Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended Commission File Number
July 2, 1995 0-12390
QUANTUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2665054
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
500 McCarthy Blvd.
Milpitas, California 95035
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 894-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 30, 1995: 51,660,891.
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QUANTUM CORPORATION
10-Q REPORT
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION 11
SIGNATURE 12
<PAGE>
QUANTUM CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share per share data)
(unaudited)
First Quarter
Three Months Ended
July 2, July 3,
1995 1994
Sales $941,316 $725,304
Cost of sales 816,827 579,227
Gross profit 124,489 146,077
Operating expenses:
Research and development 55,111 28,599
Sales and marketing 33,703 22,760
General and administrative 12,182 10,331
100,996 61,690
Income from operations 23,493 84,387
Other (income) expense:
Interest expense 8,147 3,556
Interest and other income (2,882) (2,371)
5,265 1,185
Income before income taxes 18,228 83,202
Income tax provision 5,286 24,961
Net income $12,942 $58,241
Net income per share:
Primary $0.25 $1.24
Fully diluted $0.24 $1.03
Weighted average common and
common equivalent shares:
Primary 51,712,344 46,854,979
Fully diluted 62,238,577 58,562,979
See accompanying notes to consolidated financial statements.
<PAGE>
QUANTUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
July 2, March 31,
1995 1995
Assets
Current assets:
Cash and cash equivalents $ 168,884 $ 187,753
Accounts receivable, net of allowance for
doubtful accounts of $10,918 and $11,963 537,365 497,887
Inventories 391,859 324,650
Deferred taxes 43,876 44,054
Other current assets 21,958 35,580
Total current assets 1,163,942 1,089,924
Property and equipment, net of accumulated
depreciation of $131,174 and $119,831 305,864 280,099
Purchased intangibles, net 90,382 95,818
Other assets 15,186 15,187
$1,575,374 $1,481,028
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 424,960 $355,117
Accrued warranty expense 56,628 57,001
Accrued compensation 36,717 54,917
Income taxes payable (2,164) 17,566
Accrued exit costs 32,213 32,213
Short-term debt 50,000 50,000
Other accrued liabilities 39,434 77,227
Total current liabilities 637,788 644,041
Subordinated debentures 149,056 212,500
Long-term debt 190,000 115,000
Shareholders' equity:
Common stock 217,258 141,154
Retained earnings 381,272 368,333
Total shareholders' equity 598,530 509,487
$1,575,374 $1,481,028
See accompanying notes to consolidated financial statements.
<PAGE>
QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended
July 2, July 3,
1995 1994
Cash flows from operating activities:
Net income $ 12,942 $ 58,241
Items not requiring the current use of cash:
Depreciation and amortization 21,834 7,265
Changes in assets and liabilities:
Accounts receivable (39,478) (54,908)
Inventories (67,209) 16,775
Accounts payable 69,843 2,282
Income taxes payable (16,207) 21,196
Accrued warranty expense (373) 644
Other assets and liabilities (46,793) 4,829
Net cash provided by (used in) operating activities (65,441) 56,324
Cash flows from investing activities:
Purchase of short-term investments - (17,349)
Sales and maturities of short-term investments - 10,060
Investment in property and equipment, net (38,118) (16,803)
Net cash provided by (used in) investing activities (38,118) (24,092)
Cash flows from financing activities:
Proceeds from revolving line of credit and term
loan borrowings 85,000 -
Principal payments on revolving line of credit (10,000) -
Proceeds from issuance of common stock, net 9,690 1,489
Net cash provided by financing activities 84,690 1,489
Net increase in cash and cash equivalents (18,869) 33,721
Cash and cash equivalents at beginning of period 187,753 217,531
Cash and cash equivalents at end of period $168,884 $251,252
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 9,081 $ 6,831
Income taxes $ 21,976 $ 4,247
See accompanying notes to consolidated financial statements.
<PAGE>
QUANTUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of presentation
The accompanying unaudited consolidated 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 Quantum Corporation for the fiscal year ended
March 31, 1995.
2. Inventories
Inventories consisted of the following:
(In thousands)
July 2, March 31,
1995 1995
Materials and purchased parts $156,755 $116,732
Work in process 93,808 42,091
Finished goods 141,296 165,827
$391,859 $324,650
3. Net income per share
Net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding. For fiscal 1995, net
income per share computed on a fully diluted basis assumes conversion of the
Company's outstanding 6 3/8% convertible subordinated debentures having a
principal value of $212,500,000. During the first quarter of fiscal 1996 ended
July 2, 1995, approximately thirty percent of the outstanding debentures were
converted to common stock (See Note 4 in Notes to Consolidated Financial
Statements). Therefore, net income per share for the first quarter ended July
2, 1995 computed on a fully diluted basis assumes conversion of the outstanding
debentures having a principal value of $149,056,000.
4. Debt
In October 1994, the Company entered into a three year $350 million senior
credit facility structured as a $225 million revolving credit line and a $125
million term loan. The revolving credit is governed by a borrowing base of
eligible accounts receivable and inventory, and the term loan amortizes in five
equal semiannual installments commencing October 1995. The borrowings, at the
ongoing option of the Company bear interest at either LIBOR plus a margin or a
base rate with option periods of one to six months. The facility is secured by
all the Company's domestic assets and 66% of the Company's ownership of certain
of its subsidiaries. The Company was not in compliance with one of the
financial covenants in connection with its credit facility as of July 2, 1995;
however, the Company has since received a waiver.
In June 1995, the Company executed an amendment to the $350 million senior
credit facility in order to consolidate a previously separate secured credit
agreement of $85 million. As amended, $85 million of the $225 million
revolving credit line is available for the issuance of standby letters of
credit. The previous secured credit agreement required the Company to pledge
cash of $85 million as collateral for the standby letters of credit in exchange
for a lower fee structure. The amended credit facility does not require
pledged cash as collateral for the standby letters of credit.
The Company's convertible subordinated debentures became redeemable at the
Company's option on or after April 2, 1995, at prices ranging from 104.5% of
the principal to 100% at maturity. Each debenture is convertible, at the
option of the holder into the Company's common stock at a conversion price of
approximately $18.15 per share. During the first quarter ended July 2, 1995,
$63,444,000, approximately 30%, of the outstanding convertible subordinated
debentures were converted into the Company's Common Stock. This conversion
resulted in the issuance of 3,495,761 shares.
5. Acquisition of businesses from Digital Equipment Corporation
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 accounted for
as a purchase. The operating results of the acquired Business from the date of
the purchase through July 2, 1995 have been reflected in the Company's
consolidated financial statements. The purchase price of the Acquisition was
finalized subsequent to July 2, 1995, resulting in a reduction of the purchase
price of approximately $3.2 million.
The unaudited pro forma combined condensed results of operations for the
Company for the three months ended July 3, 1994, had the acquisition occurred
at the beginning of the period and which eliminates the non-recurring charges,
are as follows:
(In thousands except per share data)
Three Months Ended
-------------------------
July 2, July 3,
1995 1994
(actual) (pro forma)
---------- -----------
Net sales $941,316 $989,639
Net income (loss) $ 12,942 $ 44,212
Net income (loss) per share:
Primary $0.25 $0.94
Fully diluted $0.24 $0.79
The unaudited pro forma results for the three months ended July 3, 1994 exclude
the effects of the charge for purchased research and development and other in
merger costs of $73 million, as such amounts are non-recurring. The pro forma
results for the first quarter of fiscal 1995 and the actual results for the
first quarter of fiscal 1996 reflect intangible asset amortization,
depreciation of acquired fixed assets, amortization of loan fees and interest
expense on the new debt related to the acquisition.
The unaudited 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.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
On October 3, 1994, Quantum acquired the Disks, Heads and Tapes Business
of the Storage Business Unit of Digital Equipment Corporation (the "Acquired
Businesses"), in a transaction (the "Acquisition") accounted for as a purchase.
The operating results of the Acquired Businesses from the date of the purchase
through July 2, 1995 have been reflected in the Company's consolidated
financial statements.
Consolidated sales for the first quarter of fiscal 1996 ended July 2,
1995 were $941 million, compared to $725 million for the corresponding period
in fiscal 1995. The increase in consolidated sales is attributable to increased
unit shipments due in part to products acquired in the Acquisition, and a
change in sales mix to higher-priced products. These increases were partially
offset by a decline in average unit sales prices on a comparable unit basis.
Unit shipments for the first quarter of fiscal 1996 ended July 2, 1995
increased 22% compared to the corresponding period in fiscal 1995, with sales
for the first quarter of fiscal 1996 ended July 2, 1995 increasing 30% over the
first quarter of fiscal 1995 ended July 3, 1994. Historically, a limited
number of disk drive products have contributed the majority of the consolidated
sales for the Company. The Company anticipates that this trend will continue in
the future.
The Company continues to focus on meeting the needs of major OEM
customers. Sales to Digital Equipment Corporation ("Digital") represented 13%
of consolidated sales for the first quarter of fiscal 1996 ended July 2, 1995,
while Compaq and Apple each represented 12% of consolidated sales. For the
first quarter of fiscal 1995 ended July 3, 1994, sales to Compaq Computer, Inc.
("Compaq") and Apple Computer, Inc. ("Apple") represented 16% and 14%,
respectively, of total consolidated sales. Sales to Digital represented less
than 10% of consolidated sales for the first quarter of fiscal 1995 ended July
3, 1994. Any significant decrease in sales to a major customer or the loss of a
major customer could have a material adverse effect on the Company's results of
operations.
In conjunction with the Acquisition, the Company and Digital signed a
multi-year supply agreement pursuant to which the Company will provide a
substantial percentage of Digital's internal hard disk drive requirements for
its Storageworks subsystems and core computer systems businesses, subject to
the Company meeting Digital's qualification standards. There can be no
assurance that Digital's future requirements for hard disk products will
increase or remain at the current levels or that the Company will be able to
meet Digital's qualification requirements on a timely basis.
Gross margin for the quarter ended July 2, 1995 decreased to 13.2% from
20.1% for the first quarter of fiscal 1995 ended July 3, 1994. This decrease
was a result of slower than anticipated transitions to the newer, higher margin
products due to delays in desktop and high capacity product qualifications and
component availability issues. The transition delays also resulted in the
Company selling a higher percentage of lower gross margin products than in the
comparable quarter of the prior year. The Company anticipates that there will
continue to be component availability issues through at least the third quarter
of fiscal 1996 ending December 31, 1995, which may potentially constrain
shipment of product. Although the Company is making efforts to avoid
significant component shortages, the Company may not be able to meet all orders
for certain products. In the future, gross margin may be affected by pricing
and other competitive conditions, as well as the Company's ability to integrate
the Acquired Businesses, including phasing out the older, lower gross margin
product lines and transitioning the manufacturing of its high capacity disk
drive products to its lower-cost facility.
Over the past ten years, Quantum has established a strong business
relationship with Matsushita-Kotobuki Electronics Industries, Ltd. ("MKE") of
Japan. This relationship has been built on Quantum's engineering and design
expertise and MKE's high-volume, high-quality manufacturing expertise. The
Company's master agreement with MKE, which covers the general terms of the
business relationship, was renegotiated during fiscal 1993 for a period of five
years. During the first quarter of fiscal 1996 ended July 2, 1995,
approximately 72% of the Company's sales were derived from products
manufactured by MKE, a decline from 91% of sales in the first quarter of fiscal
1995 ended July 3, 1994. The decline in MKE products as a percentage of sales
is a result of the increase in consolidated sales due to the products acquired
from Digital and Quantum's manufacturing of those products. There can be no
assurance that the increase in Quantum manufactured products will not adversely
influence the gross margin rate. In the event MKE is unable to supply such
products or increases its prices for manufacturing services, the Company's
results of operations would be adversely affected.
In conjunction with the acquisition of the thin film heads business from
Digital, the Company assumed Digital's relationship with Lafe Computer
Magnetics Ltd. ("Lafe") and is in the process of negotiating a manufacturing
agreement. In the event Lafe is unable to supply manufacturing services, the
Company could experience an interruption in business. The Company's
transactions with MKE and Lafe are denominated in U.S. dollars with prices for
product purchases negotiated periodically. Thus, fluctuations in the exchange
rate have no material short-term impact on Quantum's results of operations.
However, such fluctuations may impact future negotiated prices.
