advice, publication costs, title
searches, title insurance policies, surveys and such other expenses and
fees as may be incurred in the protection of the Property, the
maintenance of the line of this Mortgage, and the foreclosure hereof,
including the reasonable fees of any attorneys employed by Mortgagee in
any litigation or proceedings affecting this Mortgage.
(c) Whether or not foreclosure has been commenced, to make
entry and take full and exclusive possession of all or any part of the
Property, whether by its agents or attorneys or personally, including,
without limitation, all documents, books, records, papers and accounts,
and Mortgagee may exclude Mortgagor and any agents and servants thereby
therefrom;
(d) To appoint a receiver of the Property, such
appointment to be made either before or after foreclosure sale, without
notice, without regard to the solvency or insolvency of Mortgagor at the
time of application for such receiver, and without regard to the then
value of the Property and without regard to whether loss or waste has
occurred. Mortgagee or any employee or agent of Mortgagor may be
appointed as such receiver. Such receiver shall have all powers and
duties prescribed by law, including the power to make leases to be
binding upon all parties, including Mortgagor, of its interests in the
Property. In addition, such receiver shall have the power to collect
the Rents of the Property during the pendency of any foreclosure suit,
and in the case of a sale and deficiency, during the full statutory
period of redemption, if any, whether there be a redemption or not, as
well as during any further times when Mortgagor would be entitled to
collection of the Rents. Such receiver shall have all other powers
which may be necessary or usual for the protection, possession, control,
management and operation of the Property. Any such receiver shall be
entitled to reasonable compensation and reimbursement for services and
expenses, all of which sums shall be secured by this Mortgage.
Mortgagor hereby indemnifies Mortgagee and such receiver against all
losses, claims, demands, and liabilities (except to the extent losses,
claims, demands and liabilities arise from the gross negligence or
wrongful act of such receiver) which Mortgagee and receiver may incur,
suffer or sustain in any performance of any act required or permitted
hereunder or by law.
(e) With or without notice, and without releasing
Mortgagor from any obligation hereunder, to cure any default of
Mortgagor and, in connection therewith, to enter upon the Property and
to perform such acts and things as Mortgagee deem necessary or desirable
to inspect, investigate, assess and protect the security hereof,
including without limitation to appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or
powers of Mortgagee hereunder, to pay, purchase, contest or compromise
any encumbrance, charge, lien or claim of lien which, in the judgment of
either Mortgagee, is prior or superior hereto, the judgment of Mortgagee
being conclusive as between the parties hereto, to pay any premiums or
charges with respect to insurance required to be carried hereunder, and
to employ counsel, accountants, contractors and other appropriate
persons to assist them;
(f) To commence and maintain an action or actions in any
court of competent jurisdiction to foreclose this Mortgage or to obtain
specific enforcement of the covenants of Mortgagor hereunder, and
Mortgagor agrees that such covenants shall be specifically enforceable
by injunction or any other appropriate equitable remedy and that for the
purposes of any suit brought under this paragraph, Mortgagor waives the
defense of laches and any applicable statute of limitations;
(g) Mortgagee or its employees, acting by themselves or
through a court-appointed receiver may enter upon, possess, manage,
operate, dispose of and contract to dispose of the Property or any part
thereof; take custody of all accounts; negotiate with governmental
authorities with respect to the Property's environmental compliance and
remedial measures; make, terminate, enforce or modify leases of the
Property upon such terms and conditions as Mortgagee deems proper;
contract for goods and services, hire agents, employees and counsel,
make repairs, alterations and improvements to the Property necessary, in
Mortgagee's judgment, to protect or enhance the security hereof; to
incur the risks and obligations ordinarily incurred by owners of
property (without any personal obligation on the part of the receiver);
to subdivide or otherwise create additional parcels in the Real
Property, and grant easements, licenses, rights or way and other
appurtenances to some or all of the Property as they subdivide it or
otherwise reconstitute it; to release, in the sole discretion of
Mortgagee, any portion or portions of the Property, including without
limitation, any newly created parcels, without adversely affecting
Mortgagor's obligations hereunder or under the other Credit Documents;
and/or to take any and all other actions which may be necessary or
desirable to comply with Mortgagor's obligations hereunder and under the
Credit Documents. All sums realized by Mortgagee under this paragraph,
less all costs and expenses incurred by it under this paragraph,
including attorneys' fees, and less such sums as Mortgagee deems
appropriate as a reserve to meet future expenses under the paragraph,
shall be applied on any indebtedness secured hereby in such order as
Mortgagee shall determine. Neither application of said sums to said
indebtedness nor any other action taken by Mortgagee under this
paragraph shall cure or waive any Event of Default or notice of default
hereunder or nullify the effect of any such notice of default.
Mortgagee, or any employee or agent of Mortgagee, or a receiver
appointed by a court, may take any action or proceeding hereunder
without regard to (i) the adequacy of the security for the indebtedness
secured hereunder, (ii) the existence of a declaration that the
indebtedness secured hereby has been declared immediately due and
payable, or (iii) the filing of a notice of default;
(h) If the Property consists of several lots, parcels, or
items of property, Mortgagee may: (i) designate the order in which
such lots, parcels, or items shall be offered for sale or sold, or (ii)
elect to sell such lots, parcels or items through a single sale, through
two or more successive sales, or in any other manner Mortgagee deems in
its best interest. Mortgagor shall have no right to direct the order in
which the Property is sold. Mortgagee may postpone sale of all or any
portion of the Property by public announcement at such time and place of
sale, and from time to time thereafter may postpone such sale by public
announcement at such time fixed by the preceding postponement. Mortgagee
shall deliver to the purchaser at such sale a deed conveying the
Property or portion thereof so sold, but without any covenant or
warranty, express or implied. The recitals in such deed of any matters
or facts shall be conclusive proof of the truthfulness thereof. Any
person, including Mortgagor or Mortgagee, may purchase at such sale.
In connection with any sale or sales hereunder, Mortgagee
may elect to treat any of the Property which consists of a right in
action or which is property that can be severed from the real property
covered hereby or any improvements thereon without causing structural
damage thereto as if the same were personal property or a fixture, as
the case may be, and dispose of the same accordance with applicable law,
separate and apart from the sale of real property. Any sale of any
personal property or fixtures hereunder shall be conducted in any manner
permitted by the Uniform Commercial Code as enacted in the Commonwealth
of Massachusetts, Massachusetts General Laws Chapter 106, as the same
may be amended, restated, replaced, or recodified from time to time (the
"UCC").
After deducting all costs, fees and expenses of Mortgagee,
including all costs of evidence of title and attorneys' fees in
connection with sale, Mortgagee shall apply the proceeds of sale to
payment of all sums so expended under the terms hereof not then repaid,
the payment of all other sums then secured hereby; and the remainder, if
any, to the person or persons legally entitled thereto;
(i) To resort to and realize upon the security hereunder
and any other security now or hereafter held by Mortgagee in such order
and manner as Mortgagee may, in its sole discretion, determine; and
resort to any or all such security may be taken concurrently or
successively and in one or several consolidated or independent judicial
actions or lawfully taken non-judicial proceedings, or both;
(j) To seek a judgment that Mortgagor has breached its
covenants, representations and/or warranties with respect to the
environmental matters set forth above in paragraph A.15, by commencing
and maintaining an action or actions in any court of competent
jurisdiction for breach of contract, whether commenced prior to
foreclosure of the Property or after foreclosure of the Property, and to
seek the recovery of any and all costs, damages, expenses, fees,
penalties, fines, judgments, indemnification payments to third parties,
and other out-of-pocket costs or expenses actually incurred by Mortgagee
(collectively, the "Environmental Costs") incurred or advanced by
Mortgagee relating to the cleanup, remediation or other response action
required by Applicable Environmental Law (as defined in paragraph A.15)
or to which Mortgagee believes necessary to protect the Property, it
being conclusively presumed between Mortgagee and Mortgagor that all
such Environmental Costs incurred or advanced by Mortgagee relating to
the cleanup, remediation or other response action of or to the Property
were made by Mortgagee in good faith. All Environmental Costs incurred
by Mortgagee pursuant to this paragraph (including, without limitation,
court costs, consultants' fees and attorneys' fees, whether incurred in
litigation or not and whether before or after judgment) shall bear
interest at the rate set forth in the Credit Agreement payable during
the continuance of an Event of Default from the date of expenditure
until said sums have been paid. Mortgagee shall be entitled to bid at
any foreclosure sale of the Property the amount of said costs, expenses
and interest in addition to the amount of the other obligations hereby
secured as a credit bid, the equivalent of cash. Mortgagor acknowledges
and agrees that notwithstanding any term or provision contained herein
or in the other Credit Documents, the Environmental Costs shall be
exceptions to any non-recourse or exculpatory provision and Mortgagor
shall be fully and personally liable for the Environmental Costs
hereunder and such liability shall not be limited to the original
principal amount of the obligations secured by this Mortgage and
Mortgagor's obligations shall survive the foreclosure, deed in lieu of
foreclosure, release, discharge or any other transfer of the Property or
this Mortgage. For the purposes of any action brought under this
paragraph, Mortgagor hereby waives the defense of laches and any
applicable statute of limitations; and
(k) To waive its lien against the Property or any portion
thereof, whether fixtures or personal property, and to exercise any and
all rights and remedies of an unsecured creditor against Mortgagor and
all of Mortgagor's assets and property for the recovery of any
deficiency and Environmental Costs. Mortgagor acknowledges and agrees
that notwithstanding any term or provision contained herein or in the
Note, all judgments and awards entered against Mortgagor shall be
exceptions to any non-recourse or exculpatory provision and Mortgagor
shall be fully and personally liable for all judgments and awards
entered against Mortgagor hereunder and such liability shall not be
limited to the original principal amount of the Obligations and
Mortgagor's obligations under this paragraph B.2.(h) shall survive the
foreclosure, deed in lieu of foreclosure, release, reconveyance or any
other transfer of the Property or this Mortgage. For the purposes of
any action brought under this paragraph, Mortgagor hereby waives the
defense of laches and any applicable statute of limitations.
3. Payment of Costs, Expenses and Attorneys' Fees. All
costs and expenses incurred by Mortgagee pursuant to paragraphs (a)
through (k) inclusive of paragraph B.2 (including, without limitation,
court costs, consultants' fees and attorneys' fees, whether incurred in
litigation or not and whether before or after judgment) shall bear
interest at the rate set forth in the Credit Agreement payable during
the continuance of an Event of Default from the date of expenditure
until said sums have been paid. Mortgagee shall be entitled to bid, at
the sale of the Property held pursuant to paragraph B.2.(e) above, the
amount of said costs, expenses and interest in addition to the amount of
the other obligations hereby secured as a credit bid, the equivalent of
cash.
4. Remedies Cumulative. All rights and remedies of
Mortgagee hereunder are cumulative and in addition to all rights and
remedies provided by law.
5. Releases, Extensions, Modifications and Additional
Security. Without affecting the liability of any person for payment of
any indebtedness secured hereby, or the lien or priority of this
Mortgage upon the Property, Mortgagee may, from time to time, with or
without notice, do one or more of the following: release any person's
liability for the payment of an indebtedness secured hereby, make any
agreement or take any action extending the maturity or otherwise
altering the terms or increasing the amount of any indebtedness secured
hereby, and accept additional security or release all or a portion of
the Property and/or other security held to secure the indebtedness
secured hereby.
6. Marshalling. Mortgagor hereby waives any right to
require that any security given hereunder or under any other agreement
securing the obligation secured hereby be marshalled and further waives
any right otherwise available in respect to marshalling of assets which
secure any obligation secured or imposed hereby or to require Mortgagee
to pursue its remedies against any such assets.
7. Additional Waivers. To the fullest extent
permitted by law, Mortgagor hereby expressly waives any and all rights
to reinstatement and redemption, if any, on its own behalf, on behalf of
all Persons claiming or having an interest (direct or indirect) by,
through or under Mortgagor and on behalf of each and every Person
acquiring any interest in or title to the Property subsequent to the
date hereof, it being the intent hereof that any and all such rights of
reinstatement and redemption (except the right to repay the Obligations
in full by paying the entire Indebtedness under the Credit Documents
prior to any foreclosure sale or conveyance in lieu thereof) of
Mortgagor and such other persons, are and shall be deemed to be hereby
waived to the full extent permitted by applicable law. To the fullest
extent permitted by law, Mortgagor agrees that it will not, by invoking
or utilizing any applicable law or laws otherwise, hinder, delay or
impede the exercise of any right, power or remedy herein or otherwise
granted or delegated to Mortgagee, but will suffer and permit the
exercise of every such right, power and remedy as though no such law or
laws have been or will have been made or enacted.
8. Rights Cumulative. Each right, power and remedy
herein confirmed upon Mortgagee is cumulative and in addition to every
other right, power or remedy, express or implied, now or hereafter
provided in the Mortgage or any other Credit Document, or provided by
law of in equity, and each and every right, power and remedy herein set
forth or otherwise so existing may be exercised from time to time as
often and in such order as may be deemed expedient to Mortgagee.
C. FIXTURE FILING.
1. Fixture Filing. Pursuant to the Credit Agreement and
Sections 106:9-313 and 106:9-402 of the UCC, as amended and recodified
from time to time, this Mortgage shall constitute a Fixture Filing filed
in the real estate records. Mortgagor is sometimes referred to herein
as "Debtor" and Mortgagee is sometimes referred to herein as "Secured
Party".
2. Relation of Fixture Filing To Mortgage. Some or all
of the Property described may be or become a fixture in which Mortgagee
has a security interest under the Credit Agreement or the other Credit
Documents. Nevertheless, nothing herein shall be deemed to create any
lien or interest in favor of Mortgagee under this Mortgage in any the
Property which is not a fixture, and the sole purpose of this Section C
is to create a fixture filing under Sections 106:9-313 and 106:9-402 of
the UCC. The rights, remedies, and interests of Mortgagee under this
Mortgage and the Credit Agreement and the other Credit Documents are
independent and cumulative, and there shall be no merger of any lien
hereunder with any security interest created by the Credit Agreement or
the other Credit Documents. Mortgagee may elect to exercise or enforce
any of its rights, remedies, or interests under either or both this
Mortgage or the Credit Agreement and the other Credit Documents as
Mortgagee may from time to time deem appropriate in its sole discretion.
3. Removal. Except as otherwise expressly permitted in
the Credit Agreement, Mortgagor shall not, without the prior written
consent of Mortgagee, remove or permit the removal of any fixture from
the Real Property except for fixtures removed and replaced in the
ordinary course of business. Mortgagee further reserves the right to
prohibit the removal of any such fixture by any person with the legal
right to remove any fixture from the Real Property unless and until such
person makes arrangements with (and satisfactory to) Mortgagee for the
payment to Mortgagee of all costs of repairing any physical injury to
the Real Property which may be caused by the removal of that fixture.
4. Addresses. The addresses of Debtor (Mortgagor) and
Secured Party (Mortgagee) are as follows:
Debtor (Mortgagor): Quantum Corporation
500 McCarthy Boulevard
Milpitas, California 95035
Attn: Joseph P. Rodgers
Executive Vice President
Finance and Secretary
Telephone: (408) 894-4000
Telecopier: (408) 894-3223
Secured Party
(Mortgagee): Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: [--------------------]
Telephone: (212) --------
Telecopier: (212) --------
D. MISCELLANEOUS PROVISIONS.
1. Non-Waiver. By accepting payment of any Obligation
after its due date or late performance of any Obligation, Mortgagee
shall not waive its right against any person obligated directly or
indirectly hereunder or on any obligation hereby secured, either to
require prompt payment or performance when due of all other Obligations
or to declare default for failure to make such prompt payment or
performance. No exercise of any right or remedy by Mortgagee hereunder
shall constitute a waiver of any other right or remedy herein contained
or provided by law.
2. Further Assurances. Mortgagor, upon the request of
Mortgagee, shall execute, acknowledge, deliver, and record such further
instruments and do such further acts as may be reasonably necessary,
desirable or proper to carry out the purposes of this Mortgage and the
other Credit Documents and to subject to the liens and security
interests created hereby and thereby any property intended by the terms
hereof and thereof to be covered hereby and thereby, including, without
limitation, any future renewals, additions, substitutions, replacements,
improvements, or appurtenances to the Property.
3. Usury Savings Clause. Nothing contained herein or in
the Credit Documents shall be deemed to require the payment of interest
or other charges by Mortgagor in excess of the amount Mortgagee may
lawfully charge under the applicable usury laws. In the event Mortgagee
shall collect monies which are deemed to constitute interest which would
increase the effective interest rate to a rate in excess of that
permitted to be charged by applicable Governmental Rules, all such sums
deemed to constitute interest in excess of the legal rate shall, upon
such determination, at the option of Mortgagee, be returned to Mortgagor
or credited against the principal balance of any Obligation secured
hereby then outstanding.
4. Attorneys' Fees. In the event legal action, suit or
any proceeding is commenced by or between Mortgagor or Mortgagee
regarding their respective rights and obligations under this Mortgage or
any of the other Credit Documents, the prevailing party shall be
entitled to recover, in addition to damages or other relief, costs and
expenses, attorneys' fees, other related expenses, and court costs. As
used herein the term "prevailing party" shall mean the party that
obtains the principal relief it has sought, whether by compromise
settlement or judgment. If the party that has commenced or instituted
the action, suit, or proceeding shall dismiss or discontinue it without
the concurrence of the other party, such other party shall be deemed to
be the prevailing party. This paragraph D.5. shall not limit
Mortgagor's obligation to pay or reimburse the Agents and the Banks for
expenses in accordance with the Credit Agreement.
5 Obligations of Mortgagor Joint and Several. If more
than one person has executed this Mortgage for or on behalf of
Mortgagor, the obligations of all such persons hereunder shall be joint
and several.
6 Mortgagor and Mortgagee Defined. The term "Mortgagor"
herein includes both the original Mortgagor and any subsequent owner or
owners of any of the Property, and the term "Mortgagee" includes the
original Mortgagee and also any future owner or holder, including
pledgees and participants, of the Notes, the Credit Agreement or any
interest therein.
7 No Joint Venture. The relationship of Mortgagor and
Mortgagee under this Mortgage and the Credit Documents is, and shall at
all times remain, solely that of borrower and lender, and Mortgagee
neither undertakes nor assumes any responsibility or duty to Mortgagor
or to any third party with respect to the Property. Notwithstanding any
other provisions of this Mortgage and the Credit Documents:
(a) Mortgagee is not, and shall not be construed as, a partner, joint
venturer, alter-ego, manager, controlling person or other business
associate or participant of any kind of Mortgagor, and Mortgagee does
not and does not intend to ever assume such status; (b) Mortgagee does
not and does not intend to ever assume any responsibility to any person
for the quality, suitability, safety or condition of the Property; and
(c) Mortgagee shall not be deemed responsible for or a participant in
any acts, omissions, or decisions of Mortgagor. Mortgagee shall not be
directly or indirectly liable or responsible for any loss, claim, cause
of action, liability, indebtedness, damage, or injury of any kind or
character to any person or property arising from any construction on, or
occupancy or use of, any of the Property, whether caused by or arising
from: (v) any defect in any building, structure, grading, fill,
landscaping or other improvements on the Real Property or in any on-site
or off-site improvement or other facility therein or thereon; (w) any
act or omission of Mortgagor or any of Mortgagor's agents, employees,
independent contractors, licensees or invitees; (x) any accident in or
on any of the Property or any fire, flood or other casualty or hazard
thereon; (y) the failure of Mortgagor, any of Mortgagor's licensees,
employees, invitees, agents, independent contractors or other
representatives to maintain the Property in a safe condition; and
(z) any nuisance made or suffered on any part of the Property.
8. Rules of Construction. The rules of construction set
forth in Section I of the Credit Agreement shall apply to this Mortgage.
Specific enumeration of rights, powers and remedies of Mortgagee and of
acts which it may do and acts Mortgagor must or must not do shall not
exclude or limit the general. The interpretation of any provisions of
this Mortgage shall not be construed against any party hereto based upon
the fact that such party may have drafted or caused such provision to be
drafted. Mortgagor hereby acknowledges that it has been represented by
independent counsel of its own selection and, notwithstanding that
counsel for Mortgagee has prepared this Mortgage, Mortgagor hereby
agrees that the provisions hereof shall not be construed against
Mortgagee in the event of any ambiguity solely because counsel for
Mortgagee has prepared this Mortgage, in that each party's counsel has
participated in the negotiation and codification hereof. Prior drafts
of this Mortgage shall not be taken as evidence of or used in the
interpretation of the meaning of the terms or provisions hereof or
thereof.
9. Severability. If any term of this Mortgage, or the
application thereof to any person or circumstances, shall, to any
extent, be invalid or unenforceable, the remainder of this Mortgage, or
the application of such term to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected
thereby, and each term of this Mortgage shall be valid and enforceable
to the fullest extent permitted by law.
10. Successors in Interest. The terms, covenants, and
conditions herein contained shall be binding upon and inure to the
benefit of the heirs, successors and assigns of Mortgagor hereto.
11. Notices. All notices, demands or documents which are
required or permitted to be given or served hereunder shall be given as
provided in Section 8.01 of the Credit Agreement to the parties at their
respective addresses set forth in paragraph C.4 above or such other
address as either party may designate from time to time by like notice.
12. Headings. The headings of the articles of this
Mortgage are for convenience only and do not limit or construe its
provisions.
13. Time of the Essence. Time shall be of the essence
with respect to each and every of the various conditions, undertakings
and obligations set forth in this Mortgage.
14. Choice of Law; Jurisdiction; Etc. The validity of
this Mortgage, and its construction, interpretation and enforcement,
shall be determined under, and governed by and construed in accordance
with, the internal laws (and not the law of conflicts) of the
Commonwealth of Massachusetts. To the extent it may lawfully do so,
Mortgagor hereby consent to service of process, and to be sued, in the
Commonwealth of Massachusetts and consents to the jurisdiction of the
courts of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts, as well as to the
jurisdiction of all courts from which an appeal may be taken from such
courts, for the purpose of an suit, action or other proceeding arising
out of Mortgagor's obligations hereunder or with respect to the
transactions contemplated hereby, and expressly waives any and all
objections it may have as to venue in any such courts. Mortgagor
further agrees that a summons and complaint commencing an action or
proceeding in any of such courts shall be properly served and shall
confer personal jurisdiction if served personally or by certified mail
to it at the applicable address provided in this Mortgage or as
otherwise provided under the laws of the Commonwealth of Massachusetts.
Notwithstanding the foregoing, Mortgagor agrees that nothing contained
in this paragraph D.14 shall preclude Mortgagee from instituting any
such suit, action or other proceeding in any jurisdiction other than the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage on
the day and year, first set forth above as an instrument under seal.
MORTGAGOR:
QUANTUM CORPORATION, a Delaware corporation
WITNESS:
Name By:
Name:
Title:
hereunto duly
authorized
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF: -------------- ----------------, 1994
Then personally appeared before me the above named ---------------
- -------------, duly elected --------------------- of QUANTUM CORPORATION
a Delaware corporation, who being by me duly sworn, acknowledged the
foregoing instrument to be his/her free act and deed, and the free act
and deed of said QUANTUM CORPORATION, as aforesaid.
------------------------------
Notary Public
My Commission Expires: -------
[Raised Notary Seal]
[NOTE: ACKNOWLEDGMENT DATE CANNOT PRE-DATE THE DATE THE DOCUMENT IS
EXECUTED]
<PAGE>
Exhibit A
LEGAL DESCRIPTION
[REAL PROPERTY DESCRIPTION]
<PAGE>
EXHIBIT J
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of October 3, 1994, is entered
into by and between:
(1) QUANTUM CORPORATION, a Delaware corporation ("Borrower");
and
(2) CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking
corporation, acting as administrative and collateral agent (jointly in
such capacities, "Administrative Agent") for the financial institutions
which are from time to time parties to the Credit Agreement referred to
in Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Borrower,
the Banks, ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, the Banks have agreed to extend certain credit
facilities to Borrower upon the terms and subject to the conditions set
forth therein.
B. The Banks' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions,
to receipt by Administrative Agent of this Security Agreement, duly
executed by Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Borrower hereby agrees with Administrative
Agent, for the ratable benefit of the Banks and the Agents, as follows:
1. Definitions and Interpretation. When used in this Security
Agreement, the following terms shall have the following respective
meanings:
"Administrative Agent" shall have the meaning given to that term
in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Credit Agreement" shall have the meaning given to that term in
Recital A hereof.
"Depositary Bank" shall have the meaning given to that term in
subparagraph 4(e) hereof.
"Equipment" shall mean, collectively, all Collateral of the types
described in clause (a) of Attachment 1 hereto.
"Excluded Accounts" shall mean the deposit accounts and other
property constituting "Pledged Collateral" as that term is defined in
that certain Pledge Agreement dated as of August 18, 1992 (as amended
from time to time, the "LC Pledge Agreement") between Borrower and Bank
of America National Trust and Savings Association ("BofA"), as agent for
itself, ABN and CIBC; provided, however, that such accounts and other
property shall constitute Excluded Accounts only to the extent that (i)
the LC Pledge Agreement continues in effect, (ii) the LC Pledge
Agreement prohibits other liens in such accounts and property, (iii)
such accounts and property secure Borrower's obligations under that
certain Credit Agreement dated as of August 18, 1992 (as amended from
time to time) among Borrower, BofA, ABN and CIBC in connection with
letters of credit issued by BofA, ABN and CIBC pursuant thereto in an
aggregate face amount not exceeding $85,000,000 and (iv) the aggregate
dollar amount of such accounts and property does not exceed $94,000,000
at any time.
"Inventory" shall mean, collectively, all Collateral of the types
described in clause (b) of Attachment 1 hereto.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Agent or any Bank 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 the
Credit 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
thereunder.
"Receivables" shall have the meaning given to that term in
Attachment 1 hereto.
"Related Contracts" shall have the meaning given to that term in
Attachment 1 hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Credit Agreement shall have the respective meanings
given to those terms in the Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the
UCC. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Security Agreement, apply to this Security Agreement and are hereby
incorporated by reference.
2. Grant of Security Interest. As security for the
Obligations, Borrower hereby pledges and assigns to Administrative Agent
(for the ratable benefit of the Banks and Agents) and grants to
Administrative Agent (for the ratable benefit of the Banks and Agents) a
security interest in all right, title and interest of Borrower in and to
the property described in Attachment 1 hereto (except for the Excluded
Accounts), whether now owned or hereafter acquired (collectively and
severally, the "Collateral"), which Attachment 1 is incorporated herein
by this reference.
3. Representations and Warranties. Borrower represents and
warrants to the Banks and Agents as follows:
(a) Borrower is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights in the
Collateral, will be the owner thereof). No other Person has (or, in the
case of after-acquired Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of Lien,
purchase option or otherwise) in, against or to the Collateral, other
than Permitted Liens.
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will have) a
first priority perfected security interest in the Collateral; provided,
however, that (i) the security interest of Administrative Agent may be
subject to Permitted Liens and (ii) Borrower makes no representation or
warranty with respect to the perfection of Administrative Agent's
security interest in Collateral consisting of (A) motor vehicles and
other vehicles subject to a certificate of title statute to the extent
Administrative Agent has not required Borrower to comply with the
requirements set forth in such statute for the perfection of security
interests, (B) instruments having a value of $1,000,000 or less which
have not been delivered to Administrative Agent, (C) deposit accounts for
which Administrative Agent has not required Borrower to deliver a notice
as provided in subparagraph 4(e) hereof, (D) goods located outside the
United States at the time this Security Agreement is executed (or, in
the case of after-acquired goods, at the time such goods are acquired),
which goods do not exceed in aggregate book value $6,000,000, (E) the
rights of Borrower under the laws of jurisdictions outside the United
States in intellectual property to the extent Administrative Agent has
not required Borrower to comply with the requirements of such
jurisdiction for the perfection of security interests in such rights or
(F) certificated securities in the possession of any financial
intermediary or uncertificated securities registered in the name of
Borrower on the books of any financial intermediary to the extent
Administrative Agent has not required Borrower to cause such financial
intermediary to register the security interest of Administrative Agent
in the books of such financial intermediary. As security for the
Quantum Europe Note, Borrower has (or in the case of after-acquired
Collateral, at the time Quantum Europe acquires rights therein, will
have) a first priority perfected security interest (or Similar Lien) in
the accounts of Quantum Europe, the Quantum Europe Deposit Accounts and
the other property of Quantum Europe covered by the Quantum Europe
Security Documents; provided, however, that the security interest (or
Similar Lien) of Borrower may be subject to Permitted Liens.
(c) All Equipment and Inventory are (i) located at the locations
indicated in Attachment 2 hereto (or at such other locations as Borrower
may indicate in a written notice delivered to Administrative Agent
pursuant to subparagraph 4(d) hereof), (ii) in transit to such locations
or (iii) in transit to a third party purchaser which will become
obligated on a Receivable to Borrower upon receipt. Except for
Equipment and Inventory referred to in clauses (ii) and (iii) of the
preceding sentence, Borrower has exclusive possession and control of the
Inventory and Equipment.
(d) All Inventory has been (or, in the case of hereafter
produced Inventory, will be) produced in compliance with all applicable
Governmental Rules, including the Fair Labor Standards Act (if
applicable), except for any noncompliance which is not reasonably likely
to have a Material Adverse Effect.
(e) Borrower keeps all records concerning the Receivables and
the originals of all Related Contracts at its chief executive office
located at the address set forth in item 2 of Attachment 3 hereto (or at
such other chief executive office of Borrower as Borrower may indicate
in a written notice delivered to Administrative Agent pursuant to
subparagraph 4(d) hereof).
(f) Borrower has delivered to Administrative Agent, together
with all necessary stock powers, endorsements, assignments and other
necessary instruments of transfer, the originals of all Receivables
consisting of instruments and chattel paper in amounts exceeding
$1,000,000.
(g) Each Receivable included in the calculation of the Borrowing
Base is genuine and enforceable against the party obligated to pay the
same free from any right of rescission, defense, setoff or discount.
(h) The information set forth in Attachment 3 hereto is true,
complete and correct in all material respects.
4. Covenants. Borrower hereby agrees as follows:
(a) Borrower, at Borrower's expense, shall promptly procure,
execute and deliver to Administrative Agent all documents, instruments
and agreements and perform all acts which are necessary, or which
Administrative Agent may reasonably request, to establish, maintain,
preserve, protect and perfect the Collateral, the Lien granted to
Administrative Agent therein and the first priority of such Lien
(subject to Permitted Liens) or to enable Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the preceding
sentence, Borrower shall (i) procure, execute and deliver to
Administrative Agent all stock powers, endorsements, assignments,
financing statements and other instruments of transfer reasonably
requested by Administrative Agent, (ii) deliver to Administrative Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper in amounts exceeding $1,000,000
(or, if an Event of Default has occurred and is continuing, in any
amount to the extent requested by Administrative Agent) and (iii) cause
the Lien of Administrative Agent in any Collateral consisting of
securities to be recorded or registered in the books of any financial
intermediary or clearing corporation reasonably requested by
Administrative Agent.
(b) Borrower shall not use any Collateral or permit any
Collateral to be used in violation of (i) any provision of the Credit
Agreement, this Security Agreement or any other Credit Document,
(ii) any applicable Governmental Rule or Contractual Obligation where
such use could reasonably be expected to have a Material Adverse Effect,
or (iii) any policy of insurance covering the Collateral where such use
is reasonably likely to have a Material Adverse Effect.
(c) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges (except to the
extent constituting Permitted Liens) now or hereafter imposed upon,
relating to or affecting any Collateral.
(d) Without ninety (90) days' prior written notice to
Administrative Agent, Borrower shall not (i) change Borrower's name or
chief executive office (or the office(s) in which Borrower's records
relating to Receivables or the originals of Related Contracts are kept),
(ii) keep Collateral consisting of chattel paper and documents at any
location other than its office(s) set forth in item 2 of Attachment 3
hereto (or at such other office(s) of Borrower as Borrower may indicate
in a written notice delivered to Administrative Agent pursuant to this
subparagraph 4(d)), or (iii) keep Collateral consisting of Equipment,
Inventory or other goods at any location other than the locations set
forth in Attachment 2 hereto, except for goods in transit to or from
such locations.
