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 endedOctober 1, 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
October 1, 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 October 29, 1995: 52,816,774
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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 14
SIGNATURE 17
<PAGE>
QUANTUM CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share data)
(unaudited)
Three Months Ended Six Months Ended
Oct. 1, Oct. 2, Oct. 1, Oct. 2,
1995 1994 1995 1994
Sales $1,033,048 $726,169 $1,974,363 $1,451,473
Cost of sales 890,622 593,439 1,707,448 1,172,666
Gross profit 142,426 132,730 266,915 278,807
Operating expenses:
Research and development 55,147 28,554 110,258 57,153
Sales and marketing 34,802 23,106 68,505 45,866
General and administrative 15,453 11,353 27,635 21,684
105,402 63,013 206,398 124,703
Income from operations 37,024 69,717 60,517 154,104
Other (income) expense:
Interest expense 7,318 3,448 15,465 7,004
Interest and other income (1,315) (3,164) (4,197) (5,534)
6,003 284 11,268 1,470
Income before income taxes 31,021 69,433 49,249 152,634
Income tax provision 8,996 20,830 14,282 45,790
Net income $ 22,025 $ 48,603 $ 34,967 $106,844
Net income per share:
Primary $0.39 $1.03 $0.65 $2.27
Fully diluted $0.37 $0.85 $0.61 $1.87
Weighted average common and
common equivalent shares:
Primary 56,239,763 47,326,797 54,016,054 47,090,888
Fully diluted 63,566,680 59,037,402 62,942,630 58,800,191
See accompanying notes to consolidated financial statements.
<PAGE>
QUANTUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
Oct. 1, March 31,
1995 1995
Assets
Current assets:
Cash and cash equivalents $ 158,805 $ 187,753
Accounts receivable, net of allowance for
doubtful accounts of $9,971 and $11,963 635,013 497,887
Inventories 508,807 324,650
Deferred taxes 43,888 44,054
Other current assets 26,383 35,580
Total current assets 1,372,896 1,089,924
Property and equipment, net of accumulated
depreciation of $149,174 and $119,831 346,812 280,099
Purchased intangibles, net 82,936 95,818
Other assets 14,292 15,187
$1,816,936 $1,481,028
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 529,660 $355,117
Accrued warranty expense 56,470 57,001
Accrued compensation 39,273 54,917
Income taxes payable 1,858 17,566
Accrued exit costs 32,213 32,213
Short-term debt 50,000 50,000
Other accrued liabilities 35,004 77,227
Total current liabilities 744,478 644,041
Subordinated debentures 132,933 212,500
Long-term debt 290,000 115,000
Shareholders' equity:
Common stock 246,265 141,154
Retained earnings 403,260 368,333
Total shareholders' equity 649,525 509,487
$1,816,936 $1,481,028
See accompanying notes to consolidated financial statements.
<PAGE>
QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six Months Ended
Oct. 1, Oct. 2,
1995 1994
Cash flows from operating activities:
Net income $ 34,967 $106,844
Items not requiring the current use of cash:
Depreciation and amortization 46,976 14,888
Changes in assets and liabilities:
Accounts receivable (137,126) (111,792)
Inventories (184,157) (6,795)
Accounts payable 174,543 43,258
Income taxes payable (10,479) 12,651
Accrued warranty expense (531) 3,660
Other assets and liabilities (51,283) (26,947)
Net cash provided by (used in) operating activities (127,090) 35,767
Cash flows from investing activities:
Purchase of short-term investments - (20,474)
Sales and maturities of short-term investments - 113,774
Investment in property and equipment, net (98,018) (37,232)
Net cash provided by (used in) investing activities (98,018) 56,068
Cash flows from financing activities:
Proceeds from revolving line of credit and term
loan borrowings 225,000 -
Principal payments on revolving line of credit (50,000) -
Proceeds from issuance of common stock, net 21,160 7,485
Net cash provided by financing activities 196,160 7,485
Net increase (decrease) in cash and cash equivalents (28,948) 99,320
Cash and cash equivalents at beginning of period 187,753 217,531
Cash and cash equivalents at end of period $158,805 $316,851
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 13,249 $ 6,870
Income taxes $ 24,874 $ 29,835
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)
Oct. 1, March 31,
1995 1995
Materials and purchased parts $134,471 $116,732
Work in process 129,915 42,091
Finished goods 244,421 165,827
$508,807 $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 six months ended October 1,
1995, approximately 37% 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 three and six months ended October 1,
1995, computed on a fully diluted basis, assumed conversion of the
outstanding debentures having a principal value of $132,933,000.
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.
In September 1995, the Company executed an amendment to the senior
credit facility. This amendment extended the revolving line of credit term
one year to September 1998 and increased the total amount available under the
revolving credit line portion of the facility from $225 million to $325
million.
Also in September 1995, the Company entered into a one-year $85 million
unsecured Letter of Credit facility with certain banks to issue standby
letters of credit to Matsushita-Kotobuki Electronics and its affiliates.
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 three months ended October 1,
1995, $16,123,000, approximately 7%, of the outstanding convertible
subordinated debentures were converted into the Company's Common Stock. This
conversion resulted in the issuance of 887,716 shares. In the six months
ended October 1, 1995, a total of $79,567,000 of the debentures,
approximately 37%, were converted, resulting in the issuance of 4,383,477
shares.
5. Acquisition of businesses from Digital Equipment Corporation
On October 3, 1994, Quantum Corporation ("Quantum" or "the Company")
acquired the Hard Disk Drive, Heads and Tape Drives 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 October 1, 1995, have
been reflected in the Company's consolidated financial statements. The
purchase price of the Acquisition was finalized during the second quarter of
fiscal 1996, resulting in a reduction of the purchase price of approximately
$5.7 million.
The unaudited pro forma combined condensed results of operations for the
Company for the three months and six months ended October 2, 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 Six Months Ended
------------------------- ---------------------
Oct. 1, Oct. 2, Oct. 1, Oct. 2,
1995 1994 1995 1994
(actual) (pro forma) (actual) (pro forma)
----------- ----------- ---------- ----------
Net sales $1,033,048 $ 884,619 $1,974,363 $1,874,258
Net income $ 22,025 $ (14,265) $ 34,967 $ 29,947
Net income per share:
Primary $0.39 ($0.30) $0.65 $0.64
Fully diluted $0.37 ($0.30) $0.61 $0.58
The unaudited pro forma results for the three months and six months
ended October 2, 1994, exclude the effects of the charge for purchased
research and development and other merger costs of $73 million, as such
amounts are non-recurring. The pro forma results for the three months and
six months ended October 2, 1994, and the actual results for the three months
and six months ended October 1, 1995, 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 Hard Disk Drive, Heads and
Tape Drive Business of the Storage Business Unit of Digital Equipment
Corporation (the "acquired Business"), in a transaction (the "Acquisition")
accounted for as a purchase. The operating results of the acquired Business
from the date of the purchase through October 1, 1995, have been reflected in
the Company's consolidated financial statements.
Consolidated sales for the three and six months ended October 1,
1995, were $1,033 million and $1,974 million, respectively, compared to $726
million and $1,451 million for the corresponding periods in fiscal 1995. The
increase in consolidated sales year to year 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 second quarter of fiscal 1996 increased 22% compared to the
corresponding period in fiscal 1995, with sales for the second quarter of
fiscal 1996 increasing 42% over the second quarter of fiscal 1995. For the
six months ended October 1, 1995, unit shipments increased 20% and sales
increased 36% over the comparable period in fiscal 1995. 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.