Quantum operates in an extremely competitive industry and its rapid
growth has been the result of the Company's ability to identify customer needs
and develop quality products to meet those requirements. The Company expects
that sales from new products will account for a significant portion of sales
for the remainder of fiscal 1996 and will replace sales of some current
products. The Company's ability to produce new products economically and
manage the transition of customers to these new products is essential for
continued success. The hard disk drive industry is characterized by
increasingly short product life cycles and is dependent on the strength of unit
demand in the personal computer market. As a result, the industry tends to
experience periods of excess product inventory and intense price competition.
These and other factors may affect the Company's results of operations, and
past financial performance should not be considered a reliable indicator of
future performance. Investors should not use historical trends to anticipate
results or trends in future periods.
Operating Expenses
Research and development expenses in the first quarter of fiscal 1996
ended July 2, 1995 were $55 million, or 5.9% of sales, compared to $29 million,
or 3.9% of sales in the corresponding period in fiscal 1995. The increase in
absolute dollars is due primarily to the Acquired Businesses and reflects
spending for both the vertically integrated heads business and the additional
high capacity disk drive products, which are more research and development
intensive than the Company's other businesses. Principally as a result of the
Acquisition, the Company expects to continue this higher level of expenditures
for research and development. The hard disk drive industry is subject to rapid
technological advances, and the future success of the Company is dependent upon
continued development and timely introduction of new products and technologies.
Sales and marketing expenses in the first quarter of fiscal 1996 ended
July 2, 1995 were $34 million, or 3.6% of sales, compared to $23 million, or
3.1% of sales in the corresponding period in fiscal 1995. The increase in
absolute dollars is principally due to the Acquisition and the costs associated
with supporting the higher sales volume and the expanded Company
infrastructure. The percentage increase is due to lower than anticipated sales
in the first quarter of fiscal 1996. The Company anticipates a continued higher
level of absolute dollar spending for sales and marketing related to the
Acquisition, with expenditures as a percentage of sales remaining relatively
consistent.
General and administrative expenses in the first quarter of fiscal 1996
ended July 2, 1995 were $12 million, or 1.3% of sales, compared to $10 million,
or 1.4% of sales in the corresponding period in fiscal 1995. The increase in
absolute dollars is primarily related to the infrastructure required to operate
the Acquired Businesses. The percentage decline is due to the increase in
consolidated sales. The Company expects a continued higher level of general and
administrative absolute dollar spending principally due to the Acquisition,
with expenditures as a percentage of sales remaining relatively consistent.
Net interest and other income/expense in the first quarter of fiscal 1996
ended July 2, 1995 was $5.3 million net expense, compared to $1.2 million net
expense in the corresponding period in fiscal 1995. The increase in net expense
in the fiscal 1996 period can be principally attributed to higher interest
expense resulting from Acquisition financing and lower cash balances due to
cash used for the Acquisition.
The Acquisition will have a future effect on both operating and net
income resulting from the amortization of intangibles, depreciation of the
acquired fixed assets and interest expense on the debt. The purchase price of
the Acquisition was finalized subsequent to July 2, 1995, resulting in a
reduction of the purchase price of approximately $3.2 million. The Company
estimates that charges for the amortization of intangibles and the depreciation
of the fixed assets acquired in the Acquisition, respectively, will approximate
$25 million and $30 million over each of the next three fiscal years. Interest
expense on the debt will be dependent on the loan balance and interest rate.
See Note 4 of Notes to the Financial Statements.
The Company has signed a Memorandum of Understanding to sell its La Cie,
Ltd. subsidiary to one of the Company's international customers and anticipates
the transaction will be completed by the end of the third fiscal quarter. The
transaction will not be material to the present or future financial results of
the Company.
Income Taxes
The effective tax rate for the first quarter of fiscal 1996 ended July 2, 1995
was 29%, compared to 30% for the corresponding period in fiscal 1995. The
effective tax rates are below the combined federal and state statutory rates
primarily as a result of the tax benefit associated with the income of foreign
subsidiaries taxed at lower than federal rates.
Liquidity and Capital Resources
At July 2, 1995, the Company had $169 million in cash and cash
equivalents and short-term investments, compared to $188 million at March 31,
1995. The decrease in cash is a result of cash used in operating and investing
activities offset by cash provided by financing activities. Cash used in
operating and investing activities is primarily a result of increases in
accounts receivables and inventories and investing in property and equipment.
Cash provided by financing activities is primarily a result of borrowing under
the credit facility described below.
In October 1994, the Company entered into a three year $350 million
senior credit facility structured as a $225 million revolving credit line and a
$125 million term loan. The revolving credit is governed by a borrowing base
of eligible accounts receivable and inventory, and the term loan amortizes in
five equal semiannual installments commencing October 1995. The borrowings, at
the ongoing option of the Company bear interest at either LIBOR plus a margin
or a base rate with option periods of one to six months. The facility is
secured by all the Company's domestic assets and 66% of the Company's ownership
of certain of its subsidiaries.
In June 1995, the Company executed an amendment to the $350 million
senior credit facility in order to consolidate a previously separate secured
credit agreement of $85 million. As amended, $85 million of the $225 million
revolving credit line is available for the issuance of standby letters of
credit. The previous secured credit agreement required the Company to pledge
cash of $85 million as collateral for the standby letters of credit in exchange
for a lower fee structure. The amended credit facility does not require
pledged cash as collateral for the standby letters of credit. The Company was
not in compliance with one of the financial covenants in connection with its
credit facility as of July 2, 1995; however, the Company has since received a
waiver.
The Company's convertible subordinated debentures became redeemable at
the Company's option on or after April 2, 1995, at prices ranging from 104.5%
of the principal to 100% at maturity. Each debenture is convertible, at the
option of the holder into the Company's common stock at a conversion price of
approximately $18.15 per share. During the first quarter ended July 2, 1995,
$63,444,000, approximately 30%, of the outstanding convertible subordinated
debentures were converted into the Company's Common Stock. This conversion
resulted in the issuance of 3,495,761 shares.
At this time, the Company expects to spend approximately $200 million for
leasehold improvements, capital equipment and expansion of the Company's
facilities during fiscal 1996. Included in this amount is a significant amount
of additional capital expenditures that will be required to expand the Asia
manufacturing facilities and to support the recording heads business of the
acquired Businesses. In conjunction with the Acquisition, the Company recorded
an accrual for exit costs related to exiting facilities and operations acquired
from Digital. The Company anticipates that cash outlays during fiscal 1996 for
the exit activities will be approximately $23 million. During the first
quarter of fiscal 1996 ended July 2, 1995, there were no cash outlays related
to the exit costs. The Company believes that its existing capital resources,
including its credit facilities and any cash generated from operations, will be
sufficient to meet all currently planned expenditures and sustain operations
through the balance of the calendar year. There can be no assurance, however,
that the Company will not be required, or choose, to raise capital in advance
of that date. There can be no assurance that the Company will be able to
obtain any such financing on acceptable terms, or at all.
<PAGE>
QUANTUM CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal proceedings
The Company is a co-defendant in a lawsuit filed by Supercom, Inc. and
other named plaintiffs on April 17, 1995 in the United States District
Court in and for the Northern District of California. The complaint
alleges that the defendants were responsible for the initiation and
execution of a search warrant relating to Quantum disk drives in the
plaintiffs' possession, in violation of the plaintiffs' rights. The
complaint includes allegations of malicious prosecution, assault,
abuse of process, conspiracy, negligent and intentional interference
with contractual relations, negligent and intentional infliction of
emotional distress and civil rights violation, and seeks unspecified
damages which the plaintiffs' allege are in excess of $500,000. The
Company believes that the plaintiffs' claims against Quantum are
without merit, and the Company intends to vigorously defend itself.
Item 2. Changes in securities - Not Applicable.
Item 3. Defaults upon senior securities - Not Applicable.
Item 4. Submission of matters to a vote of security holders - Not
Applicable.
Item 5. Other information - Not Applicable.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits. The exhibits listed on the accompanying index to
exhibits immediately following the signature page are
filed as part of this report.
(b) Reports on Form 8-K. None
<PAGE>
SIGNATURE
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
(Registrant)
Date: August 16, 1995 By: /s/ JOSEPH T. RODGERS
Executive Vice President, Finance
and Chief Financial Officer
<PAGE>
QUANTUM CORPORATION
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Page
10.30 Second Amendment dated June 26, 1995 to Credit
Agreement (dated October 3, 1994), 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 XX
11.1 Statement of Computation of Net Income Per Share XX
27 Financial Data Schedule
<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Amendment"), dated as of June 26, 1995, is entered into by and
among:
(1)QUANTUM CORPORATION, a Delaware corporation
("Borrower");
(2)Each of the financial institutions listed in
Schedule I to the Credit Agreement referred to in Recital A
below, (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. Borrower, the Banks, Managing Agents and Administrative
Agent are parties to a Credit Agreement dated as of October 3,
1994, as amended by a First Amendment to Credit Agreement dated
as of February 15, 1995 (as so amended, the "Credit Agreement"),
pursuant to which the Banks have provided certain credit
facilities to Borrower.
B. Borrower, certain financial institutions (the "Existing
Issuing Banks") and Bank of America National Trust and Savings
Association, as agent for the Existing Issuing Banks (in such
capacity, the "Existing LC Paying Agent"), are parties to a
Credit Agreement dated as of August 18, 1992, as amended by an
Amendment to Credit Agreement dated as of August 18, 1993 and a
Second Amendment to Credit Agreement dated as of August 18, 1994
(as so amended, the "Existing LC Agreement"), pursuant to which
the Existing Issuing Banks have provided a letter of credit
facility to Borrower.
C. Borrower has requested the Banks, Managing Agents and
Administrative Agent to amend the Credit Agreement to add a
letter of credit facility to replace the letter of credit
facility now provided in the Existing LC Agreement.
D. The Banks, Managing Agents and Administrative Agent are
willing so to amend the Credit Agreement upon the terms and
subject to the conditions set forth below.
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, the Banks,
Managing Agents and Administrative Agent hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms
defined above and elsewhere in this Amendment shall be used
herein as so defined. Unless otherwise defined herein, all other
capitalized terms used herein shall have the respective meanings
given to those terms in the Credit Agreement, as amended by this
Amendment. The rules of construction set forth in Section I of
the Credit Agreement shall, to the extent not inconsistent with
the terms of this Amendment, apply to this Amendment and are
hereby incorporated by reference.
2. Amendments to Credit Agreement. Subject to the
satisfaction of the conditions set forth in paragraph 4 below,
the Credit Agreement is hereby amended as follows:
(a)Paragraph 1.01 is amended by changing the
definitions of the following terms set forth therein to read
in their entirety as follows:
"Banks" shall have the meaning given to that term
in clause (2) of the introductory paragraph hereof.
Where the context so permits, "Banks" shall include the
"Issuing Banks" in their capacities as such.
"Commitments" shall mean, collectively, the
Revolving Loan Commitments, the Term Loan Commitments
and the LC Commitments.
"Credit Documents" shall mean and include this
Agreement, the LC Applications, the Letters of Credit,
the Notes, the Security Documents, the Agents' Fee
Letters, the Issuing Banks' Fee Letter and the LC
Paying Agent Agreement; 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, the selection of a new
Interest Period for any Revolving LIBOR Loan or Term
LIBOR Borrowing Portion, the issuance of any Letter of
Credit or the amendment of any Letter of Credit.
"Defaulting Bank" shall mean a Bank which has
failed to fund its portion of any Borrowing or Drawing
Payment 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.
"maturity" shall mean, with respect to any Loan,
Reimbursement Obligation, interest, fee or other amount
payable by Borrower under this Agreement or the other
Credit Documents, the date such Loan, Reimbursement
Obligation, interest, fee or other amount becomes due,
whether upon the stated maturity or due date, upon
acceleration or otherwise.
"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 and the aggregate stated amount of all
Letters of Credit then outstanding.
(b)Paragraph 1.01 is further amended by adding
thereto, in the appropriate alphabetical order, the
following definitions to read in their entirety as follows:
"Attorney Costs" of any Person shall mean and
include all fees and disbursements of any law firm or
other external counsel for such Person and, to the
extent such services are not redundant to those
provided in the matter by external counsel for such
Person, the allocated cost of internal legal services
and all disbursements of internal counsel.
"BofA" shall mean Bank of America National Trust
and Savings Association.
"Canadian Imperial" shall mean Canadian Imperial
Bank of Commerce.