(e) For each deposit account maintained by Borrower (except for
the Excluded Accounts), Borrower shall, at the request of Administrative
Agent, (i) execute and deliver to the bank or other depository
institution at which such deposit account is maintained (the "Depositary
Bank") a Notice of Security Interest in the form of Attachment 4 hereto
(or other form acceptable to Administrative Agent) and (ii) use its best
efforts to cause the Depositary Bank to execute and deliver to
Administrative Agent an Acknowledgment and Agreement in the form set
forth in such Notice of Security Interest. Without ten (10) days prior
written notice to Administrative Agent, Borrower shall not establish any
deposit account not set forth in item 16 of Attachment 3 hereto.
(f) Borrower shall, if requested by Administrative Agent,
deposit, or cause to be deposited, all remittances, checks and other
funds (in whatever form) received with respect to Receivables to a
deposit account for which Borrower has complied with subparagraph 4(e)
above and in which Administrative Agent has a first priority perfected
security interest.
(g) Borrower shall appear in and defend any action or proceeding
which may affect its title to or Administrative Agent's security
interest in the Collateral if an adverse decision is reasonably likely
to have a Material Adverse Effect.
(h) Borrower shall keep separate, accurate and complete records
of the Collateral and shall permit Administrative Agent to examine and
make copies of such records and provide such reports and information
relating to the Collateral as Administrative Agent may reasonably
request from time to time.
(i) Borrower shall not surrender or lose possession of (other
than to Administrative Agent), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein except as permitted in the Credit Agreement, and Borrower shall
keep the Collateral free of all Liens except Permitted Liens.
(j) If directed by Administrative Agent, Borrower shall type,
print or stamp conspicuously on the face of all original copies of all
Collateral consisting of chattel paper and documents in amounts
exceeding $50,000 not in the possession of Administrative Agent a legend
satisfactory to Administrative Agent indicating that such chattel paper
and documents are subject to the security interest granted hereby.
(l) Borrower shall collect, compromise, enforce and receive
delivery of the Receivables in accordance with its past practices until
otherwise notified by Administrative Agent.
(m) Borrower shall comply with all material Requirements of Law
applicable to Borrower which relate to the production, possession,
operation, maintenance and control of the Collateral except where
noncompliance is not reasonably likely to have a Material Adverse
Effect.
5. Authorized Action by Administrative Agent. Borrower hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and
agrees that Administrative Agent may perform (but Administrative Agent
shall not be obligated to and shall incur no liability to Borrower or
any third party for failure so to do) any act which Borrower is
obligated by this Security Agreement to perform, and to exercise such
rights and powers as Borrower might exercise with respect to the
Collateral, including, without limitation, the right to (a) collect by
legal proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now
or hereafter payable on or on account of the Collateral; (b) enter into
any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Collateral; (c) insure, process,
preserve and enforce the Collateral; (d) make any compromise or
settlement, and take any action it deems advisable, with respect to the
Collateral; (e) pay any indebtedness of Borrower relating to the
Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder; provided,
however, that Administrative Agent shall exercise such powers only after
the occurrence and during the continuance of an Event of Default.
Borrower agrees to reimburse Administrative Agent upon demand for all
reasonable costs and expenses payable to third parties, including
attorneys' fees, Administrative Agent may incur while acting as
Borrower's attorney-in-fact hereunder, all of which costs and expenses
are included in the Obligations. Borrower agrees that such care as
Administrative Agent gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in
Administrative Agent's possession; provided, however, that
Administrative Agent shall not be required to make any presentment,
demand or protest, or give any notice and need not take any action to
preserve any rights against any prior party or any other Person in
connection with the Obligations or with respect to the Collateral.
6. Default and Remedies. Borrower shall be deemed in default
under this Security Agreement upon the occurrence and during the
continuance of an Event of Default, as that term is defined in the
Credit Agreement. In addition to all other rights and remedies granted
to Administrative Agent by this Security Agreement, the Credit
Agreement, the other Credit Documents, the UCC and other applicable
Governmental Rules, Administrative Agent may, upon the occurrence and
during the continuance of any Event of Default, exercise any one or more
of the following rights and remedies: (a) collect, receive, appropriate
or realize upon the Collateral or otherwise foreclose or enforce
Administrative Agent's security interests in any or all Collateral in
any manner permitted by applicable Governmental Rules or in this
Security Agreement; (b) notify any or all account debtors to make
payments on Receivables directly to Administrative Agent; (c) sell or
otherwise dispose of any or all Collateral at one or more public or
private sales, whether or not such Collateral is present at the place of
sale, for cash or credit or future delivery, on such commercially
reasonable terms and in such commercially reasonable manner as
Administrative Agent may determine; (d) require Borrower to assemble the
Collateral and make it available to Administrative Agent at a place to
be designated by Administrative Agent which is reasonably convenient to
both parties; (e) enter onto any property where any Collateral is
located and take possession thereof with or without judicial process;
and (f) prior to the disposition of the Collateral, store, process,
repair or recondition any Collateral consisting of goods, perform any
obligations and enforce any rights of Borrower under any Related
Contracts or otherwise prepare and preserve Collateral for disposition
in any manner and to the extent Administrative Agent deems appropriate.
In furtherance of Administrative Agent's rights hereunder upon the
occurrence and during the continuance of any Event of Default, Borrower
hereby grants to Administrative Agent an irrevocable, non-exclusive
license (exercisable without royalty or other payment by Administrative
Agent) to use, license or sublicense any patent, trademark, tradename,
copyright or other intellectual property in which Borrower now or
hereafter has any right, title or interest(to the extent Borrower may
grant such license or sublicense without breaching the agreement
pursuant to which it obtained its right, title and interest therein),
together with the right of access to all media in which any of the
foregoing may be recorded or stored. In any case where notice of any
sale or disposition of any Collateral is required, Borrower hereby
agrees that five (5) days notice of such sale or disposition is
reasonable.
7. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Borrower or Administrative Agent under this Security Agreement
shall be given as provided in Paragraph 8.01 of the Credit Agreement.
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Security Agreement may be amended or waived only as
provided in the Credit Agreement. No failure or delay by Administrative
Agent 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 any 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.
(c) Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of Administrative Agent, Borrower,
the Banks and the other Agents and their respective successors and
assigns; provided, however, that Administrative Agent, Borrower, the
Banks and the other Agents may sell, assign and delegate their
respective rights and obligations hereunder only as permitted by the
Credit Agreement. The Banks and the Agents may disclose this Security
Agreement as provided in the Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Security
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.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent under this Security Agreement shall be in addition
to all rights, powers and remedies given to Administrative Agent, the
Banks and the other Agents by virtue of any applicable Governmental
Rule, the Credit Agreement or any other Credit Document, all of which
rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Administrative Agent's
rights hereunder. Borrower waives any right to require Administrative
Agent, any Bank or any other Agent to proceed against any Person or to
exhaust any Collateral or to pursue any remedy in Administrative
Agent's, Bank's or any other Agent's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower
under this Security Agreement shall be made by Borrower free and clear
of and without deduction for any and all present and future taxes,
levies, charges, deductions and withholdings (except as otherwise
provided in the Credit Agreement). In addition, Borrower shall pay upon
demand any stamp or other taxes, levies or charges of any jurisdiction
with respect to the execution, delivery, registration, performance and
enforcement of this Security Agreement. Upon request by Agent, Borrower
shall furnish evidence satisfactory to Administrative Agent that all
requisite authorizations and approvals by, and notices to and filings
with, governmental authorities and regulatory bodies have been obtained
and made and that all requisite taxes, levies and charges have been
paid.
(g) Borrower's Continuing Liability. Notwithstanding any
provision of this Security Agreement or any other Credit Document or any
exercise by Administrative Agent of any of its rights hereunder or
thereunder (including, without limitation, any right to collect or
enforce any Collateral), (i) Borrower shall remain liable to perform its
obligations and duties in connection with the Collateral (including,
without limitation, the Related Contracts and all other agreements
relating to the Collateral) and (ii) neither Administrative Agent, any
Agent nor any Bank shall assume or be considered to have assumed any
liability to perform such obligations and duties or to enforce any of
Borrower's rights in connection with the Collateral (including, without
limitation, the Related Contracts and all other agreements relating to
the Collateral).
(h) Attorneys' Fees. In the event of any legal action,
including any judicial proceeding, arbitration or other proceeding, to
enforce or interpret any provision of this Security Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys'
fees and other costs incurred from the losing party.
(i) Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the State of California
without reference to conflicts of law rules (except to the extent
otherwise provided in the UCC).
(j) Counterparts. This Security 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.
IN WITNESS WHEREOF, Borrower and Administrative Agent have caused
this Security Agreement to be executed as of the day and year first
above written.
QUANTUM CORPORATION
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
Name:
Title:
<PAGE>
ATTACHMENT 1
TO SECURITY AGREEMENT
All right, title and interest of Borrower, whether now owned or
hereafter acquired, in and to the following property:
(a) All equipment and fixtures (including, without limitation,
all manufacturing equipment, furniture, vehicles and other machinery and
office equipment), together with all additions and accessions thereto
and replacements therefor;
(b) All inventory (including, without limitation, (i) all disk
drives, tape drives, head stacks and gimbel assemblies and all other raw
materials, work in process and finished goods and (ii) all such goods
which are returned to or repossessed by Borrower), together with all
additions and accessions thereto, replacements therefor, products
thereof and documents therefor;
(c) All accounts, chattel paper, instruments, deposit accounts
and other rights to the payment of money (including, without limitation,
general intangibles and contract rights) (collectively, the
"Receivables") and all contracts, purchase orders, security agreements,
leases, guaranties and other agreements evidencing, securing or
otherwise relating to the Receivables (including, without limitation,
the Quantum Europe Note and the other Quantum Europe Loan Documents)
(collectively, the "Related Contracts");
(d) All other general intangibles and contract rights not
otherwise described above (including, without limitation, (i) all
rights, warranties and indemnities under the DEC Purchase Agreement and
the other DEC Purchase Documents, (ii) customer and supplier lists and
contracts, books and records, insurance policies, tax refunds, contracts
for the purchase of real or personal property, (iii) all patents,
copyrights, trademarks, tradenames and service marks, (iv) all licenses
to use, applications for, and other rights to, such patents, copyrights,
trademarks, tradenames and service marks, and (v) all goodwill of
Borrower);
(e) All other personal property not otherwise described above
(including, without limitation, all money, certificated securities,
uncertificated securities, documents and goods); and
(f) All proceeds of the foregoing (including, without
limitation, whatever is receivable or received when Collateral or
proceeds is sold, collected, exchanged, returned, substituted or
otherwise disposed of, whether such disposition is voluntary or
involuntary, including rights to payment and return premiums and
insurance proceeds under insurance with respect to any Collateral, and
all rights to payment with respect to any cause of action affecting or
relating to the Collateral)
<PAGE>
ATTACHMENT 2
TO SECURITY AGREEMENT
LOCATIONS OF EQUIPMENT AND INVENTORY
<PAGE>
ATTACHMENT 3
TO SECURITY AGREEMENT
BORROWER PROFILE
Quantum Corporation
("Borrower")
1. The current legal name of Borrower is ----------------
- ------------------------------------------------------------------.
2. Borrower's chief executive office is located at ------
- ------------------------------------------------------------------.
. Borrower's federal employer I.D. no. is -----------------.
3. Borrower was incorporated on -------------, 19-- in the
state of ---------. Since its incorporation, Borrower has had no other
legal name (other than its current legal name) except for the following
(provide name and date of change):
Date Name
Prior Name Changed
- ------------------ -------------
- ------------------ -------------
- ------------------ -------------
- ------------------ -------------
4. Borrower does not do business under any trade name except
for the following (provide name and indicate whether registered):
Trade Name Registered?
- ------------------ -------------
- ------------------ -------------
- ------------------ -------------
- ------------------ -------------
5. Since Borrower's incorporation, no other corporation has
been merged into Borrower except for the following (provide names, dates
and brief description of transactions):
Name of Date of Description of
Corporation Merger Transaction
- --------------- ------- -------------
- --------------- ------- -------------
- --------------- ------- -------------
- --------------- ------- -------------
- --------------- ------- -------------
- --------------- ------- -------------
6. Borrower has not acquired any of its assets in a bulk sale
or any other transaction not in the ordinary course of business of the
seller except for the following (provide description of assets, date and
description of transaction and name of seller):
Description Date of Description of
of Assets Acquisition Transaction Seller
- ----------- ----------- -------------- ------------
- ----------- ----------- -------------- ------------
- ----------- ----------- -------------- ------------
- ----------- ----------- -------------- ------------
- ----------- ----------- -------------- ------------
- ----------- ----------- -------------- ------------
- ----------- ----------- -------------- ------------
7. The following is a complete list of all states and other
jurisdictions in which Borrower is qualified to do business:
State or Jurisdiction
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
8. The following is a complete list of all offices and other
places of business at which Borrower currently conducts or has within
the last four months conducted business (provide address, owner of site
and brief description of assets located there):
Brief Description
Address Owner of Site of Assets
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
(Sites marked with an asterisk have been closed.)
9. The following is a complete list of all persons and entities
(other than Borrower) who at any time have possession of any assets of
Borrower (provide name, address where located and description of assets
located there):
Person or Brief Description
Entity Address of Assets
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
- ------------------ --------------------- ----------------------
<PAGE>
Of the persons and entities listed above in this item 9;
a. The following persons and entities are warehouses which
issue warehouse receipts:
Person or
Entity
- -------------
- -------------
- -------------
- -------------
- -------------
b. The following persons and entities process or finish
inventory or other goods for Borrower:
Person or
Entity
- -------------
- -------------
- -------------
- -------------
- -------------
c. The following persons and entities hold inventory or other
goods on consignment for Borrower:
Person or
Entity
- -------------
- -------------
- -------------
- -------------
- -------------; and
d. The following other persons and entities have possession of
assets of Borrower for the purposes indicated:
Person or
Entity Purpose
- ------------ -------------------
- ------------ -------------------
- ------------ -------------------
- ------------ -------------------
- ------------ -------------------
<PAGE>
10. The following is a complete list of all motor vehicles owned
by Borrower (describe each vehicle by make, model and year and indicate
for each the state in which registered and the state in which based):
State of State in which
Vehicle Registration Based
11. The following is a complete list of all aircraft and boats
and all other inventory, equipment and other goods of Borrower which are
subject to any certificate of title or other registration statute of the
United States, any state or any other jurisdiction (provide description
of covered goods and indicate registration system and jurisdiction):
Registration
Goods System Jurisdiction
12. The following is a complete list of all patents, copyrights,
trademarks, tradenames and service marks registered in the name of
Borrower:
a. Patents Registration No.
b. Copyrights Registration No.
c. Trademarks,
Trade Names and
Service Marks Registration No.
13. The following is a complete list of all subsidiaries of
Borrower (provide name of subsidiary, jurisdiction of incorporation,
outstanding shares and shares owned by Borrower):
Shares Shares Owned
Subsidiary Jurisdiction Outstanding by Borrower
14. The following is a complete list of all other stock (other
than the stock of subsidiaries described in item 13 above), bonds,
debentures, notes and other securities owned by Borrower which have a
value (higher of cost or market value) of $ or more (provide
name of issuer, a description of security and value):
Description of
Issuer Security Value
15. The following is a complete list of all notes payable to
Borrower not otherwise listed in item 14 above (provide name of obligor,
date, original principal amount and current principal balance):
Original Current
Obligor Date Amount Balance
16. The following is a complete list of all bank accounts
maintained by Borrower (provide name and address of depository bank,
type of account and account number):
Depository Bank Type of Account
Bank Address Account Number
17. Does Borrower regularly receive letters of credit from
customers to secure payments of sums owed to Borrower?
Yes ----. No ----.
18. Does Borrower regularly have accounts receivable due from,
or contracts with, the United States government or any agency or
department thereof?
Yes ----. No ----.
If yes, indicate the percentage of Borrower's total outstanding
accounts receivable that are due from the United States government and
agencies and departments thereof: --------%
19. Does Borrower regularly receive advance deposits from
customers for goods not yet delivered to such customers?
Yes . No .
20. Does Borrower regularly import goods from outside the United
States?
Yes . No .
21. The following is a complete list of all third parties who
perform data processing services for Borrower or maintain records with
respect to Borrower's accounts receivable (provide name and address of
third party and describe services performed and/or records maintained):
Description of Services
Name Address and/or Records
22. The following is a complete list of all data processing
equipment of Borrower which is leased (provide description of equipment
and name and address of lessor):
Lessor
Description of Equipment Lessor Address
23. The following is a complete list of all data processing
equipment of Borrower which is subject to security interests of persons
other than Bank (provide description of equipment and name and address
of secured party):
Secured Party
Description of Equipment Secured Party Address
24. The most recent federal income tax returns of Borrower that
have been audited by the IRS are for the fiscal year ended ,
19 .
25. Neither Borrower nor any of its property is subject to any
tax assessments which are currently outstanding and unpaid except for
the following (provide name of assessing authority and amount and
description of assessment):
Assessing Authority Amount Description
26. Neither Borrower nor any of its property is subject to any
judgment lien, attachment, assessment (other than any tax assessments
set forth in item 25 above) or any other similar process which is
currently outstanding and unpaid except for the following (provide name
of party asserting lien, etc., amount and description of lien, etc.):
Asserting Party Amount Description
27. None of Borrower's property is subject to any Lien of any
type except for (a) the tax assessments described in item 25 above, (b)
the judgment liens, attachments, assessments and other similar processes
described in item 26 above, (c) security interests in personal property
of Borrower evidenced by UCC financing statements filed currently on
file with and (d) the following (provide name of lien holder, amo
the Lien and description of Lien):
Lien Holder Amount Description
<PAGE>
ATTACHMENT 4
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
- ---------------,-----
[Name of Depositary Bank]
[Address of Depositary Bank]
- -------------------------
- -------------------------
QUANTUM CORPORATION, a Delaware corporation ("Borrower"), and
CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking corporation,
acting as administrative and collateral agent for certain financial
institutions (jointly in such capacities, "Administrative Agent"), under
that certain Credit Agreement dated as of October 3, 1994 (the "Credit
Agreement"), hereby notify you that Borrower has granted to
Administrative Agent a security interest in all deposit accounts
maintained by Borrower with you including, without limitation, the
deposit accounts described below:
Account Depositor's Account
Number Name Type
- --------- ----------------------- -----------
- --------- ----------------------- -----------
- --------- ----------------------- -----------
Borrower and Administrative Agent authorize you to continue to allow
Borrower to make deposits to, draw checks upon and otherwise withdraw
funds from such deposit accounts (the "Deposit Accounts") without the
consent of Administrative Agent until Administrative Agent shall
instruct you otherwise.
Borrower has authorized Administrative Agent to inform you when an
Event of Default (as defined in the Credit Agreement) has occurred and
is continuing and at such time instruct you to cease to permit any
further payments or withdrawals from the Deposit Accounts by Borrower
and/or to pay any or all amounts in the Deposit Accounts to
Administrative Agent. Borrower authorizes and directs you to comply
with all such instructions received by you from Administrative Agent
without further inquiry on your part and hereby agrees to indemnify and
hold harmless you and your officers, directors and employees from and for
any compliance by you with such instructions.
QUANTUM CORPORATION
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By:
Name:
Title:
<PAGE>
ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSITARY BANK
The undersigned depositary bank hereby acknowledges receipt of the
above notice and agrees with Borrower and Administrative Agent to comply
with any instruction it may receive from Administrative Agent in
accordance therewith. The undersigned confirms to Administrative Agent
that the information set forth above regarding the Deposit Accounts is
accurate, that such Deposit Accounts are currently open and that the
undersigned has no prior notice of any other security interest, lien or
interest in such Deposit Accounts. The undersigned waives any right of
setoff except for its right of recoupment for returned items.
By:
Name:
Title:
<PAGE>
EXHIBIT K
SECURITY AGREEMENT
(INTELLECTUAL PROPERTY)
THIS SECURITY AGREEMENT (INTELLECTUAL PROPERTY), dated as of
October 3, 1994 is entered into by and between:
(1) QUANTUM CORPORATION, a Delaware corporation ("Borrower");
and
(2) CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking
corporation, acting as administrative and collateral agent (jointly in
such capacities, "Administrative Agent") for the financial institutions
which are from time to time parties to the Credit Agreement referred to
in Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Borrower,
the Banks, ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, the Banks have agreed to extend certain credit
facilities to Borrower upon the terms and subject to the conditions set
forth therein.
B. The Banks' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions,
to receipt by Administrative Agent of this Security Agreement duly
executed by Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Borrower hereby agrees with Agent, for the
ratable benefit of the Banks and Agent, as follows:
1. Definitions and Interpretation. When used in this Security
Agreement, the following terms shall have the following respective
meanings:
"Administrative Agent" shall have the meaning given to that term
in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Credit Agreement" shall have the meaning given to that term in
Recital A hereof.
"Copyright Office" shall mean the United States Copyright Office
or any successor office or agency thereto.
"Copyrights" shall have the meaning given to that term in
Attachment 1 hereto.
"Mask Works" shall have the meaning given to that term in
Attachment 1 hereto.
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Borrower to any
Agent or any Bank 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 the
Credit Agreement or any of the other Credit Documents, including all
interest, fees, charges, expenses, attorneys' fees and accountants' fees
chargeable to and payable by Borrower hereunder and thereunder.
"Patent and Trademark Office" shall mean the United States Patent
and Trademark Office or any successor office or agency thereto.
"Patent Applications" shall mean all applications made by, or on
behalf of, Borrower to the Patent and Trademark Office or to any similar
office or agency of any foreign country or political subdivision thereof
for the registration of Patents.
"Patent Registrations" shall mean all Patents registered with the
Patent and Trademark Office or with any similar office or agency of any
foreign country or political subdivision thereof and all Patent
Applications.
"Patents" shall have the meaning given to that term in Attachment
1 hereto.
"Trade Secrets" shall have the meaning given to that term in
Attachment 1 hereto.
"Trademarks" shall have the meaning given to that term in
Attachment 1 hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Credit Agreement shall have the respective meanings
given to those terms in the Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the
UCC. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Security Agreement, apply to this Security Agreement and are hereby
incorporated by reference.
2. Grant of Security Interest. As security for the
Obligations, Borrower hereby pledges and assigns to Administrative Agent
(for the ratable benefit of the Banks and Agents) and grants to
Administrative Agent (for the ratable benefit of the Banks and Agents) a
security interest in all right, title and interest of Borrower in and to
the property described in Attachment 1 hereto, whether now owned or
hereafter acquired (collectively and severally, the "Collateral"), which
Attachment 1 is incorporated herein by this reference.
3. Representations and Warranties. Borrower represents and
warrants to the Banks and Agents as follows:
(a) Borrower is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights in the
Collateral, will be the owner thereof). No other Person has (or, in the
case of after-acquired Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of Lien,
purchase option or otherwise) in, against or to the Collateral, other
than Permitted Liens.
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will have) a
first priority perfected security interest in the Collateral, subject to
Permitted Liens; provided, however, that (i) the security interest of
Administrative Agent may be subject to Permitted Liens and (ii)
Administrative Agent must make the filings with the Patent and Trademark
Office contemplated by this Security Agreement to perfect its security
interest in Borrower's Patents and Trademarks registered with that
office.
(c) Borrower has the sole, full and unencumbered right, title
and interest in and to (i) each of the Trademarks described in
Schedule A to Attachment 1 hereto for the goods and services covered by
the registrations thereof, (ii) each of the Patents described in
Schedule B to Attachment 1 hereto, (iii) each of the Copyrights
described in Schedule C to Attachment 1 hereto and (iv) each of the Mask
Works described in Schedule D to Attachment 1 hereto. The registrations
for such Trademarks and Patents are valid and enforceable and in full
force and effect and none of the Patents has been abandoned or
dedicated. According to the records of the Copyright Office, such
Copyrights and Mask Works are valid and enforceable and in full force
and effect.
(d) Borrower does not own any Patents, Trademarks, Copyrights or
Mask Works registered in, or the subject of pending applications in, the
Patent and Trademark Office or the Copyright Office, other than those
described in Schedules A, B, C and D to Attachment 1 hereto.
(e) To the best of Borrower's knowledge, no claim has been made
by any third party and remains unresolved that any of the Patents,
Trademarks, Copyrights or Mask Works is invalid and unenforceable or
violates or may violate the rights of any Person.
(f) Set forth in Schedule E to Attachment 1 hereto is a complete
list of all material licenses of Patents, Trademarks, Copyrights, Mask
Works and Trade Secrets which Borrower has granted to any Person.
(g) Set forth in Schedule F to Attachment 1 hereto is a complete
list of all licenses of Patents, Trademarks, Copyrights, Mask Works and
Trade Secrets which any Person has granted to Borrower.
(h) Borrower has obtained from each employee who may be
considered the inventor of patentable inventions (invented within the
scope of such employee's employment with Borrower) an assignment to
Borrower of all rights to such inventions, including Patents.
(i) Borrower has taken all commercially reasonable steps to
protect the secrecy and the validity under applicable law of all
material Trade Secrets.
4. Covenants of Borrower. Borrower hereby agrees as follows:
(a) Borrower, at Borrower's expense, shall promptly procure,
execute and deliver to Administrative Agent all documents, instruments
and agreements and perform all acts which are necessary, or which
Administrative Agent may reasonably request, to establish, maintain,
preserve, protect and perfect the Collateral, the Lien granted to
Administrative Agent therein and the first priority of such Lien
(subject to Permitted Liens) or to enable Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the preceding
sentence, Borrower shall (i) execute all notices of security interest
for each relevant type of intellectual property in forms suitable for
filing with the Patent and Trademark Office or the Copyright Office, as
applicable, substantially in the forms of Attachments 2 and 3 hereto or
other forms acceptable to Administrative Agent and (ii) take all
commercially reasonable steps in any proceeding before the Patent and
Trademark Office, the Copyright Office or any similar office or agency
in any other country or any political subdivision thereof, to diligently
prosecute or maintain, as applicable, each application and registration
of the Patents, Trademarks, Copyrights and Mask Works, including filing
of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings (except to the
extent that dedication, abandonment or invalidation is permitted
hereunder or would not be reasonably likely to have a Material Adverse
Effect).
(b) Borrower shall not use any Collateral or permit any
Collateral to be used in violation of (i) any provision of the Credit
Agreement, this Security Agreement or any other Credit Document,
(ii) any applicable Governmental Rule or Contractual Obligation where
such use could reasonably be expected to have a Material Adverse Effect,
or (iii) any policy of insurance covering the Collateral where such use
is reasonably likely to have a Material Adverse Effect.
(c) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges (except to the
extent constituting Permitted Liens) now or hereafter imposed upon,
relating to or affecting any Collateral.
(d) Borrower shall appear in and defend any action or proceeding
which may affect its title to or Administrative Agent's security
interest in the Collateral if an adverse decision is reasonably likely
to have a Material Adverse Effect.
(e) Borrower shall keep separate, accurate and complete records
of the Collateral and shall permit Administrative Agent to examine and
make copies of such records and provide such reports and information
relating to the Collateral as Administrative Agent may reasonably
request from time to time.
(f) Borrower shall not sell, encumber, lease, rent, option,
license or otherwise dispose of or transfer any Collateral or right or
interest therein except as permitted in the Credit Agreement, and
Borrower shall keep the Collateral free of all Liens except Permitted
Liens.
(g) Borrower (either directly or through licensees) will
continue to use the Trademarks in connection with each and every
trademark class of goods or services applicable to its current line of
products or services as reflected in its current catalogs, brochures,
price lists or similar materials in order to maintain the Trademarks in
full force and effect free from any claim of abandonment for nonuse, and
Borrower will not (and will not permit any licensee thereof to) do any
act or knowingly omit to do any act whereby any Trademark may become
invalidated. Borrower will not do any act, or omit to do any act,
whereby the Patents or Patent Registrations may become abandoned or
dedicated or the remedies available against potential infringers
weakened if such action or omission would be reasonably likely to have a
Material Adverse Effect and shall notify Administrative Agent
immediately if it knows of any reason or has reason to know that any
such Patent Registration may become abandoned or dedicated. Borrower
will not do any act or omit to do any act, whereby the Copyrights or
Mask Works may become abandoned or dedicated or the remedies available
against potential infringers weakened if such action or omission would
be reasonably likely to have a Material Adverse Effect, and shall notify
Administrative Agent immediately if it knows of any reason or has reason
to know that any such Copyright or Mask Work may become abandoned or
dedicated.
(h) Borrower will promptly notify Administrative Agent upon the
filing, either by Borrower or through any agent, employee, licensee or
designee, of (i) an application for the registration of any Patent,
Trademark, Copyright or Mask Work with the Patent and Trademark Office
or the Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, (ii) any assignment of any
Patent or Trademark, which Borrower may acquire from a third party, with
the Patent and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof, or (iii) any
assignment of any Copyright or Mask Work, which Borrower may acquire
from a third party, with the Copyright Office or any similar office or
agency in any other country or any political subdivision thereof.
(i) Borrower shall (i) make application to the Patent and
Trademark Office to register any material unpatented but patentable
inventions developed by Borrower or its employees (within the scope of
their employment), unless Borrower, in the exercise of its prudent
business judgment, deems any such Patent not to have any significant
commercial value or determines that its rights thereunder are better
preserved as a Trade Secret, (ii) make application to the Patent and
Trademark Office to register any registerable but unregistered material
Trademarks used by Borrower in connection with its products or services
unless Borrower in the exercise of its prudent business judgment, deems
any such Trademark not to have any significant commercial value, and
(iii) make application to the Copyright Office to register any material
unregistered Copyright or Mask Work to which Borrower has rights unless
Borrower in the exercise of its prudent business judgment, deems any
such Copyright or Mask Work not to have any significant commercial value
or determines that its rights thereunder are better protected as a Trade
Secret.
(j) Borrower shall (i) use proper statutory notice in connection
with its use of the Patents, Trademarks, Copyrights and Mask Works,
(ii) maintain consistent standards of quality in its manufacture of
products sold under the Trademarks or provision of services in
connection with the Trademarks, and (iii) take all steps necessary to
protect the secrecy and the validity under applicable law of all
material Trade Secrets.
(k) If any Executive Officer of Borrower learns of any use by
any Person of any term or design likely to cause confusion with any
Trademark, Borrower shall promptly notify Administrative Agent of such
use and of all steps taken and to be taken to remedy any infringement of
such Trademark.
(l) Borrower shall maintain with each employee who may have
access to the Trade Secrets of Borrower an agreement by which such
employee agrees not to disclose such Trade Secrets and with each
employee who may be the inventor of patentable inventions (invented
within the scope of such employee's employment) an invention assignment
agreement requiring such employee to assign all rights to such
inventions, including, patents and patent applications, to Borrower and
further requiring such employee to cooperate fully with Borrower, its
successors in interest, including Administrative Agent, and their
counsel, in the prosecution of any patent application or in any
litigation involving the invention, whether such cooperation is required
during such employee's employment with Borrower or after the termination
of such employment.
5. Authorized Action by Administrative Agent. Borrower hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and
agrees that Administrative Agent may perform (but Administrative Agent
shall not be obligated to and shall incur no liability to Borrower or
any third party for failure so to do) any act which Borrower is
obligated by this Security Agreement to perform, and to exercise such
rights and powers as Borrower might exercise with respect to the
Collateral, including, without limitation, the right to (a) collect by
legal proceedings or otherwise and endorse, receive and receipt for all
royalties, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) insure,
process, preserve and enforce the Collateral; (c) make any compromise or
settlement, and take any action it deems advisable, with respect to the
Collateral; (d) pay any indebtedness of Borrower relating to the
Collateral; and (e) execute UCC financing statements and other
documents, instruments and agreements required hereunder; provided,
however, that Administrative Agent shall exercise such powers only after
the occurrence and during the continuance of an Event of Default. In
furtherance of the powers granted in this paragraph 5, Borrower shall
execute and deliver to Administrative Agent a Special Power of Attorney
in the form of Attachment 4 hereto. Borrower agrees to reimburse
Administrative Agent upon demand for all reasonable costs and expenses,
including attorneys' fees, Administrative Agent may incur while acting
as Borrower's attorney-in-fact hereunder, all of which costs and
expenses are included in the Obligations. Borrower agrees that such
care as Administrative Agent gives to the safekeeping of its own
property of like kind shall constitute reasonable care of the Collateral
when in Administrative Agent's possession; provided, however, that
Administrative Agent shall not be required to make any presentment,
demand or protest, or give any notice and need not take any action to
preserve any rights against any prior party or any other Person in
connection with the Obligations or with respect to the Collateral.