Subsequent to the end of the second quarter, the Company learned
that a major customer was experiencing problems integrating a specific
configuration of a product family qualified and shipped during the quarter.
The Company agreed to accept a return of the drives for credit, and the
Company reversed the $32 million in revenue from the second quarter results.
Sales to the top five customers for the three and six months ended
October 1, 1995, represented 49% and 48% of consolidated sales, respectively,
with three customers having sales greater than 10% of consolidated sales for
each period. For the corresponding periods in fiscal 1995, sales to the top
five customers represented 51% and 49% of consolidated sales, with two
customers having sales greater than 10% of consolidated sales for each
period.
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. During the second
quarter of fiscal 1996, Digital did not complete its internal qualification
procedures for certain of the Company's new products. 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 October 1, 1995, decreased to
13.8% from 18.3% for the quarter ended October 2, 1994. For the six months
ended October 1, 1995, gross margin was 13.5%, compared to 19.2% for the six
months ended October 2, 1994. This decrease was due to the acquired Business
and slower than anticipated transition to higher margin products in the high
capacity product line, as well as component availability issues. 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 Business, 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. In the first half of fiscal 1996, 73% of Quantum's sales were
derived from products manufactured by MKE. For the comparable period of the
prior fiscal year, products manufactured by MKE represented approximately 90%
of the Company's sales. The decline in MKE products as a percentage of sales
is a result of Quantum's manufacturing of the products acquired from Digital.
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"). The Company has reached an agreement with Lafe, in
principal, on providing manufacturing services and a contract is expected to
be completed in the third quarter. 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 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 latter half 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 shorter 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 second quarter of fiscal 1996
were $55 million, or 5.3% of sales, compared to $29 million, or 3.9% of sales
in the corresponding period in fiscal 1995. For the first half of fiscal
1996, research and development expenses were $110 million, or 5.6% of sales,
compared to $57 million, or 3.9% of sales, in the corresponding period in
fiscal 1995. The increase is due primarily to the acquired Business 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 second quarter of fiscal 1996 were
$35 million, or 3.4% of sales, compared to $23 million, or 3.2% of sales in
the corresponding period in fiscal 1995. Sales and marketing expenses for the
first half of fiscal 1996 were $69 million, or 3.5% of sales, compared to $46
million, or 3.2% of sales, in the corresponding period in fiscal 1995. The
increase is principally due to the Acquisition and the costs associated with
supporting the higher sales volume and the expanded Company infrastructure.
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 second quarter of fiscal 1996
were $15 million, or 1.5% of sales, compared to $11 million, or 1.6% of sales
in the corresponding period in fiscal 1995. General and administrative
expenses for the first half of fiscal 1996 were $28 million, or 1.4% of
sales, compared to $22 million, or 1.5% 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 Business. 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 quarter ended October 1,
1995, was $6 million net expense, compared to $0.3 million net expense in the
corresponding period in fiscal 1995. Net interest and other income/expense
for the six months ended October 1, 1995, were $11.3 million, compared to
$1.5 million 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 the Acquisition financing and lower cash
balances due to cash used for the Acquisition.
The Acquisition will continue to have an 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 during the second quarter of fiscal
1996, resulting in a reduction of the purchase price of approximately $5.7
million. The Company estimates that charges for the amortization of
intangibles and the depreciation of the fixed assets acquired in the
Acquisition will approximate $25 million and $30 million, respectively, 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.
On November 8, 1995, the Company announced plans to reorganize the High
Capacity Storage Group ("HCSG"), as part of a plan to improve its operating
results. The reorganization will include closing the production launch line
in Shrewsbury, Massachusetts, canceling the Empire II development program and
accelerating end-of-life plans for less cost effective products. The Company
expects to record a non-recurring charge of $35 to $40 million, pre-tax,
primarily to cost of goods sold, in the third quarter of fiscal 1996.
Additionally, the Company is accelerating the shutdown of the Colorado
Springs disk drive manufacturing plant and now expects to close the plant by
December 31, 1995.
Income Taxes
The effective tax rate for the quarter and six months ended October 1,
1995, was 29%, compared to 30% for the corresponding periods in fiscal 1995.
The effective tax rates are below the combined U.S. federal and state
statutory rates primarily as a result of the tax benefit associated with the
income of foreign subsidiaries taxed at lower than the combined U.S. federal
and state income tax rates.
Liquidity and Capital Resources
At October 1, 1995, the Company had $159 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 receivable and inventories and investing in property and
equipment, partially offset by an increase in accounts payable. 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 September 1995, the Company executed an amendment to the senior
credit facility. This amendment extended the revolving line of credit term
one year to September 1998 and increased the total amount available under the
revolving credit line portion of the facility from $225 million to $325
million.
Also in September 1995, the Company entered into a one-year $85 million
unsecured Letter of Credit facility with certain banks to issue standby
letters of credit to MKE and its affiliates.
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 half of fiscal 1996,
$79,567,000, or approximately 37%, of the outstanding convertible
subordinated debentures were converted into the Company's Common Stock. This
conversion resulted in the issuance of 4,383,477 shares.
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 Business. 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 six months ended October 1, 1995, there were no cash outlays
related to the exit costs.
In conjunction with the HCSG reorganization announced November 8, 1995, the
Company expects to record a non-recurring charge of $35 to $40 million during
the third quarter of fiscal 1996. The Company anticipates that cash outlays
during fiscal 1996 for the reorganization will be approximately $20 to $25
million.
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
1996 fiscal year. However, the Company continues to work to identify
additional sources of cash and there can be no assurance 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
As previously reported, Quantum's declaratory judgment lawsuit against
Rodime PLC of Glasgow, Scotland, resulted in a summary judgment that claims
of Rodime's U.S. Patent No. 4,638,383 were invalid because of impermissible
broadening in reexamination proceedings. This summary judgment was
affirmed on September 22, 1995, by the U.S. Court of Appeals for the
Federal Circuit. Subsequently, Rodime has petitioned the court for a
rehearing and a hearing in banc. This petition remains pending. If the
appellate decision is left undisturbed by any further appellate
proceedings, Quantum believes that it is fully dispositive of its dispute
with Rodime. Due to the inherent uncertainties of ongoing litigation,
there can be no assurance that the appellate decision will become finally
dispositive.
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.
The 1995 Annual Meeting of Shareholders was held on September 6, 1995.
The matters voted upon were the election of directors, an amendment to the
Company's Employee Stock Purchase Plan, and the appointment of the
independent auditors.
The shareholders approved the election of directors as follows:
For Against
Stephen M. Berkley 42,804,909 157,308
David A. Brown 42,818,359 143,858
Robert J. Casale 42,818,259 143,958
Edward M. Esber, Jr. 42,818,409 143,808
William J. Miller 42,804,759 157,458
Steven C. Wheelwright 42,820,309 141,908
The shareholders approved and ratified an amendment to the Company's
Employee Stock Purchase Plan, increasing the number of shares reserved for
issuance thereunder from 6,300,000 to 8,500,000 shares of Common Stock. The
number of affirmative votes cast for this matter was 39,991,891. The number
of negative votes cast with respect to this matter were 2,071,627, with
135,977 votes abstaining and 8,528,004 broker non-votes.
The appointment of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ending March 31, 1996, was approved with
42,834,738 affirmative votes, 32,844 negative votes, 64,635 votes abstaining
and 7,795,282 broker non-votes.