"Drawing Payment" shall have the meaning given to
that term in Subparagraph 2.01A(f).
"Expiration Date" shall mean, with
respect to any
Letter of Credit, the expiration date set forth
therein.
"Existing LC Agreement" shall have the meaning
given to that term in Subparagraph 2.01A(k).
"Existing LC Applications" shall have the meaning
given to that term in Subparagraph 2.01A(k).
"Existing Letters of Credit" shall have the
meaning given to that term in Subparagraph 2.01A(k).
"Issuing Bank" shall have the meaning given to
that term in Subparagraph 2.01A(a).
"Issuing Banks' Fee Letter" shall mean the letter
agreement dated June 26, 1995 among Borrower and the
Issuing Banks.
"LC Amendment Application" shall have the meaning
given to that term in Subparagraph 2.01A(c).
"LC Applications" shall have the meaning given to
that term in Subparagraph 2.01A(c).
"LC Commitment" shall mean, with respect to any
Issuing Bank at any time, such Issuing Bank's LC
Percentage Share at such time of the Total LC
Commitment at such time.
"LC Facility Expiration Date" shall have the
meaning given to that term in Subparagraph 2.01A(a).
"LC Issuance Application" shall have the meaning
given to that term in Subparagraph 2.01A(c).
"LC Issuance Fees" shall have the meaning given to
that term in Subparagraph 2.04(d).
"LC Paying Agent" shall mean BofA, acting in its
capacity as agent for the Issuing Banks pursuant to the
LC Paying Agent Agreement and this Agreement.
"LC Paying Agent Agreement" shall mean the Paying
Agent Agreement dated as of June 26, 1995 among the
Issuing Banks.
"LC Percentage Share" shall mean, with respect to
each Issuing Bank, the percentage set forth under the
caption "LC Percentage Share" opposite such Issuing
Bank's name on Schedule II.
"LC Usage Fees" shall have the
meaning given to
that term in Subparagraph 2.04(d).
"Letter of Credit" shall have the meaning given to
that term in Subparagraph 2.01A(a).
"Outstanding LC Credit" shall have the meaning
given to that term in Subparagraph 2.01A(a).
"Outstanding Revolver/LC Credit" shall have the
meaning given to that term in Subparagraph 2.03(a).
"Reimbursement Due Date" shall have the meaning
given to that term in Subparagraph 2.01A(f).
"Reimbursement Obligation" shall have the meaning
given to that term in Subparagraph 2.01A(f).
"Reimbursement Payment" shall have the meaning
given to that term in Subparagraph 2.01A(f).
"Second Amendment Effective Date" shall mean the
"Effective Date" as defined in the Second Amendment to
this Agreement dated as of June 26, 1995.
"Total LC Commitment" shall have the meaning given
to that term in Subparagraph 2.01A(a).
(c)Section II is amended by adding thereto,
immediately following Subparagraph 2.01(g), a new Paragraph
2.01A to read in its entirety as follows:
2.01A.Letter of Credit Facility.
(a)Letter of Credit Availability. Subject
to the terms and conditions of this Agreement
(including the amount limitations set forth in
Paragraph 2.03), ABN, BofA and Canadian Imperial
(each in its capacity as the issuer of a letter of
credit under this Paragraph 2.01A, an "Issuing
Bank") severally agree to issue on behalf of
Borrower from time to time during the period
beginning on the Second Amendment Effective Date
and ending on February 28, 1996 (the "LC Facility
Expiration Date") such letters of credit as
Borrower may request under this Paragraph 2.01A
(individually, a "Letter of Credit"); provided,
however, as follows:
(i) The Letters of Credit shall be
issued in sets of three (3) Letters of Credit
each, with each set to include a Letter of
Credit issued by each Issuing Bank in an
amount equal to such Issuing Bank's LC
Percentage Share of the aggregate amount of
all three Letters of Credit in such set;
(ii) The sum at any time of (A) the
aggregate stated amount of all Letters of
Credit issued by any Issuing Bank then
outstanding and (B) the aggregate amount of
all Reimbursement Obligations owed to such
Issuing Bank then outstanding shall not
exceed such Issuing Bank's LC Commitment at
such time;
(iii) The sum at any time of (A) the
aggregate stated amount of all Letters of
Credit issued by all Issuing Banks then
outstanding and (B) the aggregate amount of
all Reimbursement Obligations owed to all
Banks then outstanding (such sum to be
referred to herein as the "Outstanding LC
Credit") shall not exceed Eighty-Five Million
Dollars ($85,000,000) (the "Total LC
Commitment");
(iv) Each Letter of Credit shall (A) be
in the form of Exhibit V, (B) be issued for
the benefit of Matsushita-Kotobuki
Electronics Industries, Ltd. or an affiliate
of Matsushita-Kotobuki Electronics
Industries, Ltd. satisfactory to each Issuing
Bank, (C) be in a Dollar amount which is not
less than $1,000,000 and (D) expire not later
than the LC Facility Expiration Date;
(v) The Letter of Credit issued by each
Issuing Bank as part of a set and outstanding
at any time shall (A) be in a Dollar amount
which is equal to such Issuing Bank's LC
Percentage Share of the aggregate stated
amount of all three Letters of Credit in such
set then outstanding and (B) otherwise be
identical to the other two Letters of Credit
of the other Issuing Banks in such set which
are then outstanding (except for references
therein to the other Issuing Banks' Letters
of Credit in such set); and
(vi) No Issuing Bank shall have any
obligation to issue a Letter of Credit
requested hereunder if, at the time such
Letter of Credit is to be issued, any
Requirement of Law applicable to such Issuing
Bank or any request or directive (whether or
not having the force of law) to such Issuing
Bank from any Governmental Authority having
jurisdiction over such Issuing Bank shall (A)
enjoin, restrain or prohibit (or purport to
enjoin, restrain or prohibit), or request
such Issuing Bank to refrain from, the
issuance of letters of credit generally or
such Letter of Credit in particular; (B)
impose upon such Issuing Bank with respect to
such Letter of Credit any restriction,
reserve or capital requirement (for which
such Issuing Bank is not otherwise
compensated hereunder) not in effect on the
Second Amendment Effective Date; or (C)
impose upon such Issuing Bank any
unreimbursed loss, cost or expense which was
not applicable on the Second Amendment
Effective Date and which such Issuing Bank in
good faith deems material to it.
Except as otherwise provided herein, Borrower may
request Letters of Credit, cause or allow Letters
of Credit to expire and request additional Letters
of Credit until the LC Facility Expiration Date.
(b)Letter of Credit Amendments. Subject to
the terms and conditions of this Agreement
(including the requirements set forth in
Subparagraph 2.01A(a) and the amount limitations
set forth in Paragraph 2.03), the Issuing Banks
severally agree to amend the outstanding Letters
of Credit from time to time during the period
beginning on the Second Amendment Effective Date
and ending on the LC Facility Expiration Date as
Borrower may request to extend or shorten the
expiration dates of the Letters of Credit or to
decrease or increase the amounts of the Letters of
Credit.
(c)LC Applications. Borrower shall request
the Issuing Banks to issue the Letters of Credit
by delivering to LC Paying Agent, with a copy to
Administrative Agent, an irrevocable written
application in the form of Exhibit W,
appropriately completed (an "LC Issuance
Application"). Borrower shall request the Issuing
Banks to amend the Letters of Credit by delivering
to LC Paying Agent, with a copy to Administrative
Agent, an irrevocable written application in the
form of Exhibit X, appropriately completed (an "LC
Amendment Application"). Borrower shall deliver
each LC Issuance Application and LC Amendment
Application (collectively, "LC Applications") to
Administrative Agent and LC Paying Agent at least
ten (10) Business Days before the proposed date of
issuance of the requested Letters of Credit. Each
LC Application shall be delivered by first-class
mail or facsimile to LC Paying Agent and
Administrative Agent at their respective offices
or facsimile numbers and during the hours
specified in Paragraph 8.01; provided, however,
that Borrower shall promptly deliver to LC Paying
Agent the original of any LC Application initially
delivered by facsimile. LC Paying Agent shall
promptly notify each Issuing Bank of the contents
of each LC Application and of the Letter of Credit
or amendment to be issued by such Issuing Bank in
connection therewith. Administrative Agent shall
promptly notify each Bank which is not an Issuing
Bank of the contents of each LC Application. In
the event of any conflict between the terms of
this Agreement and the terms of any LC
Application, the terms of this Agreement shall
control.
(d)Issuance of Letters of Credit and
Amendments. Unless, on or before the Business Day
immediately preceding the date on which the
Issuing Banks are to issue any Letters of Credit
or amendments to Letters of Credit, such Issuing
Bank has received notice from Administrative Agent
stating (A) that the issuance of such Letter of
Credit or amendments is not then permitted under
the limitations set forth in Subparagraph 2.01A(a)
or (B) that one or more of the applicable
conditions contained in Paragraph 3.02 is not then
satisfied, each Issuing Bank shall, before 3:00
p.m. (San Francisco time) on the date such Letters
of Credit or amendments are to be issued (which
date shall be a Business Day), deliver the Letter
of Credit or amendment to be issued by such
Issuing Bank to the advising bank named therein
or, if no advising bank is so named, to the
beneficiary of such Letters of Credit.
Concurrently with each such delivery, each Issuing
Bank also shall deliver to LC Paying Agent and
Administrative Agent a true copy of the Letter of
Credit or amendment so delivered by such Issuing
Bank.
(e)Drawings and Disbursement.
(i)Upon its receipt of any demand
for
payment under any Letters of Credit, LC
Paying Agent shall promptly deliver to
Administrative Agent, each Issuing Bank and
Borrower a notice setting forth the amount
demanded under each Letter of Credit in the
applicable set and the date such demand is to
be honored. Upon its receipt of any such
notice from LC Paying Agent, Administrative
Agent shall promptly notify each Bank of the
contents of such notice.
(ii) Concurrently with its delivery of
any notice of a demand for payment pursuant
to clause (i) above, LC Paying Agent also
shall deliver to each Issuing Bank all drafts
and documents presented to LC Paying Agent in
connection with such demand under such
Issuing Bank's Letter of Credit. LC Paying
Agent shall deliver copies of such drafts and
documents as applicable to each Issuing Bank
by facsimile on the date of receipt by LC
Paying Agent and shall deliver the originals
as applicable to each Issuing Bank by
overnight express mail. Not later than 3:00
p.m. (San Francisco time) on the third
Business Day following its receipt of any
such drafts and documents by facsimile, each
Issuing Bank shall notify LC Paying Agent
whether the demand for payment complies with
the requirements for a drawing under such
Issuing Bank's Letter of Credit and, if not,
the reasons it does not. If an Issuing Bank
notifies LC Paying Agent that any demand for
payment does not comply with the requirements
for a drawing under its Letter of Credit, LC
Paying Agent shall promptly notify the
advising bank for the Letter of Credit (or,
if there is no advising bank, the
beneficiary) and Borrower of such
determination.
(iii) Unless an Issuing Bank has notified
LC Paying Agent pursuant to clause (ii) above
that a demand for payment under a Letter of
Credit issued by such Issuing Bank does not
comply with the requirements for a drawing
thereunder, each Issuing Bank shall, before
10:00 a.m. (San Francisco time) on the date
such demand is to be honored, make available
to LC Paying Agent at its office specified in
Paragraph 8.01, in same day or immediately
available funds, the amount demanded under
such Issuing Bank's Letter of Credit.
After LC Paying Agent's receipt of such
funds, LC Paying Agent shall disburse such
funds in accordance with such Letter of
Credit.
(f)Reimbursement.
(i) Not later than five (5) Business
Days after the payment by an Issuing Bank of
a demand for payment under its Letter of
Credit (a "Drawing Payment"), Borrower shall
make or cause to be made to Administrative
Agent, for the account of such Issuing Bank
or the Banks as appropriate, a payment in the
amount of such Drawing Payment (a
"Reimbursement Payment"), together with any
accrued interest thereon as provided below.
Administrative Agent shall promptly pay any
such Reimbursement Payments received by
Administrative Agent to the applicable
Issuing Banks or, if the Banks have funded
their Proportionate Shares of the applicable
Drawing Payments pursuant to clause (iii) of
Subparagraph 2.01A(g), to the Banks.