6. Default and Remedies. Borrower shall be deemed in default
under this Security Agreement upon the occurrence and during the
continuance of an Event of Default, as that term is defined in the
Credit Agreement. In addition to all other rights and remedies granted
to Administrative Agent by this Security Agreement, the Credit
Agreement, the other Credit Documents, the UCC and other applicable
Governmental Rules, Administrative Agent may, upon the occurrence and
during the continuance of any Event of Default, exercise any one or more
of the following rights and remedies: (a) collect, receive, appropriate
or realize upon the Collateral or otherwise foreclose or enforce
Administrative Agent's security interests in any or all Collateral in
any manner permitted by applicable Governmental Rules or in this
Security Agreement; (b) notify any or all licensees to make payments on
Receivables directly to Administrative Agent; (c) sell or otherwise
dispose of any or all Collateral at one or more public or private sales,
whether or not such Collateral is present at the place of sale, for cash
or credit or future delivery, on such commercially reasonable terms and
in such commercially reasonable manner as Administrative Agent may
determine; (d) upon five (5) Business Days' prior notice to Borrower,
direct Borrower not to make any further use of the Patents, the
Trademarks (or any mark similar thereto), the Copyrights (or any work
deriving therefrom), or the Mask Works for any purpose; (e) upon five
(5) Business Days' prior notice to Borrower, license, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis,
any of the Patents, Trademarks, Copyrights or Mask Works, throughout the
world for such term or terms, on such conditions, and in such manner, as
Agent shall in its sole discretion determine; (f) enforce (and upon
notice to Borrower have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of Borrower in, to and
under any one or more license agreements with respect to the Collateral
(without assuming any obligations or liability thereunder), and take or
refrain from taking any action under any thereof; and (g) in addition to
the foregoing, in order to implement the assignment, sale or other
disposal of any of the Collateral, pursuant to the authority granted in
paragraph 5 hereof, execute and deliver on behalf of Borrower, upon five
(5) Business Days' prior notice to Borrower, one or more instruments of
assignment of the Patents, Trademarks, Copyrights or Mask Works (or any
application or registration thereof), in form suitable for filing,
recording or registration in any country.
7. Indemnification and Release.
(a) Borrower assumes all responsibility and liability arising
from the use of the Patents, Trademarks, Copyrights and Mask Works, and
Borrower hereby indemnifies and holds Administrative Agent, each other
Agent and each Bank and their respective directors, officers, employees,
agents and any of their respective Affiliates ("Indemnitees") harmless
from and against any claim, suit, loss, damage or expense (including
reasonable attorneys' fees and expenses) arising out of or in connection
with any alleged infringement of any patent, trademark, service mark,
trade name, trade secret, copyright or mask work of a third party or
alleged defect in any product manufactured, promoted or sold by Borrower
(or any Affiliate of Borrower) in connection with any Patent, Trademark,
Copyright or Mask Work or out of the manufacture, promotion, labeling,
sale or advertisement of any product or service by Borrower (or any
Affiliate of Borrower). Borrower agrees that Administrative Agent, the
Agents and the Banks do not assume, and shall have no responsibility
for, the payment of any sums due or to become due under any agreement or
contract included in the Collateral or the performance of any
obligations to be performed under or with respect to any such agreement
or contract by Borrower, and Borrower hereby agrees to indemnify and
hold each Indemnitee harmless with respect to any and all claims by any
Person relating thereto.
(b) Borrower agrees to indemnify and hold the Indemnitees
harmless and against any claim, suit, loss, damage or expense (including
reasonable attorneys' fees and expenses) arising out of or in connection
with any action taken or omitted to be taken by Administrative Agent
hereunder with respect to any license agreement of Borrower.
(c) Borrower agrees to indemnify and hold the Indemnitees
harmless and against any claim, suit, loss, damage or expense (including
reasonable attorneys' fees and expenses) arising out of or in connection
with any claim, suit or proceeding instituted by Borrower or in which
Borrower participates.
(d) Borrower hereby releases the Indemnitees from any claims,
causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by Administrative Agent
under the powers of attorney granted in paragraph 5 hereof, other than
actions taken or omitted to be taken through the gross negligence or
willful misconduct of such Indemnitees or any breach of this Agreement
or the other Credit Documents.
(e) Borrower agrees to cause Administrative Agent to be named as
an additional insured with respect to any policy of insurance held by
Borrower from time to time covering product liability or intellectual
property infringement risk.
(f) Nothing contained in this Paragraph 7 shall, however, be
deemed to require Borrower to indemnify or hold harmless any Indemnitee
from any losses, costs, claims or damages arising from or relating to
such Indemnitee's gross negligence or willful misconduct.
8. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Borrower or Administrative Agent under this Security Agreement
shall be given as provided in Paragraph 8.01 of the Credit Agreement.
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Security Agreement may be amended or waived only as
provided in the Credit Agreement. No failure or delay by Administrative
Agent 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 any 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.
(c) Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of Administrative Agent, Borrower,
the Banks and the other Agents and their respective successors and
assigns; provided, however, that Administrative Agent, Borrower, the
Banks and the other Agents may sell, assign and delegate their
respective rights and obligations hereunder only as permitted by the
Credit Agreement. The Banks and the Agents may disclose this Security
Agreement as provided in the Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Security
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.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent under this Security Agreement shall be in addition
to all rights, powers and remedies given to Administrative Agent, the
Banks and the other Agents by virtue of any applicable Governmental
Rule, the Credit Agreement or any other Credit Document, all of which
rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Administrative Agent's
rights hereunder. Borrower waives any right to require Administrative
Agent, any Bank or any other Agent to proceed against any Person or to
exhaust any Collateral or to pursue any remedy in Administrative
Agent's, Bank's or any other Agent's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower
under this Security Agreement shall be made by Borrower free and clear
of and without deduction for any and all present and future taxes,
levies, charges, deductions and withholdings (except as otherwise
provided in the Credit Agreement). In addition, Borrower shall pay upon
demand any stamp or other taxes, levies or charges of any jurisdiction
with respect to the execution, delivery, registration, performance and
enforcement of this Security Agreement. Upon request by Agent, Borrower
shall furnish evidence satisfactory to Administrative Agent that all
requisite authorizations and approvals by, and notices to and filings
with, governmental authorities and regulatory bodies have been obtained
and made and that all requisite taxes, levies and charges have been
paid.
(g) Borrower's Continuing Liability. Notwithstanding any
provision of this Security Agreement or any other Credit Document or any
exercise by Administrative Agent of any of its rights hereunder or
thereunder (including, without limitation, any right to collect or
enforce any Collateral), (i) Borrower shall remain liable to perform its
obligations and duties in connection with the Collateral and (ii)
neither Administrative Agent, any Agent nor any Bank shall assume or be
considered to have assumed any liability to perform such obligations and
duties or to enforce any of Borrower's rights in connection with the
Collateral.
(h) Attorneys' Fees. In the event of any legal action,
including any judicial proceeding, arbitration or other proceeding, to
enforce or interpret any provision of this Security Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys'
fees and other costs incurred from the losing party.
(i) Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the State of California
without reference to conflicts of law rules (except to the extent
otherwise provided in the UCC).
(j) Counterparts. This Security 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.
IN WITNESS WHEREOF, Borrower and Administrative Agent have caused
this Security Agreement to be executed as of the day and year first
above written.
QUANTUM CORPORATION
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
Name:
Title:
<PAGE>
ATTACHMENT 1
TO SECURITY AGREEMENT
All right, title and interest of Borrower, whether now owned or
hereafter acquired, in and to the following property:
(a) All trademarks, trade names, trade styles and service marks,
and all prints and labels on which said trademarks, trade names, trade
styles and service marks have appeared or appear, and all designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all right, title and interest therein and thereto, all
registrations and recordings thereof, including, (i) all applications,
registrations and recordings in the Patent and Trademark Office or in
any similar office or agency of the United States, any state thereof, or
any foreign country or any political subdivision thereof, all whether
now owned or hereafter acquired by Borrower, including those described
in Schedule A to this Attachment 1, which Schedule A is incorporated
herein by this reference, and (ii) all reissues, extensions or renewals
thereof and all licenses thereof (collectively, the "Trademarks");
(b) All patentable inventions, patent rights, shop rights,
letters patent of the United States or any foreign country, all right,
title and interest therein and thereto, and all registrations and
recordings thereof, including (i) all Patent Registrations and
recordings in the Patent and Trademark Office or in any similar office
or agency of the United States, any state thereof or any foreign country
or political subdivision thereof, all whether now owned or hereafter
acquired by Borrower, including those described in Schedule B to this
Attachment 1, which Schedule B is incorporated herein by this reference,
and (ii) all reissues, continuations, continuations-in-part or
extensions thereof and all licenses thereof (collectively, the
"Patents");
(c) All copyrights including, without limitation, (i) all
original works of authorship fixed in any tangible medium of expression,
all right, title and interest therein and thereto, and all registrations
and recordings thereof, including all applications, registrations and
recordings in the Copyright Office or in any similar office or agency of
the United States, any state thereof, or any foreign country or any
political subdivision thereof, all whether now owned or hereafter
acquired by Borrower, including those described on Schedule C to this
Attachment 1, which Schedule C is incorporated herein by this reference,
and (ii) all extensions or renewals thereof and all licenses thereof
(collectively, the "Copyrights");
(d) All mask works including all series of related images,
however fixed or encoded, in final or intermediate form, having or
representing the predetermined, three dimensional pattern of metallic,
insulating, or semiconductor material present or removed from the layers
of a semiconductor chip product, in which series the relation of the
images to one another is that each image has the pattern of the surface
of one form of the semiconductor chip product, and all right, title and
interest therein and thereto, and all registrations and recordings
thereof, including all applications, registrations and recordings in the
Copyright Office or in any similar office or agency of the United
States, any state thereof, or any foreign country or any political
subdivision thereof, all whether now owned or hereafter acquired by the
Borrower, including those described on Schedule D to this Attachment 1,
which Schedule D is incorporated herein by this reference, and (ii) all
extensions or renewals thereof and all licenses thereof (collectively,
the "Mask Works");
(e) All goodwill of Borrower's business symbolized by the
Trademarks and all customer lists and other records of Borrower relating
to the distribution of products or provision of services bearing or
covered by the Trademarks;
(f) All proprietary information, including formulas, patterns,
compilations, programs, devices, methods, techniques or processes, that
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means
by other Persons who can obtain economic value from its disclosure or
use, all whether now owned or hereafter acquired by the Borrower
(collectively, the "Trade Secrets");
(g) All claims by Borrower against any Person for past, present
or future infringement of the Patents, Trademarks, Copyrights, Mask
Works or Trade Secrets; and
(h) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is (are) sold,
collected, exchanged, licensed or otherwise disposed of, whether such
disposition is voluntary or involuntary, including rights to payment and
return premiums and insurance proceeds under insurance with respect to
any Collateral, and all rights to payment with respect to any cause of
action affecting or relating to the Collateral).
<PAGE>
SCHEDULE A
TO ATTACHMENT 1
TO SECURITY AGREEMENT
TRADEMARKS AND TRADEMARK APPLICATIONS
<PAGE>
SCHEDULE B
TO ATTACHMENT 1
TO SECURITY AGREEMENT
PATENTS AND PATENT APPLICATIONS
<PAGE>
SCHEDULE C
TO ATTACHMENT 1
TO SECURITY AGREEMENT
COPYRIGHTS
Registration No. Jurisdiction Date
<PAGE>
SCHEDULE D
TO ATTACHMENT 1
TO SECURITY AGREEMENT
MASK WORKS
Registration No. Jurisdiction Date
<PAGE>
SCHEDULE E
TO ATTACHMENT 1
TO SECURITY AGREEMENT
LICENSES GRANTED BY BORROWER TO THIRD PARTIES
<PAGE>
SCHEDULE F
TO ATTACHMENT 1
TO SECURITY AGREEMENT
LICENSES GRANTED BY THIRD PARTIES TO BORROWER
<PAGE>
ATTACHMENT 2
TO SECURITY AGREEMENT
[SEPARATE INSTRUMENT FOR
EACH FORM OF COLLATERAL]
GRANT OF SECURITY INTEREST
[TRADEMARKS][COPYRIGHTS][MASK WORKS]
THIS GRANT OF SECURITY INTEREST, dated as of October 3, 1994, is
executed by QUANTUM CORPORATION, a Delaware corporation ("Borrower"), in
favor of CANADIAN IMPERIAL BANK OF COMMERCE, as administrative and
collateral agent (jointly in such capacities, the "Administrative
Agent") for the financial institutions which are from time to time
parties to the Credit Agreement referred to in Recital A below
(collectively, the "Banks").
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Borrower,
the Banks, ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, the Banks have agreed to extend certain credit
facilities to Borrower upon the terms and subject to the conditions set
forth therein.
[B. Borrower has adopted, used and is using the trademarks, more
particularly described on Schedules 1-A and 1-B annexed hereto and made
a part hereof, which trademarks are registered or subject to an
application for registration in the United States Patent and Trademark
Office (collectively, the "Trademarks").]
[B. Borrower owns the copyrights registered in the United States
Copyright Office, more particularly described on Schedule 1-A annexed
hereto and made a part hereof (collectively, the "Copyrights").]
[B. Borrower owns the mask works registered in the United States
Copyright Office, more particularly described on Schedule 1-A annexed
hereto and made a part hereof (collectively, the "Mask Works").]
C. Borrower has entered into a Security Agreement (Intellectual
Property) dated the date hereof (the "Security Agreement") in favor of
Administrative Agent (for the ratable benefit of the Banks and Agents).
[D. Pursuant to the Security Agreement, Borrower has granted to
Administrative Agent (for the ratable benefit of the Banks and Agents) a
security interest in all right, title and interest of Borrower in and to
the Trademarks, together with the goodwill of the business symbolized by
the Trademarks and the customer lists and records related to the
Trademarks and the applications and registrations thereof, and all
proceeds thereof, including any and all causes of action which may exist
by reason of infringement thereof (the "Collateral"), to secure the
payment, performance and observance of the Obligations, as defined in
the Security Agreement.]
[D. Pursuant to the Security Agreement, Borrower has granted to
Administrative Agent (for the ratable benefit of the Banks and Agents) a
security interest in all right, title and interest of Borrower in and to
the Copyrights and the registrations thereof, together with any renewals
or extensions thereof, and all proceeds thereof, including any and all
causes of action which may exist by reason of infringement thereof for
the full term of the Copyrights (the "Collateral"), to secure the prompt
payment, performance and observance of the Obligations, as defined in
the Security Agreement.]
[D. Pursuant to the Security Agreement, Borrower has granted to
Administrative Agent (for the ratable benefit of the Banks and Agents) a
security interest in all right, title and interest of Borrower in and to
the Mask Works and the registrations thereof, together with any renewals
or extensions thereof, and all proceeds thereof, including any and all
causes of action which may exist by reason of infringement thereof for
the full term of the Mask Works (the "Collateral"), to secure the prompt
payment, performance and observance of the Obligations, as defined in
the Security Agreement.]
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Borrower does hereby further grant to
Administrative Agent a security interest in the Collateral to secure the
prompt payment, performance and observance of the Obligations.
Borrower does hereby further acknowledge and affirm that the
rights and remedies of Administrative Agent with respect to the security
interest in the Collateral granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Administrative Agent's address is:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman, Syndications
Telephone: (212) 856-3695
Telecopier: (212) 856-3799
IN WITNESS WHEREOF, Borrower has caused this Agreement to be
executed as of the day and year first above written.
QUANTUM CORPORATION
By:
Name:
Title:
STATE OF CALIFORNIA )
)
COUNTY OF )
On , 1994
before me, , personally appeared
, personally known to me (or proved to me on the bas
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in her/her/their authorized capacity(ies), and that by
his/her/their signature(s) on such instrument the person or entity on
behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
<PAGE>
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
TRADEMARKS
SCHEDULE 1-B TO GRANT OF SECURITY INTEREST
TRADEMARK APPLICATIONS
Mark Application Date Application No.
<PAGE>
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
COPYRIGHTS
Description Registration Date Registration No.
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
MASK WORKS
Description Registration Date Registration No.
<PAGE>
ATTACHMENT 3
TO SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
(PATENTS)
THIS GRANT OF SECURITY INTEREST, dated as of October 3, 1994, is
executed by QUANTUM CORPORATION, a Delaware corporation ("Borrower"), in
favor CANADIAN IMPERIAL BANK OF COMMERCE, as administrative and
collateral agent (jointly in such capacities, the "Administrative
Agent") for the financial institutions which are from time to time
parties to the Credit Agreement referred to in Recital A below
(collectively, the "Banks").
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Borrower,
the Banks, ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, the Banks have agreed to extend certain credit
facilities to Borrower upon the terms and subject to the conditions set
forth therein.
B. Borrower owns the letters patent, and/or applications for
letters patent, of the United States and certain foreign countries, more
particularly described on Schedules 1-A and 1-B annexed hereto and made
a part hereof (collectively, the "Patents").
C. Borrower has entered into a Security Agreement (Intellectual
Property) dated the date hereof (the "Security Agreement") in favor of
Administrative Agent (for the ratable benefit of the Banks and Agents.
D. Pursuant to the Security Agreement, Borrower has assigned
and granted to Administrative Agent (for the ratable benefit of the
Banks and Agents) a security interest in all right, title and interest
of Borrower in and to the Patents, together with any reissue,
continuation, continuation-in-part or extension thereof, and all
proceeds thereof, including any and all causes of action which may exist
by reason of infringement thereof (the "Collateral"), to secure the
prompt payment, performance and observance of the Obligations, as
defined in the Security Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Borrower does hereby further assign,
transfer and convey unto Administrative Agent and grant to
Administrative Agent a security interest in the Collateral to secure the
prompt payment, performance and observance of the Obligations.
Borrower does hereby further acknowledge and affirm that the
rights and remedies of Administrative Agent with respect to the
assignment of and security interest in the Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are hereby incorporated herein by reference as if
fully set forth herein.
Administrative Agent's addresses is:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman, Syndications
Telephone: (212) 856-3695
Telecopier: (212) 856-3799
IN WITNESS WHEREOF, Borrower has caused this Agreement to be
executed as of the day and year first above written.
QUANTUM CORPORATION
By:
Name:
Title:
STATE OF CALIFORNIA )
)
COUNTY OF )
On , 1994
before me, , personally appeared
, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in her/her/their authorized capacity(ies), and that by
his/her/their signature(s) on such instrument the person or entity on
behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
<PAGE>
SCHEDULE 1-A TO GRANT OF SECURITY INTEREST
PATENTS
SCHEDULE 1-B TO GRANT OF SECURITY INTEREST
PATENT APPLICATIONS
Title Jurisdiction Application Date Application No.
<PAGE>
ATTACHMENT 4
TO SECURITY AGREEMENT
SPECIAL POWER OF ATTORNEY
STATE OF CALIFORNIA )
) ss.:
COUNTY OF )
KNOW ALL PERSONS BY THESE PRESENTS, THAT QUANTUM CORPORATION, a
Delaware corporation ("Borrower"), pursuant to a Security Agreement
(Intellectual Property), dated the date hereof (the "Security
Agreement"), between Borrower and CANADIAN IMPERIAL BANK OF COMMERCE, as
administrative and collateral agent (for the ratable benefit of the
Banks and Agents) (jointly in such capacities, the "Administrative
Agent") under that certain Credit Agreement dated October 3, 1994 (as
amended from time to time, the "Credit Agreement") among Borrower, the
Banks, ABN AMRO Bank N.V., San Francisco International Branch, Barclays
Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, hereby appoints and constitutes Administrative
Agent its true and lawful attorney in fact, with full power of
substitution, and with full power and authority to perform the following
acts on behalf of Borrower:
1. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Borrower in and
to any letters patent of the United States or any other country or
political subdivision thereof, and all registrations, recordings,
reissues, continuations, continuations-in-part and extensions thereof,
and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other
formality with respect to, the foregoing, to execute and deliver any and
all agreements, documents, instruments of assignment or other papers
necessary or advisable to effect such purpose;
2. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Borrower in and
to any trademarks, trade names, trade styles and service marks, and all
registrations, recordings, reissues, extensions and renewals thereof,
and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other
formality with respect to, the foregoing, to execute and deliver any and
all agreements, documents, instruments of assignment or other papers
necessary or advisable to effect such purpose;
3. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Borrower in and
to any copyrights, and all registrations, recordings, reissues,
extensions and renewals thereof, and all pending applications therefor,
and for the purpose of the recording, registering and filing of, or
accomplishing any other formality with respect to, the foregoing, to
execute and deliver any and all agreements, documents, instruments of
assignment or other papers necessary or advisable to effect such
purpose;
4. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Borrower in and
to any mask works, and all registrations, recordings, reissues,
extensions and renewals thereof, and all pending applications therefor,
and for the purpose of the recording, registering and filing of, or
accomplishing any other formality with respect to, the foregoing, to
execute and deliver any and all agreements, documents, instruments of
assignment or other papers necessary or advisable to effect such
purpose;
5. For the purpose of evidencing and perfecting Agent's
interest in any patent, trademark, copyright or mask work not previously
assigned to Agent as security, or in any patent, trademark, copyright or
mask work, which Borrower may acquire from a third party, and for the
purpose of the recording, registering and filing of, or accomplishing
any other formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of assignment or
other papers necessary or advisable to effect such purpose.
6. To execute any and all documents, statements, certificates
or other papers necessary or advisable in order to obtain the purposes
described above as Agent may in its sole discretion determine.
This power of attorney is made pursuant to the Security Agreement
and takes effect solely for the purposes of thereof and is subject to
the conditions thereof and may not be revoked until termination of the
Security Agreement as provided therein.
Dated: October 3, 1994
QUANTUM CORPORATION
By:
Name:
Title:
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On , 1994
before me, , personally appeared
, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in her/her/their authorized capacity(ies), and that by
his/her/their signature(s) on such instrument the person or entity on
behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
<PAGE>
EXHIBIT L
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of October 3, 1994 is executed by
and between:
(1) QUANTUM CORPORATION, a Delaware corporation ("Borrower");
and
(2) CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking
corporation, acting as administrative and collateral agent (jointly in
such capacities, "Administrative Agent") for the financial institutions
which are from time to time parties to the Credit Agreement referred to
in Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Borrower,
the Banks, ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, the Banks have agreed to extend certain credit
facilities to Borrower upon the terms and subject to the conditions set
forth therein.
B. The Banks' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions,
to receipt by Administrative Agent of this Pledge Agreement, duly
executed by Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Borrower hereby agrees with Administrative
Agent, for the ratable benefit of the Banks and Agents, as follows:
1. Definitions and Interpretation. When used in this Pledge
Agreement, the following terms shall have the following respective
meanings:
"Administrative Agent" shall have the meaning given to that term
in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Credit Agreement" shall have the meaning given to that term in
Recital A hereof.
"Domestic Subsidiary" shall mean each Subsidiary of Borrower which
is created or organized in the United States or under the laws of the
United States or any state of the United States, including without
limitation as of the date hereof, each of the Subsidiaries listed in
Part A of Attachment 1 hereto.
"Domestic Subsidiary Shares" shall mean all Subsidiary Shares in
Domestic Subsidiaries.
"Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other
equity interests in 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.
"Foreign Subsidiary" shall mean each Subsidiary of Borrower which
is not a Domestic Subsidiary, including without limitation as of the
date hereof, each of the Subsidiaries listed in Part B of Attachment 1
hereto.
"Foreign Subsidiary Nonvoting Shares" shall mean all Subsidiary
Shares in Foreign Subsidiaries having no voting power, including without
limitation as of the date hereof, the Subsidiary Shares so designated in
Part B of Attachment 1 hereto.
"Foreign Subsidiary Voting Shares" shall mean all Subsidiary
Shares in Foreign Subsidiaries having voting power, including without
limitation as of the date hereof, the Subsidiary Shares so designated in
Part B of Attachment 1 hereto.
"Maximum Percentage" shall mean, with respect to the Foreign
Subsidiary Voting Shares of any Foreign Subsidiary, the maximum
percentage of such shares that can be pledged to Administrative Agent
without increasing the gross income of Borrower pursuant to Sections 951
and 956(c) (or any successor provisions) of the Internal Revenue Code of
1986, as amended, which percentage as of the date hereof shall be sixty-
six percent (66%).
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Agent or any Bank 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 the
Credit 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
thereunder.
"Pledged Shares" shall mean the Subsidiary Shares described in
subparagraphs 2(a), 2(b) and 2(c) hereof.
"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 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.
"Subsidiary Shares" shall mean, with respect to any Subsidiary of
Borrower, all Equity Securities issued by such Subsidiary.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Credit Agreement shall have the respective meanings
given to those terms in the Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the
UCC. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Pledge Agreement, apply to this Pledge Agreement and are hereby
incorporated by reference.
2. Pledge. As security for the Obligations, Borrower hereby
pledges, charges and assigns to Administrative Agent (for the ratable
benefit of the Banks and Agents) and grants to Administrative Agent (for
the ratable benefit of the Banks and Agents) a security interest in all
right, title and interest of Borrower in and to the property described
in subparagraphs (a) - (e) below, whether now owned or hereafter
acquired (collectively and severally, the "Collateral"):
(a) All Domestic Subsidiary Shares;
(b) All Foreign Subsidiary Voting Shares of each Foreign
Subsidiary equal to the Maximum Percentage therefor;
(c) All Foreign Subsidiary Nonvoting Shares;
(d) All dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any of the Pledged
Shares; and
(e) All proceeds of the foregoing.
3. Representations and Warranties. Borrower represents and
warrants to the Banks and Agents as follows:
(a) Borrower is the record legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Borrower acquires rights in the Collateral, will be the record legal and
beneficial owner thereof). Except as set forth in Attachment 2 hereto,
no other Person has (or, in the case of after-acquired Collateral, at
the time Borrower acquires rights therein, will have) any right, title,
claim or interest (by way of Lien, purchase option or otherwise) in,
against or to the Pledged Shares or the other Collateral (except, with
respect to the Collateral other than the Pledged Shares, Permitted
Liens).
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will have) a
first priority perfected security interest in the Pledged Shares and the
other Collateral; provided, however, that (i) the security interest of
Administrative Agent in Collateral other than the Pledged Shares may be
subject to Permitted Liens and (ii) Borrower makes no representation or
warranty with respect to the perfection of Administrative Agent's
security interest in Collateral other than the Pledged Shares consisting
of instruments which have not been delivered to Administrative Agent.
(c) All Pledged Shares have been (or in the case of
after-acquired Pledged Shares, at the time Borrower acquires rights
therein, will have been) duly authorized, validly issued and fully paid
and are (or in the case of after-acquired Pledged Shares, at the time
Borrower acquires rights therein, will be) non-assessable.
(d) Borrower has delivered to Administrative Agent the originals
of all Pledged Shares, other Collateral and all certificates,
instruments and other writings evidencing the same, together with all
necessary stock powers, endorsements, assignments and other necessary
instruments of transfer.
(e) Set forth in Attachment 1 hereto is a true, complete and
accurate list of all Subsidiary Shares. All information set forth in
Attachment 1 is true, complete and accurate.
4. Covenants. Borrower hereby agrees as follows:
(a) Borrower, at Borrower's expense, shall promptly procure,
execute and deliver to Administrative Agent all documents, instruments
and agreements and perform all acts which are necessary or which
Administrative Agent may reasonably request, to establish, maintain,
preserve, protect and perfect the Collateral, the Lien granted to
Administrative Agent therein and the first priority of such Lien or to
enable Administrative Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the preceding sentence, Borrower shall (i) procure,
execute and deliver to Administrative Agent all stock powers,
endorsements, assignments, financing statements and other instruments of
transfer reasonably requested by Administrative Agent, (ii) deliver to
Administrative Agent promptly upon receipt the originals of all Pledged
Shares and all certificates, instruments and other writings evidencing
the Collateral and (iii) cause the Lien of Administrative Agent to be
recorded or registered in the books of any financial intermediary or
clearing corporation requested by Administrative Agent.
(b) Borrower shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
(c) Upon demand by Administrative Agent after the occurrence and
during the continuance of any Event of Default, Borrower shall deposit,
or cause to be deposited, all remittances, checks and other funds (in
whatever form) received with respect to Collateral with Administrative
Agent.
(d) Borrower shall appear in and defend any action or proceeding
which may affect its title to or Administrative Agent's security
interest in the Collateral if an adverse decision is reasonably likely
to have a Material Adverse Effect.
(e) Borrower shall not surrender or lose possession of (other
than to Administrative Agent), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein except as permitted in the Credit Agreement, and Borrower shall
keep the Collateral free of all Liens (except, with respect to the
Collateral other than the Pledged Shares, Permitted Liens).
5. Voting Rights and Dividends Prior to Default. Until
Administrative Agent shall otherwise notify Borrower after an Event of
Default has occurred and is continuing:
(a) Borrower may exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Pledged Shares or
any part thereof; provided, however, that Borrower shall not exercise or
refrain from exercising any such rights where the consequence of such
action or inaction would be (i) to impair any Collateral, the Lien
granted to Administrative Agent therein, the first priority of such Lien
or Administrative Agent's rights and remedies hereunder with respect to
any Collateral, (ii) to breach or violate any representation, warranty
or covenant under the Credit Agreement or any other Credit Document, or
(iii) otherwise inconsistent with the terms of this Pledge Agreement and
the other Credit Documents.
(b) Borrower may receive and retain all dividends
permitted by the Credit Agreement to be paid in cash in respect of the
Pledged Shares, except for any such dividends and interest paid in
connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus. Borrower shall promptly deliver to Administrative
Agent to hold as Collateral all dividends which Borrower is not entitled
to receive and retain pursuant to the preceding sentence, in the same
form as so received (with any necessary endorsement), and, until so
delivered, shall hold such dividends and interest in trust for the
benefit of Administrative Agent, segregated from the other property or
funds of Borrower.
6. Authorized Action by Administrative Agent. Borrower hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and
agrees that Administrative Agent may perform (but Administrative Agent
shall not be obligated to and shall incur no liability to Borrower or
any third party for failure so to do) any act which Borrower is
obligated by this Pledge Agreement to perform, and to exercise such
rights and powers as Borrower might exercise with respect to the
Collateral, including, without limitation, the right to (a) collect by
legal proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now
or hereafter payable on or on account of the Collateral; (b) enter into
any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Collateral; (c) insure, process,
preserve and enforce the Collateral; (d) make any compromise or
settlement, and take any action it deems advisable, with respect to the
Collateral; (e) pay any indebtedness of Borrower relating to the
Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder; provided,
however, that Administrative Agent shall exercise such powers only after
the occurrence and during the continuance of an Event of Default.
Borrower agrees to reimburse Administrative Agent upon demand for all
reasonable costs and expenses, including attorneys' fees, Administrative
Agent may incur while acting as Borrower's attorney-in-fact hereunder,
all of which costs and expenses are included in the Obligations.
Borrower agrees that such care as Administrative Agent gives to the
safekeeping of its own property of like kind shall constitute reasonable
care of the Collateral when in Administrative Agent's possession;
provided, however, that Administrative Agent shall not be required to
make any presentment, demand or protest, or give any notice and need not
take any action to preserve any rights against any prior party or any
other Person in connection with the Obligations or with respect to the
Collateral.
7. Events of Default.
(a) Event of Default. Borrower shall be deemed in default under
this Pledge Agreement upon the occurrence and during the continuance of
an Event of Default, as that term is defined in the Credit Agreement.
(b) Voting Rights and Dividends. Upon the occurrence and during
the continuance of an Event of Default:
(i) All rights of Borrower to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to subparagraph 5(a) hereof and to receive the dividends and
other payments which it would otherwise be authorized to receive and
retain pursuant to subparagraph 5(b) hereof shall cease upon notice from
Administrative Agent and all such rights shall thereupon become vested
in Administrative Agent which shall thereupon have the sole right, but
not the obligation, to exercise such voting and other consensual rights
and to receive and hold as Collateral such dividends and interest
payments.