In addition, the shareholders voted to allow the directors to vote on any
other matters of business that might come before the meeting with 28,417,202
affirmative votes, 5,514,456 negative votes, 9,000,289 abstaining votes, and
7,795,552 broker non-votes.
Item 5. Other information.
William J. Miller resigned as Chairman of the Board of Directors and
Chief Executive Officer ("CEO") for personal reasons, effective August 23,
1995. Stephen M. Berkley, who was Chairman and CEO until Mr. Miller joined
the company in 1992, became Chairman of the Board. On September 26, 1995,
Michael A. Brown was named to the position of Chief Executive Officer of the
Company. Mr. Brown has been at Quantum since 1984, and was most recently
President of the Desktop and Portable Storage Group ("DPSG"), which
represents approximately 70% of Quantum's revenues. Mark Jackson, who was
previously Vice President of Worldwide Logistics reporting to Mr. Brown,
succeeded Mr. Brown as President of DPSG.
Effective November 1, 1995, Robert K. Maeser resigned as President and
General Manager of the Company's High Capacity Storage Group ("HCSG"). He
was replaced by Kenneth Lee, Executive Vice President, Engineering and
Technology, and Chief Technical Officer. Mr. Lee will continue to lead the
advanced technology and engineering efforts of the Company in addition to his
new role.
<PAGE>
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: November 20, 1995 By: /s/ Joseph T. Rodgers
Joseph T. Rodgers
Executive Vice President, Finance
and Chief Financial Officer
<PAGE>
QUANTUM CORPORATION
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Page
10.31 Third Amendment, dated September 29, 1995, to Credit
Agreement (dated October 3, 1994) among Quantum
Corporation and the Banks named therein 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 19
10.32 Credit Agreement dated September 22, 1995, among Quantum
Corporation and the Banks named therein and THE SUMITOMO
BANK, LIMITED, acting through its San Francisco branch,
as Agent for the Banks and as Issuer 49
10.33 Lease Agreement, dated August 31, 1995, between CRAY
COMPUTER CORPORATION, as Landlord, and QUANTUM 88
Corporation, as Tenant
11.1 Statement of Computation of Net Income Per Share 113
27 Financial Data Schedule 114
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EXHIBIT 10.31
QUANTUM CORPORATION
_ THIRD AMENDMENT TO CREDIT AGREEMENT
_
_ THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"),
_dated as of September 29, 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 "EXISTING 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 Existing 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 Existing Banks;
_
_ (5) CANADIAN IMPERIAL BANK OF COMMERCE, as
_ administrative and collateral agent for the Existing Banks
_ (in such capacities, the "ADMINISTRATIVE AGENT"); ABN, as
_ syndication agent for the Existing Banks; and Barclays, as
_ documentation agent for the Existing Banks; and
_
_ (6) THE FUJI BANK, LIMITED, a Japanese banking
_ corporation (the "NEW BANK").
_
_
_ RECITALS
_
_ A. Borrower, the Existing 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 and a Second Amendment to
_Credit Agreement dated as of June 26, 1995 (as so amended, the
_"CREDIT AGREEMENT"), pursuant to which the Existing Banks have
_provided certain credit facilities to Borrower.
_
_ B. Borrower has requested the Existing Banks, Managing
_Agents and Administrative Agent to amend the Credit Agreement to
_increase the amount of the credit facilities, to add the New Bank
_and to make certain other changes.
_
_ C. The Existing 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 Existing
_Banks, Managing Agents, Administrative Agent and the New Bank
_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, except that the terms "Issuing Bank," "Issuing Banks'
_Fee Letter," "LC Applications," "LC Issuance Fees," "LC Paying
_Agent" and "LC Usage Fees" are used in PARAGRAPHS 4, 5 AND 6
_below with the respective meanings given to those terms in the
_Credit Agreement prior to 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.
_
_ "COMMITMENTS" shall mean, collectively, the
_ Revolving Loan Commitments and the Term Loan
_ Commitments.
_
_ "CREDIT DOCUMENTS" shall mean and include this
_ Agreement, the Notes, the Security Documents and the
_ Agents' Fee Letters; all documents, instruments and
_ agreements delivered to any Agent or any Bank pursuant
_ to PARAGRAPH 3.01; and all other documents, instruments
_ and agreements delivered by Borrower or any of its
_ Subsidiaries to any Agent or Bank in connection with
_ this Agreement on or after the date of this Agreement.
_
_ "CREDIT EVENT" shall mean the making of any Loan,
_ the conversion of any Revolving Base Rate Loan or Term
_ Base Rate Borrowing Portion into a Revolving LIBOR Loan
_ or Term LIBOR Borrowing Portion or the selection of a
_ new Interest Period for any Revolving LIBOR Loan or
_ Term LIBOR Borrowing Portion.
_
_ "DEBT SERVICE COVERAGE RATIO" shall mean, with
_ respect to any Person for any period, the ratio,
_ determined on a consolidated basis in accordance with
_ GAAP where applicable, of;
_
_ (a) The Adjusted Net Income of such Person
_ and its Subsidiaries for such period;
_
_ TO
_
_ (b) The sum of (i) all principal payments on
_ Indebtedness for borrowed money of such Person and
_ its Subsidiaries scheduled for payment during such
_ period, (ii) fifty percent (50%) of all Capital
_ Expenditures of such Person and its Subsidiaries
_ for such period, and (iii) all dividends paid by
_ such Person and its Subsidiaries during such
_ period (excluding any dividends paid to such
_ Person).
_
_ (In calculating the Debt Service Coverage Ratio of
_ Borrower for any period, the principal payments
_ "scheduled for payment during such period" on the Term
_ Loans shall be the Term Loan principal payments
_ actually scheduled for payment during such period
_ pursuant to SUBPARAGRAPH 2.02(F), except that, for the
_ period January 1, 1995 through December 31, 1995, the
_ principal payments "scheduled for payment during such
_ period" on the Term Loans shall be deemed to be the
_ principal payment due on the Term Loans on
_ September 30, 1995 and one-half of the principal
_ payment due on the Term Loans on March 31, 1996.)
_
_ "DEFAULTING BANK" shall mean a Bank which has
_ failed to fund its portion of any Borrowing which it is
_ required to fund under this Agreement and has continued
_ in such failure for three (3) Business Days after
_ written notice from Administrative Agent.
_
_ "DESIGNATED ASSET SALE PROCEEDS" shall mean, for
_ any fiscal year of Borrower, the Net Proceeds payable
_ to Borrower and its Subsidiaries (to the extent of
_ Borrower's ownership interest therein) from the sale of
_ assets (including the direct or indirect sale of any
_ stock or other Equity Securities of any Subsidiary)
_ during such year, other than any sale permitted by
_ CLAUSE (I), (II), (III), (IV), (VI) OR (IX) OF
_ SUBPARAGRAPH 5.02(C) or any license permitted by CLAUSE
_ (V) OF SUBPARAGRAPH 5.02(C).
_
_ "FIXED CHARGE COVERAGE RATIO" shall mean, with
_ respect to any Person for any period, the ratio,
_ determined on a consolidated basis in accordance with
_ GAAP where applicable, of;
_
_ (a) The remainder of (i) EBITDA of such
_ Person and its Subsidiaries for such period, MINUS
_ (ii) fifty percent (50%) of all Capital
_ Expenditures of such Person and its Subsidiaries
_ for such period;
_
_ TO
_
_ (b) All Interest Expenses of such Person and
_ its Subsidiaries for such period.