(ii) Unless Borrower makes a
Reimbursement Payment for a Drawing Payment
in full on the same day as such Drawing
Payment, Borrower shall pay interest on the
outstanding amount of such Drawing Payment at
a per annum rate equal to (A) during the
period beginning on the date of such Drawing
Payment and ending on the fifth Business Day
thereafter (the "Reimbursement Due Date"),
the rate then applicable to Revolving Base
Rate Loans and (B) thereafter, the rate set
forth in Subparagraph 2.06(c).
(iii) The obligation of Borrower to
reimburse any Issuing Bank or the Banks, as
the case may be, for a Drawing Payment (such
obligation, together with the obligation to
pay interest thereon, to be referred to
herein collectively as a "Reimbursement
Obligation") shall be absolute, unconditional
and irrevocable, and shall be performed
strictly in accordance with the terms of this
Agreement under and without regard to any
circumstances, including, without limitation
(A) any lack of validity or enforceability of
any of the Credit Documents, (B) any
amendment or waiver of or any consent to
departure from all or any of the provisions
of any of the Credit Documents, (C) the use
which may be made of any Letter of Credit by,
or any acts or omissions of, any beneficiary
of such Letter of Credit (or any Person for
which any such beneficiary may be acting),
(D) the existence of any claim, setoff,
defense or other right which Borrower may
have at any time against any beneficiary of
any Letter of Credit (or any Person for which
any such beneficiary may be acting), any
Issuing Bank, any Agent, any other Bank or
any other Person, whether in connection with
this Agreement, the transactions contemplated
herein or in the other Credit Documents, or
in any unrelated transaction, (E) any breach
of contract or dispute between Borrower, any
beneficiary of any Letter of Credit (or any
Person for which any such beneficiary may be
acting), Issuing Bank, any Agent, any other
Bank or any other Person, (F) any demand,
statement or other document presented under
any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any
respect or any statement therein being untrue
or inaccurate in any respect, (G) payment by
any Issuing Bank under any Letter of Credit
against presentation of a demand for payment
which does not comply with the terms of such
Letter of Credit, (H) any non-application or
misapplication by any beneficiary of any
Letter of Credit (or any Person for which any
such beneficiary may be acting) of the
proceeds of any drawing under such Letter of
Credit, (I) any delay, extension of time,
renewal, compromise or other indulgence or
modification granted or agreed to by LC
Paying Agent, any Issuing Bank, any Agent or
any other Bank, with or without notice to or
approval by Borrower, with respect to
Borrower's indebtedness under this Agreement
or (J) any other event, circumstance or
condition whatsoever, whether or not similar
to any of the foregoing; provided, however,
that this Subparagraph 2.01A(f) shall not
abrogate any right which Borrower may have to
recover damages from any Issuing Bank
pursuant to Subparagraph 2.01A(h).
(g)Bank Participations; Revolving Loan
Funding.
(i) Participation Agreement. Each Bank
severally, unconditionally and irrevocably
agrees with each Issuing Bank to participate
in each Letter of Credit and each drawing
thereunder in an amount equal to such Bank's
Proportionate Share of the stated amount of
such Letter of Credit or drawing thereunder
as applicable from time to time.
(ii) Funding Through Revolving Loans.
If Borrower fails to make any Reimbursement
Payment to Administrative Agent on or prior
to the Reimbursement Due Date, Borrower shall
be deemed to have requested a Revolving Loan
Borrowing consisting of Revolving Base Rate
Loans in the amount of the outstanding
Reimbursement Obligation. Administrative
Agent shall promptly notify LC Paying Agent
and each Bank of any such failure and, if
Borrower is not then the subject of a
bankruptcy proceeding, shall promptly
initiate such Revolving Loan Borrowing by
delivering to each Bank (with a copy to
Borrower) a written notice which specifies
the aggregate amount of the outstanding
Reimbursement Obligation, the amount of the
Revolving Loan Borrowing (which shall be in
the amount of the outstanding Reimbursement
Obligation on the date of such Revolving Loan
Borrowing), the date of such Revolving Loan
Borrowing and the amount of the Revolving
Loan to be made by such Bank as part of such
Revolving Loan Borrowing. Subject to the
amount limitations set forth in Paragraph
2.01 and Paragraph 2.03 and the conditions
set forth in Section III, each Bank shall
make available to Administrative Agent funds
in the amount of its Revolving Loan as
provided in Subparagraph 2.08(a). After
receipt of such funds, Administrative Agent
shall promptly disburse such funds to the
applicable Issuing Bank in payment of the
outstanding Reimbursement Obligation.
(iii) Participation Funding. If any
outstanding Reimbursement Obligation is not
paid by Borrower on or prior to the
Reimbursement Due Date therefor and is not
paid within one (1) Business Day thereafter
from the proceeds of a Revolving Loan
Borrowing pursuant to clause (ii) above for
any reason (including the unavailability of a
Revolving Loan Borrowing in the full amount
of such Reimbursement Obligation due to the
amount limitations set forth in Paragraph
2.01 or Paragraph 2.03 or the conditions set
forth in Section III) or if any Reimbursement
Payment previously paid to an Issuing Bank is
recovered, Administrative Agent shall
promptly deliver to each Bank (with a copy to
Borrower and LC Paying Agent) a written
notice which specifies the aggregate amount
of the outstanding Reimbursement Obligation
and such Bank's Proportionate Share of such
amount. Promptly following receipt of such
notice from Administrative Agent, each Bank
shall pay to Administrative Agent, for the
benefit of the applicable Issuing Banks, such
Bank's Proportionate Share of the outstanding
Reimbursement Obligation.
(iv) Obligations Absolute. Each Bank's
obligations to fund its participations under
this Subparagraph 2.01A(g) shall be absolute,
unconditional and irrevocable and shall not
be affected by (A) the occurrence or
existence of any Default or Event of Default,
(B) any failure to satisfy any condition set
forth in Section III, (C) any event or
condition which might have a Material Adverse
Effect, (D) the failure of any other Bank to
make any payment under this Subparagraph
2.01A(g), (E) any right of offset, abatement,
withholding or reduction which such Bank may
have against LC Paying Agent, any Issuing
Bank, any Agent, any other Bank or Borrower,
(F) any event, circumstance or condition set
forth in clause (iii) of Subparagraph
2.01A(f) or Subparagraph 2.01A(h), or (G) any
other event, circumstance or condition
whatsoever, whether or not similar to any of
the foregoing; provided, however, that
nothing in this Paragraph 2.01A shall
prejudice any right which any Bank may have
against any Issuing Bank for any action by
such Issuing Bank which constitutes gross
negligence or willful misconduct.
(h)Liability of Issuing Banks, Etc.
Borrower agrees that none of LC Paying Agent, the
Issuing Banks, the Agents and the other Banks (nor
any of their respective directors, officers or
employees) shall be liable or responsible for, and
Borrower shall hold each of the foregoing harmless
from, (i) the use which may be made of any Letter
of Credit or for any acts or omissions of any
beneficiary thereof in connection therewith;
(ii) any reference which may be made to this
Agreement or to any Letter of Credit in any
agreements, instruments or other documents
relating to obligations secured by such Letter of
Credit; (iii) the validity, sufficiency or
genuineness of documents, or of any endorsement(s)
thereon, even if such documents should in fact
prove to be in any or all respects invalid,
insufficient, fraudulent or forged or any
statement therein prove to be untrue or inaccurate
in any respect whatsoever; (iv) payment by any
Issuing Bank against presentation of documents
which do not comply with the terms of any Letter
of Credit, including failure of any documents to
bear any reference or adequate reference to any
Letter of Credit; or (v) any other circumstances
whatsoever in making or failing to make payment
under any Letter of Credit, except only that an
Issuing Bank shall be liable to Borrower for acts
or events described in clauses (i) through (v)
above, to the extent, but only to the extent, of
any direct damages suffered by Borrower (excluding
consequential damages) which Borrower proves were
caused by (A) such Issuing Bank's willful
misconduct or gross negligence in determining
whether a drawing made under any of its Letters of
Credit complies with the terms and conditions
therefor stated in such Letter of Credit or
(B) such Issuing Bank's willful misconduct or
gross negligence in failing to pay under any of
its Letters of Credit after a drawing by the
beneficiary thereof strictly complying with the
terms and conditions of such Letter of Credit.
Without limiting the foregoing, an Issuing Bank
may accept a drawing that appears on its face to
be in order, without responsibility for further
investigation. The determination of whether a
drawing has been made under any Letter of Credit
prior to its expiration or whether a drawing made
under any Letter of Credit is in proper and
sufficient form shall be made by the applicable
Issuing Bank in its sole discretion, which
determination shall be conclusive and binding upon
Borrower to the extent permitted by law. Borrower
hereby waives any right to object to any payment
made under any Letter of Credit with regard to a
drawing that is in the form provided in such
Letter of Credit but which varies with respect to
punctuation, capitalization, spelling or similar
matters of form.
(i)Reports. Each Issuing Bank shall, on a
monthly basis if requested by Administrative
Agent, verify or confirm Administrative Agent's
records regarding the Letters of Credit issued by
such Issuing Bank, including the stated amounts of
such Letters of Credit, the expiration date of
such Letters of Credit, the names of the
beneficiaries of such Letters of Credit, the
amounts of any unpaid Reimbursement Obligations
and the amounts and times of Drawing Payments and
Reimbursement Payments.
(j)Purpose. Borrower
shall use the Letters
of Credit solely to secure obligations owed by
Borrower to Matsushita-Kotobuki Electronics
Industries, Ltd. or an affiliate of Matsushita-
Kotobuki Electronics Industries, Ltd. for the
purchase price of inventory.
(k)Existing Letters of Credit. On the
Second Amendment Effective Date, the letters of
credit described in Schedule 2.01A(k) (the
"Existing Letters of Credit") will be outstanding.
The Existing Letters of Credit were issued by ABN,
BofA and Canadian Imperial pursuant to a Credit
Agreement dated as of August 18, 1992 among
Borrower, ABN, BofA, Canadian Imperial and BofA as
agent (as amended to the Second Amendment
Effective Date, the "Existing LC Agreement"). On
and after the Second Amendment Effective Date
(i) The Existing Letters of Credit
shall be deemed Letters of Credit hereunder
for all purposes (including for purposes of
the fees payable pursuant to Subparagraph
2.04(d) and reimbursement of costs and
expenses to the extent provided herein) and
shall be subject to the terms of this
Agreement and the other Credit Documents, as
though the Existing Letters of Credit were
originally issued by the Issuing Banks
pursuant to this Agreement;
(ii) The applications for the issuance
and amendment of the Existing Letters of
Credit (the "Existing LC Applications") shall
be deemed LC Applications hereunder for all
purposes and shall be subject to the terms of
this Agreement and the other Credit
Documents, as though the Existing LC
Applications were originally delivered to LC
Paying Agent pursuant to this Agreement;
(iii) Each Bank shall be irrevocably and
unconditionally deemed to have purchased from
the Issuing Banks on the Second Amendment
Effective Date a participation in each
Existing Letter of Credit and all drawings
thereunder in an amount equal to such Bank's
Proportionate Share of the stated amount of
such Letter of Credit and the amount of all
drawings thereunder;
(iv) This Agreement shall constitute the
successor agreement to the Existing LC
Agreement and, as among the parties to this
Agreement, (A) all references in the Existing
LC Applications and the Existing Letters of
Credit to the Existing LC Agreement shall be
deemed to be references to this Agreement and
(B) all references in the Existing LC
Applications and the Existing Letter of
Credit to the "Banks" shall be deemed to be
references to the Issuing Banks.
(d)Subparagraph 2.03(a) is amended by changing the
introductory clause of clause (i) thereof to read in its
entirety as follows:
(i) The sum at any time (without
duplication) of the aggregate principal amount of
all Revolving Loans then outstanding and the
Outstanding LC Credit at such time (such sum to be
referred to herein as the "Outstanding Revolver/LC
Credit") shall not exceed an amount (the
"Borrowing Base") equal to the remainder at such
time of:
(e)Subparagraph 2.03(b) is amended by changing
clauses (i) and (ii) thereof to read in their entirety as
follows:
(i) Borrower may not reduce the Total Revolving
Loan Commitment if, after giving effect to such
reduction, the Outstanding Revolver/LC Credit 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, Letter of Credit or
Reimbursement Obligation would remain outstanding.