(ii) Upon notice from Administrative Agent, Borrower shall
promptly deliver to Administrative Agent to hold as Collateral all
dividends and interest thereafter received by Borrower after the
occurrence and during the continuance of any Event of Default, in the
same form as so received (with any necessary endorsement), and, until so
delivered, shall hold such dividends and interest in trust for the
benefit of Administrative Agent, segregated from the other property or
funds of Borrower.
(c) Other Rights and Remedies. In addition to all other rights
and remedies granted to Administrative Agent by this Pledge Agreement,
the Credit Agreement, the other Credit Documents, the UCC and other
applicable Governmental Rules, Administrative Agent may, upon the
occurrence and during the continuance of any Event of Default, exercise
any one or more of the following rights and remedies: (i) collect,
receive, appropriate or realize upon the Collateral or otherwise
foreclose or enforce Administrative Agent's security interests in any or
all Collateral in any manner permitted by applicable Governmental Rules
or in this Pledge Agreement; (ii) notify any or all issuers of or
transfer or paying agents for the Collateral or any applicable clearing
corporation, financial intermediary or other Person to register the
Collateral in the name of Administrative Agent or its nominee and/or to
pay all dividends, interest and other amounts payable in respect of the
Collateral directly to Administrative Agent; (iii) sell or otherwise
dispose of any or all Collateral at one or more public or private sales,
whether or not such Collateral is present at the place of sale, for cash
or credit or future delivery, on such terms and in such manner as
Administrative Agent may determine; and (iv) require Borrower to
assemble all records and information relating to the Collateral and make
it available to Administrative Agent at a place to be designated by
Administrative Agent which is reasonably convenient to both parties. In
any case where notice of any sale or disposition of any Collateral is
required, Borrower hereby agrees that five (5) days notice of such sale
or disposition is reasonable.
(d) Securities Laws.
(i) Borrower acknowledges and recognizes that Administrative
Agent may be unable to effect a public sale of all or a part of the
Pledged Shares and may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire the Pledged Shares for their own
account, for investment and not with a view to the distribution or
resale thereof. Borrower acknowledges that any such private sales may
be at prices and on terms less favorable to Administrative Agent than
those of public sales. Borrower agrees that the conduct of such private
sales so as to avoid the violation of any applicable law shall not in
and of itself result in such sale being deemed not to have been made in
a commercially reasonable manner and that Administrative Agent has no
obligation to delay sale of any Pledged Shares to permit the issuer
thereof to register it for public sale under the Securities Act of 1933,
as amended, or under any state securities law.
(ii) Upon the occurrence of an Event of Default and at
Administrative Agent's request, Borrower shall, and shall cause all
issuers of Collateral and all officers and directors thereof and all
other necessary Persons to, execute and deliver all documents,
instruments and agreements and perform all other acts necessary or, in
the reasonable opinion of Agent, advisable to sell the Collateral in any
public or private sale; provided, however, that Borrower shall not be
required to register any Collateral under the Securities Act of 1933.
9. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Borrower or Administrative Agent under this Pledge Agreement shall
be given as provided in Paragraph 8.01 of the Credit Agreement.
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Pledge Agreement may be amended or waived only as
provided in the Credit Agreement. No failure or delay by Administrative
Agent 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 any 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.
(c) Successors and Assigns. This Pledge Agreement shall be
binding upon and inure to the benefit of Administrative Agent, Borrower,
the Banks and the other Agents and their respective successors and
assigns; provided, however, that Administrative Agent, Borrower, the
Banks and the other Agents may sell, assign and delegate their
respective rights and obligations hereunder only as permitted by the
Credit Agreement. The Banks and the Agents may disclose this Pledge
Agreement as provided in the Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Pledge Agreement is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Pledge
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.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent under this Pledge Agreement shall be in addition to
all rights, powers and remedies given to Administrative Agent, the Banks
and the other Agents by virtue of any applicable Governmental Rule, the
Credit Agreement or any other Credit Document, all of which rights,
powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Administrative Agent's
rights hereunder. Borrower waives any right to require Administrative
Agent, any Bank or any other Agent to proceed against any Person or to
exhaust any Collateral or to pursue any remedy in Administrative
Agent's, Bank's or any other Agent's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower
under this Pledge Agreement shall be made by Borrower free and clear of
and without deduction for any and all present and future taxes, levies,
charges, deductions and withholdings (except as otherwise provided in
the Credit Agreement). In addition, Borrower shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect
to the execution, delivery, registration, performance and enforcement of
this Pledge Agreement. Upon request by Agent, Borrower shall furnish
evidence satisfactory to Administrative Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and
made and that all requisite taxes, levies and charges have been paid.
(g) Borrower's Continuing Liability. Notwithstanding any
provision of this Pledge Agreement or any other Credit Document or any
exercise by Administrative Agent of any of its rights hereunder or
thereunder (including, without limitation, any right to collect or
enforce any Collateral), (i) Borrower shall remain liable to perform its
obligations and duties in connection with the Collateral and (ii)
neither Administrative Agent, any Agent nor any Bank shall assume or be
considered to have assumed any liability to perform such obligations and
duties or to enforce any of Borrower's rights in connection with the
Collateral.
(h) Attorneys' Fees. In the event of any legal action,
including any judicial proceeding, arbitration or other proceeding, to
enforce or interpret any provision of this Pledge Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys'
fees and other costs incurred from the losing party.
(i) Governing Law. This Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of California
without reference to conflicts of law rules (except to the extent
otherwise provided in the UCC).
(j) Counterparts. This Pledge 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.
IN WITNESS WHEREOF, Borrower and Administrative Agent have caused
this Pledge Agreement to be executed as of the day and year first above
written.
QUANTUM CORPORATION
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
Name:
Title:
<PAGE>
ATTACHMENT 1
TO PLEDGE AGREEMENT
PART A
DOMESTIC SUBSIDIARY SHARES
Class Number of Number of Shares Owned
Jurisdiction of of Shares Shares by
Subsidiary Incorporation Stock Issued Outstanding Borrower
- --------- --------------- ------ --------- ---------- ------------
- ---------------
Asterisks indicate non-voting. Otherwise all listed are voting.
<PAGE>
PART B
FOREIGN SUBSIDIARY SHARES
Class Number of Number of Shares Owned
Jurisdiction of of Shares Shares by
Subsidiary Incorporation Stock Issued Outstanding Borrower
- --------- --------------- ------ --------- ---------- ------------
<PAGE>
ATTACHMENT 2
TO PLEDGE AGREEMENT
THIRD PARTY RIGHTS IN COLLATERAL
Right of first refusal in favor of Storage Tech under the Rocky
Mountain Stockholders Agreement. The right of first refusal with
respect to the pledge to Administrative Agent pursuant to this Pledge
Agreement expires if it is not exercised by Storage Tech on or before 60
days after the Closing Date
<PAGE>
EXHIBIT M
SUBSIDIARY SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of October 3, 1994, is entered
into by and between:
(1) [--------------------], a [----------] corporation
("Grantor"); and
(2) CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking
corporation, acting as administrative and collateral agent (jointly in
such capacities, "Administrative Agent") for the financial institutions
which are from time to time parties to the Credit Agreement referred to
in Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Quantum
Corporation, a Delaware corporation ("Borrower"), the Banks, ABN AMRO
Bank N.V., San Francisco International Branch, Barclays Bank PLC and
CIBC Inc., as managing agents for the Banks, and Administrative Agent,
the Banks have agreed to extend certain credit facilities to Borrower
upon the terms and subject to the conditions set forth therein.
B. The Banks' obligations to extend the credit facilities to
Borrower under the Credit Agreement are subject, among other conditions,
to receipt by Administrative Agent of this Security Agreement, duly
executed by Grantor.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Grantor hereby agrees with Administrative
Agent, for the ratable benefit of the Banks and the Agents, as follows:
1. Definitions and Interpretation. When used in this Security
Agreement, the following terms shall have the following respective
meanings:
"Administrative Agent" shall have the meaning given to that term
in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in the
Recital A hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Credit Agreement" shall have the meaning given to that term in
Recital A hereof.
"Depositary Bank" shall have the meaning given to that term in
subparagraph 4(e) hereof.
"Equipment" shall mean, collectively, all Collateral of the types
described in clause (a) of Attachment 1 hereto.
"Grantor" shall have the meaning given to that term in the
introductory paragraph hereof.
"Inventory" shall mean, collectively, all Collateral of the types
described in clause (b) of Attachment 1 hereto.
"Maximum Amount" shall mean, at any time, the greatest of
(a) ninety-five percent (95%) of the Net Asset Value of Grantor at such
time, (b) ninety-five percent (95%) of the Net Asset Value of Grantor on
the date hereof and (c) the value derived by Grantor from the
Obligations incurred at or prior to such time.
"Net Asset Value" shall mean, with respect to Grantor at any time,
the remainder of (a) the fair value of the assets of Grantor at such
time, minus (b) the fair value of the liabilities of Grantor at such
time (excluding, however, any liability of Grantor hereunder), such
assets and liabilities to be determined in accordance with any state or
federal fraudulent conveyance or transfer law which is applicable to
this Security Agreement.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Agent or any Bank 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 the
Credit 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
thereunder.
"Receivables" shall have the meaning given to that term in
Attachment 1 hereto.
"Related Contracts" shall have the meaning given to that term in
Attachment 1 hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Credit Agreement shall have the respective meanings
given to those terms in the Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the
UCC. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Security Agreement, apply to this Security Agreement and are hereby
incorporated by reference. Grantor acknowledges receipt of a copy of
the Credit Agreement.
2. Grant of Security Interest. As security for the Obligations
up to the Maximum Amount, Grantor hereby pledges and assigns to
Administrative Agent (for the ratable benefit of the Banks and Agents)
and grants to Administrative Agent (for the ratable benefit of the Banks
and Agents) a security interest in all right, title and interest of
Grantor in and to the property described in Attachment 1 hereto, whether
now owned or hereafter acquired (collectively and severally, the
"Collateral"), which Attachment 1 is incorporated herein by this
reference.
3. Representations and Warranties. Grantor represents and
warrants to the Banks and Agents as follows:
(a) Grantor is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation.
(b) The execution, delivery and performance by Grantor of this
Security Agreement and each other Credit Document executed by Grantor
are within the corporate power of Grantor and have been duly authorized
by all necessary corporate actions on the part of Grantor.
(c) This Security Agreement and each other Credit Document
executed by Grantor have been duly executed and delivered by Grantor and
constitute the legal, valid and binding obligations of Grantor,
enforceable against it in accordance with their 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 (regardless of whether considered in a
proceeding in equity or at law).
(d) The execution, delivery and performance by Grantor of this
Security Agreement and each other Credit Document executed by Grantor do
not (i) violate any Requirement of Law applicable to Grantor,
(ii) contravene any material Contractual Obligation of Grantor which
could reasonably be expected to have a Material Adverse Effect or
(iii) result in the creation or imposition of any Lien upon any
Collateral (except for (A) the security interest granted in this
Security Agreement to Administrative Agent and (B) Permitted Liens).
(e) 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, delivery and
performance of this Security Agreement and the other Credit Documents
executed by Grantor, except such consents, approvals, orders,
authorizations, registrations, declarations and filings that are so
required and which have been obtained and are in full force and effect.
(f) Grantor is neither an investment company (as defined in the
Investment Company Act of 1940) nor controlled by an investment company.
(g) Grantor is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Grantor acquires rights in the
Collateral, will be the owner thereof). No other Person has (or, in the
case of after-acquired Collateral, at the time Grantor acquires rights
therein, will have) any right, title, claim or interest (by way of Lien,
purchase option or otherwise) in, against or to the Collateral, other
than Permitted Liens.
(h) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Grantor acquires rights therein, will have) a
first priority perfected security interest in the Collateral; provided,
however, that (i) the security interest of Administrative Agent may be
subject to Permitted Liens and (ii) Grantor makes no representation or
warranty with respect to the perfection of Administrative Agent's
security interest in Collateral consisting of (A) motor vehicles and
other vehicles subject to a certificate of title statute to the extent
Administrative Agent has not required Borrower to comply with the
requirements set forth in such statute for the perfection of security
interests, (B) instruments having a value of $200,000 or less which have
not been delivered to Administrative Agent, (C) deposit accounts for
which Administrative Agent has not required Grantor to deliver a notice
as provided in subparagraph 4(e) hereof, (D) goods located outside the
United States at the time this Security Agreement is executed (or, in
the case of after-acquired goods, at the time such goods are acquired),
which goods do not exceed in aggregate book value $500,000, (E) the
rights of Grantor under the laws of jurisdictions outside the United
States in intellectual property to the extent Administrative Agent has
not required Grantor to comply with the requirements of such
jurisdiction for the perfection of security interests in such rights,
(F) the rights of Grantor in intellectual property registered with the
United States Patent and Trademark Office to the extent Administrative
Agent has not required Grantor to file notices of security interests
with such office, and (G) certificated securities in the possession of
any financial intermediary or uncertificated securities registered in
the name of Grantor on the books of any financial intermediary to the
extent Administrative Agent has not required Grantor to cause such
financial intermediary to register the security interest of
Administrative Agent in the books of such financial intermediary.
(i) All Equipment and Inventory are (i) located at the locations
indicated in Attachment 2 hereto (or at such other locations as Grantor
may indicate in a written notice delivered to Administrative Agent
pursuant to subparagraph 4(d) hereof), (ii) in transit to such locations
or (iii) in transit to a third party purchaser which will become
obligated on a Receivable to Grantor upon receipt. Except for Equipment
and Inventory referred to in clauses (ii) and (iii) of the preceding
sentence, Grantor has exclusive possession and control of the Inventory
and Equipment.
(j) All Inventory has been (or, in the case of hereafter
produced Inventory, will be) produced in compliance with all applicable
Governmental Rules, including the Fair Labor Standards Act (if
applicable), except for any noncompliance which is not reasonably likely
to have a Material Adverse Effect.
(k) Grantor keeps all records concerning the Receivables and the
originals of all Related Contracts at its chief executive office located
at the address set forth in item 2 of Attachment 3 hereto (or at such
other chief executive office of Grantor as Grantor may indicate in a
written notice delivered to Administrative Agent pursuant to
subparagraph 4(d) hereof).
(l) Grantor has delivered to Administrative Agent, together with
all necessary stock powers, endorsements, assignments and other
necessary instruments of transfer, the originals of all Receivables
consisting of instruments and chattel paper in amounts exceeding
$200,000.
(m) Each Receivable included in the calculation of the Borrowing
Base is genuine and enforceable against the party obligated to pay the
same free from any right of rescission, defense, setoff or discount.
(n) The information set forth in Attachment 3 hereto is true,
complete and correct in all material respects.
4. Covenants. Grantor hereby agrees as follows:
(a) Grantor, at Grantor's expense, shall promptly procure,
execute and deliver to Administrative Agent all documents, instruments
and agreements and perform all acts which are necessary, or which
Administrative Agent may reasonably request, to establish, maintain,
preserve, protect and perfect the Collateral, the Lien granted to
Administrative Agent therein and the first priority of such Lien
(subject to Permitted Liens) or to enable Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the preceding
sentence, Grantor shall (i) procure, execute and deliver to
Administrative Agent all stock powers, endorsements, assignments,
financing statements and other instruments of transfer reasonably
requested by Administrative Agent, (ii) deliver to Administrative Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper in amounts exceeding $200,000
and (iii) cause the Lien of Administrative Agent in any Collateral
consisting of securities to be recorded or registered in the books of
any financial intermediary or clearing corporation reasonably requested
by Administrative Agent.
(b) Grantor shall not use any Collateral or permit any
Collateral to be used in violation of (i) any provision of the Credit
Agreement, this Security Agreement or any other Credit Document,
(ii) any applicable Governmental Rule or Contractual Obligation where
such use could reasonably be expected to have a Material Adverse Effect,
or (iii) any policy of insurance covering the Collateral where such use
is reasonably likely to have a Material Adverse Effect.
(c) Grantor shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges (except to the
extent constituting Permitted Liens) now or hereafter imposed upon,
relating to or affecting any Collateral.
(d) Without ninety (90) days' prior written notice to
Administrative Agent, Grantor shall not (i) change Grantor's name or
chief executive office (or the office(s) in which Grantor's records
relating to Receivables or the originals of Related Contracts are kept),
(ii) keep Collateral consisting of chattel paper and documents at any
location other than its office(s) set forth in item 2 of Attachment
3 hereto (or at such other office(s) of Grantor as Grantor may indicate
in a written notice delivered to Administrative Agent pursuant to this
subparagraph 4(d)), or (iii) keep Collateral consisting of Equipment,
Inventory or other goods at any location other than the locations set
forth in Attachment 2 hereto, except for goods in transit to or from
such locations.
(e) For each deposit account maintained by Grantor, Grantor
shall, at the request of Administrative Agent, (i) execute and deliver
to the bank or other depository institution at which such deposit
account is maintained (the "Depositary Bank") a Notice of Security
Interest in the form of Attachment 4 hereto (or other form acceptable to
Administrative Agent) and (ii) use its best efforts to cause the
Depositary Bank to execute and deliver to Administrative Agent an
Acknowledgment and Agreement in the form set forth in such Notice of
Security Interest. Without ten (10) days prior written notice to
Administrative Agent, Grantor shall not establish any deposit account
not set forth in item 16 of Attachment 3 hereto.
(f) Grantor shall, if requested by Administrative Agent,
deposit, or cause to be deposited, all remittances, checks and other
funds (in whatever form) received with respect to Receivables to a
deposit account for which Grantor has complied with subparagraph 4(e)
above and in which Administrative Agent has a first priority perfected
security interest.
(g) Grantor shall appear in and defend any action or proceeding
which may affect its title to or Administrative Agent's security
interest in the Collateral if an adverse decision is reasonably likely
to have a Material Adverse Effect.
(h) Grantor shall keep separate, accurate and complete records
of the Collateral and shall permit Administrative Agent to examine and
make copies of such records and provide such reports and information
relating to the Collateral as Administrative Agent may reasonably
request from time to time.
(i) Grantor shall not surrender or lose possession of (other
than to Administrative Agent), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein except as permitted in the Credit Agreement, and Grantor shall
keep the Collateral free of all Liens except Permitted Liens.
(j) If directed by Administrative Agent, Grantor shall type,
print or stamp conspicuously on the face of all original copies of all
Collateral consisting of chattel paper and documents in amounts exceeding
$50,000 not in the possession of Administrative Agent a legend
satisfactory to Administrative Agent indicating that such chattel paper
and documents are subject to the security interest granted hereby.
(l) Grantor shall collect, compromise, enforce and receive
delivery of the Receivables in accordance with its past practices until
otherwise notified by Administrative Agent.
(m) Grantor shall comply with all material Requirements of Law
applicable to Grantor which relate to the production, possession,
operation, maintenance and control of the Collateral except where
noncompliance is not reasonably likely to have a Material Adverse
Effect.
5. Authorized Action by Administrative Agent. Grantor hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and
agrees that Administrative Agent may perform (but Administrative Agent
shall not be obligated to and shall incur no liability to Grantor or any
third party for failure so to do) any act which Grantor is obligated by
this Security Agreement to perform, and to exercise such rights and
powers as Grantor might exercise with respect to the Collateral,
including, without limitation, the right to (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now
or hereafter payable on or on account of the Collateral; (b) enter into
any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Collateral; (c) insure, process,
preserve and enforce the Collateral; (d) make any compromise or
settlement, and take any action it deems advisable, with respect to the
Collateral; (e) pay any indebtedness of Grantor relating to the
Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder; provided,
however, that Administrative Agent shall exercise such powers only after
the occurrence and during the continuance of an Event of Default.
Grantor agrees to reimburse Administrative Agent upon demand for all
reasonable costs and expenses payable to third parties, including
attorneys' fees, Administrative Agent may incur while acting as
Grantor's attorney-in-fact hereunder, all of which costs and expenses
are included in the Obligations. Grantor agrees that such care as
Administrative Agent gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in
Administrative Agent's possession; provided, however, that
Administrative Agent shall not be required to make any presentment,
demand or protest, or give any notice and need not take any action to
preserve any rights against any prior party or any other Person in
connection with the Obligations or with respect to the Collateral.
6. Default and Remedies. Grantor shall be deemed in default
under this Security Agreement upon the occurrence and during the
continuance of an Event of Default, as that term is defined in the
Credit Agreement. In addition to all other rights and remedies granted
to Administrative Agent by this Security Agreement, the Credit
Agreement, the other Credit Documents, the UCC and other applicable
Governmental Rules, Administrative Agent may, upon the occurrence and
during the continuance of any Event of Default, exercise any one or more
of the following rights and remedies: (a) collect, receive, appropriate
or realize upon the Collateral or otherwise foreclose or enforce
Administrative Agent's security interests in any or all Collateral in
any manner permitted by applicable Governmental Rules or in this
Security Agreement; (b) notify any or all account debtors to make
payments on Receivables directly to Administrative Agent; (c) sell or
otherwise dispose of any or all Collateral at one or more public or
private sales, whether or not such Collateral is present at the place of
sale, for cash or credit or future delivery, on such commercially
reasonable terms and in such commercially reasonable manner as
Administrative Agent may determine; (d) require Grantor to assemble the
Collateral and make it available to Administrative Agent at a place to
be designated by Administrative Agent which is reasonably convenient to
both parties; (e) enter onto any property where any Collateral is
located and take possession thereof with or without judicial process;
and (f) prior to the disposition of the Collateral, store, process,
repair or recondition any Collateral consisting of goods, perform any
obligations and enforce any rights of Grantor under any Related
Contracts or otherwise prepare and preserve Collateral for disposition
in any manner and to the extent Administrative Agent deems appropriate.
In furtherance of Administrative Agent's rights hereunder upon the
occurrence and during the continuance of any Event of Default, Grantor
hereby grants to Administrative Agent an irrevocable, non-exclusive
license (exercisable without royalty or other payment by Administrative
Agent) to use, license or sublicense any patent, trademark, tradename,
copyright or other intellectual property in which Grantor now or
hereafter has any right, title or interest (to the extent Grantor may
grant such license or sublicense without breaching the agreement
pursuant to which it obtained its right, title and interest therein),
together with the right of access to all media in which any of the
foregoing may be recorded or stored. In any case where notice of any
sale or disposition of any Collateral is required, Grantor hereby agrees
that five (5) days notice of such sale or disposition is reasonable.
7. Authorized Actions. Grantor authorizes Administrative
Agent, in its discretion, without notice to Grantor, irrespective of any
change in the financial condition of Borrower, Grantor or any other
guarantor of the Obligations since the date hereof, and without
affecting or impairing in any way the liability of Grantor hereunder,
from time to time to (a) create new Obligations, and, either before or
after receipt of notice of revocation, renew, compromise, extend,
accelerate or otherwise change the time for payment or performance of,
or otherwise change the terms of the Obligations or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take
and hold security for the payment or performance of the Obligations and
exchange, enforce, waive or release any such security; (c) apply such
security and direct the order or manner of sale thereof; (d) purchase
such security at public or private sale; (e) otherwise exercise any
right or remedy it may have against Borrower, Grantor, any other
guarantor of the Obligations or any security, including, without
limitation, the right to foreclose upon any such security by judicial or
nonjudicial sale; (f) settle, compromise with, release or substitute any
one or more makers, endorsers or guarantors of the Obligations; and
(g) assign the Obligations, this Security Agreement, or the other Credit
Documents in whole or in part.
8. Waivers. Grantor waives (a) any right to require
Administrative Agent to (i) proceed against Borrower or any other
guarantor of the Obligations, (ii) proceed against or exhaust any
security received from Borrower or any other guarantor of the
Obligations, or (iii) pursue any other remedy in Administrative Agent's
power whatsoever; (b) any defense arising by reason of the application
by Borrower of the proceeds of any borrowing; (c) any defense resulting
from the absence, impairment or loss of any right of reimbursement,
subrogation, contribution or other right or remedy of Grantor against
Borrower, any other guarantor of the Obligations or any security,
whether resulting from an election by Administrative Agent to foreclose
upon security by nonjudicial sale, or otherwise; (d) any setoff or
counterclaim of Borrower or any defense which results from any
disability or other defense of Borrower or the cessation or stay of
enforcement from any cause whatsoever of the liability of Borrower
(including, without limitation, the lack of validity or enforceability
of any Credit Document); (e) any right to exoneration of sureties which
would otherwise be applicable; (f) any right of subrogation or
reimbursement and, if there are any other guarantors of the Obligations,
any right of contribution, and right to enforce any remedy which
Administrative Agent now has or may hereafter have against Borrower, and
any benefit of, and any right to participate in, any security now or
hereafter received by Administrative Agent; (g) all presentments,
demands for performance, notices of non-performance, notices delivered
under the Credit Agreement or any Credit Document, protests, notice of
dishonor, and notices of acceptance of this Security Agreement and of
the existence, creation or incurring of new or additional Obligations
and notices of any public or private foreclosure sale; (h) the benefit
of any statute of limitations to the extent permitted by law; (i) any
appraisement, valuation, stay, extension, moratorium redemption or
similar law or similar rights for marshalling; and (j) any right to be
informed by Administrative Agent of the financial condition of Borrower
or any other guarantor of the Obligations or any change therein or any
other circumstances bearing upon the risk of nonpayment or
nonperformance of the Obligations. Grantor has the ability and assumes
the responsibility for keeping informed of the financial condition of
Borrower and any other guarantors of the Obligations and of other
circumstances affecting such nonpayment and nonperformance risks.
Without limiting the generality of any of the foregoing, Grantor hereby
waives (i) any right to be reimbursed by Borrower or any other guarantor
of the Obligations for any payment of the Obligations made directly or
indirectly by Grantor or from any property of Grantor, whether arising
by way of any statutory, contractual or other right of subrogation,
contribution, indemnification or otherwise and (ii) all rights and
benefits based upon Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968) or
subsequent cases, or under Section 580d of the California Code of Civil
Procedure stating that no deficiency may be recovered on an obligation
secured by a deed of trust on real property if the real property or any
part thereof is sold under a power of sale contained therein, and any
and all defenses based on any loss or impairment of Grantor's right to
recover any such amount from the person primarily liable as a result of
such nonjudicial foreclosure sale, whether by right of subrogation,
estoppel, Section 726 of the California Code of Civil Procedure (one
form of action), Section 580a of the California Code of Civil Procedure
(fair market value), or otherwise. GRANTOR HEREBY ACKNOWLEDGES THAT BUT
FOR THE FOREGOING WAIVER AND OTHER WAIVERS CONTAINED HEREIN, THE LOSS OF
DEFICIENCY RIGHTS AGAINST BORROWER RESULTING FROM A NONJUDICIAL
FORECLOSURE SALE OF ANY REAL PROPERTY UNDER ADMINISTRATIVE AGENT'S
SECURITY DOCUMENTS COULD CREATE A DEFENSE TO PAYMENT BY GRANTOR
HEREUNDER.
9. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Grantor or Administrative Agent under this Security Agreement or
the other Credit Documents shall be in writing and faxed, mailed or
delivered to Grantor or Administrative Agent at its respective facsimile
number or address set forth below (or to such other facsimile number or
address for any party as indicated in any notice given by that party to
the other party). All such notices and communications shall be
effective (i) when sent by Federal Express or other overnight service of
recognized standing, on the second Business Day following the deposit
with such service; (ii) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon
receipt; (iii) when delivered by hand, upon delivery; and (iv) when
faxed, upon confirmation of receipt.
Administrative
Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman, Syndications
Telephone: (212) 856-3695
Facsimile: (212) 856-3799
Grantor: --------------------
--------------------
--------------------
Attn: --------------
Telephone: --------------
Facsimile: --------------
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Security Agreement may be amended or waived, subject
to the terms of the Credit Agreement, if such amendment or waiver is in
writing and is signed by Grantor and Administrative Agent. No failure
or delay by Administrative Agent 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
any 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.
(c) Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of Administrative Agent, Grantor,
the Banks and the other Agents and their respective successors and
assigns; provided, however, that Administrative Agent, Grantor, the
Banks and the other Agents may sell, assign and delegate their
respective rights and obligations hereunder only as permitted by the
Credit Agreement. The Banks and the Agents may disclose this Security
Agreement as provided in the Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Security
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.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent under this Security Agreement shall be in addition
to all rights, powers and remedies given to Administrative Agent, the
Banks and the other Agents by virtue of any applicable Governmental
Rule, the Credit Agreement or any other Credit Document, all of which
rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Administrative Agent's
rights hereunder. Grantor waives any right to require Administrative
Agent, any Bank or any other Agent to proceed against any Person or to
exhaust any Collateral or to pursue any remedy in Administrative
Agent's, Bank's or any other Agent's power.
(f) Payments Free of Taxes, Etc. All payments made by Grantor
under this Security Agreement shall be made by Grantor free and clear of
and without deduction for any and all present and future taxes, levies,
charges, deductions and withholdings (except as otherwise provided in
the Credit Agreement). In addition, Grantor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect
to the execution, delivery, registration, performance and enforcement of
this Security Agreement. Upon request by Agent, Grantor shall furnish
evidence satisfactory to Administrative Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and
made and that all requisite taxes, levies and charges have been paid.
(g) Grantor's Continuing Liability. Notwithstanding any
provision of this Security Agreement or any other Credit Document or any
exercise by Administrative Agent of any of its rights hereunder or
thereunder (including, without limitation, any right to collect or
enforce any Collateral), (i) Grantor shall remain liable to perform its
obligations and duties in connection with the Collateral (including,
without limitation, the Related Contracts and all other agreements
relating to the Collateral) and (ii) neither Administrative Agent, any
Agent nor any Bank shall assume or be considered to have assumed any
liability to perform such obligations and duties or to enforce any of
Grantor's rights in connection with the Collateral (including, without
limitation, the Related Contracts and all other agreements relating to
the Collateral).
(h) Attorneys' Fees. In the event of any legal action,
including any judicial proceeding (whether at trial or on appeal),
arbitration or other proceeding, to enforce or interpret any provision
of this Security Agreement, the prevailing party shall be entitled to
recover its reasonable attorneys' fees and other costs incurred from the
losing party.
(i) Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the State of California
without reference to conflicts of law rules (except to the extent
otherwise provided in the UCC).
(j) Jury Trial. EACH OF GRANTOR AND ADMINISTRATIVE 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.
(k) Counterparts. This Security 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.
IN WITNESS WHEREOF, Grantor and Administrative Agent have caused
this Security Agreement to be executed as of the day and year first
above written.
LA CIE, LTD.
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
Name:
Title:
<PAGE>
ATTACHMENT 1
TO SECURITY AGREEMENT
All right, title and interest of Grantor, whether now owned or
hereafter acquired, in and to the following property:
(a) All equipment and fixtures (including, without limitation,
all manufacturing equipment, furniture, vehicles and other machinery and
office equipment), together with all additions and accessions thereto
and replacements therefor;
(b) All inventory (including, without limitation, (i) all disk
drives, tape drives, head stacks and gimbel assemblies and all other raw
materials, work in process and finished goods and (ii) all such goods
which are returned to or repossessed by Grantor), together with all
additions and accessions thereto, replacements therefor, products
thereof and documents therefor;
(c) All accounts, chattel paper, instruments, deposit accounts
and other rights to the payment of money (including, without limitation,
general intangibles and contract rights) (collectively, the
"Receivables") and all contracts, purchase orders, security agreements,
leases, guaranties and other agreements evidencing, securing or
otherwise relating to the Receivables (collectively, the "Related
Contracts");
(d) All other general intangibles and contract rights not
otherwise described above (including, without limitation, (i) customer
and supplier lists and contracts, books and records, insurance policies,
tax refunds, contracts for the purchase of real or personal property,
(ii) all patents, copyrights, trademarks, tradenames and service marks,
(iii) all licenses to use, applications for, and other rights to, such
patents, copyrights, trademarks, tradenames and service marks, and
(iv) all goodwill of Grantor);
(e) All other personal property not otherwise described above
(including, without limitation, all money, certificated securities,
uncertificated securities, documents and goods); and
(f) All proceeds of the foregoing (including, without
limitation, whatever is receivable or received when Collateral or
proceeds is sold, collected, exchanged, returned, substituted or
otherwise disposed of, whether such disposition is voluntary or
involuntary, including rights to payment and return premiums and
insurance proceeds under insurance with respect to any Collateral, and
all rights to payment with respect to any cause of action affecting or
relating to the Collateral).