_
_ "MATURITY" shall mean, with respect to any Loan,
_ interest, fee or other amount payable by Borrower under
_ this Agreement or the other Credit Documents, the date
_ such Loan, interest, fee or other amount becomes due,
_ whether upon the stated maturity or due date, upon
_ acceleration or otherwise.
_
_ "PROPORTIONATE SHARE" shall mean, with respect to
_ each Bank at any time, a fraction (expressed as a
_ percentage rounded to the sixth digit to the right of
_ the decimal point), the numerator of which is the sum
_ at such time of such Bank's Revolving Loan Commitment
_ and Term Loan and the denominator of which is the sum
_ at such time of the Total Revolving Loan Commitment and
_ the Term Loan Borrowing.
_
_ "QUICK RATIO" shall mean, with respect to any
_ Person at any time, the ratio, determined on a
_ consolidated basis in accordance with GAAP, of:
_
_ (a) The sum at such time of all cash, cash
_ equivalents (less than ninety (90) days in term),
_ short-term marketable securities (less than one
_ (1) year in term) and accounts receivable of such
_ Person and its Subsidiaries (less all reserves
_ therefor);
_
_ TO
_
_ (b) The current liabilities of such Person
_ and its Subsidiaries at such time.
_
_ "REQUIRED BANKS" shall mean (a) at any time Loans are
_ outstanding and the Banks are obligated to make
_ Revolving Loans pursuant to their Revolving Loan
_ Commitments, Banks holding more than sixty-six and two
_ thirds percent (66 2/3%) of the aggregate principal
_ amount of all Loans outstanding, calculated as if
_ Revolving Loans in the full amount of the Banks'
_ Revolving Loan Commitments were outstanding, (b) at any
_ time Loans are outstanding and the Banks are not
_ obligated to make Revolving Loans pursuant to their
_ Revolving Loan Commitments, Banks holding more than
_ sixty-six and two thirds percent (66 2/3%) of the
_ aggregate principal amount of all Loans outstanding and
_ (c) at any time no Loans are outstanding, Banks whose
_ aggregate Revolving Loan Commitments exceed sixty-six
_ and two thirds percent (66 2/3%) of the Total Revolving
_ Loan Commitment at such time.
_
_ "REVOLVING LOAN COMMITMENT" shall mean, with
_ respect to any Bank at any time, such Bank's Revolving
_ Loan Proportionate Share at such time of the Total
_ Revolving Loan Commitment at such time.
_
_ "TERM LOAN COMMITMENT" shall mean, with respect to
_ any Bank at any time, such Bank's Term Loan
_ Proportionate Share at such time of the Total Term Loan
_ Commitment at such time.
_
_ "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.
_
_ (b) PARAGRAPH 1.01 is further amended by changing the
_ definitions of "Eligible Borrower Accounts," "Eligible
_ Borrower Inventory" and "Eligible Quantum Europe Accounts"
_ as follows:
_
_ (i) The definition of "ELIGIBLE BORROWER
_ ACCOUNTS" is amended by changing CLAUSE (G) and CLAUSE
_ (J) thereof to read in their entirety as follows:
_
_ (g) Any account payable by (i) the United
_ States government or any department, agency or
_ other subdivision thereof (except to the extent
_ Borrower complies with the Federal Assignment of
_ Claims Act of 1940, as amended) or (ii) an
_ Affiliate of Borrower;
_
_ (j) Accounts owed by an account debtor
_ having either (i) a long-term debt rating of at
_ least BBB (or its equivalent) from Standard and
_ Poor's Ratings Group or (ii) a short-term debt
_ rating of at least A-1 (or its equivalent) from
_ Standard and Poor's Ratings Group, to the extent
_ the total accounts owed by such account debtor to
_ Borrower exceed thirty percent (30%) of Borrower's
_ total accounts;
_
_ (ii) The definition of "ELIGIBLE BORROWER
_ INVENTORY" is amended by changing CLAUSE (B) thereof to
_ read in its entirety as follows:
_
_ (b) Any inventory consisting of work-in-
_ process or any other inventory not constituting
_ raw materials or finished inventory;
_
_ (iii) The definition of "ELIGIBLE QUANTUM EUROPE
_ ACCOUNTS" is amended by changing CLAUSE (J) thereof to
_ read in its entirety as follows:
_
_ (j) Accounts owed by an account debtor
_ having either (i) a long-term debt rating of at
_ least BBB (or its equivalent) from Standard and
_ Poor's Ratings Group or (ii) a short-term debt
_ rating of at least A-1 (or its equivalent) from
_ Standard and Poor's Ratings Group, to the extent
_ the total accounts owed by such account debtor to
_ Quantum Europe exceed thirty percent (30%) of
_ Quantum Europe's total accounts;
_
_ (c) PARAGRAPH 1.01 is further amended by adding
_ thereto, in the appropriate alphabetical order, the
_ following definitions to read in their entirety as follows:
_
_ "OUTSTANDING REVOLVER CREDIT" shall have the
_ meaning given to that term in SUBPARAGRAPH 2.03(A).
_
_ "REVOLVING LOAN BANK" shall mean, at any time, a
_ Bank which then has a Revolving Loan Commitment or then
_ holds an outstanding Revolving Loan.
_
_ "REVOLVING LOAN MATURITY DATE" shall have the
_ meaning given to that term in SUBPARAGRAPH 2.01(A).
_
_ "REVOLVING LOAN PROPORTIONATE SHARE" shall mean,
_ with respect to each Bank, the percentage set forth
_ under the caption "Revolving Loan Proportionate Share"
_ opposite such Bank's name on SCHEDULE I, or, if
_ changed, such percentage as may be set forth for such
_ Bank in the Register.
_
_ "SUMITOMO LC AGREEMENT" shall mean the Credit
_ Agreement dated as of September 22, 1995 among
_ Borrower, The Sumitomo Bank, Limited and other banks
_ from time to time parties thereto.
_
_ "SUMITOMO LC BANKS" shall mean The Sumitomo Bank,
_ Limited, and the other banks from time to time parties
_ to the Sumitomo LC Agreement.
_
_ "TERM LOAN BANK" shall mean, at any time, a Bank
_ which then has a Term Loan Commitment or then holds an
_ outstanding Term Loan.
_
_ "TERM LOAN MATURITY DATE" shall have the meaning
_ given to that term in SUBPARAGRAPH 2.02(F).
_
_ "TERM LOAN PROPORTIONATE SHARE" shall mean, with
_ respect to each Bank, the percentage set forth under
_ the caption "Term Loan Proportionate Share" opposite
_ such Bank's name on SCHEDULE I, or, if changed, such
_ percentage as may be set forth for such Bank in the
_ Register.