(f)Paragraph 2.03 is further amended by (i) deleting
Subparagraph (c) thereof and (ii) changing the designation
of Subparagraph (d) thereof to "(c)".
(g)Paragraph 2.04 is amended by adding thereto,
immediately following Subparagraph 2.04(c), a new
Subparagraph 2.04(d) to read in its entirety as follows:
(d)Letter of Credit Fees.
(i) LC Usage Fees. Borrower shall pay to
Administrative Agent, for the ratable benefit of
the Banks as provided in clause (vii) of
Subparagraph 2.09(a), nonrefundable letter of
credit fees for the Letters of Credit (the "LC
Usage Fees") equal to one and one-fourth percent
(1.25%) per annum on the daily average stated
amount of each Letter of Credit for the period
beginning on the Second Amendment Effective Date
and ending on the date such Letter of Credit
expires. Borrower shall pay the LC Usage Fees for
each Letter of Credit quarterly in arrears on the
last day in each calendar quarter (commencing June
30, 1995) and on the date such Letter of Credit
expires.
(ii) LC Issuance Fees. Borrower shall pay to
Administrative Agent, for the sole benefit of each
Issuing Bank, nonrefundable issuance fees for such
Issuing Bank's Letters of Credit (the "LC Issuance
Fees") in the amounts and at the times set forth
in the Issuing Banks' Fee Letter.
(iii) Other Letter of Credit Fees. In
addition to the LC Usage Fees and the LC Issuance
Fees, Borrower shall pay to Administrative Agent,
for the benefit of each Issuing Bank, other
standard fees of such Issuing Bank for drawings
under, transfers of and amendments to its Letter
of Credit and other administrative actions
performed by such Issuing Bank in connection with
its Letter of Credit, payable at such times and in
such amounts as are consistent with such Issuing
Bank's standard fee policy at the time of such
amendment or other action.
(h)Subparagraph 2.05(c) is amended by changing clause
(i) thereof to read in its entirety as follows:
(i) If, at any time, the Outstanding Revolver/LC
Credit exceeds the Borrowing Base at such time,
Borrower shall immediately prepay Revolving Loans in an
aggregate principal amount equal to such excess.
(i)Subparagraph 2.05(c) is further amended by
deleting clause (viii) thereof.
(j)Subparagraph 2.06(c) is amended by changing the
parenthetical on the third and fourth lines thereof to read
in its entirety as follows:
(including, without limitation, principal or interest
payable on any Loan, Reimbursement Payments or interest
thereon, any fees or other amounts)
(k)Subparagraph 2.06(d) is amended to read in its
entirety as follows:
(d)Application of Payments. All payments
hereunder shall be applied first to unpaid fees, costs
and expenses then due and payable under this Agreement
or the other Credit Documents, second to accrued
interest then due and payable under this Agreement or
the other Credit Documents, third to any unpaid
Reimbursement Obligations and finally to reduce the
principal amount of outstanding Loans.
(l)Subparagraph 2.08(c) is amended to read in its
entirety as follows:
(c)Banks' Obligations Several. The failure of
any Bank to make the Loan to be made by it as part of
any Borrowing or the failure of any Bank to fund its
participation in any Drawing Payment shall not relieve
any other Bank of its obligation hereunder to make its
Loan on the date of such Borrowing or fund its
participation on the date of such funding, 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 or fund the participation to be
funded by such other Bank on the date of such funding.
(m)Subparagraph 2.09(a) is amended by changing clause
(i) thereof to read in its entirety as follows:
(i) Each Revolving Loan Borrowing, each reduction
of the Total Revolving Loan Commitment and the Term
Loan Borrowing and participations in each Letter of
Credit shall be made or shared among the Banks pro rata
according to their respective Proportionate Shares;
(n)Subparagraph 2.09(a) is further amended by (i)
deleting the word "and" at the end of clause (v) thereof;
(ii) changing the designation of clause (vi) to "(viii)" and
(iii) adding thereto, immediately after clause (v), new
clauses (vi) and (vii) to read in their entirety as follows:
(vi) Each Reimbursement Payment and interest
payable by Borrower thereon shall be shared among the
Banks (including the applicable Issuing Banks) which
made or funded the applicable Drawing Payment pro rata
according to the respective amounts of such Drawing
Payment so made or funded by such Banks;
(vii) Each payment of LC Usage 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;
and
(o)Subparagraph 2.09(b) is amended by adding to the
first sentence thereof, immediately after the word "Loans"
in the three places it appears, the words "or Reimbursement
Obligations".
(p)Subparagraph 2.10(c) is amended by
changing the
phrase "Revolving LIBOR Loan or Term LIBOR Borrowing Portion
or such Bank's Commitments" where it appears in clause (iii)
thereof and in the third and fourth lines thereafter to
"Revolving LIBOR Loan, Term LIBOR Borrowing Portion or
Letter of Credit or such Bank's Commitments".
(q)Subparagraph 2.10(d) is amended by adding to
clause (ii) of the first sentence thereof, immediately after
the word "Commitments", the words ", the Letters of Credit".
(r)Subparagraph 3.02(a) is amended to read in its
entirety as follows:
(a)Borrower shall have delivered to
Administrative Agent (and, in the case of any LC
Application, LC Paying Agent) the Notice of Borrowing,
Notice of Conversion, Notice of Interest Period
Selection or LC Application, as the case may be, for
such Credit Event in accordance with this Agreement;
(s)Subparagraph 3.02(b) is amended by changing clause
(iii) thereof to read in its entirety as follows:
(iii) In the case of Credit Events with respect to
Revolving Loan Borrowings, the issuance of Letters of
Credit or amendments to Letters of Credit which would
increase the aggregate stated amount of Letters of
Credit outstanding, no adverse change in the Borrowing
Base shall have occurred since the date of the most
recent Borrowing Base Certificate; and
(t)Paragraph 3.02 is further amended by changing the
last sentence thereof to read in its entirety as follows:
The submission by Borrower to Administrative Agent (or,
in the case of any LC Application, LC Paying 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), each
Notice of Interest Period Selection and each LC
Application shall be deemed to be a representation and
warranty by Borrower as of the date thereon as to the
above.
(u)Subparagraph 5.02(a) is amended by changing clause
(viii) thereof to read in its entirety as follows:
(viii) Indebtedness of Borrower to MKE, provided
that such Indebtedness (except to the extent any such
Indebtedness is secured by the Letters of Credit) 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;
(v)Subparagraph 6.01(a) is amended to read in its
entirety as follows:
(a)Borrower (i) shall fail to pay when due any
principal or interest on the Loans or any Reimbursement
Payment 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
(w)Paragraph 6.02 is amended to read in its entirety
as follows:
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 or issue Letters of Credit,
(b) declare all outstanding Obligations payable by
Borrower to be immediately due and payable without
presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived,
anything contained herein or in the Notes to the
contrary notwithstanding, and/or (c) direct Borrower to
deliver to Administrative Agent funds in an amount
equal to the aggregate stated amount of all outstanding
Letters of Credit. 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 or issue Letters of Credit 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.
Borrower immediately shall deliver to Administrative
Agent all funds directed by Administrative Agent
pursuant to clause (c) above, and Administrative Agent
shall hold such funds in a non-interest bearing account
as additional Collateral for the Obligations. Borrower
hereby grants to Administrative Agent, for the benefit
of the Agents and the Banks, a security interest in
such funds and such account. 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 LC
Paying Agent and each Bank of such action.
(x)Paragraph 8.01 is amended by (i) changing the
reference to "Borrower or Administrative Agent" on the fifth
and sixth lines thereof to "Borrower, Administrative Agent
or LC Paying Agent", (ii) adding to the proviso at the end
of the second sentence thereof, immediately after the words
"Administrative Agent" the words "or LC Paying Agent", (iii)
adding thereto, immediately after the address and telephone
facsimile numbers for Borrower, the following address and
telephone facsimile numbers for LC Paying Agent:
LC Paying
Agent: Bank of America National Trust and
Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Wendy Young
Vice President
Telephone: (415) 953-2506
Facsimile: (415) 622-4894
and (iv) changing the first sentence after the address of LC
Paying Agent so added to read in its entirety as follows:
Each Notice of Borrowing, Notice of Loan Conversion,
Notice of Interest Period Selection and LC Application
shall be given by Borrower to Administrative Agent and,
in the case of an LC Application, to LC Paying Agent,
to the office of such Person located at the address
referred to above during such Person'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.
(y)Paragraph 8.02 is amended by changing clauses (b),
(c) and (d) of the first sentence thereof to read in their
entirety as follows:
(b) all reasonable Attorney Costs and other reasonable
fees and expenses payable to third parties incurred by
Agents and LC Paying Agent 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 Attorney Costs and other
reasonable fees and expenses payable to third parties
incurred by Agents and LC Paying Agent in connection
with the exercise of their rights or duties under this
Agreement and the other Credit Documents; and (d) all
reasonable Attorney Costs and other reasonable fees and
expenses payable to third parties incurred by any
Agent, any Bank or LC Paying Agent 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)
(z)Paragraph 8.03 is amended by changing clause (a)
of the first sentence thereof to read in its entirety as
follows:
(a) any use by Borrower of any proceeds of the Loans or
of the Letters of Credit,
(aa)Subparagraph 8.04(a) is amended by changing clause
(i) thereof to read in its entirety as follows:
(i) increases the Total Revolving Loan Commitment, the
Total Term Loan Commitment or the Total LC Commitment,
(bb)Paragraph 8.04 is further amended by (i) deleting
the word "and" at the end of Subparagraph (b) thereof; (ii)
changing the designation of Subparagraph (c) to "(e)" and
(iii) adding thereto, immediately after Subparagraph (b), a
new Subparagraphs (c) and (d) to read in their entirety as
follows:
(c) Any amendment, waiver or consent which
(i) amends Paragraph 2.01A, (ii) changes any Issuing
Bank's LC Percentage Share or (iii) otherwise affects
the rights or obligations of the Issuing Banks must be
in writing and signed or approved in writing by all
Issuing Banks;
(d) Any amendment, waiver or consent which
affects the rights or obligations of LC Paying Agent
must be in writing and signed by LC Paying Agent; and
(cc)Subparagraph 8.05(c) is amended by (i) changing
the phrase "Borrower and Administrative Agent" in the two
places it appears in clause (i) thereof to "Borrower,
Administrative Agent and each Issuing Bank" and (ii) adding
thereto, after the last sentence thereof, a new sentence to
read in its entirety as follows:
(Notwithstanding any other provision of this
Subparagraph 8.05(c), if any Bank which is an Issuing
Bank reduces its Proportionate Share to 0% through
assignments hereunder, such Issuing Bank shall continue
as a "Bank" hereunder solely in its capacity as an
Issuing Bank.)
(dd)The Credit Agreement is further amended by adding
thereto, immediately after Schedule I, a new Schedule II to
read in its entirety as set forth in Attachment 1 hereto.
(ee)The Credit Agreement is further amended by adding
thereto, immediately after Schedule II, a new Schedule
2.01A(k) to read in its entirety as set forth in Attachment
2 hereto.
(ff)Schedule 5.02(a) is amended by deleting item 1
thereof and renumbering the remaining items 1 through 9.
(gg)Schedule 5.02(b) is amended by deleting the
reference on page 5.02(b)-1 thereof to UCC Filing No.
92180067 filed with the California Secretary of State in
favor of BofA as Secured Party.
(hh)The Credit Agreement is further amended by adding
thereto, immediately after Exhibit U, new Exhibits V, W and
X to read in their entirety as set forth in Attachment 3
hereto.
3. Representations and Warranties. Borrower hereby
represents and warrants to the Banks and the Agents that the
following are true and correct on the date of this Amendment and
that, after giving effect to the amendments set forth in
paragraph 2 above, the following also will be true and correct on
the Effective Date (as defined below):
(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 shall be true and correct as of
such date);
(b)No Default or Event of Default has occurred and is
continuing; and
(c)Each of the Credit Documents is in full force and
effect.
(Without limiting the scope of the term "Credit Documents,"
Borrower expressly acknowledges in making the representations and
warranties set forth in this paragraph 3 that, on and after the
date hereof, such term includes this Amendment.)