<PAGE>
ATTACHMENT 2
TO SECURITY AGREEMENT
LOCATIONS OF EQUIPMENT AND INVENTORY
<PAGE>
ATTACHMENT 3
TO SECURITY AGREEMENT
GRANTOR PROFILE
("Grantor")
1. The current legal name of Grantor is
.
2. Grantor's chief executive office is located at
. Grantor's federal employer I.D. no. is .
3. Grantor was incorporated on -------------, 19-- in the state
of . Since its incorporation, Grantor has had no other legal
name (other than its current legal name) except for the following
(provide name and date of change):
Date Name
Prior Name Changed
4. Grantor does not do business under any trade name except for
the following (provide name and indicate whether registered):
Trade Name Registered?
5. Since Grantor's incorporation, no other corporation has been
merged into Grantor except for the following (provide names, dates and
brief description of transactions):
Name of Date of Description of
Corporation Merger Transaction
6. Grantor has not acquired any of its assets in a bulk sale or
any other transaction not in the ordinary course of business of the
seller except for the following (provide description of assets, date and
description of transaction and name of seller):
Description Date of Description of
of Assets Acquisition Transaction Seller
7. The following is a complete list of all states and other
jurisdictions in which Grantor is qualified to do business:
State or Jurisdiction
8. The following is a complete list of all offices and other
places of business at which Grantor currently conducts or has within the
last four months conducted business (provide address, owner of site and
brief description of assets located there):
Brief Description
Address Owner of Site of Assets
(Sites marked with an asterisk have been closed.)
9. The following is a complete list of all persons and entities
(other than Grantor) who at any time have possession of any assets of
Grantor (provide name, address where located and description of assets
located there):
Person or Brief Description
Entity Address of Assets
Of the persons and entities listed above in this item 9;
a. The following persons and entities are warehouses which
issue warehouse receipts:
Person or
Entity
;
;
b. The following persons and entities process or finish
inventory or other goods for Grantor:
Person or
Entity
;
;
c. The following persons and entities hold inventory or other
goods on consignment for Grantor:
Person or
Entity
; and
d. The following other persons and entities have possession of
assets of Grantor for the purposes indicated:
Person or
Entity Purpose
.
10. The following is a complete list of all motor vehicles owned
by Grantor (describe each vehicle by make, model and year and indicate
for each the state in which registered and the state in which based):
State of State in which
Vehicle Registration Based
11. The following is a complete list of all aircraft and boats
and all other inventory, equipment and other goods of Grantor which are
subject to any certificate of title or other registration statute of the
United States, any state or any other jurisdiction (provide description
of covered goods and indicate registration system and jurisdiction):
Registration
Goods System Jurisdiction
12. The following is a complete list of all patents, copyrights,
trademarks, tradenames and service marks registered in the name of
Grantor:
a. Patents Registration No.
b. Copyrights Registration No.
c. Trademarks,
Trade Names and
Service Marks Registration No.
13. The following is a complete list of all subsidiaries of
Grantor (provide name of subsidiary, jurisdiction of incorporation,
outstanding shares and shares owned by Grantor):
Shares Shares Owned
Subsidiary Jurisdiction Outstanding by Grantor
14. The following is a complete list of all other stock (other
than the stock of subsidiaries described in item 13 above), bonds,
debentures, notes and other securities owned by Grantor which have a
value (higher of cost or market value) of $ or more (provide
name of issuer, a description of security and value):
Description of
Issuer Security Value
15. The following is a complete list of all notes payable to
Grantor not otherwise listed in item 14 above (provide name of obligor,
date, original principal amount and current principal balance):
Original Current
Obligor Date Amount Balance
16. The following is a complete list of all bank accounts
maintained by Grantor (provide name and address of depository bank, type
of account and account number):
Depository Bank Type of Account
Bank Address Account Number
17. Does Grantor regularly receive letters of credit from
customers to secure payments of sums owed to Grantor?
Yes ----. No ----.
18. Does Grantor regularly have accounts receivable due from, or
contracts with, the United States government or any agency or department
thereof?
Yes ----. No ----.
If yes, indicate the percentage of Grantor's total outstanding
accounts receivable that are due from the United States government and
agencies and departments thereof: --------%
19. Does Grantor regularly receive advance deposits from
customers for goods not yet delivered to such customers?
Yes . No .
20. Does Grantor regularly import goods from outside the United
States?
Yes . No .
21. The following is a complete list of all third parties who
perform data processing services for Grantor or maintain records with
respect to Grantor's accounts receivable (provide name and address of
third party and describe services performed and/or records maintained):
Description of Services
Name Address and/or Records
22. The following is a complete list of all data processing
equipment of Grantor which is leased (provide description of equipment
and name and address of lessor):
Lessor
Description of Equipment Lessor Address
23. The following is a complete list of all data processing
equipment of Grantor which is subject to security interests of persons
other than Bank (provide description of equipment and name and address
of secured party):
Secured Party
Description of Equipment Secured Party Address
24. The most recent federal income tax returns of Grantor that
have been audited by the IRS are for the fiscal year ended ,
19 .
25. Neither Grantor nor any of its property is subject to any
tax assessments which are currently outstanding and unpaid except for
the following (provide name of assessing authority and amount and
description of assessment):
Assessing Authority Amount Description
26. Neither Grantor nor any of its property is subject to any
judgment lien, attachment, assessment (other than any tax assessments
set forth in item 25 above) or any other similar process which is
currently outstanding and unpaid except for the following (provide name
of party asserting lien, etc., amount and description of lien, etc.):
Asserting Party Amount Description
27. None of Grantor's property is subject to any Lien of any
type except for (a) the tax assessments described in item 25 above, (b)
the judgment liens, attachments, assessments and other similar processes
described in item 26 above, (c) security interests in personal property
of Grantor evidenced by UCC financing statements filed currently on file
with
and (d) the following (provide name of lien holder, amount secured b
the Lien and description of Lien):
Lien Holder Amount Description
<PAGE>
ATTACHMENT 4
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
,
[Name of Depositary Bank]
[Address of Depositary Bank]
-------------------, a -------- corporation ("Grantor"), and
CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking corporation,
acting as administrative and collateral agent for certain financial
institutions (jointly in such capacities, "Administrative Agent"), under
that certain Credit Agreement dated as of October 3, 1994 (the "Credit
Agreement"), hereby notify you that Grantor has granted to
Administrative Agent a security interest in all deposit accounts
maintained by Grantor with you including, without limitation, the
deposit accounts described below:
Account Depositor's Account
Number Name Type
Grantor and Administrative Agent authorize you to continue to allow
Grantor to make deposits to, draw checks upon and otherwise withdraw
funds from such deposit accounts (the "Deposit Accounts") without the
consent of Administrative Agent until Administrative Agent shall
instruct you otherwise.
Grantor has authorized Administrative Agent to inform you when an
Event of Default (as defined in the Credit Agreement) has occurred and
is continuing and at such time instruct you to cease to permit any
further payments or withdrawals from the Deposit Accounts by Grantor
and/or to pay any or all amounts in the Deposit Accounts to
Administrative Agent. Grantor authorizes and directs you to comply with
all such instructions received by you from Administrative Agent without
further inquiry on your part and hereby agrees to indemnify and hold
harmless you and your officers, directors and employees from and for any
compliance by you with such instructions.
LA CIE, LTD.
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By:
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSITARY BANK
The undersigned depositary bank hereby acknowledges receipt of the
above notice and agrees with Grantor and Administrative Agent to comply
with any instruction it may receive from Administrative Agent in
accordance therewith. The undersigned confirms to Administrative Agent
that the information set forth above regarding the Deposit Accounts is
accurate, that such Deposit Accounts are currently open and that the
undersigned has no prior notice of any other security interest, lien or
interest in such Deposit Accounts. The undersigned waives any right of
setoff except for its right of recoupment for returned items.
By:
Name:
Title:
<PAGE>
EXHIBIT N
LIEN ACKNOWLEDGMENT AGREEMENT
THIS LIEN ACKNOWLEDGMENT AGREEMENT, dated as of October 3, 1994,
is entered into by and among:
(1) QUANTUM CORPORATION, a Delaware corporation ("Borrower");
(2) [QUANTUM PERIPHERALS (EUROPE) S.A., a Swiss
corporation][QUANTUM DATA STORAGE B.V., a Netherlands corporation]
("Subsidiary"); and
(3) CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian banking
corporation, acting as administrative and collateral agent (jointly in
such capacities, "Administrative Agent") for the financial institutions
which are from time to time parties to the Credit Agreement referred to
in Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Credit Agreement, dated as of October 3, 1994
(as amended from time to time, the "Credit Agreement"), among Borrower,
the Banks, ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
Administrative Agent, the Banks have agreed to extend certain credit
facilities to Borrower upon the terms and subject to the conditions set
forth therein. Pursuant to the terms of the Credit Agreement, Borrower
has executed that certain Borrower Pledge Agreement dated as of October
3, 1994 (the "Borrower Pledge Agreement") which pledges to
Administrative Agent and grants to Administrative Agent a security
interest in, among other property, certain stock and other equity
securities which are now owned or hereafter acquired by Borrower
(collectively, as defined in the Borrower Pledge Agreement, the "Pledged
Shares").
B. Borrower now wishes to transfer to Subsidiary and Subsidiary
wishes to acquire certain of the Pledged Shares. Administrative Agent
and the Banks have consented to such transfer provided that such
transfer and acquisition are made subject to the security interest in
favor of Administrative Agent as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Borrower and Subsidiary hereby agree with
Administrative Agent, for the ratable benefit of the Banks and the
Agents, as follows:
1. Definitions and Interpretation. When used in this Security
Agreement, the following terms shall have the following respective
meanings:
"Administrative Agent" shall have the meaning given to that term
in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower Pledge Agreement" shall have the meaning given to that
term in Recital A hereof.
"Credit Agreement" shall have the meaning given to that term in
Recital A hereof.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Agent or any Bank 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 the
Credit 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
thereunder.
"Pledged Shares" shall have the meaning given to that term in the
Borrower Pledge Agreement.
"Subsidiary" shall have the meaning given to that term in the
introductory paragraph hereof.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Credit Agreement shall have the respective meanings
given to those terms in the Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the
UCC. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Lien Acknowledgment Agreement, apply to this Lien Acknowledgment
Agreement and are hereby incorporated by reference. Subsidiary
acknowledges receipt of a copy of the Credit Agreement and the Borrower
Pledge Agreement.
2. Lien Acknowledgment. Borrower and Subsidiary hereby
acknowledge the security interest of Administrative Agent in the Pledged
Shares and agree that all transfers by Borrower to Subsidiary and all
acquisitions by Subsidiary from Borrower of Pledged Shares, including
the transfer and acquisition of the stock in the Subsidiaries of
Borrower listed below to be consummated on or around the Closing Date,
are subject to the security interest of Administrative Agent in such
Pledged Shares:
(a) [---------------], a [-----------] corporation;
(b) [---------------], a [-----------] corporation;
(c) [---------------], a [-----------] corporation; and
(d) [---------------], a [-----------] corporation.
Subsidiary further acknowledges that its acquisition and ownership of
the Pledged Shares is subject to the due, timely and complete
performance of all obligations and duties of Borrower under the Borrower
Pledge Agreement and acknowledges the rights and remedies of
Administrative Agent under the Borrower Pledge Agreement with respect
to, in each case, all Pledged Shares acquired by Subsidiary. Without
limiting the generality of the foregoing, Subsidiary acknowledges and
agrees that, upon the occurrence and during the continuance of an Event
of Default, Administrative Agent shall be entitled to foreclose its
interest in the Pledged Shares pursuant to the Borrower Pledge Agreement
and to acquire the Pledged Shares or convey them to a third party
purchaser at such foreclosure sale free and clear of any interest of
Borrower or Subsidiary therein.
3. Further Assurances. Borrower and Subsidiary shall deliver
to Administrative Agent such instruments, agreements, filings, notices,
registrations, certificates, opinions and other documents and take such
other actions as Administrative Agent may reasonably determine are
necessary to continue, perfect, maintain, protect and evidence the
security interest of Administrative Agent in all Pledged Shares after
any acquisition thereof by Quantum Europe.
4. Representations and Warranties. Borrower and Subsidiary
each represent and warrant to the Banks and Agents as follows:
(a) Such Person is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.
(b) The execution, delivery and performance by such Person of
this Lien Acknowledgment Agreement are within the corporate power of
such Person and have been duly authorized by all necessary corporate
actions on the part of such Person.
(c) This Lien Acknowledgment Agreement has been duly executed
and delivered by such Person and constitute the legal, valid and binding
obligations of such Person, enforceable against it 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 (regardless
of whether considered in a proceeding in equity or at law).
(d) The execution, delivery and performance by such Person of
this Lien Acknowledgment Agreement do not (i) violate any Requirement
of Law applicable to such Person, (ii) contravene any material
Contractual Obligation of such Person which could reasonably be expected
to have a Material Adverse Effect or (iii) result in the creation or
imposition of any Lien upon any of the Pledged Shares (except for the
security interest therein granted in the Borrower Pledge Agreement to
Administrative Agent).
(e) 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, delivery and
performance of this Lien Acknowledgment Agreement, except such
consents, approvals, orders, authorizations, registrations, declarations
and filings that are so required and which have been obtained and are in
full force and effect.
5. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Borrower, Subsidiary or Administrative Agent under this Lien
Acknowledgment Agreement shall be in writing and faxed, mailed or
delivered to Borrower, Subsidiary or Administrative Agent at its
respective facsimile number or address set forth below (or to such other
facsimile number or address for any party as indicated in any notice
given by that party to the other party). All such notices and
communications shall be effective (i) when sent by Federal Express or
other overnight service of recognized standing, on the second Business
Day following the deposit with such service; (ii) when mailed, first
class postage prepaid and addressed as aforesaid through the United
States Postal Service, upon receipt; (iii) when delivered by hand, upon
delivery; and (iv) when faxed, upon confirmation of receipt.
Borrower: Quantum Corporation
500 McCarthy Boulevard
Milpitas, CA 95035
Attn: Joseph T. Rodgers,
Executive Vice President Finance
and Secretary
Telephone: (408) 894-4212
Facsimile: (408) 894-3223
Subsidiary: [QUANTUM PERIPHERALS (EUROPE) S.A.]
[QUANTUM DATA STORAGE B.V.]
c/o Quantum Corporation
500 McCarthy Boulevard
Milpitas, CA 95035
Attn: Joseph T. Rodgers,
Executive Vice President Finance
and Secretary
Telephone: (408) 894-4212
Facsimile: (408) 894-3223
Administrative
Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman, Syndications
Telephone: (212) 856-3695
Facsimile: (212) 856-3799
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Lien Acknowledgment Agreement may be amended or
waived, subject to the terms of the Credit Agreement, if such amendment
or waiver is in writing and is signed by Borrower, Subsidiary and
Administrative Agent. No failure or delay by Administrative Agent 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 any 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.
(c) Successors and Assigns. This Lien Acknowledgment Agreement
shall be binding upon and inure to the benefit of Administrative Agent,
Borrower, Subsidiary, the Banks and the other Agents and their
respective successors and assigns; provided, however, that
Administrative Agent, Borrower, Subsidiary, the Banks and the other
Agents may sell, assign and delegate their respective rights and
obligations hereunder only as permitted by the Credit Agreement. The
Banks and the Agents may disclose this Lien Acknowledgment Agreement as
provided in the Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Lien Acknowledgment Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions of
this Lien Acknowledgment 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.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent under this Lien Acknowledgment Agreement shall be
in addition to all rights, powers and remedies given to Administrative
Agent, the Banks and the other Agents by virtue of any applicable
Governmental Rule, the Credit Agreement or any other Credit Document,
all of which rights, powers, and remedies shall be cumulative and may be
exercised successively or concurrently without impairing Administrative
Agent's rights hereunder. Borrower and Subsidiary waive any right to
require Administrative Agent, any Bank or any other Agent to proceed
against any Person or to exhaust any Pledged Shares or to pursue any
remedy in Administrative Agent's, Bank's or any other Agent's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower
or Subsidiary under this Lien Acknowledgment Agreement shall be made by
Borrower or Subsidiary free and clear of and without deduction for any
and all present and future taxes, levies, charges, deductions and
withholdings (except as otherwise provided in the Credit Agreement). In
addition, Borrower and Subsidiary shall pay upon demand any stamp or
other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this
Lien Acknowledgment Agreement. Upon request by Administrative Agent,
Borrower and Subsidiary shall furnish evidence satisfactory to
Administrative Agent that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory
bodies have been obtained and made and that all requisite taxes, levies
and charges have been paid.
(g) Borrower and Subsidiary's Continuing Liability.
Notwithstanding any provision of this Lien Acknowledgment Agreement or
any other Credit Document or any exercise by Administrative Agent of any
of its rights hereunder or thereunder (including, without limitation,
any right to collect or enforce any Pledged Shares), (i) each of
Borrower and Subsidiary shall remain severally liable to perform their
respective obligations and duties in connection with the Pledged Shares
owned by it (including, without limitation, all agreements relating to
such Pledged Shares) and (ii) neither Administrative Agent, any Agent
nor any Bank shall assume or be considered to have assumed any liability
to perform such obligations and duties or to enforce any of Borrower or
Subsidiary's rights in connection with the Pledged Shares (including,
without limitation, all agreements relating to the Pledged Shares).
(h) Attorneys' Fees. In the event of any legal action,
including any judicial proceeding, arbitration or other proceeding, to
enforce or interpret any provision of this Lien Acknowledgment
Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and other costs incurred from the losing
party.
(i) Governing Law. This Lien Acknowledgment Agreement shall be
governed by and construed in accordance with the laws of the State of
California without reference to conflicts of law rules (except to the
extent otherwise provided in the UCC).
(j) Jury Trial. EACH OF BORROWER, SUBSIDIARY AND ADMINISTRATIVE
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.
(k) Counterparts. This Lien Acknowledgment 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.
[For Quantum Holdings only] [(l) Waiver of Certain Rights.
Quantum Holdings waives and abandons all rights and remedies which it
may have under, and all rights to invoke the provisions of, Article 7,
Book 2 of the Netherlands Civil Code ("Article 7") with respect to this
Lien Acknowledgment Agreement or the Pledged Shares, to the extent that
Article 7 may apply thereto.]
IN WITNESS WHEREOF, Borrower, Subsidiary and Administrative Agent
have caused this Lien Acknowledgment Agreement to be executed as of the
day and year first above written.
QUANTUM CORPORATION
By:
Name:
Title:
QUANTUM PERIPHERALS (EUROPE) S.A.
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
Name:
Title:
<PAGE>
EXHIBIT O
COMPLIANCE CERTIFICATE
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement, dated as
of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Credit Agreement have the
same respective meanings when used herein (including Attachment 1
hereto).
2. Borrower hereby certifies to the Agents and the Banks as
follows:
(a) In connection with the preparation of the Financial
Statements of Borrower for the [quarter][year] ended ----------, ----
(the "Financial Statements"), the undersigned Executive Officer of
Borrower (the "Undersigned") has reviewed the terms of the Credit
Agreement and has made, or caused to be made, a detailed review of the
transactions and financial condition of Borrower and its Subsidiaries
during the accounting period covered by the Financial Statements.
(b) The Undersigned did not discover during the course of such
reviews, and has no other knowledge of, any event or condition which
constitutes a Default or an Event of Default at the end of the
accounting period covered by the Financial Statements or as of the date
of this Compliance Certificate, except as follows:
[State "None" or describe in detail any event or condition which
constitutes a Default or an Event of Default, including the period
during which any such event or condition has existed, and the action
which Borrower proposes to take in connection therewith.]
(c) Set forth in Attachment 1 hereto are true, complete and
accurate computations used in determining compliance with various
covenants set forth in the Credit Agreement for the period covered by
the Financial Statements and as of the last day of such period.
IN WITNESS WHEREOF, Borrower has executed this Compliance
Certificate on the date set forth above.
QUANTUM CORPORATION
By:---------------------------
Name:----------------------
Title:---------------------
<PAGE>
EXHIBIT P
BORROWING BASE CERTIFICATE
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement, dated as
of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO BANK N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and CANADIAN
IMPERIAL BANK OF COMMERCE, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Credit Agreement have the
same respective meanings when used herein (including Attachment 1
hereto).
2. Borrower hereby certifies to the Agents and the Banks that,
as of [insert date of determination of Revolving Facilities Borrowing
Base], the Borrowing Base was $----------------, calculated as set forth
in Attachment 1 hereto.
3. Borrower further certifies to the Agents and the Banks that
the value of inventory listed in Attachment 1 was revalued as of the end
of the month preceding the date of this Certificate in accordance with
GAAP and consistent with Borrower's past practice.
IN WITNESS WHEREOF, Borrower has executed this Borrowing Base
Certificate on the date set forth above.
QUANTUM CORPORATION
By:---------------------------
Name:-------------------------
Title:------------------------
<PAGE>
ATTACHMENT 1
TO BORROWING BASE CERTIFICATE
Calculation of Borrowing Base
As of --------, -- (the "Determination Date")
A. Eligible Borrower
Accounts as of the Determination Date:
1. Aggregate
net amount of all accounts of Borrower $--------
- --
2.
Deductions:
(a) Accounts which do not arise from the sale or lease of goods or
services
rendered to the account debtor thereon in the ordinary
lease or service which has not been fully performed by Borrower $----------
(b) Accounts and portions thereof to the extent the same are
subject to any
right of discount, credit, allowance, rescission, seto
enforceable against the account debtor thereon $----------
(c) Accounts which are not subject to a first priority perfected
security
interest (or Similar Lien) in favor of Administrative Ag
(d) Accounts which are not owned by Borrower free and clear of all
Liens,
rights and interests of all other Persons except for Per
(e) Accounts which are unpaid more than ninety (90) days after the
invoice
date therefor $----------
(f) Accounts arising from consignments by Borrower as consignee
and COD
shipments $----------
(g) Accounts payable by (i) the United States government or any
department,
agency or other subdivision thereof (except to the ext
Claims Act of 1940, as amended), (ii) Persons located in any
jurisdiction outside the United States or, if Administrative Agent has
been satisfied that it has a first priority perfected security
interest (or similar Lien) in such accounts, Canada (except to the
extent secured by letters of credit acceptable to Agents or covered by
credit insurance issued by the FICA on a policy acceptable to Agents)
or (iii) Affiliates of Borrower $----------
(h) Accounts payable by account debtors (i) which are the subject
of any
bankruptcy, insolvency, liquidation or similar proceeding
creditors, (iii) for which receivers have been appointed or (iv) which
have admitted in writing their inability to pay their debts as such
debts become due $----------
(i) Accounts payable by account debtors which have failed to pay
within
ninety (90) days of their invoice date twenty percent (20%
$----------
(j) Accounts owed by account debtors having either (i) long-term
debt ratings
of at least BBB (or its equivalent) from Standard an
Moody's Investors Service, Inc. or (ii) short-term debt rating of at
least A-1 (or its equivalent) from Standard and Poor's Ratings Group
or P-1 (or its equivalent) from Moody's Investors Service, Inc., to
the extent the total accounts owed by each such account debtor to
Borrower exceed thirty percent (30%) of Borrower's total accounts $----------
(k) Accounts owed by account debtors not satisfying the
requirements set
forth in item A.2.(j) above to the extent the total account
uch account debtor to Borrower exceed
twenty-five percent (25%) of Borrower's total accounts $--------
- --
(l) Other accounts which Agents have reasonably determined are not
likely to be paid in full within 90 days after the invoice date
Total
deductions (sum of A.2.(a)-(l) $--------
- --
--------
- --
3. Total
Eligible Borrower Accounts (A.1 minus A.2) $--------
- --
B. Eligible Borrower
Inventory as of the Determination Date:
1. Aggregate
net book value of all inventory of Borrower $--------
- --
(Date of
most recent revaluation of inventory ----------, 19--)
2.
Deductions:
(a) Inventory which is not held by or on behalf of Borrower for
sale or lease
in the ordinary course of its business $----------
(b) Inventory consisting of raw materials or work-in-process or
any other
inventory not constituting finished inventory $---------
(c) Inventory which is not subject to a first priority perfected
security
interest (or Similar Lien) in favor of Administrative Ag
(d) Inventory which is not owned by Borrower free and clear of all
Liens,
rights and interests of all other Persons except for Per
(e) Inventory which is obsolete, unsaleable or damaged $-------
- ---
(f) The aggregate portion of any inventory shown on the books of
Borrower
representing any purchase price discount earned by Borro
Total
deductions (sum of B.2.(a)-(f)) $--------
- --
--------
- --
3. Total
Eligible Borrower Inventory (B.1 minus B.2) $--------
- --
C. Eligible Quantum
Europe Accounts as of the Determination Date:
1. Aggregate
net amount of all accounts of Quantum Europe $--------
- --
2.
Deductions:
(a) Accounts which do not arise from the sale or lease of goods or
services
rendered to the account debtor thereon in the ordinary
sale, lease or service which has not been fully performed by Borrower
$----------
(b) Accounts and portions thereof to the extent the same are
subject to
any right of discount, credit, allowance, rescission, seto
enforceable against the account debtor thereon $----------
(c) Accounts which are not subject to a first priority perfected
security
interest (or Similar Lien) in favor of Borrower and assi
the Agents and Banks $----------
(d) Accounts which are not owned by Quantum Europe free and clear
of all
Liens, rights and interests of all other Persons except f
(e) Accounts which are unpaid more than ninety (90) days after the
invoice
date therefor $----------
(f) Accounts arising from consignments by Quantum Europe as
consignee and COD
shipments $----------
(g) Accounts payable by (i) a government or any department, agency
or other
subdivision thereof, (ii) Persons located in any juris
Europe's accounts is not or cannot be perfected in a manner
satisfactory to Agents (except to the extent secured by letters of
credit acceptable to Agents) or (iii) Affiliates of Quantum Europe $-------
- ---
(h) Accounts payable by account debtors (i) which are the subject
of any
bankruptcy, insolvency, liquidation or similar proceeding
creditors, (iii) for which receivers have been appointed or (iv) which
have admitted in writing their inability to pay their debts as such
debts become due $----------
(i) Accounts payable by account debtors which have failed to pay
within ninety
(90) days of their invoice date twenty percent (20%
Europe $----------
(j) Accounts owed by account debtors having either (i) long-term
debt
ratings of at least BBB (or its equivalent) from Standard an
Moody's Investors Service, Inc. or (ii) short-term debt rating of at
least A-1 (or its equivalent) from Standard and Poor's Ratings Group
or P-1 (or its equivalent) from Moody's Investors Service, Inc., to
the extent the total accounts owed by each such account debtor to
Quantum Europe exceed thirty percent (30%) of Quantum Europe's total
accounts $----------
(k) Accounts owed by account debtors not satisfying the
requirements set
forth in item C.2.(j) above to the extent the total accou
twenty-five percent (25%) of Quantum Europe's total accounts $--------
- --
(l) Other accounts which Agents have reasonably determined are not
likely to be paid in full within 90 days after the invoice date
Total
deductions (sum of A.2.(a)-(l) $--------
- --
--------
- --
3. Total
Eligible Quantum Europe Accounts (C.1 minus C.2) $----------
D. Borrowing Base as of
the Determination Date:
1. Total
Revolving Loan Commitment $--------
- --
2. Total
Eligible Borrower Accounts (A.3.) times .80 $----------
3. Lesser of
(a) Total Eligible Borrower Inventory (B.3.) times .30 ($----------)
and (b) $50,000,000 $----------
4. Lesser of
(a) outstanding principal amount of Quantum Europe Note ($----------)
and (b) Eligible Quantum Europe Accounts (C.3) times .60 ($----------)
$----------
5.
Outstanding principal
amount of DEC Note $----------
6. Sum of
D.2, D.3 and D.4 minus D.5 $--------
- --
--------
- --
7. Borrowing
Base (lesser of D.1 and D.6) $--------
- --
<PAGE>
EXHIBIT Q
INSURANCE ENDORSEMENTS
1. Property Insurance. Each of the property insurance policies
of Borrower and each of its Material Subsidiaries which executes a
Subsidiary Security Agreement (individually, an "Insured Party") shall
contain substantially the following endorsements:
(a) Administrative Agent shall be named as additional loss
payee.
(b) In respect of the interests of Administrative Agent in the
policies, the insurance shall not be invalidated by any action or by
inaction of any Insured Party or by any Person having temporary
possession of the property covered thereby (the "Property") while under
contract with any Insured Party to perform maintenance, repair,
alteration or similar work on the Property, and shall insure the
interests of Administrative Agent regardless of any breach or violation
of any warranty, declaration or condition contained in the insurance
policy by any Insured Party or Administrative Agent or any other
additional insured (other than by such additional insured, as to such
additional insured) or by any Person having temporary possession of the
Property while under contract with Borrower to perform maintenance,
repair, alteration or similar work on the Property.
(c) If the insurance policy is cancelled for any reason
whatsoever, or substantial change is made in the coverage that affects
the interests of Administrative Agent, or if the insurance coverage is
allowed to lapse for non-payment of premium, such cancellation, change
or lapse shall not be effective as to Agent for 30 days (or 10 days in
the case of non-payment of premium) after receipt by Administrative
Agent of written notice from the insurers of such cancellation, change
or lapse.
(d) Neither any Agent nor any Bank shall have any obligation or
liability for premiums, commissions, assessments, or calls in connection
with the insurance.
(e) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or otherwise,
that it may have against each Agent and each Bank.
(f) The insurance shall be primary without right of contribution
from any other insurance that may be carried by any Agent or any Bank
with respect to its or their interest in the Property.
(g) The insurer shall waive any right of subrogation against
each Agent and Bank.
(h) All provisions of the insurance, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each insured party.
2. Liability Insurance. Each of the liability insurance
policies of each Insured Party shall contain substantially the following
endorsements:
(a) Administrative Agent shall be named as additional insured.
(b) In respect of the interests of Administrative Agent in the
policies, the insurance shall not be invalidated by any action or by
inaction of any Insured Party or by any Person having temporary
possession of the property covered thereby (the "Property") while under
contract with any Insured Party to perform maintenance, repair,
alteration or similar work on the Property, and shall insure the
interests of Administrative Agent regardless of any breach or violation
of any warranty, declaration or condition contained in the insurance
policy by any Insured Party or Administrative Agent or any other
additional insured (other than by such additional insured, as to such
additional insured) or by any Person having temporary possession of the
Property while under contract with Borrower to perform maintenance,
repair, alteration or similar work on the Property; provided, however,
that the foregoing shall not be deemed to (i) cause such insurance
policies to cover matters otherwise excluded from coverage by the terms
of such policies or (ii) require any insurance to remain in force
notwithstanding non-payment of premiums except as provided in clause (c)
below.
(c) If the insurance policy is cancelled for any reason
whatsoever, or substantial change is made in the coverage that affects
the interests of Administrative Agent, or if the insurance coverage is
allowed to lapse for non-payment of premium, such cancellation, change
or lapse shall not be effective as to Administrative Agent for 30 days
(or 10 days in the case of non-payment of premium) after receipt by
Agent of written notice from the insurer of such cancellation, change or
lapse.
(d) Neither any Agent nor any Bank shall have any obligation or
liability for premiums, commissions, assessments, or calls in connection
with the insurance.
(e) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or otherwise,
that it may have against each Agent and each Bank.
(f) The insurance shall be primary without right of contribution
from any other insurance that may be carried by any Agent or any Bank
with respect to their interests in the Property.
(g) The insurer shall waive any right of subrogation against
each Agent and each Bank.
(h) All provisions of the insurance, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each insured party.
<PAGE>
EXHIBIT R
MKE SUBORDINATED DEBT TERMS
Borrower: Borrower.
Lender: MKE or any of its affiliates.