_
_ (d) PARAGRAPH 1.01 is further amended by deleting the
_ definitions of the following terms set forth therein:
_
_ "DRAWING PAYMENT"
_
_ "EXISTING LC AGREEMENT"
_
_ "EXISTING LC APPLICATIONS"
_
_ "EXISTING LETTERS OF CREDIT"
_
_ "EXPIRATION DATE"
_
_ "ISSUING BANK"
_
_ "ISSUING BANKS' FEE LETTER"
_
_ "LC AMENDMENT APPLICATION"
_
_ "LC APPLICATIONS"
_
_ "LC COMMITMENT"
_
_ "LC FACILITY EXPIRATION DATE"
_
_ "LC ISSUANCE APPLICATION"
_
_ "LC ISSUANCE FEES"
_
_ "LC PAYING AGENT"
_
_ "LC PAYING AGENT AGREEMENT"
_
_ "LC PERCENTAGE SHARE"
_
_ "LC USAGE FEES"
_
_ "LETTER OF CREDIT"
_
_ "MATURITY DATE"
_
_ "OUTSTANDING LC CREDIT"
_
_ "OUTSTANDING REVOLVER/LC CREDIT"
_
_ "REIMBURSEMENT DUE DATE"
_
_ "REIMBURSEMENT OBLIGATION"
_
_ "REIMBURSEMENT PAYMENT"
_
_ "SECOND AMENDMENT EFFECTIVE DATE"
_
_ "TOTAL LC COMMITMENT"
_
_ (e) SUBPARAGRAPH 2.01(A) is amended to read in its
_ entirety as follows:
_
_ (a) REVOLVING LOAN AVAILABILITY. Subject to the
_ terms and conditions of this Agreement (including the
_ amount limitations set forth in PARAGRAPH 2.03), each
_ Bank severally agrees to advance to Borrower from time
_ to time during the period beginning on the Closing Date
_ and ending on September 30, 1998 (the "REVOLVING LOAN
_ MATURITY DATE") such revolving loans as Borrower may
_ request under this PARAGRAPH 2.01 (individually, a
_ "REVOLVING LOAN"); PROVIDED, HOWEVER, that (i) the
_ aggregate principal amount of all Revolving Loans made
_ by such Bank at any time outstanding shall not exceed
_ such Bank's Revolving Loan Commitment at such time and
_ (ii) the aggregate principal amount of all Revolving
_ Loans made by all Banks at any time outstanding shall
_ not exceed Three Hundred Twenty-Five Million Dollars
_ ($325,000,000) (such amount, as reduced from time to
_ time pursuant to this Agreement, to be referred to
_ herein as the "TOTAL REVOLVING LOAN COMMITMENT"). All
_ Revolving Loans shall be made on a pro rata basis by
_ the Banks in accordance with their respective Revolving
_ Loan Proportionate Shares, with each Revolving Loan
_ Borrowing to be comprised of a Revolving Loan by each
_ Bank equal to such Bank's Revolving Loan Proportionate
_ Share of such Revolving Loan Borrowing. Except as
_ otherwise provided herein, Borrower may borrow, repay
_ and reborrow Revolving Loans until the Revolving Loan
_ Maturity Date.
_
_ (f) SUBPARAGRAPH 2.01(E) is amended by changing the
_ term "Maturity Date" in the one place it appears in CLAUSE
_ (I)(C) thereof to "Revolving Loan Maturity Date".
_
_ (g) SUBPARAGRAPH 2.01(F) is amended by changing the
_ term "Maturity Date" in the one place it appears in the
_ first sentence thereof to "Revolving Loan Maturity Date".
_
_ (h) PARAGRAPH 2.01A is deleted in its entirety.
_
_ (i) SUBPARAGRAPH 2.02(A) is amended by changing the
_ term "Proportionate Shares" in the two places it appears in
_ the second sentence thereof to "Term Loan Proportionate
_ Shares".
_
_ (j) SUBPARAGRAPH 2.02(E) is amended by changing the
_ term "Maturity Date" in the one place it appears in CLAUSE
_ (I)(C) thereof to "Term Loan Maturity Date".
_
_ (k) SUBPARAGRAPH 2.02(F) is amended by changing the
_ first sentence thereof to read in its entirety as follows:
_
_ Subject to SUBPARAGRAPH 2.05(D), Borrower shall repay
_ the principal amount of the Term Loans in five (5)
_ equal installments of $25,000,000 each payable on the
_ last day of each March and September, commencing
_ September 30, 1995 and ending on September 30, 1997
_ (each such date to be referred to herein as a "TERM
_ LOAN INSTALLMENT DATE"); PROVIDED, HOWEVER, that the
_ principal payment due on September 30, 1997 (the "TERM
_ LOAN MATURITY DATE") shall be in the amount necessary
_ to pay all remaining unpaid principal on all Term
_ Loans.
_
_ (l) SUBPARAGRAPH 2.03(A) is amended by changing CLAUSE
_ (I) thereof to read in its entirety as follows:
_
_ (i) The aggregate principal amount of all
_ Revolving Loans outstanding at any time (the
_ "OUTSTANDING REVOLVER CREDIT") shall not exceed an
_ amount (the "BORROWING BASE") equal to the lesser at
_ such time of:
_
_ (A) The Total Revolving Loan Commitment at
_ such time; and
_
_ (B) The sum at such time of:
_
_ (1) Ninety percent (90%) of Eligible
_ Borrower Accounts owed by an account debtor
_ having either (y) a long-term debt rating of
_ at least BBB (or its equivalent) from
_ Standard and Poor's Ratings Group or (z) a
_ short-term debt rating of at least A-1 (or
_ its equivalent) from Standard and Poor's
_ Ratings Group;
_
_ (2) Eighty percent (80%) of Eligible
_ Borrower Accounts owed by other account
_ debtors;
_
_ (3) The lesser at such time of (y)
_ thirty percent (30%) of Eligible Borrower
_ Inventory and (z) $60,000,000; and
_
_ (4) If the Quantum Europe Note and
_ Borrower's Lien in the accounts of Quantum
_ Europe securing the Quantum Europe Note are
_ then subject to a first priority perfected
_ security interest (or Similar Lien) in favor
_ of Administrative Agent for the benefit of
_ the Agents and Banks, the least at such time
_ of (x) the outstanding principal amount of
_ the Quantum Europe Note, (y) $65,000,000 and
_ (z) sixty percent (60%) of the Eligible
_ Quantum Europe Accounts securing the Quantum
_ Europe Note.
_
_ (m) 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 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 would remain
_ outstanding.
_
_ (n) SUBPARAGRAPH 2.04(C) is amended by changing the
_ term "Maturity Date" in the one place it appears in the
_ first sentence thereof and the two places it appears in the
_ last sentence thereof to "Revolving Loan Maturity Date".
_
_ (o) SUBPARAGRAPH 2.04(D) is deleted in its entirety.
_
_ (p) SUBPARAGRAPH 2.05(C) is amended by changing the
_ term "Outstanding Revolver/LC Credit" in the one place it
_ appears in CLAUSE (I) thereof to "Outstanding Revolver
_ Credit".
_
_ (q) SUBPARAGRAPH 2.05(C) is further amended by
_ changing CLAUSES (IV), (V) , (VI) AND (VII) thereof to read
_ in their entirety as follows:
_
_ (iv) If, at any time on or after twelve (12)
_ months from the Closing Date, Borrower issues or sells
_ any MKE Subordinated Debt, Borrower shall, immediately
_ after such issuance or sale, prepay Term Loans in an
_ aggregate principal amount equal to fifty percent (50%)
_ of the Net Proceeds of such debt.
_
_ (v) If, at any time after the Closing Date,
_ Borrower issues or sells any other Subordinated Debt
_ (other than any MKE Subordinated Debt), Borrower shall,
_ immediately after such issuance or sale, prepay Term
_ Loans in an aggregate principal amount equal to fifty
_ percent (50%) of the Net Proceeds of such debt.
_
_ (vi) If, at any time after the Closing Date,
_ Borrower issues or sells any other Indebtedness for
_ borrowed money, including Indebtedness evidenced by
_ notes, bonds, debentures or other similar instruments
_ (other than Subordinated Debt or any Indebtedness
_ permitted by CLAUSE (I), (III), (XI), (XV) OR (XVIII)
_ OF SUBPARAGRAPH 5.02(A)), Borrower shall, immediately
_ after such issuance or sale, prepay Term Loans in an
_ aggregate principal amount equal to one hundred percent
_ (100%) of the Net Proceeds of such debt.