4. Effective Date. The amendments effected by paragraph 2
above shall become effective on June 28, 1995 (such date, if the
conditions set forth in this paragraph are satisfied, to be
referred to herein as the "Effective Date"), subject to receipt
by Administrative Agent and the Banks on or prior to the
Effective Date of the following, each in form and substance
satisfactory to Administrative Agent, LC Paying Agent, the Banks
and their respective counsel:
(a)This Amendment duly executed by Borrower, each
Bank and Agent;
(b)A letter in the form of Exhibit A hereto, dated
the Effective Date and duly executed by each Subsidiary
which has executed a Subsidiary Security Agreement;
(c)A Paying Agent Agreement in the form of Exhibit B
hereto, dated the date of this Amendment and duly executed
by each of the Existing Issuing Banks;
(d)A Certificate of the Secretary of Borrower, dated
the Effective Date, certifying that the Certificate of
Incorporation, Bylaws and Board resolutions of Borrower, in
the forms delivered to Agent on the Closing Date, are in
full force and effect and have not been amended,
supplemented, revoked or repealed since such date;
(e)A favorable written opinion of Cooley, Godward,
Castro, Huddleson & Tatum, counsel to Borrower, dated the
Effective Date, addressed to the Administrative Agent for
the benefit of the Agents and the Banks, covering such legal
matters as Agents may reasonably request and otherwise in
form and substance satisfactory to the Agents;
(f)A date-down endorsement (or similar endorsement)
to the title insurance policy issued by Stewart Title
Guaranty Company and delivered to Administrative Agent as
item E(10) of Schedule 3.10 to the Credit Agreement, which
endorsement insures that no encumbrances or other Liens have
been recorded against the real property covered by the
Borrower Mortgage since the date on which the Borrower
Mortgage was recorded;
(g)Evidence satisfactory to the Managing Agents that
the security for Borrower's obligations under the Existing
LC Agreement has been released; and
(h)Such other evidence as any Agent, LC Paying Agent
or any Bank may reasonably request to establish the accuracy
and completeness of the representations and warranties and
the compliance with the terms and conditions contained in
this Amendment and the other Credit Documents.
5. Termination of Existing LC Agreement. ABN, BofA and
Canadian Imperial as the Existing Issuing Banks, BofA as the
Existing LC Paying Agent, and Borrower, all as the parties to the
Existing LC Agreement and the Pledge Agreement, dated as of
August 18, 1992 securing Borrower's obligations under the
Existing LC Agreement (the "Existing Pledge Agreement"), hereby
agree that, on and after the Effective Date, the Existing LC
Agreement and the Existing Pledge Agreement shall be terminated
(except for the rights and claims thereunder that shall survive
such termination as set forth below). Borrower hereby agrees
that, notwithstanding the termination of the Existing LC
Agreement and the Existing Pledge Agreement (collectively, the
"Existing Agreements"), the following rights and claims under the
Existing Agreements shall survive such termination: (a) any
accrued and unpaid fees payable under the Existing Agreements;
(b) any rights and claims under the Existing Agreements for
reimbursement or payment of any increased costs, indemnity
amount, fees and disbursements of counsel (including the
allocated cost, and disbursements, of internal counsel) or other
losses, costs, charges, expenses or disbursements which may be
incurred or suffered by the Existing LC Paying Agent or any of
the Existing Issuing Banks which are payable under either
Existing Agreement on account of actions, omissions, events or
conditions occurring prior to the Effective Date or in connection
with the enforcement or defense of the rights and claims
described in clause (a) above and this clause (b) after the
Effective Date; and (c) any accrued and unpaid interest on
amounts payable LC Paying Agent or an Issuing Bank described in
clauses (a) and (b) above. On and after the Effective Date, each
of the Existing Issuing Banks and the Existing LC Paying Agent
shall promptly give Borrower full access to and control over the
Deposit Accounts (as defined in the Existing Pledge Agreement)
and transfer or deliver, or cause to be transferred or delivered,
to Borrower any Pledged Collateral (as defined in the Existing
Pledge Agreement) held by or for the Existing LC Paying Agent and
the Existing Issuing Banks, and the Existing LC Paying Agent and
the Existing Issuing LC Banks shall execute and deliver to
Borrower such documents and instruments reasonably requested by
Borrower as shall be necessary to evidence termination of all
security interests given by Borrower to the Existing LC Paying
Agent thereunder.
6. Effect of this Amendment. On and after the Effective
Date, each reference in the Credit Agreement and the other Credit
Documents to the Credit Agreement shall mean the Credit Agreement
as amended hereby. Except as specifically amended above, (a) the
Credit Agreement and the other Credit Documents shall remain in
full force and effect and are hereby ratified and confirmed and
(b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a
waiver of any right, power, or remedy of any Bank or Agent, nor
constitute a waiver of any provision of the Credit Agreement or
any other Credit Document.
7. Expenses. Pursuant to Paragraph 8.02 of the Credit
Agreement, Borrower shall pay to Agents, the Issuing Banks and LC
Paying Agent all reasonable Attorney Costs and other reasonable
fees and expenses payable to third parties incurred by Agents,
the Issuing Banks and LC Paying Agent in connection with the
preparation, negotiation, execution and delivery of this
Amendment and the additional Credit Documents.
8. Miscellaneous.
(a)Counterparts. This Amendment 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.
(b)Headings. Headings in this Amendment are for
convenience of reference only and are not part of the
substance hereof.
(c)Governing Law. This Amendment shall be governed
by and construed in accordance with the laws of the State of
California without reference to conflicts of law rules.
[The next page is the first signature page.]
IN WITNESS WHEREOF, Borrower, the Banks and Agents have
caused this Amendment to be executed as of the day and year first
above written.
BORROWER: QUANTUM CORPORATION
By:___________________________
Name:______________________
Title:_____________________
MANAGING AGENTS: ABN AMRO BANK N.V., San Francisco
International Branch,
As a Managing Agent
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
BARCLAYS BANK PLC,
As a Managing Agent
By:___________________________
Name:______________________
Title:_____________________
CIBC INC.,
As a Managing Agent
By:___________________________
Name:______________________
Title:_____________________
ADMINISTRATIVE AGENT: CANADIAN IMPERIAL BANK OF COMMERCE,
As Administrative Agent
By:___________________________
Name:______________________
Title:_____________________
LC PAYING AGENT: BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
As LC Paying Agent
By:___________________________
Name:______________________
Title:_____________________
BANKS: ABN AMRO BANK N.V., San Francisco
International Branch,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
BARCLAYS BANK PLC,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
CIBC INC.,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
As a co-agent and as a Bank
By:___________________________
Name:______________________
Title:_____________________
CHEMICAL BANK,
As a co-agent and as a Bank
By:___________________________
Name:______________________
Title:_____________________
THE FIRST NATIONAL BANK OF BOSTON,
As a co-agent and as a Bank
By:___________________________
Name:______________________
Title:_____________________
THE INDUSTRIAL BANK OF JAPAN,
LIMITED,
As a co-agent and as a Bank
By:___________________________
Name:______________________
Title:_____________________
THE BANK OF NOVA SCOTIA,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
FLEET BANK OF MASSACHUSETTS, N.A.,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
THE NIPPON CREDIT BANK, LTD.,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
SANWA BANK CALIFORNIA,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
SHAWMUT BANK, N.A.,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
THE SUMITOMO BANK, LIMITED,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
UNION BANK,
As a Bank
By:___________________________
Name:______________________
Title:_____________________
ATTACHMENT 1
SCHEDULE II
LC PERCENTAGEINITIAL LC
SHARE* COMMITMENT
BANK OF AMERICA NATIONAL TRUST41.1764705888$35,000,000.00
AND SAVINGS ASSOCIATION
Applicable Lending Office:
Bank of America National Trust
and Savings Association
1850 Gateway Boulevard, Fourth Floor
Concord, CA 94520
Attention: Georg Korolkov
Telephone:(510) 675-7335
Fax: (510) 675-7519
Address for Notices:
As an Issuing Bank:
Bank of America National Trust
and Savings Association
Credit Products-High Technology-SF #3697
555 California Street, 41st Floor
San Francisco, CA 94104
Attention: Kevin McMahon
Telephone:(415) 622-8088
Fax: (415) 622-2514
As LC Paying Agent:
Bank of America National Trust and Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Wendy Young
Vice President
Telephone: (415) 953-2506
Fax: (415) 622-4894
Wiring Instructions:
Bank of America National Trust
and Savings Association
ABA No.: 121000358
Account No.: 1233183980
Reference: Quantum Corp.
* To be expressed as a percentage rounded to the ninth digit to the right of
the decimal point.
LC PERCENTAGEINITIAL LC
SHARE* COMMITMENT
ABN AMRO BANK N.V. 29.411764706%$25,000,000.00
Applicable Lending Office:
ABN AMRO Bank N.V.
San Francisco International
Branch
101 California Street
Suite 4550
San Francisco, CA 94111-5812
Address for Notices:
ABN AMRO Bank N.V.
San Francisco International
Branch
101 California Street
Suite 4550
San Francisco, CA 94111-5812
Attn:Robert N. Hartinger
Robin S. Yim
Telephone: (415) 984-3710
Fax: (415) 362-3524
Wiring Instructions:
ABN AMRO Bank N.V.
ABA No.: 026-009-580
Account No.: 651001054541
Account Name: ABN AMRO San
Francisco International Branch
Reference: Quantum Corp.
* To be expressed as a percentage rounded to the ninth digit to the right of
the decimal point.
LC PERCENTAGEINITIAL LC
SHARE* COMMITMENT
CIBC, INC. 29.411764706%$25,000,000.00
Applicable Lending Office:
CIBC Inc.
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Address for Notices:
CIBC Inc.
425 Lexington Avenue
New York, NY 10017
Attention: Arlene Tellerman
Telephone:(212) 856-3695
Fax: (212) 856-3763 or 3799
Wiring Instructions:
Morgan Guaranty Trust Company of
New York
New York, NY 10260
ABA No.: 021-000-238
Account No.: 630-00-480
Account Name: CIBC, New York Agency
For further credit to: Agented Loans
Account No. 07-09611
Attention: Syndications
Reference: Quantum Corporation
* To be expressed as a percentage rounded to the ninth digit to the right of
the decimal point.
ATTACHMENT 2
SCHEDULE 2.01A(k)
EXISTING LETTERS OF CREDIT
Issuing Letter of Current Current
Bank Credit No. Beneficiary Stated Amount Expiration Date
BofA 132045 MKE $31,705,882.36 November 15, 1995
ABN 200524 MKE $22,647,058.82 November 15, 1995
Canadian
ImperialSF92-767327 MKE $22,647,058.82 November 15, 1995
BofA 135793 IKEIL $ 3,294,117.64 November 15, 1995
ABN 200608 IKEIL $ 2,352,941.18 November 15, 1995
Canadian
ImperialSF92-767329 IKEIL $ 2,352,941.18 November 15, 1995
______________
TOTAL $85,000,000.00
ATTACHMENT 3
EXHIBIT V
FORM OF LETTERS OF CREDIT
______________, 199__
To: [name and address
of advising bank]
Notify:
("Beneficiary")
We hereby establish our Irrevocable Letter of Credit No.
__________ (the "Credit") in favor of Beneficiary in the amount of
U.S. $______________ for the account of Quantum Corporation. Drawings
hereunder may be made by presentation of the following items to Bank
of America National Trust and Savings Association, Agency Management
Services #5596, 1455 Market Street, 12th Floor, San Francisco, CA
94103, Attn: Wendy Young, Vice President, in its capacity as Paying
Agent hereunder ("Paying Agent"):
1.Beneficiary's sight draft in the form of Annex I
attached hereto, referring to this Credit, payable to Beneficiary,
with all blanks filled in, dated not more than ten days prior to the
date of presentation; and
2.a certificate, referring to this Credit, executed by
Beneficiary, which certificate shall be (a) in the form of Annex II
attached hereto (in the case of drawings relating to obligations of
Quantum Corporation), or (b) in the form of Annex III attached hereto
(in the case of drawings relating to obligations of Quantum Commercial
Products, a trade style of Quantum Corporation), or (c) in the form of
Annex IV attached hereto (in the case of drawings relating to
obligations of Quantum Peripheral Products (Europe) S.A., a subsidiary
of Quantum Corporation), in each case with all blanks filled in, dated
not more than ten days prior to the date of presentation.