Maximum Amount: U.S. $100 million.
Maturity Date: One year or more following the Maturity Date.
Interest Rate: Not in excess of the market rate for such
Indebtedness obtained in an arms-length transaction.
Covenants: All financial and other covenants must be less
restrictive than those in the Credit Documents.
Defaults: Cross-default of MKE Subordinated Debt to Events
of Default is not permitted but cross-acceleration to an acceleration of
the Obligations is permitted.
Other Subordination Provisions:
1. No direct or indirect payments of principal on the MKE
Subordinated Debt (including redemptions and repurchases) and no sinking
fund or other set-asides for the MKE Subordinated Debt permitted until
the Obligations are paid in full.
2. Regularly scheduled payments of accrued interest on the MKE
Subordinated Debt are permitted subject to the following:
(a) No payment of interest on the MKE Subordinated Debt if
any payment default with respect to the Obligations has occurred and is
continuing.
(b) No payment of interest on the MKE Subordinated Debt
for 180 days after Administrative Agent notifies MKE of any non-payment
default with respect to the Obligations, provided that no more than one
blockage period may be commenced in any 365-day period.
3. In any bankruptcy, insolvency or similar proceeding, all
Obligations (including post-petition interest) must be payable in full
prior to any payment on the MKE Subordinated Debt.
4. The holders of the MKE Subordinated Debt will turn over to
Administrative Agent all payments received by such holders on the MKE
Subordinated Debt not permitted by the subordination provisions of the
MKE Subordinated Debt.
5. No acceleration of the MKE Subordinated Debt or exercise of
remedies for first 90 days of interest blockage period.
<PAGE>
EXHIBIT S
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 1 hereto as
the Assignor Bank ("Assignor Bank"); and
(2) Each bank designated under item B of Attachment 1 hereto as
an Assignee Bank (individually, an "Assignee Bank").
RECITALS
A. Assignor Bank is one of the banks which is a party to the
Credit Agreement dated as of October 3, 1994, by and among Quantum
Corporation, a Delaware corporation ("Borrower"), Assignor Bank and the
other financial institutions parties thereto (collectively, the
"Banks"), ABN AMRO Bank N.V., San Francisco International Branch,
Barclays Bank PLC and CIBC Inc., as managing agents for the Banks, and
CANADIAN IMPERIAL BANK OF COMMERCE, as administrative and collateral
agent for the Banks (jointly in such capacities, "Administrative
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 Bank wishes to sell, and Assignee Bank wishes to
purchase, a portion of Assignor Bank'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 Bank hereby agrees to sell, assign
and delegate to each Assignee Bank and each Assignee Bank hereby agrees
to purchase, accept and assume an undivided interest in and share of
Assignor Bank's rights, obligations and duties under the Credit
Agreement and the other Credit Documents equal to the Proportionate
Share set forth under the caption "Proportionate Share" opposite such
Assignee Bank's name on Attachment 1 hereto.
3. Assignment Effective Upon Notice. Upon (a) receipt by
Administrative Agent of five (5) counterparts of this Assignment
Agreement (to each of which is attached a fully completed Attachment 1),
each of which has been executed by Assignor Bank and each Assignee Bank
(and, if any Assignee Bank is not then a Bank, by Borrower and
Administrative Agent, Issuing Bank and Swing Line Bank) and (b) payment
to Administrative Agent of the registration and processing fee specified
in Subparagraph 8.05(e) by Assignor Bank, Administrative Agent will
transmit to Borrower, Assignor Bank and each Assignee Bank an Assignment
Effective Notice substantially in the form of Attachment 2 hereto (an
"Assignment Effective Notice"). Such Assignment Effective Notice shall
set forth the date on which the assignment affected 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 Bank) on the Assignment Effective Date, each Assignee
Bank shall pay to Assignor Bank, in immediately available or same day
funds, an amount equal to the purchase price, as agreed between Assignor
Bank and such Assignee Bank (the "Purchase Price"), for the
Proportionate Share purchased by such Assignee Bank hereunder.
Effective upon receipt by Assignor Bank of the Purchase Price payable by
each Assignee Bank, the sale, assignment and delegation to such Assignee
Bank of such Proportionate Share as described in Paragraph 2 hereof
shall become effective.
5. Payments After the Assignment Effective Date. Assignor Bank
and each Assignee Bank hereby agree that Administrative Agent shall, and
hereby authorize and direct Administrative Agent to, allocate amounts
payable under the Credit Agreement and the other Credit Documents as
provided in the Credit Agreement in accordance with its appropriate
Proportionate Share. Assignor Bank and each Assignee Bank have made
separate arrangements for (i) the payment by Assignor Bank to such
Assignee Bank of any principal, interest, fees or other amounts
previously received or otherwise payable to Assignor Bank hereunder if
Assignor Bank and such Assignee Bank have otherwise agreed that such
Assignee Bank is entitled to receive any such amounts and (ii) the
payment by such Assignee Bank to Assignor Bank of any principal,
interest, fees or other amounts payable to such Assignee Bank hereunder
if Assignor Bank and such Assignee Bank have otherwise agreed that
Assignor Bank is entitled to receive any such amounts.
6. Delivery of Notes. On or prior to the Assignment Effective
Date, Assignor Bank will deliver to Administrative Agent the Notes
payable to Assignor Bank. On or prior to the Assignment Effective Date,
Borrower will deliver to Administrative Agent Notes for each Assignee
Bank and Assignor Bank, 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 and otherwise be in the form of Note replaced
thereby (provided that Borrower shall not be obligated to pay any
principal paid or interest accrued prior to the effective date of this
assignment to the Assignee Bank). Promptly after the Assignment
Effective Date, Administrative Agent will send to each of Assignor Bank
and the Assignee Banks its new Notes and will send to Borrower the
superseded Notes of Assignor Bank, marked "replaced."
7. Delivery of Copies of Credit Documents. Concurrently with
the execution and delivery hereof, Assignor Bank will provide to each
Assignee Bank (if it is not already a Bank party to the Credit
Agreement) conformed copies of all documents delivered to Assignor Bank
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
Bank and each Assignee Bank further represent and warrant to and
covenant with each other, Administrative Agent, the Managing Agents and
the Banks 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 Bank 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.
(b) Assignor Bank 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 Bank 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 Bank will, independently and without reliance
upon any Agent, Assignor Bank or any other Bank Party 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 Bank appoints and authorizes Agents to take
such action as Agents on its behalf and to exercise such powers under
the Credit Agreement and the other Credit Documents as are delegated to
Agents 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 Bank 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 Bank.
(g) Attachment 1 hereto sets forth the revised Proportionate
Shares of Assignor Bank and each Assignee Bank as well as administrative
information with respect to each Assignee Bank.
10. Effect of this Assignment Agreement. On and after the
Assignment Effective Date, (a) each Assignee Bank shall be a Bank with a
Proportionate Share as set forth on Attachment 1 hereto and shall have
the rights, duties and obligations of such a Bank under the Credit
Agreement and the other Credit Documents and (b) Assignor Bank shall be
a Bank with a Proportionate Share as set forth on Attachment 1 hereto,
or, if the Proportionate Share of Assignor Bank has been reduced to 0%,
Assignor Bank shall cease to be a Bank.
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 1 hereto.
------------------------------, as
Assignor Bank
By:---------------------------
Name:----------------------
Title:---------------------
------------------------------, as an
Assignee Bank
By:---------------------------
Name:----------------------
Title:---------------------
------------------------------, as an
Assignee Bank
By:---------------------------
Name:----------------------
Title:---------------------
------------------------------, as an
Assignee Bank
By:---------------------------
Name:----------------------
Title:---------------------
CONSENTED TO AND ACKNOWLEDGED BY:
QUANTUM CORPORATION
By:---------------------------
Name:----------------------
Title:---------------------
CANADIAN IMPERIAL BANK OF COMMERCE,
As Administrative Agent
By:---------------------------
Name:----------------------
Title:---------------------
ACCEPTED FOR RECORDATION
IN REGISTER:
CANADIAN IMPERIAL BANK OF COMMERCE,
As Administrative Agent
By:---------------------------
Name:----------------------
Title:---------------------
<PAGE>
ATTACHMENT 1
TO ASSIGNMENT AGREEMENT
NAMES, ADDRESSES AND PROPORTIONATE SHARES
OF ASSIGNOR BANK AND ASSIGNEE BANKS AFTER ASSIGNMENT
- --------------, ----
A. ASSIGNOR BANK Proportionate Share
------------------------------ ----%
Applicable Lending Office:
------------------------------
------------------------------
------------------------------
------------------------------
Address for notices:
------------------------------
------------------------------
------------------------------
------------------------------
Telephone No: ----------
Facsimile No: ----------
Wiring Instructions:
------------------------------
------------------------------
B. ASSIGNEE BANKS
------------------------------ ----%
Applicable Lending Office:
------------------------------
------------------------------
------------------------------
------------------------------
B. ASSIGNEE BANKS (cont'd) Proportionate Share
Address for notices:
------------------------------
------------------------------
------------------------------
------------------------------
Telephone No: ----------
Facsimile No: ----------
Wiring Instructions:
------------------------------
------------------------------
------------------------------ ----%
Applicable Lending Office:
------------------------------
------------------------------
------------------------------
------------------------------
Address for notices:
------------------------------
------------------------------
------------------------------
------------------------------
Telephone No: ----------
Facsimile No: ----------
Wiring Instructions:
------------------------------
------------------------------
<PAGE>
ATTACHMENT 2
TO ASSIGNMENT AGREEMENT
FORM OF
ASSIGNMENT EFFECTIVE NOTICE
The undersigned, as administrative agent for the banks under the
Credit Agreement, dated as of October 3, 1994 among Quantum Corporation
("Borrower"), the financial institutions parties thereto (the "Banks")
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative 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 Bank is
required to deliver to Administrative Agent on or before the Assignment
Effective Date the Notes payable to Assignor Bank.
3. Pursuant to such Assignment Agreement, Borrower is required
to deliver to Administrative Agent on or before the Assignment Effective
Date the following Notes, each dated ----------------- [Insert
appropriate date]:
[Describe each new Note for Assignor Bank and each Assignee Bank
as to principal amount.]
4. Pursuant to such Assignment Agreement, each Assignee Bank is
required to pay its Purchase Price to Assignor Bank at or before 12:00
Noon (local time of Assignor Bank) on the Assignment Effective Date in
immediately available funds.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By:---------------------------
Name:-------------------------
Title:------------------------
<PAGE>
EXHIBIT T
SOLVENCY CERTIFICATE
[Date]
Canadian Imperial Bank of Commerce,
as Administrative Agent
425 Lexington Avenue
New York, New York 10017
Attn: Arlene Tellerman
Syndications
1. Reference is made to that certain Credit Agreement, dated as
of October 3, 1994 (as amended from time to time, the "Credit
Agreement"), among Quantum Corporation ("Borrower"), the financial
institutions listed in Schedule I to the Credit Agreement (the "Banks"),
ABN AMRO Bank N.V., San Francisco International Branch, Barclays Bank
PLC and CIBC Inc., as managing agents for the Banks, and Canadian
Imperial Bank of Commerce, as administrative and collateral agent for
the Banks (jointly in such capacities, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Credit Agreement have the
same respective meanings when used herein (including Attachment 1
hereto).
2. Quantum Corporation (the "Company") hereby certifies to the
Agents and Banks as follows:
(a) Attached hereto as Attachment 1 are the most recent
quarterly Financial Statements for the Company. Such Financial
Statements are complete and fairly present the financial condition of
the Company as of the date thereof.
(b) Attached hereto as Attachment 2 is a pro forma balance sheet
of the Company based upon such Financial Statements reflecting the
consummation of the transactions contemplated by the Credit Documents,
the DEC Purchase Documents and the Quantum Europe Loan Documents on the
Closing Date, including, without limitation, (i) the initial Borrowings
under the Credit Agreement on the Closing Date, (ii) the consummation of
the DEC Acquisition, including the execution and delivery of the DEC
Note and (iii) the consummation of the Quantum Europe Loan.
(c) As of the date hereof,
(i) The fair value of the Company's assets exceed, and, on a pro
forma basis after giving effect to the transactions contemplated by the
Credit Agreement will exceed, the fair value of the Company's stated
liabilities and contingent liabilities;
(ii) The Company is, and, after giving effect to the transactions
contemplated by the Credit Agreement, will be, able to pay its debts as
they become absolute and mature;
(iii) The capital remaining in the Company after the transactions
contemplated by the Credit Agreement will not be unreasonably small for
the business in which the Company is engaged and is proposed to be
conducted following the consummation of such transactions;
(iv) The Company is, and after giving effect to the transactions
contemplated by the Credit Agreement will be, able to pay its debts as
they become due in the usual course of business; and
(v) The total assets of the Company exceed, and after giving
effect to the transactions contemplated by the Credit Agreement will
exceed, the sum of its total liabilities.
QUANTUM CORPORATION
By:----------------------
Name:----------------------
Title:---------------------
<PAGE>
EXHIBIT U
QUANTUM EUROPE NOTE
PROMISSORY NOTE
US$50,000,000 Milpitas,
California
[Date], 1994
For value received, the undersigned QUANTUM PERIPHERALS
(EUROPE) S.A., a Swiss corporation ("Maker"), hereby promises to pay to
QUANTUM CORPORATION, a Delaware corporation ("Payee"), or order, on
demand, at Payee's offices at 500 McCarthy Boulevard, Milpitas,
California 95035, United States of America, or such other address as the
holder ("Holder") of this promissory note ("Note") may designate in
writing from time to time, the principal amount of Fifty Million U.S.
Dollars (US$50,000,000), together with interest thereon as hereinafter
provided.
The principal outstanding under this Note shall bear
interest at a rate of six and one-half percent (6.5%) per annum;
provided, however, that if Maker fails to pay this Note in full as
required upon demand by Holder, the principal hereof shall bear
thereafter interest at a per annum rate equal to the per annum rate
publicly announced from time to time by Canadian Imperial Bank of
Commerce, New York Branch, as its "prime rate" plus two and one-half
percent (2.5%), such rate to change on the same day as any changes in
said "prime rate," until paid in full.
All sums paid by Maker to Holder hereunder shall be applied
first to sums other than principal and interest due to Holder hereunder,
next to accrued but unpaid interest, and next to unpaid principal. All
amounts payable hereunder shall be paid in lawful money of the United
States of America and in immediately available funds.
All payments hereunder shall be made without setoff or
counterclaim and free and clear of, and without reduction for, or on
account of, any present or future income, franchise, value added, stamp
or other taxes, levies, imports, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any government or agency, authority, commission or other
instrumentality thereof, excluding (i) net income taxes assessed by the
United States of America or any State thereof on the aggregate net
income of Holder and (ii) taxes imposed on the interest payable under
this Note by Maker's country of domicile.
Maker and all endorsers and guarantors of this Note hereby
severally waive presentment, demand, protest, notice of dishonor or
protest and all other notices of any kind, any release or discharge
arising from any extension of time, discharge of a prior party, release
of any or all of the security for this Note, or other cause of release
or discharge other than actual payment of this Note in full.
Holder shall not be deemed, by any act or omission, to have
waived any of its rights or remedies hereunder or under any agreement,
document or instrument securing this Note (the "Collateral Documents")
or with respect to any collateral or security provided by Maker for this
Note (the "Collateral"), unless such waiver is in writing and signed by
Holder and then only to the extent specifically set forth in such
writing. A waiver with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a
subsequent event. No delay or omission of Holder in exercising any
right, whether before or after a default hereunder, shall impair any
such right or shall be construed to be a waiver of any right or default,
and the acceptance at any time by Holder of any past due amount shall
not be deemed to be a waiver of the right to require prompt payment when
due of any other amounts then or thereafter due and payable.
The relationship of Maker and any Holder (including Payee)
under this Note is, and shall at all times remain, solely that of
borrower and lender. Holder does not undertake or assume any
responsibility or duty to Maker or to any third party with respect to
the Collateral.
Nothing contained in this Note shall be deemed to require
the payment of interest or other charges by Maker in excess of the
amount which the holder hereof may lawfully charge under the applicable
usury laws. In the event that Holder shall collect monies which are
deemed to constitute interest which would increase the effective
interest rate to a rate in excess of that permitted to be charged by
applicable law, all such sums deemed to constitute interest in excess of
the legal rate shall, upon such determination, at the option of Holder,
be returned to Maker or credited against the principal balance of this
Note then outstanding.
Time is of the essence hereof. Upon any default hereunder,
Holder may exercise all rights and remedies provided for herein, under
the Collateral Documents, at law or in equity.
It is expressly agreed that if this Note is referred to an
attorney or if suit is brought to collect this Note or any part hereof
or to enforce or protect any rights conferred upon Holder by this Note
or any of the Collateral Documents or any other document evidencing or
securing this Note, Maker promises and agrees to pay all reasonable
costs, including reasonable attorneys' fees, incurred by Holder in
connection therewith.
To the fullest extent permitted by law, Maker waives the
right to plead any and all statutes of limitations as a defense to any
demand under this Note.
If any provision hereof is declared invalid or unenforceable
by a court of competent jurisdiction, the remaining provisions hereof
shall remain in full force and effect.
Maker hereby irrevocably agrees that any legal action, suit,
or proceeding against it with respect to its obligations, liabilities or
any other matter under or arising out of or in connection with this Note
or for recognition or enforcement of any judgment rendered in any such
action, suit or proceeding may be brought in the United States Courts
for the Northern District of California, or in the courts of the State
of California for the County of Santa Clara or the City and County of
San Francisco, as Holder hereof may elect. By execution and delivery of
this Note, Maker hereby irrevocably accepts and submits to the non-
exclusive jurisdiction of each of the aforesaid courts in personam,
generally and unconditionally with respect to any such action, suit, or
proceeding for itself and in respect of its property. Maker further
agrees that final judgment against it in any action, suit, or proceeding
referred to herein shall be conclusive and may be enforced in any other
jurisdiction, by suit on the judgment, a certified or exemplified copy
of which shall be conclusive evidence of the fact and of the amount of
its indebtedness.
The terms, covenants and conditions contained herein shall
be binding upon the heirs, successors and assigns of Maker and shall
inure to the benefit of each Holder of this Note.
This Note shall be governed by and construed and interpreted
in accordance with the laws of the State of California.
QUANTUM PERIPHERALS (EUROPE) S.A.,
a Swiss corporation
By:
Joseph T. Rodgers
Chairman of the Board
<PAGE>
CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO 17 C.F.R. SECTION 200.80(b)(4),
200.83 and 240.24b.2.
SUPPLY AGREEMENT
BETWEEN
BOA NO. 19337
DIGITAL EQUIPMENT CORPORATION (BUYER)
AND
QUANTUM CORPORATION (SELLER)
FOR STORAGE DEVICES
OCTOBER 3, 1994
<PAGE>
1. SUPPLY AGREEMENT
A. This Supply Agreement and all attachments (called the
"Agreement") is made by DIGITAL EQUIPMENT CORPORATION ("Buyer") and
QUANTUM CORPORATION and QUANTUM PERIPHERALS (EUROPE) ("Seller").
Buyer's worldwide subsidiaries may place Purchase Orders under this
Agreement per Section 2.A. The Terms and Conditions herein exclusively
govern the purchase and sale of the material described in Exhibit A
(Product Description and Pricing) and the repairs described in Exhibit B
(Repair Services, Pricing and Location) ("Material and Repairs").
B. If any term of this Agreement conflicts with any term of an
issued Purchase Order, this Agreement shall take precedence.
C. It is understood by Seller that Material to be purchased
under this Agreement may relate to products that are under development
by Buyer. Except as expressly agreed to by Buyer, Buyer accepts no
responsibility for any expenses, losses or actions incurred or
undertaken by Seller as a result of work performed in anticipation of
purchases of said Material and Repairs by Buyer.
D. Notwithstanding the requirement in Section 22 (General) that
two signatures are necessary to amend this Agreement, Buyer may add
products of Seller to the list of Material available for purchase
hereunder in accordance with the procedures described in Exhibit A. Such
added products shall be deemed "Material and Repairs" as defined herein
as though listed in Exhibit A at the time of execution of this
Agreement.
E. Seller agrees to supply spare parts for any Material on
commercially reasonable terms.
2. PURCHASE ORDERS
A. The term "Purchase Order" shall mean Buyer's written
Purchase Order form and any documents incorporated therein by reference.
B. Buyer shall order Material and Repairs by issuing telex,
facsimile, or telephonic orders or Purchase Orders. Buyer will issue
confirming written Purchase Orders within ten (10) days after issuing
such telex, facsimile or telephonic orders. Each Purchase Order will
comply with the terms of this Agreement and will specify items such as:
item description, quantity, delivery schedule, destination, total price
of the Purchase Order. Each Purchase Order shall be made part of, and
be incorporated into, this Agreement.
Seller shall accept all Purchase Orders for Material and Repairs
Available (as defined in Exhibit A) under this Agreement that are
consistent with the terms of this Agreement, including
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
requirements as
to Leadtimes. Seller shall have [ ] after receipt to reject
any Purchase Order for failure to so comply. By not so rejecting a
Purchase Order within [ ], Seller shall be deemed to have
accepted the Purchase Order.
Acceptance by Seller is limited to the terms of this Agreement and
the Purchase Order. No additional or different terms proposed by Seller
shall apply. In addition, the parties agree that this Agreement and
issued Purchase Orders constitute a Contract for the Sale of Goods and
satisfy all statutory and legal formalities of a contract.
C. If Buyer's Purchase Order specifies export after passage of
title, Seller shall furnish Buyer with all necessary Export/Import
documentation. Export/Import documentation shall be in accordance with
the INCOTERMS then in force.
D. If Seller has more than one (1) geographic location which
could supply Material and Repairs, Seller shall use reasonable efforts
to make such Material and Repairs available to Buyer from Seller's
closest location to Buyer's "ship to" location.
3. PURCHASE PERIOD; PURCHASE COMMITMENTS
A. The period during which Buyer may issue Purchase Orders for
Material under this Agreement ("Purchase Period") shall begin on the
Closing Date (as defined in the Stock and Asset Purchase Agreement dated
July 18, 1994 (the "Stock and Asset Purchase Agreement")) and end on the
third anniversary of such date. The parties agree to negotiate in good
faith toward a [ ] extension of the Purchase Period during the
[ ] quarters thereof.
B. The period during which Buyer may issue Purchase Orders for
Repairs under this Agreement ("Repair Period") for each specific
Material shall last until [ ] after Buyer's last purchase
of such Material.
C. Buyer agrees that, during the term of this Agreement, it
will order and purchase (1) [ ] of its and its
subsidiaries' requirements (measured in dollar volume) for rigid disk
drives, (2) [ ] of its and its subsidiaries'
requirements (measured in dollar volume) for Digital linear tape drives,
media and loaders and comparable tape products (including, for example,
[
], and (3) [ ]
of its and its subsidiaries' requirements (measured in dollar volume)
for solid state disks (in each case, the "Required Percentage") from
Seller during each Measurement Period. "Measurement Period" means the
most recently completed [ ] period ending [ ]
within the Purchase Period, provided that the first Measurement Period
shall be the period from the first day of the Purchase Period to
[ ], and the last Measurement Period shall be the
period from [ ] to the last day of the Purchase Period in
the same calendar year. Buyer agrees to cooperate with Seller in
placing its orders with the Seller entity that would be the most
appropriate under the circumstances. Purchases by Buyer of its [
] prior to [ ] shall be excluded from this
requirements commitment. Purchases by Buyer's [
] or its successor of products from a supplier other
than Seller in connection
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
with performance of repair services to third
parties shall be excluded from this requirements commitment if product
so purchased is used to replace malfunctioning products originally
procured from such other supplier. Buyer may purchase products in order
to meet legal requirements to which Buyer's customer is subject that are
not met by Seller's products and any such purchases shall be excluded
from this requirements commitment. In the event Buyer purchases systems
or subsystems from third parties for resale by Buyer, products that are
included within such systems or subsystems shall also be excluded from
this requirements commitment if (1) such system or subsystem has been or
is to be designed by a third party independently of Buyer for sale
generally as designed or with immaterial modifications to accommodate
individual private label or OEM customers and (2) Buyer is not
specifying the manufacturer of the rigid disk drive or comparable
components such as monitors, keyboards and printed circuit board
assemblies (but excluding for this purpose microprocessors), or the
parts therein.
D. Buyer's requirements commitment will be subject to
modification on a product-by-product basis as set forth herein.
1. If any Material is rejected and returned by Buyer or any
Purchase Order therefor is canceled by Buyer for lateness, in each
case in accordance with the terms of this Agreement, and if Buyer
purchases substitute Material from another supplier within [
] of such rejection or cancellation, then such
substitute Material shall be deemed to have been purchased from
Seller at Buyer's actual purchase price therefor for purposes of
determining whether Buyer has purchased the Required Percentage of
its requirements for the applicable category of Material.
2. If Seller does not offer for sale a product that meets
the reasonable needs of Buyer or any such offered product is not
yet Available (as defined in Exhibit A) under this Agreement until
the later of (i) [ ] after Seller indicates its
intention to offer such product to Buyer and (ii) [
] after such time as a product that meets in all material
respects specifications requested by Buyer becomes Available for
delivery under this Agreement, Buyer may purchase substitute
product from another supplier and any such purchases shall not be
included in the determination of Buyer's requirements for the
applicable category of Material. This paragraph shall not apply
to [ ] products.
3. If Seller rejects a Purchase Order in breach of its
obligations under this Agreement, in addition to any other rights
and remedies Buyer may have under this Agreement Buyer may
purchase substitute Material from another supplier and any such
purchases shall be deemed to have been purchased from Seller at
Buyer's actual purchase price therefor for purposes of determining
whether Buyer has purchased the Required Percentage of its
requirements for the applicable
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
category of Material. In
addition, if Seller has so rejected orders for more than [ ]
of Buyer's forecasted requirements for a given product in any
quarter, Buyer may by written notice to Seller permanently exclude
such product from the determination of Buyer's requirements for
the applicable category of Material, and any further purchases of
such product from Seller will be at the discretion of Buyer.
4. If Late Volume with respect to any product in a quarter
exceeds [ ] of the number of units thereof scheduled for
delivery in such quarter pursuant to purchase orders placed in
accordance with Section 5.A, in addition to any other rights and
remedies Buyer may have under this Agreement, Buyer may reduce its
purchases of such product and its overall requirements commitment
for the applicable category of Material hereunder during such
quarter and the next quarter by [ ] of its requirements for
such product. In addition, if with respect to any product Buyer
invokes its rights hereunder more than [ ], Buyer may by
written notice to Seller permanently exclude such product from the
determination of Buyer's requirements for the applicable category
of Material, and any further purchases of such product from Seller
will be at the discretion of Buyer. "Late Volume" means the
number of units that are delivered late, as defined in Section
5.C.
5. If Nonconforming Volume with respect to any product in a
quarter exceeds the standards set forth in Exhibit C
(Qualification and Quality), Buyer may stop ordering such product
until Seller provides Buyer with a recovery plan reasonably
acceptable to Buyer, after which Buyer shall resume ordering such
product from Seller as contemplated by such recovery plan for so
long as Seller performs in all material respects in accordance
with such plan. During the period between Seller's exercise of
its right hereunder until a recovery plan has been successfully
completed, Buyer's purchases of such product from any source,
including Seller, shall not be included in the determination of
Buyer's requirements for the applicable category of Material for
purposes of Section 3.C. In addition, if with respect to any
product Buyer invokes its rights hereunder more than [ ],
Buyer may by written notice to Seller permanently exclude such
product from the determination of Buyer's requirements for the
applicable category of Material, and any further purchases of such
product from Seller will be at the discretion of Buyer.
"Nonconforming Volume" means units of product that fail to pass
inspection per Section 6.C.
E. Within thirty (30) days after the end of each complete
quarter during the Purchase Period, Buyer shall deliver a report (a
"Compliance Report") to Seller showing in reasonable detail the
determination of its requirements and its purchases and deemed purchases
from Seller during the quarter (or the period from the first day of the
Purchase Period to the end of the first such quarter, in the case of the
first such report) and during the then-current Measurement Period to the
end of such quarter. In the event of a shortfall in any complete
Measurement Period, Buyer will pay to Seller an amount equal to (1) a
[
], less (2) a [
] in excess of [ ] equal to [
]. Any such payment shall be
made within thirty (30) days of receipt of Seller's invoice, together
with supporting
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
computations, therefor as liquidated damages in respect
of Buyer's failure to purchase the Required Percentage of its
requirements. Seller's rights under this Section 3.E shall represent
Seller's exclusive remedy for a breach of Buyer's obligations under
Section 3.C.
F. With respect to inventories included within the Purchased
Assets under the Stock and Asset Purchase Agreement that relate to
proprietary products heretofore manufactured by Buyer that cannot be
readily sold to others ("Custom Inventory"), Seller shall have the
option to sell to Buyer (at the applicable purchase price in the case of
finished goods and at book value in the case of other inventory) any of
such Custom Inventory that Seller still holds (having applied "first-in-
first-out" inventory practices) on December 31, 1995.
4. PRICING
A. The prices for Material shall be established in accordance
with Exhibit A. The prices for Repairs shall be established in
accordance with Exhibit B.
B. Prices shall include all charges such as packaging, packing,
customs duties imposed before passage of title, and all taxes except
sales, use and other such taxes imposed upon the sale or transfer of
Material for which Buyer is solely responsible under applicable law and
for which Buyer is properly invoiced by Seller. If Material is supplied
without normal packaging or packing, Seller will pass on to Buyer its
cost savings in connection therewith.
5. DELIVERY, LEADTIME AND FLEXIBILITY
A. Buyer's Purchase Orders shall state Seller's committed
delivery dates for Material and Repairs. TIME AND DATE OF DELIVERY ARE
OF THE ESSENCE FOR ALL PURCHASES MADE UNDER THIS AGREEMENT. The minimum
period between Buyer's issuance of a Purchase Order and the scheduled
delivery date ("Leadtime") shall be as determined in accordance with
Exhibit A.
B. All deliveries shall be FOB Origin. Buyer shall select the
carrier and shall pay transportation charges on a "freight collect"
basis.
C. If Seller delivers Material and Repairs more than [
] business days (i.e., Monday through Friday, excluding national
holidays) in advance of the scheduled delivery date, Buyer may either
return such Material and Repairs, at Seller's expense, for subsequent
delivery on the scheduled delivery date or retain such Material and
Repairs and postpone payment until it would have been due if Seller had
delivered such Material and Repairs on schedule. Without limiting any
of Buyer's rights and remedies in equity or at law, if Seller delivers
any Material or Repairs more than [ ] business days after the
scheduled delivery date, such Material or Repairs shall be considered
"late" and Buyer may require that Seller ship the Material and Repairs
via premium means at Seller's expense, or may cancel the order for such
Material and Repairs, without cost or liability to Buyer. Seller agrees
that it will give "highest priority customer" status to Buyer's orders
in the event of a product shortage.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
D. Seller shall deliver the exact quantity of Material and
Repairs scheduled for delivery pursuant to Purchase Orders placed in
accordance with Section 5.A. If Seller delivers less than the scheduled
volume, Seller shall correct the shortage within a [ ]
period, with respect to particular items of Material and Repairs
produced by Buyer prior to the date of this Agreement that are delivered
during the first year of the Purchase Period, and within a [ ]
period for all other Material and Repairs. If Seller fails to correct
such shortage within this period, without limiting any of Buyer's rights
and remedies under this Agreement, Buyer may cancel the pertinent
portion of the order without cost or liability. If Seller delivers more
than the quantity ordered, Buyer may return any excess Material and
Repairs, at Seller's expense.
E. Buyer may require that shipments of Material and Repairs
under this Agreement be shipped by Seller to various destinations. The
Purchase Order will clearly specify the "Ship To" location for each
order placed with Seller.
F. Buyer will measure Seller's performance against commitments,
for the purpose of establishing Seller's rate of timely delivery.
Timely delivery shall mean delivery of scheduled quantities no more than
[ ] business days early, or more than [ ] business days
late.