_
_ (vii) If, at any time after the Closing Date,
_ Borrower issues or sells any Equity Securities (other
_ than an issuance or sale where the total proceeds are
_ less than $10,000,000), Borrower shall, immediately
_ after such issuance or sale, prepay Term Loans in an
_ aggregate principal amount equal to fifty percent (50%)
_ of the Net Proceeds of such Equity Securities.
_
_ (r) SUBPARAGRAPH 2.05(D) is amended by changing the
_ term "Maturity Date" in the one place it appears in the
_ second sentence thereof to "Term Loan Maturity Date".
_
_ (s) 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 or interest thereon, any fees or
_ other amounts)
_
_ (t) 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 and finally to reduce the
_ principal amount of outstanding Loans.
_
_ (u) SUBPARAGRAPH 2.08(A) is amended by changing the
_ first sentence thereof to read in its entirety as follows:
_
_ Each Bank shall, before 11:00 A.M. on the date of each
_ Borrowing, make available to Administrative Agent at
_ its office specified in PARAGRAPH 8.01, in same day or
_ immediately available funds, such Bank's pro rata share
_ of such Borrowing.
_
_ (v) SUBPARAGRAPH 2.08(B) is amended to read in its
_ entirety as follows:
_
_ (b) BANK FAILURE TO FUND. Unless Administrative
_ Agent shall have received notice from a Bank prior to
_ the date of any Borrowing that such Bank will not make
_ available to Administrative Agent such Bank's pro rata
_ share of such Borrowing, Administrative Agent may
_ assume that such Bank has made such portion available
_ to Administrative Agent on the date of such Borrowing
_ in accordance with SUBPARAGRAPH 2.08(A), and
_ Administrative Agent may, in reliance upon such
_ assumption, make available to Borrower (or otherwise
_ disburse) on such date a corresponding amount. If any
_ Bank does not make the amount of its pro rata share of
_ any Borrowing available to Administrative Agent on or
_ prior to the date of such Borrowing, such Bank shall
_ pay to Administrative Agent, on demand, interest which
_ shall accrue on such amount until made available to
_ Administrative Agent at rates equal to (i) the daily
_ Federal Funds Rate during the period from the date of
_ such Borrowing through the third Business Day
_ thereafter and (ii) the Base Rate thereafter. A
_ certificate of Administrative Agent submitted to any
_ Bank with respect to any amounts owing under this
_ SUBPARAGRAPH 2.08(B) shall be conclusive absent
_ manifest error. If any Bank's pro rata share of any
_ Borrowing is not in fact made available to
_ Administrative Agent by such Bank within three (3)
_ Business Days after the date of such Borrowing,
_ Borrower shall pay to Administrative Agent, on demand,
_ an amount equal to such pro rata share together with
_ interest thereon, for each day from the date such
_ amount was made available to Borrower until the date
_ such amount is repaid to Administrative Agent, at the
_ interest rate applicable at the time to the Loans
_ comprising such Borrowing.
_
_ (w) 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 shall not relieve any other Bank of its
_ obligation hereunder to make its Loan on the date of
_ such Borrowing, but no Bank shall be responsible for
_ the failure of any other Bank to make the Loan to be
_ made by such other Bank on the date of any Borrowing.
_
_ (x) SUBPARAGRAPH 2.09(A) is amended by changing CLAUSE
_ (I) thereof to read in its entirety as follows:
_
_ (i) Each Revolving Loan Borrowing and each
_ reduction of the Total Revolving Loan Commitment shall
_ be made by or shared among the Banks pro rata according
_ to their respective Revolving Loan Proportionate
_ Shares; the Term Loan Borrowing shall be made by the
_ Banks pro rata according to their respective Term Loan
_ Proportionate Shares;
_
_ (y) SUBPARAGRAPH 2.09(A) is further amended by (i)
_ changing the term "Proportionate Share" in the one place it
_ appears in CLAUSE (IV) thereof to "Revolving Loan
_ Proportionate Share"; (ii) adding the word "and" at the end
_ of CLAUSE (V) thereof; (iii) deleting CLAUSES (VI) AND (VII)
_ in their entirety; and (iv) changing the designation of
_ CLAUSE (VIII) to "(vi)".
_
_ (z) SUBPARAGRAPH 2.09(B) is amended by changing the
_ phrase "Loans or Reimbursement Obligations" in the three
_ places it appears in the first sentence thereof to "Loans".
_
_ (aa) SUBPARAGRAPH 2.10(C) is amended by changing the
_ phrase "Revolving LIBOR Loan, Term LIBOR Borrowing Portion
_ or Letter of Credit or such Bank's Commitments" where it
_ appears in CLAUSE (III) thereof and in the third and fourth
_ lines thereafter to "Revolving LIBOR Loan or Term LIBOR
_ Borrowing Portion or such Bank's Commitments".
_
_ (bb) SUBPARAGRAPH 2.10(D) is amended by deleting the
_ words ", the Letters of Credit" where they appear once in
_ CLAUSE (II) of the first sentence thereof.
_
_ (cc) SUBPARAGRAPH 2.13(A) is amended by adding thereto,
_ immediately after CLAUSE (VI), a new proviso to read in its
_ entirety as follows:
_
_ PROVIDED, HOWEVER, that, after any sale of the property
_ covered by the Borrower Mortgage as permitted by CLAUSE
_ (IX) OF SUBPARAGRAPH 5.02(C), (A) the Obligations shall
_ not be secured by the Borrower Mortgage and (B)
_ Administrative Agent shall execute such documents,
_ instruments and agreements as Borrower may reasonably
_ request to release the Borrower Mortgage.
_
_ (dd) SUBPARAGRAPH 3.02(A) is amended to read in its
_ entirety as follows:
_
_ (a) Borrower shall have delivered to
_ Administrative Agent the Notice of Borrowing, Notice of
_ Conversion or Notice of Interest Period Selection, as
_ the case may be, for such Credit Event in accordance
_ with this Agreement;
_
_ (ee) 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, no adverse change in the
_ Borrowing Base shall have occurred since the date of
_ the most recent Borrowing Base Certificate; and
_
_ (ff) 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 of
_ each Notice of Borrowing, each Notice of Conversion
_ (other than a notice for a conversion to a Revolving
_ Base Rate Loan or a Term Base Rate Loan Portion) and
_ each Notice of Interest Period Selection shall be
_ deemed to be a representation and warranty by Borrower
_ as of the date thereon as to the above.