Beneficiary's demand for payment hereunder shall be received
by Paying Agent, by 3:00 p.m. San Francisco time, on a day other than
a Saturday or Sunday on which Paying Agent is open for business
("Banking Day"). A demand for payment received by Paying Agent after
such time shall be deemed received on the next Banking Day. We hereby
engage with Beneficiary that its draft, drawn under and presented with
a certificate either (a) in the form of Annex II attached hereto, or
(b) in the form of Annex III attached hereto, or (c) in the form of
Annex IV attached hereto specified above and in compliance with the
terms of this Credit, shall be duly honored by the undersigned by our
making payment available to Paying Agent no later than 10:00 a.m. San
Francisco time on the fifth Banking Day after Beneficiary's demand.
Paying Agent shall then disburse to Beneficiary the amount which it
receives from the undersigned.
By acceptance of this Credit, Beneficiary agrees that
neither the issuance of this Credit nor the presentation of any items
hereunder shall impose any liability upon Paying Agent. Beneficiary
also agrees that it has the sole discretion to select the form of
certificate to present to Paying Agent, and that, in the event of a
drawing by Beneficiary in accordance with the terms of this Credit,
neither Paying Agent nor the undersigned shall have any liability for
any alleged failure by Beneficiary to select the appropriate form of
certificate for presentation to Paying Agent. Beneficiary further
agrees that ___________________________ and
____________________________ (in their capacities as Issuing Banks
party to that certain Credit Agreement dated as of October 3, 1994
among Quantum Corporation, the various banks party thereto, and
Canadian Imperial Bank of Commerce as Administrative Agent, or any
successor agreement) shall have no liability for any failure by the
undersigned to make payment under this Credit.
This Credit expires on ______________, 199__, at the offices
of Paying Agent at 5:00 p.m. San Francisco time.
[Partial drawings are permitted].
This Credit is subject to the Uniform Customs and Practice
for Documentary Credits (1993 revision), International Chamber of
Commerce Publication No. 500.
[Issuing Bank]
By:
Title:
ANNEX I
TO IRREVOCABLE LETTER OF CREDIT NO. __________
SIGHT DRAFT
____________________, 199__
To: [Issuing Bank]
At sight, pay to the order of ourselves U.S. $_________________.
Reference: Your Irrevocable
Letter of Credit No. _______
[Name of Beneficiary]
By:
Title:
ANNEX II
TO IRREVOCABLE LETTER OF CREDIT NO. ________
BENEFICIARY'S CERTIFICATE
To: [Issuing Bank]
Reference: Your Irrevocable Letter of Credit No.
__________
Internal Reference:Quantum Corporation
____________________ (the "Beneficiary") hereby certifies
that:
1.The person signing this Certificate is a duly
authorized officer of Beneficiary.
2.The total amount not paid by Quantum Corporation to
Beneficiary [insert grace period, if any] is U.S.
$____________________("Unpaid Amount").
3.The amount of the sight draft accompanying this
Certificate represents ____% of the Unpaid Amount.
4.Simultaneously herewith, drawings for the balance of
the Unpaid Amount are also being made as follows: (a) under
Irrevocable Letter of Credit No. __________, issued by __________**
for ____%** of the Unpaid Amount, and (b) under Irrevocable Letter of
Credit No. __________,** issued by ______________** for ____%** of the
Unpaid Amount.
Executed ______________, 199__.
[Name of Beneficiary]
By:
Title:
ANNEX III
TO IRREVOCABLE LETTER OF CREDIT NO. ________
BENEFICIARY'S CERTIFICATE
To: [Issuing Bank]
Reference: Your Irrevocable Letter of Credit No.
__________
Internal Reference:Quantum Commercial Products, a trade
style of Quantum Corporation
____________________ (the "Beneficiary") hereby certifies
that:
1.The person signing this Certificate is a duly
authorized officer of Beneficiary.
2.The total amount not paid by Quantum Corporation (doing
business under the trade style Quantum Commercial Products) to
Beneficiary [insert grace period, if any] is U.S.
$____________________ ("Unpaid Amount").
3.The amount of the sight draft accompanying this
Certificate represents ____% of the Unpaid Amount.
4.Simultaneously herewith, drawings for the balance of
the Unpaid Amount are also being made as follows: (a) under
Irrevocable Letter of Credit No. __________, issued by __________**
for ____%** of the Unpaid Amount, and (b) under
Irrevocable Letter of Credit No. __________,** issued by
____________________** for ____%** of the Unpaid Amount.
Executed ______________, 199__.
[Name of Beneficiary]
By:
Title:
ANNEX IV
TO IRREVOCABLE LETTER OF CREDIT NO. __________
BENEFICIARY'S CERTIFICATE
To: [Issuing Bank]
Reference: Your Irrevocable Letter of Credit No.
__________
Internal Reference:Quantum Peripheral Products (Europe)
S.A., a subsidiary of Quantum
Corporation
____________________ (the "Beneficiary") hereby certifies
that:
1.The person signing this Certificate is a duly
authorized officer of Beneficiary.
2.The total amount not paid by Quantum Peripheral
Products (Europe) S.A., a subsidiary of Quantum Corporation, to
Beneficiary [insert grace period, if any] is U.S.
$____________________ ("Unpaid Amount").
3.The amount of the sight draft accompanying this
Certificate represents ____% of the Unpaid Amount.
4.Simultaneously herewith, drawings for the balance of
the Unpaid Amount are also being made as follows: (a) under
Irrevocable Letter of Credit No. _____, issued by
__________________** for ____%** of the Unpaid Amount, and (b) under
Irrevocable Letter of Credit No. ____________________,** issued by
____________________** for ____%** of the Unpaid Amount.
Executed ______________, 199__.
[Name of Beneficiary]
By:
Title:
EXHIBIT W
FORM OF LC ISSUANCE APPLICATIONS
[Date]
Bank of America National Trust
and Savings Association
as LC Paying Agent
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Wendy Young
Vice President
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 2.01A(c) of the Credit Agreement,
Borrower irrevocably hereby requests each of the Issuing Banks to
issue a Letter of Credit. The terms and conditions of all Letters of
Credit issued pursuant to this request are to be identical (except as
indicated in subparagraph (e)) and are as follows:
(a)Date requested for issuance: .
(b)Expiry Date: .
(c)Name and address of beneficiary:
(the "Beneficiary") [must be either
Matsushita-Kotobuki Electronics Industries, Ltd. or an affiliate
thereof satisfactory to each Issuing Bank].
(d)Maximum amount available for drawings under all Letters
of Credit to be issued pursuant to this request:
$ .
(e)The information in the table below sets forth the
maximum amount available for drawings under each Letter of Credit
to be issued pursuant to this request:
Name of Bank Amount LC Percentage Share
of the amount set
forth in #4 aboveABN
29.411764706% BofA$ 41.176470588% Canadian
Imperial$ 29.411764706% $ 100.000000000%
(f)Partial drawings are/are not available.
(g)Borrower acknowledges that, in the event of a drawing
by the Beneficiary, the Beneficiary shall have the sole
discretion to select the form of certificate to present to LC
Paying Agent, and neither LC Paying Agent nor the Issuing Banks
shall have any liability for any alleged failure by the
Beneficiary to select the appropriate form of certificate for
presentation to LC Paying Agent in connection with a drawing.
(h)ABN is requested to issue its Letter of Credit in the
form of Exhibit A attached hereto, BofA is requested to issue its
Letter of Credit in the form of Exhibit B attached hereto, and
Canadian Imperial is requested to issue its Letter of Credit in
the form of Exhibit C attached hereto.
(i)Other terms and conditions:
.
3. Borrower hereby certifies to the Agents, the Banks and LC
Paying Agent that, on the date of this LC Issuance Application and
after giving effect to the issuance of the requested Letters of
Credit:
(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 issuance of the requested
Letters of Credit.
IN WITNESS WHEREOF, Borrower has executed this LC Issuance
Application on the date set forth above.
QUANTUM CORPORATION
By:___________________________
Name:_______________________
Title:______________________
cc: Canadian Imperial Bank of Commerce,
as Administrative Agent
EXHIBIT X
FORM OF LC AMENDMENT REQUEST
Bank of America National Trust
and Savings Association
as LC Paying Agent
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Wendy Young
Vice President
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 2.01A(c) of the Credit Agreement,
Borrower irrevocably hereby requests each of the Issuing Banks to
amend its Letter of Credit. The amendments to Letters of Credit to be
made pursuant to this request are as set forth below.
(a)The Letters of Credit to be amended are identified in
the table below:
Letter of
Name of Issuing Bank Credit Number
ABN
BofA
Canadian Imperial
(b)Date requested for issuance of amendments:
____________________.
(c)Each of the above-referenced Letters of Credit are to
be amended as follows:
_______________________________________________________________________________
_
_______________________________________________________________________________
_
_______________________________________________________________________________
_
___________________________________________________________.
The undersigned acknowledges that certain amendments may require
acceptance by the beneficiary.
3. Borrower hereby certifies to the Agents, the Banks and LC
Paying Agent that, on the date of this LC Amendment Application and
after giving effect to the requested amendments:
(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 amendments.
IN WITNESS WHEREOF, Borrower has executed this LC Amendment
Application on the date set forth above.
QUANTUM CORPORATION
By:___________________________
Name:______________________
Title:_____________________
cc: Canadian Imperial Bank of Commerce,
as Administrative Agent
EXHIBIT A
PLEDGOR CONSENT LETTER
June 28, 1995
TO: CANADIAN IMPERIAL BANK OF COMMERCE,
Acting as administrative and collateral agent (in such
capacities, "Administrative Agent") for the financial
institutions which are from time to time parties to the Credit
Agreement referred to below (collectively, the "Banks")
1. Reference is made to the following:
(a)The Credit Agreement dated as of October 3, 1994 (as
amended from time to time, the "Credit Agreement"), among Quantum
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 (collectively in such capacity,
the "Managing Agents"); and Administrative Agent;
(b)The Security Agreement dated as of October 3, 1994 (the
"Subsidiary Security Agreement") executed by the undersigned
("Subsidiary") and Administrative Agent; and
(c)The Second Amendment to Credit Agreement dated as of
June 26, 1995 (the "Second Amendment") among Borrower, the Banks,
the Managing Agents and Administrative Agent.
2. Subsidiary hereby consents to the Second Amendment.
Subsidiary expressly agrees that such amendment shall in no way affect
or alter the rights, duties, or obligations of Subsidiary, the Banks,
any of the Managing Agents or Administrative Agent under the
Subsidiary Agreement.
3. From and after the date hereof, the term "Credit Agreement"
as used in the Subsidiary Security Agreement shall mean the Credit
Agreement, as amended by the Second Amendment.
4. Subsidiary's consent to the Second Amendment shall not be
construed (i) to have been required by the terms of the Subsidiary
Security Agreement or any other document, instrument or agreement
relating thereto or (ii) to require the consent of Subsidiary in
connection with any future amendment of the Credit Agreement or any
other Credit Document.
IN WITNESS WHEREOF, Subsidiary has executed this Pledgor Consent
Letter as of the day and year first written above.
[________________]
By:___________________________
Name:______________________
Title:_____________________
EXHIBIT B
LC PAYING AGENT AGREEMENT
THIS LC PAYING AGENT AGREEMENT (this "Agreement"), dated as of
June 26, 1995, is entered into by and among:
(1)ABN AMRO BANK N.V., San Francisco International Branch
("ABN"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
("BofA") and CANADIAN IMPERIAL BANK OF COMMERCE ("Canadian
Imperial"), acting in their capacities as the issuers of letters
of credit under the Credit Agreement referred to in Recital A
below (in such capacities, the "Issuing Banks"); and
(2)BofA, acting in its capacity as the paying agent for
the Issuing Banks under the Credit Agreement referred to in
Recital A below (in such capacity, the "LC Paying Agent").
RECITALS
A. Quantum Corporation ("Borrower"), certain financial
institutions (the "Banks"), ABN, Barclays Bank PLC and CIBC Inc., as
managing agents for the Banks, and Canadian Imperial, as
administrative and collateral agent for the Banks, are parties to a
Credit Agreement dated as of October 3, 1994 (as amended from time to
time, the "Credit Agreement"). Pursuant to the Credit Agreement, the
Issuing Banks have agreed to issue letters of credit for the account
of Borrower.
B. The Issuing Banks have requested LC Paying Agent to act as
their agent under the Credit Agreement. LC Paying Agent is willing to
act as the Issuing Banks' agent upon the terms and subject to the
conditions set forth below.