G. Buyer may, WITHOUT COST OR LIABILITY, increase or decrease
the quantity of each specific Material ordered under this Agreement, as
well as cancel Purchase Orders or portions of Purchase Orders, in
accordance with the following schedule (with increases to be measured as
to each purchase order based on cumulative increases through the date of
the pertinent increase); provided, however, that orders for Digital
linear tape drives and solid state disks and for custom rigid disk
drives that cannot be readily sold to others are not cancelable and may
not be delayed more than [ ] days from the
originally scheduled delivery date.
% INCREASE % DECREASE % CANCEL
LEADTIME BEFORE DELIVERY SHIPMENT SHIPMENT SHIPMENT
[ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
* This line does not apply to orders for
[ ] and the previous line
shall apply to [ ].
** If, notwithstanding its best efforts, Seller is unable to accommodate
this increase, its failure to do so will not be considered to be Late
Volume for purposes of Section 3.D.4.
H. If Buyer cancels or decreases shipments in excess of what is
permitted under paragraph G above or cancels an order that is not
cancelable, then Seller agrees to use commercially reasonable efforts
(as determined by Seller in its good faith judgment) to sell such
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
excess
or cancelled products on commercially reasonable terms in consultation
with Buyer. Promptly following such cancellation or decrease, Buyer
shall pay as liquidated damages to Seller [ ] of the applicable
purchase price (less the proceeds of any sale of such products on
Buyer's behalf) if within [ ] of shipment or [ ] of
the applicable purchase price (less the proceeds of any sale of such
products on Buyer's behalf) if between [ ] of shipment. If
Seller is unable to sell all or some of such excess or cancelled
products prior to Buyer's payment of liquidated damages to Seller under
this provision, Seller shall, upon request by Buyer, use commercially
reasonable efforts to dispose of the affected product in consultation
with Buyer and will remit to Buyer from the proceeds thereof any amounts
that, together with the liquidated damages paid by Buyer, are in excess
of the applicable purchase price plus Seller's reasonable costs incurred
in effecting such disposition.
I. Buyer and Seller agree to implement an inventory management
program for rigid disk drives, based on "pulling" product to point of
consumption, per Buyer's actual consumption rates, on terms to be
agreed. The program is based on establishing FOB points close to
Buyer's manufacturing facilities, and allowing plant personnel to
provide Seller with several releases per week to ship Material to Buyer.
The objectives of this program include shortening of Leadtime, inventory
control by Buyer and Seller and increased flexibility to meet
manufacturing needs as well as quick transitions. The terms of such
inventory management program shall be consistent with industry practice
and shall be set out in a separate agreement to be negotiated.
J. Buyer shall use reasonable efforts to forecast,
[ ] its intended purchases from Seller for each of the
products included on Exhibit A for each of the next [
]. Buyer shall also provide with such forecasts relevant
information concerning its anticipated requirements from Seller for
products not then Available under this Agreement, as contemplated by
Exhibit A. Seller shall also provide forecasts of its product
availability to Buyer, and to cooperate with Buyer in dealing with any
forecasted shortfall on a timely basis. If after [ ] a
shortfall is still forecasted and the forecasted time of delivery is
within [ ], Buyer may procure the shortfall in such
product from another source; and such purchases will be excluded from
the determination of Buyer's requirements. Such forecasts are for
Seller's convenience only, and shall not create any Buyer liability or
obligation to purchase Material.
K. A copy of Seller's packing list shall accompany all Material
and Repairs shipments and shall indicate Buyer's Purchase Order Number,
Part Number, and Serial Number.
L. Seller agrees to provide Buyer with the product
documentation described in Exhibit A.
6. QUALITY, INSPECTION AND ACCEPTANCE
A. Prior to delivery Seller shall insure that all Material and
Repairs are in accordance with the terms of this Agreement, including
but not limited to Exhibits A, B and C.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
B. Seller authorizes and agrees to assist Buyer in performing
source inspection and quality assurance reviews at Seller's
manufacturing facilities. This shall in no way relieve Seller of its
obligation to deliver conforming Material and Repairs, or waive any
other Buyer rights hereunder.
C. During the [ ] Acceptance Period after Buyer's
receipt of the shipment of Material and Repairs, Buyer will return, at
Seller's expense, Material and Repairs which fail to pass inspection per
the criteria defined in Exhibit C (Qualification and Quality). Such
returns shall be, at Buyer's option, for credit, refund of purchase
price or repair/replacement. Within [ ] of Buyer's notice
to Seller of nonconformance, Seller shall designate carrier and insure
pickup of rejected Material and Repairs, or Buyer may select a carrier
and return rejected Material and Repairs, freight collect, FOB Buyer's
dock.
D. Spares Emergency Leadtime (applies to U.S. only) (does not
apply to Material subject to an inventory management program per Section
5.I).
1. Seller shall accept and process Priority One (P-1)
Purchase Order(s)
[
]. All
P-1 Purchase Orders will be delivered to Buyer's
designated carrier or freight agent within [
] of authorization.
2. Invoice(s) for P-1 Purchase Order(s) must be
accompanied by a copy of the Waybill(s) for the
shipment(s).
E. If any Repairs are returned to Seller for any reason, they
will be identified in Buyer's accompanying form. Buyer will retain
title to all such items ("Buyer-Owned Material"). While Buyer-Owned
Material is in Seller's care, custody, and control, Seller shall be
responsible for the amount of the Buyer-Owned Material's full
replacement value against all risks or acts of war. Seller shall
identify such Material as Buyer-Owned Material and shall use such
Material solely under the terms of this Agreement. Upon request from
Buyer, Seller shall promptly return all Buyer-Owned Material.
7. PAYMENT
A. Buyer shall issue payment net [ ] after
receipt of product and correct invoice for Material and Repairs
delivered during the first [ ] of the Purchase Period
and net [ ] after receipt of product thereafter.
B. Amounts owed to Buyer due to rejections of Material and
Repairs, or discrepancies on paid invoices will be, at Buyer's option,
fully credited against future invoices payable by Buyer, or paid by
Seller within [ ] from Seller's receipt of a debit memo
or other written request for payment from Buyer.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
C. Buyer shall have the right to offset amounts coming due to
Seller hereunder against amounts then due and unpaid to Buyer under that
certain promissory note issued to Buyer pursuant to the terms of the
Stock and Asset Purchase Agreement.
8. WARRANTY
Seller shall warrant each item of Material and Repairs pursuant to
its standard warranty terms (which shall be consistent with industry
standards, which the parties agree as of the date hereof is [ ]
for IDE and [ ] for SCSI rigid disk drive products and [
] for SCSI and [ ] for SDI/DSSI solid state disks) applicable to
such item. Notwithstanding the foregoing, Digital linear tape drives
and loaders currently in production will carry the same warranty terms
that Buyer provided prior to the date of this Agreement (i.e.,
[ ]. For purposes of this
Agreement, "industry standards" for any practice or policy shall mean
the practice or policy followed by two (as selected by Buyer) of the
four largest suppliers of the comparable product in supplying comparable
customers. Seller agrees to offer a secured site warranty consistent
with the requirements of the federal government. Seller warrants it has
the right to convey the Material and Repairs and that the Material and
Repairs are free of all liens and encumbrances.
SUCH WARRANTIES WILL BE EXCLUSIVE AND NO OTHER WARRANTIES, WHETHER
WRITTEN OR ORAL, EXPRESSED OR IMPLIED OR STATUTORY, INCLUDING WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, SHALL APPLY.
9. AUDITS, CONFIDENTIAL INFORMATION AND ADVERTISING
A. Each party agrees to retain appropriate backup documentation
in respect of, in the case of Buyer, its Compliance Reports delivered
pursuant to Section 3.E and, in the case of Seller, its reports
concerning pricing determinations pursuant to Exhibits A and B and
liquidated damages pursuant to Section 3.E for at least [ ]
following delivery thereof. Each party shall have the right to have its
independent auditor inspect such documentation for the purpose of
verifying the accuracy of such reports not more than once each year on
reasonable advance notice and during normal business hours. Any
discrepancies that are identified as a result of such an audit will be
promptly corrected by the parties. If any additional payment is
required in order to effect such correction, the paying party shall also
pay interest thereon from the date such amount should have been paid to
the date on which it is paid at the rate of [ ] per annum. Any
information disclosed as a result of such an audit will be confidential.
B. The parties shall maintain as confidential and shall not
disclose to any person outside its employ, nor use for purposes other
than performance of this Agreement, all specifications, drawings,
blueprints, data, business information, or other proprietary information
of either party, learned by virtue of this Agreement, unless required by
law, and only then after written notice to the other. Upon termination
of this Agreement, the parties shall promptly return all copies of
confidential material.
<PAGE>
C. Without prior written consent, the parties shall not in any
manner disclose, advertise, or publish the terms of this Agreement.
D. Buyer may reproduce and use Seller's manuals, schematics,
and merchandising literature provided by Seller under this Agreement.
10. INTELLECTUAL PROPERTY INDEMNITY
Seller shall defend, at its expense, any claim against Buyer
alleging that Material and Repairs, or any part thereof infringes any
patent, copyright, trademark, trade secret, mask work, or other
intellectual property interest in any country and shall pay all costs
and damages awarded, provided Seller is notified promptly in writing of
such a claim. If an injunction against Buyer's or Buyer's customer's
use, sale, lease, license, or other distribution of the Material and
Repairs, or any part thereof, results from such a claim (or if Buyer
reasonably believes such an injunction is likely), Seller shall, at its
expense (and in addition to the Seller's other obligations, hereunder),
and as Buyer requests: obtain for Buyer and/or Buyer's customers the
right to continue using, selling, leasing, licensing, or otherwise
distributing the Material and Repairs, or replace or modify such
Material and Repairs so they become noninfringing but functionally
equivalent. The terms of this Section shall not apply to any claim for
infringement resulting solely from Seller's compliance with Buyer's
detailed written design specifications.
11. CHANGES
A. No changes shall be made in the form, fit, function,
maintainability or reliability of Material without Buyer's prior written
approval. Buyer's evaluation requirements are detailed in Exhibit C.
Seller shall provide all necessary documentation to enable evaluation
and, upon approval, implementation of proposed changes. Without
limiting any of Buyer's rights and remedies in equity or at law, if
Seller fails to comply with the above, Seller and Buyer shall jointly
assess the impact of such failure and agree on such corrective measures
as may be necessary to remedy the situation. If there is any
disagreement as to what measures are required, the heads of the
applicable business units of Seller and Buyer shall meet promptly to
review and, if possible, resolve any such disagreement.
B. A "Mandatory" Change as used herein shall be defined as:
any change required by Seller to insure that the Material and Repairs,
(1) meet the applicable Product Purchase Specification(s), (2) are safe,
and (3) comply with all applicable laws.
1. After written Seller notification of change to Buyer,
and Buyer review of change and written approval to Seller, Seller
shall start implementation of Mandatory Changes to the Material
and Repairs, per a mutually agreed upon schedule(s).
2. To implement Mandatory Change(s) to Material and
Repairs already delivered to Buyer, Seller shall supply Buyer with
Material which contains such Mandatory Change(s) as needed to
effect such Mandatory Change(s) or as promptly as possible under
the circumstances.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
C. Change Notices: Any notice given under this Section shall
be initially transmitted by means agreed to between the parties, to the
addressees specified in Section 21 (Notices).
12. TERM OF AVAILABILITY
A. In addition to the provisions of Section 3.A and 3.B, Seller
grants to Buyer the option to continue to purchase any Material and
Repairs for as long as they are made available to any of Seller's other
customers.
B. Seller shall provide Buyer with at least [ ]
advance written notice prior to discontinuing the manufacture of any
item of Material. At Buyer's option, Seller shall sell Buyer sufficient
quantities of such Material and related Repairs as Buyer deems necessary
and implement the End of Life Plan set forth in Exhibit D, hereto.
13. FORCE MAJEURE
Neither party shall be liable for failure to perform any of its
obligations under this Agreement during any period in which such party
cannot perform due to fire, flood, or other natural disaster, war,
embargo, riot, or the intervention of any government authority, provided
that the party so delayed immediately notifies the other party of such
delay.
14. COMPLIANCE WITH LAWS
All Material and Repairs supplied and work performed under this
Agreement shall comply with all applicable (U.S. and other) laws and
regulations, including, but not limited to the following: customs and
trade including, restraints on the use of convict labor government
procurement, export controls, environmental, health and safety, and
labor laws and regulations. Seller's failure to comply with any of the
requirements of this Section shall be considered to be a material breach
of this Agreement.
Upon request, Seller agrees to provide Buyer with information and
certifications required to demonstrate compliance with applicable laws
and regulations for the Materials and Repairs supplied and work
performed under this Agreement. Seller shall indemnify and hold Buyer
harmless from and against any claims, costs, or damages resulting from
or arising out of Buyer's reliance on such information and/or
certifications.
The following describes some, but not all of the applicable US
regulatory requirements with which Seller agrees to comply and/or
provide information/certifications.
A. Federal Acquisition Requirements
The following provisions and clauses of the Federal
Acquisition Regulation (FAR), 48 CFR Chapter 1, are hereby incorporated
by reference, with the same force and effect as if they were given in
full text and are hereby made binding upon Seller. Where the clauses or
provisions say "Contractor," substitute "subcontractor or vendor."
<PAGE>
1. All Subcontracts that offer further subcontracting
opportunities:
52.219-8 Utilization of Small Business Concerns and
Small Disadvantaged Business Concerns (FEB 1990)
2. Nonexempt Subcontracts and Purchase Orders over
$2,500:
52.222-36 Affirmative Action for Handicapped Workers
(APR 1984)
3. Nonexempt Subcontracts and Purchase Orders over
$10,000 or subcontracts and purchase orders the
aggregate value of which in any twelve month period
exceeds or can be expected to exceed 10,000:
52.222-26 Equal Opportunity (APR 1984)
4. Nonexempt Subcontracts and Purchase Orders over
$10,000:
52.222-21 Certification of Nonsegregated Facilities
(APR 1984)
52.222-35 Affirmative Action for Special Disabled and
Vietnam Era Veterans (APR 1984)
5. Subcontracts and Purchase Orders over the small
purchase limitation, $25,000:
52.219-3 Utilization of Women-Owned Small Business
(AUG 1986)
6. Subcontracts over $500,000, except for small
businesses:
52.219-9 Small Business and Small Disadvantaged
Business Subcontracting Plan (JAN 1991). However,
Digital will only require submission of a Plan by the
Subcontractor if one is required by the government or
a higher-tier prime.
A copy of the Filing Standard Form 100 (EEO-1) and
Development of Affirmative Action Compliance Program is attached as
Exhibit F to this Agreement, and incorporated herein by reference.
B. Environmental Requirements
The provisions of the Clean Air Act (42 U.S.C. Sections 7401
et seq.) and the Clean Water Act (33 U.S.C. Sections 1251 et seq.) are
made a part of this Agreement. A copy of the Certification required
under these statutes is attached as Exhibit G to this Agreement and
incorporated herein by reference.
<PAGE>
Seller agrees to comply with the Occupational Safety and
Health Act ("OSHA") 29 C.F.R. Sections 1910, 1200(b), and (g)(8); the
Toxic Substance Control Act ("TSCA") 15 U.S.C. Section 2612(a). Seller
also agrees to comply with the United States Federal requirements
contained at Title 40, Code of Federal Regulations Part 82 - "Protection
of Stratospheric Ozone; Labeling." Moreover, Seller shall not supply to
Buyer any product or part that contains or has been manufactured using a
Class 1 ozone depleting substance, as that term is defined in the
Regulations.
Seller certifies that all packaging materials and packaging
components supplied to Buyer under this Agreement, including those
supplied in connection with any materials or goods, shall meet the
following standard: The sum of the concentration levels of lead,
mercury, hexavalent chromium and cadmium shall not exceed 100 parts per
million (ppm) by weight.
C. Consumer Protection Requirements
The provisions of any applicable State "Right-to-Know" laws
and regulations are made a part of this Agreement. A copy of the
applicable Material Safety Data Sheets as required under such laws and
regulations shall be provided by Seller upon delivery of Material and
Repairs and updated as necessary.
D. Customs, Trade and Export Requirements
All Material and Repairs, and their containers, must be
conspicuously marked with the Country of Origin in compliance with
Section 304 of the US Tariff Act. If the Material and Repairs cannot be
directly marked legibly due to size or other circumstances, then the
immediate container(s) must be marked. For each delivery against
Purchase Orders made under this Agreement, Seller shall furnish Buyer
with a signed certificate stating Country of Origin by quantity and part
number (Buyer's and Seller's).
For each purchase under this Agreement and for each item of
Material and Repairs delivered hereunder for which U.S. Customs import
duties have been paid, or for Materials that contain parts for which
import duties have been paid, Seller shall furnish Buyer with a signed
"Manufacturing Drawback Entry and/or Certificate" (U.S. Customs Form
#CF331 or its successor). Seller shall provide such required Form(s)
#CF331 at the end of each fiscal quarter, unless otherwise agreed in
writing by both parties. Buyer reserves its first right to claim Duty
Drawback on all purchases made under this Agreement.
Seller agrees to comply with laws restraining the use of
convict labor under 18 U.S.C. Sections 1761 and 1762.
Seller agrees to comply with the US Export Administration
Regulations under 15 C.F.R. Part 770 et al. and to provide all
information necessary to determine proper export classifications.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
15. TERMINATION FOR CAUSE
A. Upon the occurrence of any of the following, Buyer shall
have the right to terminate this Agreement upon written notice to
Seller.
1. Seller assigns this Agreement in violation of Section
19.
2. Seller becomes insolvent or makes any assignment for
the benefit of creditors, or a receiver of similar officer is
appointed to take charge of all or part of Seller's assets.
B. Upon the occurrence of any of the following, Seller shall
have the right to terminate this Agreement upon written notice to Buyer.
1. Buyer assigns this Agreement in violation of Section
19.
2. Buyer becomes insolvent or makes an assignment for the
benefit of creditors, or a receiver or similar officer is
appointed to take charge of all or part of Buyers' assets.
C. A party may terminate this Agreement by written notice to
the other party if such other party has failed to cure a material breach
of this Agreement, the remedies for which are not otherwise specified
herein, within [ ] in the case of payments
due) after written notice of such breach from the terminating party.
16. REPAIRS
A. At Buyer's option, Seller shall correct defects in Material
and Repairs, at its facility. Seller agrees to provide an Exchange
Program for Repairs in support of Buyer's service commitments to
customers. Such program seeks to assure the shortest Repairs leadtime
possible; Seller shall ship replacement product within [ ]
of notification in the case of items of Material sold by Seller prior to
the date of this Agreement and within [ ] of
notification by Buyer for all other products. The parties agree to
establish and implement a plan to reduce this time frame to [
] or less for all products.
B. Repairs prices shall be determined as set forth in Exhibit
B.
C. Buyer requires a [ ] notification period
prior to Seller's plan to subcontract repair services to a third party.
17. BUSINESS REVIEWS; INDUSTRY PRACTICES
Buyer and Seller shall, each at their own expense, meet quarterly
to review performance and business transacted, to identify and resolve
those issues which have arisen since the last business review meeting
and to exchange and discuss information relating to current and planned
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
product development activities and changes and advances in industry
practices relevant to their relationship. Buyer and Seller acknowledge
and agree that it is their intention that the supplier relationship
established by this Agreement be consistent with the competitive
practices of the storage industry with respect to leadtimes,
availability, quality, performance, warranty terms, pricing, development
times, delivery dates and other terms material to a storage supply
agreement. Buyer and Seller agree that if either party determines that
the terms of this Agreement are not consistent with such industry
standards, such party may submit to the other party evidence of such
inconsistency, whereupon the parties agree to negotiate in good faith
with a view to amending this Agreement so as to bring such terms into
line with such competitive industry practices.
18. LICENSE OPTION; NO IMPLIED LICENSE
A. If Seller discontinues the manufacture and sale of [
] products during the Purchase Period
or Buyer terminates this Agreement pursuant to Section 15.A or C, Buyer
shall have the option to acquire for [ ] a paid up, nonexclusive,
license to the technology necessary for it to make, have made, use and
sell such products and the Required Percentage for such products will be
reduced to zero. The noncompetition covenant contained in Section 5.06
of the Stock and Asset Purchase Agreement shall be modified so as to
permit Buyer full use of any license acquired pursuant to the provisions
hereof.
B. Except as may be otherwise expressly stated herein, neither
the Terms and Conditions of this Agreement, nor the acts of either party
under this Agreement shall be considered in any way as a grant of any
license whatsoever under any of Buyer's present or future patents,
copyrights, trademarks, trade secrets, or other proprietary rights, nor
is any such license granted by implication, estoppel, or otherwise.
19. ASSIGNMENT
A. Neither party may assign or otherwise transfer this
Agreement without the written consent of the other party, except that
such consent shall not be unreasonably withheld in connection with the
sale of all or substantially all of the assets of the assigning party.
B. It is understood and agreed that Seller may, at its
election, sell or otherwise dispose of its business and assets relating
to solid state disks and/or linear tape drives, in which case Buyer
agrees that it will enter into a separate agreement with the Purchaser
thereof incorporating the terms and conditions of this Agreement
relating to such products, and this Agreement will be modified
accordingly.
C. It is also understood and agreed that Buyer
[
]. As a condition of any such
[ ], Buyer agrees that it will [ ] as may be
reasonably necessary to ensure that Buyer meets its commitment under
Section 3.C to purchase the Required Percentage of its requirements and the
requirements of the business that is sold or disposed of
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[ ] or (2) pay to Seller the [
20. HOLD HARMLESS AND INDEMNITY
A. Seller shall defend, indemnify, and hold Buyer, its
officers, directors, agents, and employees harmless from and against any
and all claims, losses, expenses (including reasonable attorney's fees),
demands, settlements, or judgments ("Claims") which result from or arise
out of:
1. The presence of the Seller, equipment, or tools used
by Seller in the performance of this Agreement on the property of
Buyer or its customers; or
2. The acts, errors, omissions, or negligence of Seller
while on the property of Buyer or its customers, regardless of
whether the loss, damage, or injury resulting from same occurs
after the Seller has left such property; or
3. The use by Seller of Buyer's equipment, tools, or
facilities ("Equipment") whether or not any Claims are based upon
the condition of the Equipment or Buyer's, its agent's, or
employee's alleged negligence in permitting its use (permission by
Buyer to use the Equipment shall be gratuitous); or
4. The nonpayment by Seller of any monies due and owing a
third-party with whom Seller has contracted, at anytime during the
Purchase Period or any extension thereof.
B. Insurance:
1. Seller agrees to carry at all times insurance of the
kinds and in the amounts listed below:
a. Worker's Compensation statutory limits in each
state in which Seller is required to provide Worker's
Compensation coverage.
b. Employer's Liability not less than [ ]
per employee.
c. Comprehensive General Liability -- including
Contractual Liability, Independent Contractor's Liability,
Products and/or Completed Operations Liability, and Personal
Injury/Property Damage Coverages in a combined single limit
of not less than [ ].
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
d. Automobile Liability for owned, non-owned, and
hired vehicles in a combined single limit of not less than [ ].
e. Umbrella Liability in a combined single limit of
not less than [ ].
C. Seller shall indemnify, hold harmless, and defend Buyer from
and against any and all claims, suits, actions, damages, judgments,
costs, losses, expenses (including settlement awards and reasonable
attorney's fees) and other liabilities arising from or in connection
with any product liability claims related to the Material including, but
not limited to, personal injury as well as damage to real or personal
property arising out of the use or sale of the material, and regardless
of the theory upon which the claim is based including, but not limited
to, negligence, strict liability, and breach of warranty.
21. NOTICES
Any notice given under this Agreement shall be written or sent by
telex or facsimile. Written notice shall be sent by registered mail or
certified mail, postage prepaid, return receipt requested, or by any
other overnight delivery service which delivers to the noticed
destination, and provides proof of delivery to the sender. All notices
shall be effective when first received at the following addresses:
If to Seller: If to Buyer:
Quantum Corporation Digital Equipment Corporation
500 McCarthy Blvd. 111 Powdermill Road
Milpitas, CA 95035 Maynard, MA 01754
Attn: Chief Financial Officer Attn: Charles F. Christ
Telecopy: (408) 894-3223 Telecopy: (508) 841-3522
with a copy to: with copies to:
Cooley Godward Castro Digital Equipment Corporation
Huddleson & Tatum 111 Powdermill Road
One Maritime Plaza, 20th Floor Maynard, MA 01754
San Francisco, CA 94111 Attn: Molly Brennan, Esq.
Attn: James C. Gaither, Esq. Telecopy: (508) 493-6049
Telecopy: (415) 951-3699
Testa, Hurwitz & Thibeault
53 State Street
Boston, MA 02109
Attn: Linda DeRenzo, Esq.
Telecopy: (607) 248-7100
22. GENERAL
A. This Agreement is the complete and entire understanding
between the parties on this subject matter and supersedes all prior
agreements, proposals, representations, statements,
<PAGE>
or understandings whether written or oral. The terms of this
Agreement may be amended or waived only by a writing executed
by the authorized representatives of both of the parties hereto.
B. The terms of this Agreement dealing with Payment, Warranty,
Confidential Information and Advertising, Intellectual Property
Indemnity, Repairs, Compliance with Laws, General, and Exhibits(s) A, B
and C shall survive termination or expiration of this Agreement.
C. In the event that either party shall, on any occasion, fail
to perform any provision of this Agreement, and the other party does not
enforce that provision, the failure to enforce shall not prevent
enforcement of the provision on any other occasion.
D. As used in this Agreement, except where otherwise noted, the
word "days" shall mean calendar days.
E. Seller, including its servants, agents, and employees, is an
independent contractor and not an agent or employee of Buyer. Without
limiting the generality of the foregoing, Seller is not authorized to
represent or make any commitments on behalf of Buyer, and Buyer
expressly disclaims any and all liability for such attempted
representation or commitments.
F. Supplemental terms are included in Exhibit A through Exhibit
G and are incorporated herein by reference.
G. All rights and remedies conferred by this Agreement, by any
other instrument, or by law, are cumulative and may be exercised
singularly or concurrently. If any provision of this Agreement is held
invalid by any law or regulation of any government or by any court, such
invalidity shall not effect the enforceability of any other provisions
hereof. This Agreement and any Purchase Orders issued hereunder shall
be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts, exclusive of its conflict of laws
statutes.
<PAGE>
In Witness Whereof, the authorized representatives of the parties
have executed this Agreement under seal as of the date(s) set forth
below. Upon execution, contract effective date is as agreed upon in
Section 3. clause A.
QUANTUM CORPORATION DIGITAL EQUIPMENT CORPORATION
(Seller) (Buyer)
By /s/ Joseph T. Rodgers By /s/ Charles F. Christ
(Signature) (Signature)
Executive Vice President Vice President, Components Division
Finance
October 3, 1994
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Exhibit A
I. PRODUCT DESCRIPTION
A. Annex 1 hereto is the initial list of products, together
with the product identification and initially applicable
Leadtime and FOB points pertaining thereto, that are
currently qualified by Buyer and that are to be initially
available under this Agreement. Annex 1 shall be updated
from time to time as hereinafter provided.
B. The products listed from time to time on Annex 1 hereto
shall be the products that are "Available" for purchase
within the meaning of this Agreement. In addition to the
products that are listed on Annex 1 hereto and are therefore
Available at the time of execution of this Agreement, other
products shall be added to Annex 1 as provided below:
1. Attached hereto as Annex 2 is a list of the products
currently offered for sale by Seller that have not
been qualified for purchase by Buyer. The products
indicated with an asterisk are products that Buyer
currently forecasts having requirements therefor. The
parties agree to use their commercially reasonable
best efforts to test and otherwise evaluate such
products in order that they may be qualified by Buyer
as soon as possible. Seller will make prototype,
evaluation and qualification units available to Buyer
at the same time as or earlier than such units are
made available to any other customer. Upon such
qualification, Buyer shall notify Seller and the
affected product will be added to Annex 1 hereto.
Buyer may decline to qualify a product, provided that
such product will be deemed to be Available for
purposes of this Agreement [ ]
after it would have been qualified had Buyer proceeded
to qualify it in accordance with this Agreement.
2. If at any time during the Purchase Period after
execution of this Agreement Buyer forecasts having
requirements for any other product on Annex 2 hereto,
the parties will proceed in accordance with paragraph
1 to cause such product to be so qualified and added
to Annex 1 hereto.
3. Subject to paragraph 4, Seller may by written notice
to Buyer advise Buyer that a new product has been
developed by Seller and is available for evaluation by
Buyer. Such notice will contain relevant information
concerning the new product, including the
specifications and warranty terms. Upon such notice,
such product will be added to Annex 2 hereto. If at
the time of such addition or at any time thereafter
during the Purchase Period Buyer forecasts having
requirements therefor, the parties will proceed in
accordance with paragraph 1 above to cause such
product to be added to Annex 1 hereto.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
4. If at any time during the Purchase Period Buyer
anticipates having requirements for any product not then on Annex 1 or
Annex 2, Buyer shall so advise Seller by written notice offering Seller
the opportunity to develop and make Available under this Agreement a
product meeting specifications required by Buyer. With respect to
[ ] Seller, after considering Buyer's notice, shall
respond in writing within [ ] if practicable but in any
event within [ ] as to whether it will (a) decline to
develop such product, in which case Buyer may contract with others to
develop and manufacture such product for Buyer for the life of such
product and such product will be permanently excluded from the
determination of Buyer's requirements for the applicable category of
Material, or (b) undertake to develop such product on such basis as the
parties may agree, provided that if after reasonable good faith efforts
the parties are unable to agree on such basis within such [
] period, Seller will be deemed to have declined to develop
such product. Upon notice from Seller to Buyer that such product has
been developed, the parties will proceed in accordance with paragraph 1
above to cause such product to be added to Annex 1 hereto so as to make
it Available under this Agreement. With respect to [
] the parties agree to establish an
appropriate mechanism to ensure that the parties work effectively
together to establish specifications and develop products in a manner
that meets the needs and objectives of the parties. Seller further
agrees to notify Buyer of its intention to
develop and offer a product to Buyer at least [ ] prior to
the anticipated date of Availability. For so long as Buyer indicates an
interest in purchasing such product, Seller will advise Buyer monthly of
the status of Seller's development program and will do so in writing if
material delays or changes have been encountered or made in the program.
C. The Leadtimes set forth on Annex 1 shall be adjusted by
mutual agreement on a quarterly basis to reflect then
existing business conditions and cycle times for each
product. In addition, the FOB points set forth on Annex 1
may be adjusted from time to time by mutual agreement.
II. DETERMINATION OF PRICING
A. Prices for products that cannot be priced under B below,
such as custom products intended solely for Buyer, will be
established by agreement of the parties.
B. Prices for standard products are intended to be
[
] To accomplish this, with respect to each
standard product to be purchased hereunder, within [
] after the end of each calendar quarter during the Purchase
Period Seller shall provide Buyer with a written statement
showing the calculation of [
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
] will be the
final price applied to the purchases of the applicable
product during that quarter. Such written statement shall
be attached as part of Annex 3 to this Agreement.
Approximately [ ] prior to the beginning of each
quarter, Seller shall provide Buyer with its good faith
estimate of what it expects the final price Buyer will pay
will be, based on [
]. The parties acknowledge that prices for Materials [
]. Such estimated prices shall be the
tentative prices for such quarter. Tentative prices
applicable to purchases by Buyer prior to December 31, 1994,
shall be as set forth in Annex 3 hereto.
Final pricing for standard products will be based on [
] in a quarter and will be [
] determined in accordance with the foregoing.
At the time such final pricing is established, retroactive
price adjustments will be made to the tentative prices
applied to purchases made during the applicable quarter and
Seller shall deliver an invoice or a credit memo, as
applicable, for any resulting difference.
C. The foregoing pricing arrangement has been agreed to by
Buyer based on its review of an analysis of pricing that
would have applied over [ ] on product
currently supplied to Buyer, subject to the assumptions
stated therein. Seller represents that such analysis was
prepared accurately and in good faith. If the foregoing
representation is inaccurate or misleading in any material
respect, the parties agree to negotiate in good faith such
modifications to the foregoing as may be appropriate to
ensure that the prices charged for products are [
].