_
_ (gg) SUBPARAGRAPH 5.02(A) is amended by changing
_ CLAUSES (III), (VI), (VIII), (XI), (XVII) AND (XVIII)
_ thereof to read in their entirety as follows:
_
_ (iii) Indebtedness under purchase money loans and
_ Capital Leases incurred by Borrower or any of its
_ Subsidiaries to finance the acquisition by such Person
_ of real property, fixtures or equipment provided that
_ (A) in each case, (y) such Indebtedness is incurred by
_ such Person at the time of, or not later than forty-
_ five (45) days after, the acquisition by such Person of
_ the property so financed and (z) such Indebtedness does
_ not exceed the purchase price of the property so
_ financed and (B) the aggregate amount of such
_ Indebtedness outstanding at any time does not exceed
_ $40,000,000;
_
_ (vi) Indebtedness of Borrower under the Sumitomo
_ LC Agreement, provided that (A) the only credit
_ extended to Borrower by the Sumitomo LC Banks pursuant
_ to the Sumitomo LC Agreement consists of letters of
_ credit issued for the benefit of MKE or its affiliates
_ to secure obligations owed by Borrower to the
_ beneficiaries for the purchase price of inventory; (B)
_ the sum at any time of the aggregate face amount of all
_ letters of credit issued by the Sumitomo LC Banks under
_ the Sumitomo LC Agreement plus the aggregate amount of
_ all unreimbursed drawings under such letters of credit
_ does not exceed eighty-five million Dollars
_ ($85,000,000); (C) the Indebtedness of Borrower under
_ the Sumitomo LC Agreement is at all times unsecured;
_ and (D) the financial covenants of Borrower set forth
_ in the Sumitomo LC Agreement are not more restrictive
_ than the financial covenants of Borrower set forth in
_ SUBPARAGRAPH 5.02(M);
_
_ (viii) Indebtedness of Borrower to MKE, provided
_ that (A) such Indebtedness is subordinated to the
_ Obligations on terms and conditions no less favorable
_ to the Agents and Banks than those set forth on EXHIBIT
_ R or as otherwise approved by the Required Banks; (B)
_ the Net Proceeds of such Indebtedness are applied to
_ prepay the Term Loans as required by SUBPARAGRAPH
_ 2.05(C); and (C) the aggregate amount of all
_ Subordinated Debt of Borrower (including MKE
_ Subordinated Debt) does not exceed $300,000,000;
_
_ (xi) Indebtedness of Borrower and its Subsidiaries
_ under initial or successive refinancings of any
_ Indebtedness permitted by CLAUSE (II), (III) OR (VI)
_ above, provided that (A) the principal amount of any
_ such refinancing does not exceed the principal amount
_ of the Indebtedness being refinanced and (B) the
_ material terms and provisions of any such refinancing
_ (including maturity, redemption, prepayment, default
_ and subordination provisions) are no less favorable to
_ the Banks than the Indebtedness being refinanced;
_
_ (xvii) Indebtedness of Borrower (other than MKE
_ Subordinated Debt) which is subordinated to the
_ Obligations, provided that (A) the payment terms,
_ interest rate, subordination provisions and other terms
_ of such Indebtedness are reasonably acceptable to the
_ Required Banks; (B) the Net Proceeds of such
_ Indebtedness are applied to prepay the Term Loans as
_ required by SUBPARAGRAPH 2.05(C); and (C) the aggregate
_ amount of all Subordinated Debt of Borrower (including
_ MKE Subordinated Debt) does not exceed $300,000,000;
_ and
_
_ (xviii) Other Indebtedness of Borrower and its
_ Subsidiaries, provided that the aggregate principal
_ amount of all such Indebtedness does not exceed
_ $40,000,000 at any time;
_
_ (hh) SUBPARAGRAPH 5.02(C) is amended by (i) deleting
_ the word "and" at the end of CLAUSE (VIII) thereof; (ii)
_ changing the designation of CLAUSE (IX) to "(x)"; and (iii)
_ adding thereto, immediately after CLAUSE (VIII), a new
_ CLAUSE (IX) to read in its entirety as follows:
_
_ (ix) Sale by Borrower of the property covered by
_ the Borrower Mortgage in a sale and leaseback
_ transaction; and
_
_ (ii) SUBPARAGRAPH 5.02(E) is amended by changing the
_ amount "$50,000,000" in the one place it appears in CLAUSE
_ (X)(A) thereof to "$65,000,000".
_
_ (jj) SUBPARAGRAPH 5.02(F) is amended by deleting the
_ word "and" at the end of CLAUSE (I) thereof.
_
_ (kk) SUBPARAGRAPH 5.02(G) is amended to read in its
_ entirety as follows:
_
_ (g) CAPITAL EXPENDITURES. Borrower and its
_ Subsidiaries shall not pay or incur (without
_ duplication) in any of the periods set forth below
_ Capital Expenditures in an aggregate amount which
_ exceeds the amount set forth opposite such period below
_ (plus, during the first sixty (60) days of any such
_ period, any portion of such permitted amounts of
_ Capital Expenditures not paid or incurred during the
_ immediately preceding period):
_
_ Closing Date -
_ March 31, 1995 $100,000,000;
_ April 1, 1995 -
_ March 31, 1996 $225,000,000;
_ April 1, 1996 -
_ March 31, 1997 $250,000,000;
_ April 1, 1997 -
_ March 31, 1998 $250,000,000;
_ April 1, 1998 -
_ Revolving Loan Maturity Date $125,000,000.
_
_ (ll) SUBPARAGRAPH 5.02(I) is amended to read in its
_ entirety as follows:
_
_ (i) CERTAIN INDEBTEDNESS PAYMENTS, ETC. Neither
_ Borrower nor any of its Subsidiaries shall pay, prepay,
_ redeem, purchase, defease or otherwise satisfy in any
_ manner prior to the scheduled payment thereof any
_ Subordinated Debt; amend, modify or otherwise change
_ the terms of any document, instrument or agreement
_ evidencing Subordinated Debt so as to increase its
_ obligations thereunder or accelerate the scheduled
_ payment thereof; or amend, modify or otherwise change
_ any of the subordination or other provisions of any
_ document, instrument or agreement evidencing
_ Subordinated Debt in a manner which adversely affects
_ the material rights of the Agents and Banks; except as
_ follows:
_
_ (i) Borrower shall prepay the DEC Note as
_ required under SUBPARAGRAPH 5.01(H);
_
_ (ii) Borrower may redeem the Convertible
_ Subordinated Debentures in part in an aggregate
_ amount not exceeding $6,647,250, provided that no
_ Default or Event of Default has occurred and is
_ continuing or would result from such redemption;
_ and
_
_ (iii) Borrower may redeem the Convertible
_ Subordinated Debentures in whole provided that:
_
_ (A) (1) No Default or Event of Default has
_ occurred and is continuing or would result
_ from such redemption; (2) such redemption is
_ made pursuant to a written agreement with an
_ underwriter of recognized standing, whereby
_ the underwriter agrees (x) to purchase all of
_ the Convertible Subordinated Debentures from
_ Borrower on the date of redemption for the
_ aggregate redemption price paid or to be paid
_ by Borrower for such debentures, (y) to
_ convert all of the Convertible Subordinated
_ Debentures so purchased to stock on the date
_ of redemption pursuant to the terms of such
_ debentures and (z) to market such stock in
_ the secondary market; and (3) the net effect
_ of such redemption on Borrower is otherwise
_ the same as a conversion of all of the
_ Convertible Subordinated Debentures by the
_ holders thereof pursuant to the terms of such
_ debentures with no cash payment by Borrower;
_ or
_
_ (B) Such redemption is otherwise approved by
_ Required Banks.
_
_ (mm) SUBPARAGRAPH 5.02(M) is amended by changing CLAUSE
_ (I) thereof to read in its entirety as follows:
_
_ (i) Borrower shall not permit its cumulative
_ Fixed Charge Coverage Ratio for each period set forth
_ below to be less than the ratio set forth opposite such
_ period below:
_
_ October 1, 1994 -
_ December 31, 1994 1.50;
_ October 1, 1994 -
_ March 31, 1995 1.50;
_ October 1, 1994 -
_ June 30, 1995 2.00;
_ October 1, 1994 -
_ September 30, 1995 2.50;
_ January 1, 1995 -
_ December 31, 1995 2.50;
_ April 1, 1995 -
_ March 31, 1996 2.50;
_ Each consecutive four-
_ quarter period ending
_ on the last day of each
_ quarter thereafter 3.00.