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, the Issuing Banks and LC Paying Agent
hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms defined
above and elsewhere in this Agreement shall be used herein as so
defined. Unless otherwise defined herein, all other capitalized terms
used herein shall have the respective meanings given to those terms in
the Credit Agreement. The rules of construction set forth in Section
I of the Credit Agreement shall, to the extent not inconsistent with
the terms of this Agreement, apply to this Agreement and are hereby
incorporated by reference.
2. Appointment of LC Paying Agent. Each Issuing Bank hereby
irrevocably appoints, designates and authorizes LC Paying Agent to
take such action on its behalf under the provisions of this Agreement,
the Credit Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to it
as LC Paying Agent by the terms of this Agreement, the Credit
Agreement and the other Credit Documents, together with such powers as
are reasonably incidental thereto.
3. Sharing of Payments Etc. If, other than as expressly
contemplated elsewhere herein, any Issuing Bank shall obtain on
account of the Reimbursement Obligations owed to it any payment
(whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its LC Percentage Share of
payments on account of Reimbursement Obligations obtained by all the
Issuing Banks, such Issuing Bank shall forthwith (a) notify LC Paying
Agent of such fact, and (b) purchase from the other Issuing Banks such
participations in the Reimbursement Obligations owed to them as shall
be necessary to cause such purchasing Issuing 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 the
purchasing Issuing Bank, such purchase shall to that extent be
rescinded and each other Issuing Bank shall repay to the purchasing
Issuing Bank the purchase price paid thereto together with an amount
equal to such paying Issuing Bank's LC Percentage Share (according to
the proportion of (i) the amount of such paying Issuing Bank's
required repayment to (ii) the total amount so recovered from the
purchasing Issuing Bank) of any interest or other amount paid or
payable by the purchasing Issuing Bank in respect of the total amount
so recovered. LC Paying Agent will keep records (which shall be
conclusive and binding in the absence of manifest error), of
participations purchased pursuant to this Paragraph 3 and will in each
case notify the Issuing Banks following any such purchases.
4. Duties. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Credit Document,
LC Paying Agent shall not have any duties or responsibilities, except
those expressly set forth herein and in the Credit Agreement, nor
shall LC Paying Agent have or be deemed to have any fiduciary
relationship with any Issuing Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Credit Document or otherwise
exist against LC Paying Agent.
5. Delegation of Duties. LC Paying Agent may execute any of
its duties under this Agreement or any other Credit Document by or
through agents, employees or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties.
LC Paying Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
6. Liability of LC Paying Agent. None of LC Paying Agent, its
affiliates, or any of their respective officers, directors, employees,
agents, or attorneys-in-fact shall (a) be liable for any action taken
or omitted to be taken by any of them under or in connection with this
Agreement or any other Credit Document (except for its own gross
negligence or willful misconduct), or (b) be responsible in any manner
to any of the Issuing Banks for any recital, statement, representation
or warranty made by Borrower or any subsidiary or affiliate of
Borrower, or any officer thereof, contained in this Agreement or in
any other Credit Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by LC
Paying Agent under or in connection with, this Agreement or any other
Credit Document, or for the value of any Collateral or the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Credit Document, or for any failure of Borrower
or any other party to any Credit Document to perform its obligations
hereunder or thereunder. No such Person shall be under any obligation
to any Issuing Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of,
this Agreement or any other Credit Document, or to inspect the
properties, books or records of Borrower or any of its subsidiaries or
affiliates.
7. Material Credit Documents. LC Paying Agent will forward to
the Issuing Banks copies of all material documents received by LC
Paying Agent in its capacity as such from Borrower under the
provisions of this Agreement and any other Credit Document.
8. Communication. Upon receipt by LC Paying Agent in its
capacity as such from Borrower of any communication calling for an
action on the part of the Issuing Banks under the provisions of this
Agreement or any other Credit Document, it will in turn inform the
other Issuing Banks of such communication.
9. Reliance by LC Paying Agent. LC Paying Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel to
Borrower), independent accountants and other experts selected by LC
Paying Agent. LC Paying Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of
the Majority Issuing Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the
Issuing 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. LC Paying Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any
other Credit Document in accordance with a request or consent of the
Majority Issuing Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the
Issuing Banks. (As used herein, "Majority Issuing Banks" shall mean,
at any time, Issuing Banks whose Letters of Credit then outstanding
have an aggregate stated amount in excess of sixty-six and two thirds
percent (66-2/3%) of the aggregate stated amount of all Letters of
Credit then outstanding.)
10. Notice of Default. LC Paying Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of
Default, unless LC Paying Agent shall have received written notice
from an Issuing Bank or Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that LC Paying Agent
receives such a notice, LC Paying Agent shall promptly give notice
thereof to Administrative Agent and the Issuing Banks. LC Paying
Agent shall take such action with respect to such Default or Event of
Default as shall be requested by the Issuing Banks in accordance with
this Agreement and the other Credit Documents; provided, however, that
unless and until LC Paying Agent shall have received any such request,
LC Paying 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 or in the best interest of
the Issuing Banks.
11. Credit Decision. Each Issuing Bank expressly acknowledges
that none of LC Paying Agent, its affiliates, or any of their
respective officers, directors, employees, agents or attorneys-in-
fact, has made any representation or warranty to it and that no act by
LC Paying Agent hereinafter taken, including any review of the affairs
of Borrower and its subsidiaries shall be deemed to constitute any
representation or warranty by LC Paying Agent to any Issuing Bank.
Each Issuing Bank represents to LC Paying Agent that it has made and
will continue to make, independently and without reliance upon LC
Paying Agent and based on such documents, information and
investigations as it has deemed appropriate, its own credit analysis,
and appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and
creditworthiness of Borrower and its subsidiaries, and all applicable
bank regulatory laws relating to the transactions contemplated
thereby, and has made its own decision to enter into this Agreement
and extend credit to Borrower hereunder. Except for notices, reports
and other documents expressly herein required to be furnished to the
Issuing Banks by LC Paying Agent, LC Paying Agent shall not have any
duty or responsibility to provide any Issuing Bank with any credit or
other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of
Borrower which may come into the possession of LC Paying Agent or any
of its subsidiaries or affiliates.
12. Indemnification. The Issuing Banks shall indemnify upon
demand LC Paying Agent, its affiliates, and their respective officers,
directors, employees, agents and attorneys-in-fact (to the extent not
reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), ratably from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the
termination of the Letters of Credit and repayment of the
Reimbursement Obligations) be imposed on, incurred by or asserted
against any such Person any way relating to or arising out of this
Agreement or any other Credit Document or the transactions
contemplated hereby or thereby or any action taken or omitted by any
such Person under or in connection with any of the foregoing;
provided, however, that no Issuing Bank shall be liable for the
payment to any such Person of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the
foregoing, each Issuing Bank shall reimburse LC Paying Agent upon
demand for its ratable share of any reasonable Attorney Costs and
other reasonable fees and expenses payable to third parties incurred
by LC Paying Agent in its capacity as such in connection with the
preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Credit Document, or
any document contemplated by or referred to herein to the extent that
LC Paying Agent is not reimbursed for such expenses by or on behalf of
Borrower. The obligation of the Issuing Banks in this paragraph shall
survive the payment of all Obligations.
13. LC Paying Agent in Individual Capacity. BofA and its
affiliates may make loans to, issue letters of credit for the account
of, accept deposits from and generally engage in any kind of business
with Borrower and its subsidiaries and affiliates as though BofA were
not LC Paying Agent hereunder and without notice to the Issuing Banks.
With respect to its Letters of Credit, BofA shall have the same rights
and powers under this Agreement and the other Credit Documents as any
other Issuing Bank and may exercise the same as though it were not LC
Paying Agent, and the terms "Issuing Bank" and "Issuing Banks" shall
include BofA in its individual capacity.
14. Successor LC Paying Agent. LC Paying Agent may, and at the
request of the Majority Issuing Banks shall, resign as LC Paying Agent
upon 30 days' notice to the Issuing Banks. If LC Paying Agent shall
resign as LC Paying Agent under this Agreement, the Majority Issuing
Banks shall appoint from among the Issuing Banks a successor agent for
the Issuing Banks. If no successor LC Paying Agent is appointed prior
to the effective date of the resignation of LC Paying Agent, LC Paying
Agent shall appoint, after consulting with the Issuing Banks and
Borrower, a successor agent from among the Issuing Banks. Upon the
acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of
the retiring LC Paying Agent and the term "LC Paying Agent" shall mean
such successor agent and the retiring LC Paying Agent's rights, powers
and duties as LC Paying Agent shall be terminated. After any retiring
LC Paying Agent's resignation hereunder as LC Paying Agent, the
provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was LC Paying
Agent under this Agreement.
15. Miscellaneous.
(a)Notices. Except as otherwise provided herein, all
notices, requests, demands, consents, instructions or other
communications to or upon any Issuing Bank or LC Paying Agent
under this Agreement shall be in writing and faxed, mailed or
delivered to its respective facsimile number or address set forth
in Schedule II of the Credit Agreement (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 (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; (ii) when delivered by hand, upon delivery; and (d)
when faxed, upon confirmation of receipt.
(b)Amendments. Any term, covenant, agreement or condition
of this Agreement may be amended or waived if such amendment or
waiver is in writing and is signed by the Issuing Banks and LC
Paying Agent.
(c)Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of each of the Issuing
Banks and LC Paying Agent and their respective successors and
permitted assigns. All references in this Agreement to any
Person shall be deemed to include all successors and assigns of
such Person.
(d)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.
(e)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.
(f)Jury Trial. EACH OF THE ISSUING BANKS AND LC PAYING
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 THIS AGREEMENT.
(g)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.
(h)Headings. Headings in this Agreement are for
convenience of reference only and are not part of the substance
hereof.
(i)Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
[The next page is the first signature page.]
<PAGE>
IN WITNESS WHEREOF, the Issuing Banks and LC Paying Agent have
caused this Agreement to be executed as of the day and year first
above written.
ABN AMRO Bank N.V., San Francisco
International Branch,
As an Issuing Bank
By:___________________________
Name:______________________
Title:_____________________
By:___________________________
Name:______________________
Title:_____________________
CANADIAN IMPERIAL BANK OF COMMERCE,
As an Issuing Bank
By:___________________________
Name:______________________
Title:_____________________
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION,
As an Issuing Bank
By:___________________________
Name:______________________
Title:_____________________
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION,
As LC Paying Agent
By:___________________________
Name:______________________
Title:_____________________
ACKNOWLEDGED:
QUANTUM CORPORATION
By:_______________________
Name:__________________
Title:_________________
<PAGE>
EXHIBIT 11.1
QUANTUM CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(In thousands except per share data)
Three Months Ended
July 2, July 3,
1995 1994
PRIMARY
Weighted average number of common shares
during the period 47,954 44,749
Incremental common shares attributable to
exercise of outstanding options 3,758 2,106
Total shares 51,712 46,855
Net income $12,942 $58,241
Net income per share $0.25 $1.24
FULLY DILUTED
Weighted average number of common shares
during the period 47,954 44,749
Incremental common shares attributable to
exercise of outstanding options and
conversion of 6 3/8% convertible
subordinated debentures 14,285 13,814
Total shares 62,239 58,563
Net income:
Net income $12,942 $58,241
Add 6 3/8% convertible subordinated
debentures interest, net of income
tax effect 1,837 2,093
Net income, as adjusted $14,779 $60,334
Net income per share $0.24 $1.03
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS OF QUANTUM CORPORATION FOR THE THREE MONTH
PERIOD ENDED JULY 2, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUL-02-1995
<CASH> 168,884
<SECURITIES> 0
<RECEIVABLES> 548,283
<ALLOWANCES> 10,918
<INVENTORY> 391,859
<CURRENT-ASSETS> 1,163,942
<PP&E> 437,038
<DEPRECIATION> 131,174
<TOTAL-ASSETS> 1,575,374
<CURRENT-LIABILITIES> 637,788
<BONDS> 339,056
<COMMON> 217,258
0
0
<OTHER-SE> 381,272
<TOTAL-LIABILITY-AND-EQUITY> 1,575,374
<SALES> 941,316
<TOTAL-REVENUES> 941,316
<CGS> 816,827
<TOTAL-COSTS> 816,827
<OTHER-EXPENSES> 98,114
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,147
<INCOME-PRETAX> 18,228
<INCOME-TAX> 5,286
<INCOME-CONTINUING> 12,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,942
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.24
</TABLE>