D. Pricing for [ ]
will be negotiated in good faith with the objective of
achieving pricing that is reasonable under the circumstances
in cases where the absence of OEM customers makes the
foregoing pricing arrangement unworkable.
III. DOCUMENTATION
Seller shall provide Buyer with any documentation in a format
reasonably acceptable to Buyer that Seller regularly ships with a
product (the "Documentation"). Seller hereby grants to Buyer a non-
exclusive, worldwide, limited license to use reproduce, reformat and
distribute the Documentation.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B
REPAIR, PRICING AND LOCATIONS
I. Repair Pricing Schedule
Quantum Digital Repair
Part Number Part Number Price
[
]
This pricing is effective through [ ]. The
parties will meet once per quarter to review and negotiate in good faith
appropriate prices for subsequent periods.
For ex-Digital products, the out-of warranty repair price will be
set at [ ] of the "sell price" for the products listed in this
Agreement. Actual prices will be agreed to by the parties within [
] the date of this Agreement. Thereafter, the parties will meet once
each quarter to review pricing.
In the event the foregoing pricing mechanism results in repair
pricing that is below Seller's cost of performing repair services for a
product, the parties agree to adjust repair pricing for such product so
that Seller's costs are covered. Seller will use reasonable efforts to
assure competitive processes and practices.
Buyer shall be free to purchase [
] and any [
] shall not count toward Buyer's requirements under
this Agreement.
<PAGE>
II. Repair Facilities Locations
NORTH AMERICA
Quantum Corporation
525 Sycamore
Milpitas, California 95035
Phone: (408) 553-7302
Fax: (408) 954-8610
Hours: 5am to 5pm
EUROPE
Quantum GmbH
D-Genferstrasse 4B
D-6000 Frankfurt AM Main 56
Germany
Phone: 011-69-509-108-93
Fax: 011-69-509-108-92
Hours: 8am to 5pm - PACIFIC RIM
PACIFIC RIM
Quantum Peripherals (m) Snd. Bhd.
Plot 2 1, Phase IV
Bayan Lepas Free Trade Zone
Penang, Malaysia
Phone: 011-604-642-3200
Fax: 011-604-642-3100
Hours: 8am to 5pm
COLORADO
301 Rockrimmon Blvd. South
Colorado Springs, CO 80919-2398
Phone: (719) 548-3565
Fax: (719) 548-2934
MALAYSIA
4 Janal Budalu, 13-4
46200 Petaling Jaya
Malaysia
Phone: 011-603-758-1988
Fax: 011-603-758-1900
<PAGE>
III. Material Return Authorization (MRA) Process for Rejection of
Materials and Repairs
Definition: If any Material or Repairs fail to pass a Buyer's
inspection, the following procedure shall be followed by the designated
Responsible Party in accordance with the provisions of Section 6.C. of
this Agreement. The following procedures shall also apply to
manufacturing defects. A manufacturing (supplier delivered) defect is a
unit of Seller supplied material placed into Buyer's inventory that,
when installed into Buyer's system, is verified by reasonable industry
verification practices as failing to function as intended.
RESPONSIBLE PARTY ACTION/PROCESS
BUYER Send to Seller via fax:
-Purchase order and serial number
-Reason(s) for rejection
-Selection of credit, refund,
repair/replacement
-Issue Debit Memo if credit desired
SELLER Send to Buyer via fax:
-Return Material Authorization
Number(RMA #) if
repair/replacement desired
-Send payment to Buyer via check if
refund is desired
BUYER Ship Material to Seller per terms of
Agreement
-RMA # on each carton
SELLER If repair replacement desired
(1) If defective material was damaged by Buyer or Buyers' agent, then
such material shall be deemed out-of-warranty. Such cases will be
verified by mutual agreement of the parties.
(2) Buyer agrees to accept deliveries of verified good products
returned to Seller by Buyer or other customers of Seller as a
result of defects identified during the integration period.
(3) Buyer and Seller agree to work together to review "No Trouble
Found" (NTF%) drives and establish mutually agreed to reasonable
and appropriate corrective actions to identify root causes and
bring about the reduction of such circumstances.
(4) Buyer shall apply reasonable methods and care to separately
identify incoming inspection (integration) returns from field
returns when obtaining an RMA and returning such material.
<PAGE>
IV. Spares/Repairs Return Authorization (RMA) Process For In/Out of
Warranty Material
RESPONSIBILITY ACTION/PROCESS
BUYER Ship units to Seller - shipping terms in
compliance with B.O.A.
Provide Seller with the following
information via fax:
- Quantity
- Purchase Order
- Ship date by when Seller should
ship repaired material
SELLER'S REPAIR FACILITY Verification of warranty
Acknowledges replacement purchasing
order to Buyer including committed
ship date.
Return repaired units to Buyer.
Provide Buyer with status on
returns.
<PAGE>
EXHIBIT C
QUALIFICATION AND QUALITY
BETWEEN
DIGITAL EQUIPMENT CORPORATION (Buyer)
and
QUANTUM CORPORATION (Seller)
October 3, 1994
<PAGE>
INDEX
SECTION DESCRIPTION PAGES
- --- DEFINITION OF ACRONYMS 01
1 INTRODUCTION 02
1.1 EXHIBIT COVERAGE 02
1.2 ISO9000 02
1.3 ODM ELIMINATION 02
2 QUALIFICATION 02
2.1 TESTING 02
2.2 CONTROLS 02
2.3 VERIFICATION 02
3 PRODUCT ASSURANCE TEAM 02
3.1 MEETINGS 02
3.2 REPRESENTATIVES 02
3.3 VISITS 02
3.4 ISSUES LOG 02
4 RELIABILITY TESTING 03
4.1 REPORTS 03
4.2 FAILURE ANALYSIS 03
4.3 FIELD PERFORMANCE 03
4.4 PRST PERFORMANCE 03
<PAGE>
5 PRODUCT DELIVERED DEFECTS 03
5.1 SUPPLIER OBJECTIVE 03
5.2 SIX SIGMA REQUIREMENTS 03
5.3 DPU POINT OF MEASUREMENT 04
5.4 CATASTROPHIC DEFECTS 04
5.5 DEFECT VERIFICATION 04
5.6 LATENT DEFECTS 04
5.7 RECOVERY FROM NON COMPLIANCE 05
6 QUALITY REQUIREMENTS 05
6.1 MATERIAL LABELING 05
6.2 PACKAGING AND LABELS 06
6.3 MATERIAL REVISION 07
6.4 ENGINEERING CHANGES 07
6.5 WAIVERS 07
6.6 MATERIAL HOLDS 07
6.7 DATA AND FEEDBACK 08
7 MATERIAL QUALITY 08
8 DOCUMENT CONTROL 08
8.1 CONTROL PROCEDURE 08
<PAGE>
9 DVT PLAN 09
9.1 PLAN 09
9.2 REPORTS 09
9.3 COMPLETION 09
10 BUYER ON-SITE AUDITS 09
10.1 AUDITS 09
11 PRODUCT END OF LIFE 09
11.1 PLAN 09
12 RELIABILITY GOALS FOR DLT PRODUCTS 10
12.1 GOALS 10
<PAGE>
DEFINITION OF ACRONYMS AND ABBREVIATIONS
USED IN THIS DOCUMENT
DLT - DIGITAL LINEAR TAPE DRIVES
DPU - DEFECTS PER UNIT
DOA - DEAD ON ARRIVAL
DVT - DESIGN VERIFICATION TEST
ECO - ENGINEERING CHANGE ORDER
ECR - ENGINEERING CHANGE REQUEST
ESD - ELECTRO-STATIC DAMAGE
FVS - FIRST VOLUME SHIPMENT
MTBF - MEAN TIME BETWEEN FAILURE
NTF - NO TROUBLE FOUND
ORA - ONGOING RELIABILITY ASSURANCE
ORT - ONGOING RELIABILITY TEST
PAT - PRODUCT ASSURANCE TEAM
POU - POINT OF USE
PPM - PARTS PER MILLION
PRST - PROBABILITY RATIO SEQUENTIAL TEST
PPQ - PERIODIC PRODUCT QUALIFICATION
PVT - PROCESS VERIFICATION TEST
RQT - RELIABILITY QUALIFICATION TEST
SSD - SOLID STATE DRIVE
SPC - STATISTICAL PROCESS CONTROL
VMI - VISUAL MECHANICAL INSPECTION
DRP - DEFECT REDUCTION PROGRAM
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
1. INTRODUCTION:
1.1 THIS DOCUMENT COVERS PRODUCT QUALITY AGREEMENTS.
1.2 SELLER TO BE ISO9002 CERTIFIED FOR SAID PRODUCT
MANUFACTURING OPERATIONS OR ACHIEVE SUCH WITHIN [
] OF CONTRACT SIGNING, AND TO SUBMIT A
PLAN THEREFOR WITHIN [ ].
1.3 SELLER TO PROVIDE WRITTEN COMPLIANCE NOTICE TO BUYER
OF CFC/ODM'S ELIMINATION REQUIREMENTS BEING MET.
2. QUALIFICATION OVERVIEW:
2.1 BUYER WILL VERIFY PRODUCT SPECIFICATION AND
APPLICATION COMPLIANCE THROUGH NECESSARY QUALIFICATION
TESTING.
2.2 SELLER WILL ASSURE THAT NECESSARY CONTROLS ARE APPLIED
TO MEET ALL BUYER REQUIREMENTS AS MUTUALLY AGREED.
2.3 SELLER SHALL PROVIDE EVIDENCE OF SUCCESSFUL TEST
COMPLETION TO VERIFY PRODUCT SPECIFICATION CLAIMS.
THIS SHALL INCLUDE DVT, RQT AND MANUFACTURING PROCESS
QUALIFICATION TESTING AND SUCH OTHER TESTING AS AGREED
BY BUYER AND SELLER.
3. PRODUCT ASSURANCE TEAM:
3.1 REPRESENTATIVES TYPICALLY ARE:
-DESIGN, MANUFACTURING, QUALITY, FIELD
AND PRODUCT SUPPORT ENGINEERING PERSONNEL.
3.2 MUTUAL VISITS WILL OCCUR AS AGREED.
3.3 AN ISSUE LOG WILL BE MAINTAINED AND PUBLISHED BY THE
SELLER TO THE REPRESENTATIVES ONE DAY PRIOR TO
MEETINGS.
4. RELIABILITY TESTING:
4.1 SELLER SHALL SUBMIT TO BUYER BY THE TENTH DAY OF EACH
MONTH. EVIDENCE OF PRODUCT CONFORMANCE
<PAGE>
TO SPECIFIED RELIABILITY CLAIMS. TEST SAMPLES FOR SUCH EVIDENCE
SHALL BE TAKEN FROM REGULAR PRODUCTION LOTS.
4.2 SELLER SHALL PROVIDE BUYER WITH WRITTEN ORT FAILURE
ANALYSIS REPORTS AND A WRITTEN DESCRIPTION OF ANY
ASSOCIATED CORRECTIVE ACTIONS ON A MONTHLY BASIS.
4.3 SELLER SHALL PROVIDE BUYER WITH WRITTEN MONTHLY AFR%
FIELD PERFORMANCE DATA SORTED BY TOTAL AND BUYER
POPULATION.
4.4 IF RELIABILITY TESTING INDICATES A MUTUALLY AGREED
FUNCTIONAL FIELD EXPOSURE, THE FOLLOWING ACTIONS WILL
BE TAKEN BY SELLER:
1. PROVIDE NOTICE TO BUYER WITHIN TWO
BUSINESS DAYS.
2. STOP ALL DELIVERIES OF AFFECTED MATERIAL
UPON BUYER'S REQUEST
3. ISSUE TO BUYER A PRELIMINARY CORRECTIVE
ACTION PLAN WITHIN THREE DAYS FOLLOWING
FAILURE ANALYSIS, AND A FINAL PLAN WITHIN
30 DAYS.
4. IF MUTUALLY AGREED UPON PLAN CALLS FOR A
PURGE, SELLER WILL PROVIDE FULL SUPPORT
FOR THE PURGE.
5. REPLACE PURGED INVENTORY WITH CONFORMING
PRODUCT.
5. PRODUCT DELIVERED DEFECTS PERFORMANCE
5.1 SELLER SHALL STRIVE TO SHIP DEFECT FREE PRODUCTS.
5.2 SUPPLIER COMMITS TO A DOA RATE IN SUPPORT OF BUYER'S
SIX SIGMA OBJECTIVES ON A REASONABLE BEST EFFORTS
BASIS.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SUPPLIER AGREES TO THESE DOA PPM LEVELS:
--------------------------------------------
PRODUCT INITIAL(1) (I+6MO'S)(I+12MO'S)(I+18MO'S)
--------- ------- --------- -------- -------
[ ] [ ] [ ][ ] [ ]
[
] WILL BE ESTABLISHED BY MUTUAL
AGREEMENT OF THE PARTIES PRIOR TO DECEMBER 31, 1994,
BASED ON RELEVANT PRODUCT DATA.
5.3 DOA'S ARE TO BE MEASURED AT THE POINT OF USE AND
REPORTED TO BUYER IN DPU'S MONTHLY AND QUARTERLY.
BUYER AND SELLER SHALL STRIVE TO REMOVE NTF AND BUYER
MISHANDLED DRIVE FAILURES FROM THE DOA CALCULATION.
5.4 IF ANY SHIPMENT OF PRODUCT IS MUTUALLY AGREED TO BE
CATASTROPHICALLY DEFECTIVE, SELLER SHALL WITHIN ONE
WEEK:
1. PROVIDE WRITTEN FAILURE CAUSE REPORT TO
BUYER.
2. REPLACE DEFECTIVE INVENTORY WITH
CONFORMING PRODUCT IF REQUESTED BY BUYER.
3. PROVIDE ON SITE ASSISTANCE, IF REQUESTED,
TO SCREEN AND VERIFY DEFECTIVE PRODUCTS.
4. TAKE BACK DEFECTIVE LOT AND CREDIT BUYER.
IF SO REQUESTED BY THE BUYER.
5. SELLER SHALL DISCONTINUE PRODUCT SHIPMENT
IF SO REQUESTED BY BUYER AND RESUME
SHIPMENT ONLY WITH BUYER APPROVAL.
5.5 BUYER WITH SELLER SUPPORT (IF REQUESTED), WILL VERIFY
DEFECTIVE PRODUCT CLAIMS. SECOND BOX VERIFY METHODS
MAY BE USED.
5.6 IF A MUTUALLY VERIFIED SYSTEMIC LATENT DEFECTIVE
CONDITION OCCURS INSIDE OR OUTSIDE THE SPECIFIED
WARRANTY LIABILITY PERIOD, [
]. IN ADDITION, WITHOUT LIMITING
ANY OF BUYER'S RIGHTS AND REMEDIES IN EQUITY OR AT
LAW, SELLER AND BUYER WILL JOINTLY ASSESS THE IMPACT
OF SUCH CONDITION AND, IF APPROPRIATE, AGREE ON SUCH
CORRECTIVE MEASURES AS
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
MAY BE NECESSARY TO REMEDY THE
SITUATION. IF THERE IS ANY DISAGREEMENT AS TO WHAT
MEASURES ARE REQUIRED, THE HEADS OF THE APPLICABLE
BUSINESS UNITS OF SELLER AND BUYER SHALL MEET PROMPTLY
TO REVIEW AND, IF POSSIBLE, RESOLVE ANY SUCH
DISAGREEMENT.
5.7 RECOVERY FROM NON COMPLIANCE:
WITHOUT LIMITING ANY OF BUYER'S RIGHTS AND REMEDIES IN
EQUITY OR AT LAW, IF SELLER FAILS TO MEET ANY OR ALL
OF THE REQUIREMENTS DESCRIBED IN THIS EXHIBIT C FOR
[ ], THE PARTIES WILL PROMPTLY MEET AND
AGREE ON A PLAN TO CORRECT THE SITUATION, WHICH PLAN
SHALL INCLUDE SPECIFIED ACTIONS TO BE TAKEN, UNTIL
STIPULATED QUALITY REQUIREMENTS ARE MET FOR [
]. IF THERE IS ANY DISAGREEMENT
BETWEEN THE PARTIES CONCERNING SUCH PLAN, THE HEADS OF
THE APPLICABLE BUSINESS UNITS OF SELLER AND BUYER
SHALL MEET PROMPTLY TO REVIEW AND, IF POSSIBLE,
RESOLVE ANY SUCH DISAGREEMENT.
1. BUYER WILL REPORT VERIFIED INTEGRATION
FAILURE RATE ON A MONTHLY BASIS; SUPPLIER
WILL ASSIST WITH FAILURE VERIFICATION AND
FAILURE RATE REDUCTION PROGRAM IF
REQUESTED. ANY MUTUALLY VERIFIED DEFECTS
CAUSED BY BUYER SHALL BE EXCLUDED.
6. QUALITY REQUIREMENTS:
6.1 MATERIAL SERIALIZATION LABEL REQUIREMENTS
SELLER WILL ATTACH SERIALIZATION LABELS TO A
PERMANENT MEMBER OF EACH UNIT AT BUYER
PRESCRIBED LOCATIONS. EACH LABEL WILL BE HUMAN
AND BAR CODE READABLE AND STIPULATE THE
FOLLOWING BUYER MATERIAL INFORMATION. TIME
DESIGNATIONS ARE IN CALENDAR YEAR.
1. OPTION DESIGNATION
2. REVISION
3. SERIAL NUMBER
<PAGE>
SERIAL # EXAMPLE: (XX230YYYYY)
-------------------------------
XX 2 30 YYYYY
SITE YEAR WEEK SELLER'S SERIAL NUMBER
CODE (1992)
NOTE:
BUYER WILL FURNISH SITE CODES FOR MULTIPLE LOCATIONS.
6.2 PACKAGING/PACKAGING LABEL REQUIREMENTS:
1. EXISTING QUALIFIED BULK AND SINGLE
PACKAGING DESIGNS WILL BE USED. SELLER
WILL REMOVE SELLER IDENTIFICATION MARKING
FROM THE SINGLE PACK.
2. SELLER WILL ATTACH 2 IDENTICAL BAR CODE
AND HUMAN READABLE LABELS ON ADJACENT
CORNERS OF EACH BULK AND SINGLE PACKAGE;
WHICH SHALL CONTAIN OPTION DESIGNATION,
REVISION, SERIAL NUMBERS AND IN THE CASE
OF BULK PACK SERIAL # RANGE AND ENCLOSED
QUANTITY.
3. FOR DLT PRODUCTS, SELLER SHALL PROVIDE FOR
PLACEMENT OF THE DIGITAL LOGO LABEL ON
SINGLE PACKAGED TABLE TOP UNITS. BUYER
SHALL INDICATE ARTWORK REQUIREMENTS.
STANDARD INTERNATIONAL CARE HANDLING
SYMBOLOGY SHALL ALSO BE APPLIED.
6.3 PRODUCT REVISION:
1. EACH UNIT DELIVERED WILL HAVE THE BUYER
REVISION LEVEL ON THE SERIALIZATION
LABELS.
EXAMPLE OF REVISION CHANGE:
PRODUCT RELEASE A01
FUNCTIONAL CHANGE TO MATERIAL B01
SUBSEQUENT DOCUMENTATION CHANGE C01
2ND FUNCTIONAL CHANGE TO MATERIAL D01
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
6.4 ENGINEERING CHANGES PRODUCT AND PROCESS (ECO'S AND
PCA'S):
1. THE SELLER SHALL PROVIDE REASONABLE
ADVANCE WRITTEN NOTIFICATION OF CHANGES
BEING PROPOSED TO THE PRODUCT AND PROCESS
TO ALLOW DIGITAL TO DETERMINE NECESSARY
CHANGE IMPACTS. SOME CHANGES WILL REQUIRE
EXTENSIVE SYSTEMS VERIFICATION TESTING BY
BUYER AND COULD NEED AS MUCH AS [ ]
ADVANCE NOTIFICATION.
6.5 WAIVERS:
1. DEVIATIONS FROM SELLER'S MATERIAL OR
MANUFACTURING AND TEST PROCESSES OR
LOCATION OF SAME WILL REQUIRE ADVANCE
WRITTEN WAIVER FROM THE BUYER. SELLER
WILL PROVIDE BUYER WITH SERIAL NUMBERS OF
AFFECTED MATERIAL.
6.6 MATERIAL HOLD ISSUES:
1. A MATERIAL HOLD CONDITION SHALL EXIST WHEN
A PRODUCT SAFETY, DATA INTEGRITY OR KEY
FUNCTIONAL DEFECT CIRCUMSTANCE OCCURS.
BUYER AND SELLER WILL NOTIFY THE OTHER'S
QUALITY ASSURANCE REPRESENTATIVES OF ANY
REPORTED OR OBSERVED HOLD CONDITION WITHIN
24 HOURS OF OCCURRENCE. AN OCCURRENCE
WILL RESULT IN IMMEDIATE MATERIAL SHIP
HOLD WHICH CAN BE REMOVED ONLY AFTER BUYER
APPROVED CORRECTIVE ACTIONS HAVE BEEN
FULLY IMPLEMENTED
6.7 MONTHLY PRODUCT DATA AND FEEDBACK:
1. PRODUCT RETURNS DATA
SELLER SHALL PROVIDE DEFECTIVE MATERIAL REPORTS
WHICH INCLUDE THE INFORMATION STATED BELOW FOR
MATERIAL RETURNED BY BUYER.
<PAGE>
1. AMOUNT OF MATERIAL RETURNED DURING
THE MONTH REPORTED
2. PARETO DEFECT SUMMARY OF THE FAILURE
CAUSES AND REPAIR ACTIONS BY BUYER
LOCATION AND BY PRODUCT.
3. CORRECTIVE ACTIONS REQUIRED AS A
RESULT OF REPAIR ACTIVITY.
4. DPU'S AT EACH MANUFACTURING PROCESS
INSPECTION POINT, WITH DEFECT PARETO
AND ASSOCIATED CORRECTIVE ACTIONS.
7. MATERIAL QUALITY (NEW BUILD MATERIAL, SPARES, REPAIRS)
1. SELLER SHALL MEET THE BUYER'S
QUALITY GOALS FOR:
FUNCTIONAL PER MATERIAL
SPECIFICATION
FUNCTIONAL PER MTBF SPECIFICATION
PACKAGING/LABELING
DOA (DPU'S) AS MEASURED AT BUYER'S
INTEGRATION SITES
8. DOCUMENT CONTROL:
8.1 MATERIAL SHALL BE UNDER DOCUMENT CONTROL WHEN
ENGINEERING DOCUMENTS ARE COMPLETED TO A FORM WHERE
ALL SUBSEQUENT CHANGES COMPLY WITH THE REQUIREMENTS OF
THE FORMAL DOCUMENT CONTROL SYSTEM. THIS POINT IS
REFERRED TO AS THE DESIGN BASE LINE. AN ENGINEERING
DOCUMENTATION CONTROL PROCEDURE SHALL BE FOLLOWED BY
SELLER PRIOR TO THE DESIGN BASE LINE CONDITION.
9. DVT PLAN:
9.1 A DVT PLAN WILL BE PROVIDED BY THE SUPPLIER AND
ACCEPTED BY THE BUYER PRIOR TO THE TEST BEGINNING.
BUYER AND SELLER DESIGN ENGINEERING SHALL AGREE UPON
TEST AND MEASUREMENT TECHNIQUES USED. TEST
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
MAY INCLUDE VIBRATION, SHOCK, TEMPERATURE, HUMIDITY,
VOLTAGE MARGIN, ACOUSTICS, ESD TEST, ENVIRONMENTAL,
AGENCY APPROVALS, INTERCHANGEABILITY, OF MODULES
AND/OR SUB-ASSEMBLIES ETC. PER MATERIAL PURCHASE
SPEC'S. FOR REMOVABLE MEDIA PRODUCTS MEDIA
INTERCHANGE, DEVICE INTERCHANGE AND SCSI COMPLIANCE
QUALIFICATION IS REQUIRED.
9.2 THE SELLER'S DVT TEST ENGINEERING LOGS AND FINAL
REPORTS SHALL BE PREPARED AND ISSUED TO THE BUYER FOR
REVIEW AND ACCEPTANCE PRIOR TO START OF PRODUCTION.
9.3 DVT TEST IS COMPLETE WHEN:
1. SUCCESSFUL PASS OF EACH SPECIFIED TEST PARAMETER
AS AGREED BY SUPPLIER AND BUYER.
2. CLOSURE OF ALL MUTUALLY AGREED TO OPEN ACTION
ITEMS
10. BUYER AUDITS:
10.1 BUYER, UPON WRITTEN NOTICE TO SELLER, MAY CONDUCT
SELLER PROCESS, PRODUCT AND FIRST ARTICLE AUDITS.
SELLER SHALL DEMONSTRATE COMPLIANCE TO STIPULATED
PRODUCT SPECIFICATIONS AND MANUFACTURING PROCESS
CONTROLS AS A CONDITION OF SHIPMENT OR CONTINUED
SHIPMENT OF PRODUCT.
11. PRODUCT END OF LIFE:
11.1 SELLER SHALL PROVIDE [ ] ADVANCE
WRITTEN NOTIFICATION OF A PRODUCT'S "END OF
MANUFACTURING LIFE". SELLER SHALL, AT THAT TIME,
SUBMIT FOR BUYER WRITTEN APPROVAL, A PRODUCT "END OF
MANUFACTURING LIFE" PLAN IN THE FORM SPECIFIED BY
EXHIBIT D OF THE AGREEMENT.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
12. RELIABILITY GOALS FOR DLT PRODUCTS:
12.1 SELLER AND BUYER SHALL JOINTLY SET PRODUCT RELIABILITY
GOALS FOR DLT PRODUCTS AT THE INTERVALS SPECIFIED
BELOW. SELLER SHALL USE ITS REASONABLE BEST EFFORTS
TO ACHIEVE SUCH GOALS:
[
]
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D
END OF LIFE PLAN
Seller agrees to provide [ ] notice prior to
discontinuing manufacture of the products(s) listed in Annex 1 of
Exhibit A.
Seller agrees to provide continued support for a period of [
] following formal obsolescence of a product. During
this period Seller will:
1. Maintain equipment, fixtures and process for repairing or
replacing HDAs and PCBs.
2. Maintain equipment and processes for testing such product.
3. Maintain raw components supplies at a level sufficient for
meeting Buyer's repair requirements.
4. Continue to provide Buyer with quality data reporting
associated with field performance as long as such data is
available.
5. Maintain technical product support expertise.
6. Provide a schedule to return any consigned equipment
supplied by Buyer that is associated with the product and
processes being declared EOL.
7. Provide [ ] written notification prior to
the end of the [ ] support period.
All repair activity may be consolidated to one (1) Seller repair site
and or assigned to a third party service organization. In case of plans
to subcontract to a third party, Seller will be responsible for
providing Buyer no less than [ ] lead time to allow for
adequate qualification of the third party repair site.
Buyer acknowledges that Seller will be unable to re-start production of
product(s) following official obsolescence.
Seller agrees to work aggressively with Buyer to ensure that compatible,
next generation products will be qualified in time to meet Buyer's
ongoing requirements.
<PAGE>
List of Quantum Products Currently Qualified By Digital
For Exhibit A, Annex 1
IDE Disks SCSI Disks
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ]
[ ]
Solid State Disks Tapes
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 1
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
DPSG Products
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
HCSG Products
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 2
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
Solid State Products
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
Terms and Conditions per Supply Agreement #19337
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 3
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
Tape Products
[ ] (17 models unlisted)
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
Terms and Conditions per Supply Agreement #19337
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 4
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
Tape Products
[ ] (17 models unlisted)
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 5
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
Tape Products
[ ] (17 models unlisted)
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 6
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
Tape Products
[ ] (4 models unlisted)
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 1
Quantum Product Chart
Forecasted Qualified Products
Page 7
DEC QNTM Lead Digital Pricing
Model Model Interface Code Name Capacity Time Q2 Forecast CYQ494
Tape/Media
[ ] (8 models unlisted)
[ ]
[ ]
[ ]
<PAGE>
Exhibit A Rev. 4 9/30/94
Annex 1: Quantum Product Chart Forecasted Qualified Products
BOA #19337
* Wide/Diff = Add [ ] per unit
* HCSG products = [ ] warranty
* DPSG products = [ ] warranty
* DPSG Products offered FOB:
Milpitas, California
Singapore
Dundalk, Ireland
* HCSG Producted Offered FOB:
X-Digital Colorado Springs, Colorado
Milpitas, California
Singapore
Dundalk, Ireland
* FOB Turnkey Scotland (3PL) add [ ] unit
* Prices for products manufactured in the U.S. does not include duty
into Europe.
* Add [ ] unit for single pack requirements.
Acknowledged and Agreed to: Effective for the Period:
Name Date , , to ,
Name Date
<PAGE>
Exhibit A, Annex 2
Quantum Product Chart
Available But Not Qualified
Page 1
DEC QNTM
Model Model Interface Code Name Capacity Available CYQ494
DPSG Products
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
Portable 2.5"
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
HCSG Products
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
<PAGE>
Exhibit A, Annex 2
Quantum Product Chart
Available But Not Qualified
Page 2
DEC QNTM
Model Model Interface Code Name Capacity Available CYQ494
HCSG Products
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ] [ ]
Solid State Disks
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 2
Quantum Product Chart
Available But Not Qualified
Page 3
DEC QNTM
Model Model Interface Code Name Capacity Available CYQ494
Tape Products
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 2
Quantum Product Chart
Available But Not Qualified
Page 4
DEC QNTM
Model Model Interface Code Name Capacity Available CYQ494
Tape Products
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A, Annex 2
Quantum Product Chart
Available But Not Qualified
Page 5
DEC QNTM
Model Model Interface Code Name Capacity Available CYQ494
Tape Products
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit A Rev. 4 9/30/94
Annex 2: Quantum Product Chart Available But Not Qualified
BOA #19337
* Wide/Diff = Add [ ] per unit
* HCSG products = [ ] warranty
* DPSG products = [ ] warranty X-Digital Colorado Springs, Colorado
* DPSG Products offered FOB:
Milpitas, California
Singapore
Dundalk, Ireland
* HCSG Producted Offered FOB:
X-Digital Colorado Springs, Colorado
Milpitas, California
Singapore
Dundalk, Ireland
* FOB Turnkey Scotland (3PL) add [ ] unit
* Prices for products manufactured in the U.S. does not include duty
into Europe.
* Add [ ] unit for single pack requirements.
Acknowledged and Agreed to: Effective for the Period:
Name Date , , to ,
Name Date
<PAGE>
Exhibit A, Annex 3
Quantum Product Chart
Future Products
DEC QNTM Budgetary
Model Model Interface Code Name Capacity Avail Pricing
DPSG Products
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
Portable 2.5"
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
Avastor HCSG Products
Disk
Avastor Solid State Products
Disk
Avastor Tape Products
Disk
20817691
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Form S-8 (Registration
No. 33-55503) dated September 16, 1994 pertaining to the Employee Stock
Purchase Plan of Quantum Corporation and Form S-8 (Registration No. 33-54343)
dated June 28, 1994 pertaining to the 1993 Long Term Incentive Plan of
Quantum Corporation of our report dated September 29, 1994 included in
Form 8-K/A-1 dated January 30, 1995 of Quantum Corporation which presents
the Assets Sold and Liabilities Assumed by Quantum Corporation of the Disks,
Heads and Tapes Business of the Storage Business Unit of Digital Equipment
Corporation (the "Business") as of July 2, 1994 and July 3, 1993 and the
Related Statements of Operations for each of the three fiscal years in the
period ended July 2, 1994 based on our audits of the Financial Statements
(the "Financial Statements") of the Business. Our report on the Financial
Statements contains the following two emphasis of matter paragraphs in
addition to an explanatory paragraph. The first emphasis of matter para-
graph describes the financial statements as not intending to be a complete
presentation of Business' financial position or cash flows. The second
emphasis of matter paragraph concerns costs and expenses presented in the
Financial Statements which represent allocations and management's estimates
of the costs of services provided by Digital Equipment Corporation and
management's decision regarding revenue pricing and recognition and
allocation of certain selling and administrative expenses in the Financial
Statements. The explanatory paragraph concerns the Business's change in
accounting method for postretirement benefits other than pensions in the
Financial Statements.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 30, 1995