_
_ (nn) SUBPARAGRAPH 5.02(M) is further amended by
_ changing CLAUSE (III)(C) thereof to read in its entirety as
_ follows:
_
_ (C) One hundred percent (100%) of the Net
_ Proceeds of all Equity Securities issued by Borrower
_ and its Subsidiaries (excluding any issuance where the
_ total proceeds are less than $10,000,000) during the
_ period commencing on the base date and ending on the
_ determination date; and
_
_ (oo) SUBPARAGRAPH 5.02(M) is further amended by
_ changing CLAUSE (IV) thereof to read in its entirety as
_ follows:
_
_ (iv) Borrower shall not permit its Leverage Ratio
_ during any period set forth below to be more than the
_ ratio set forth opposite such period below:
_
_ From the Closing Date to
_ March 31, 1996 1.35;
_
_ Thereafter 1.10.
_
_ (pp) SUBPARAGRAPH 5.02(M) is further amended by
_ changing CLAUSE (VI) thereof to read in its entirety as
_ follows:
_
_ (vi) Borrower shall not permit its Quick Ratio to
_ be less than 0.85 at any time.
_
_ (qq) 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 (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
_
_ (rr) SUBPARAGRAPH 6.01(E) is amended to read in its
_ entirety as follows:
_
_ (e) (i) Borrower or any of Borrower's
_ Subsidiaries (A) shall fail to make a payment or
_ payments in an aggregate amount of $1,000,000 or more
_ when due under the terms of any bond, debenture, note
_ or other evidence of indebtedness to be paid by such
_ Person (excluding this Agreement and the other Credit
_ Documents or any intercompany Indebtedness between
_ Borrower and any of its Subsidiaries, but including any
_ other evidence of indebtedness of Borrower or any of
_ its Subsidiaries to any Bank) and such failure shall
_ continue beyond any period of grace provided with
_ respect thereto, or (B) shall fail to make any other
_ payment or payments when due under or otherwise default
_ in the observance or performance of any other
_ agreement, term or condition contained in any such
_ bond, debenture, note or other evidence of
_ indebtedness, and the effect of such failure or default
_ is to cause, or permit the holder or holders thereof to
_ cause indebtedness in an aggregate amount of $5,000,000
_ or more to become due prior to its stated date of
_ maturity; or (ii) the beneficiaries of any letters of
_ credit issued under the Sumitomo LC Agreement shall
_ make a drawing or drawings under such letters of
_ credit, Borrower or any of its Subsidiaries shall
_ provide cash collateral or any other security for
_ Borrower's obligations under the Sumitomo LC Agreement,
_ any of the Sumitomo LC Banks or any agent therefor
_ shall demand any such cash collateral or other security
_ or any event of default shall occur under the Sumitomo
_ LC Agreement; or
_
_ (ss) 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 and/or (b) declare all
_ outstanding Obligations payable by Borrower to be
_ immediately due and payable without presentment,
_ demand, protest or any other notice of any kind, all of
_ which are hereby expressly waived, anything contained
_ herein or in the Notes to the contrary notwithstanding.
_ Upon the occurrence or existence of any Event of
_ Default described in SUBPARAGRAPH 6.01(F) or 6.01(G),
_ immediately and without notice, (1) the Commitments and
_ the obligations of the Banks to make Loans shall
_ automatically terminate and (2) all outstanding
_ Obligations payable by Borrower hereunder shall
_ automatically become immediately due and payable,
_ without presentment, demand, protest or any other
_ notice of any kind, all of which are hereby expressly
_ waived, anything contained herein or in the Notes to
_ the contrary notwithstanding. In addition to the
_ foregoing remedies, upon the occurrence or existence of
_ any Event of Default, Administrative Agent may exercise
_ any right, power or remedy permitted to it by law,
_ either by suit in equity or by action at law, or both.
_ Immediately after taking any action under this
_ PARAGRAPH 6.02, Administrative Agent shall notify and
_ each Bank of such action.
_
_ (tt) PARAGRAPH 8.01 is amended by (i) changing the
_ reference to "Borrower, Administrative Agent or LC Paying
_ Agent" on the fifth and sixth lines thereof to "Borrower or
_ Administrative Agent"; (ii) deleting from the proviso at the
_ end of the second sentence thereof the words "or LC Paying
_ Agent"; (iii) deleting the address and telephone and
_ facsimile numbers for the "LC Paying Agent;" and (iv)
_ changing the first sentence after the address of Borrower to
_ read in its entirety as follows:
_
_ Each Notice of Borrowing, Notice of Loan Conversion and
_ Notice of Interest Period Selection shall be given by
_ Borrower to Administrative Agent to the office of 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.
_
_ (uu) 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 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 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 or any Bank in the enforcement or
_ attempted enforcement of any of the Obligations or in
_ preserving any of Agents' or the Banks' rights and
_ remedies (including all such fees and expenses incurred
_ in connection with any "workout" or restructuring
_ affecting the Credit Documents or the Obligations or
_ any bankruptcy or similar proceeding involving Borrower
_ or any of its Subsidiaries)
_
_ (vv) 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,
_
_ (ww) SUBPARAGRAPH 8.04 is amended to read in its
_ entirety as follows:
_
_ 8.04. WAIVERS; AMENDMENTS. Any term,
_ covenant, agreement or condition of this Agreement or
_ any other Credit Document may be amended or waived if
_ such amendment or waiver is in writing and is signed by
_ Borrower and the Required Banks; PROVIDED, HOWEVER
_ that:
_
_ (a) Any amendment, waiver or consent which
_ (i) amends this PARAGRAPH 8.04, (ii) releases any
_ substantial part of the Collateral (other than
_ sales or dispositions of assets permitted under
_ SUBPARAGRAPH 5.02(C)) or (iii) amends the
_ definition of Required Banks must be in writing
_ and signed or approved in writing by all Banks;
_
_ (b) Any amendment, waiver or consent which
_ (i) increases the Total Revolving Loan Commitment,
_ (ii) extends the Revolving Loan Maturity Date,
_ (iii) reduces the principal of or interest on the
_ Revolving Loans or any fees or other amounts
_ payable for the account of the Revolving Loan
_ Banks hereunder, or (iv) postpones any date fixed
_ for any payment of the principal of or interest on
_ the Revolving Loans or any fees or other amounts
_ payable for the account of the Revolving Loan
_ Banks hereunder must be in writing and signed or
_ approved in writing by all Revolving Loan Banks;
_
_ (c) Any amendment, waiver or consent which
_ (i) increases the Total Term Loan Commitment,
_ (ii) extends the Term Loan Maturity Date,
_ (iii) reduces the principal of or interest on the
_ Term Loans or any fees or other amounts payable
_ for the account of the Term Loan Banks hereunder,
_ or (iv) postpones any date fixed for any payment
_ of the principal of or interest on the Term Loans
_ or any fees or other amounts payable for the
_ account of the Term Loan Banks hereunder must be
_ in writing and signed or approved in writing by
_ all Term Loan Banks;
_
_ (d) Any amendment, waiver or consent which
_ increases or decreases the Revolving Loan
_ Proportionate Share or Term Loan Proportionate
_ Share of any Bank must be in writing and signed by
_ such Bank; and
_
_ (e) Any amendment, waiver or consent which
_ affects the rights or obligations of any Agent
_ must be in writing and signed by such Agent.
_
_ No failure or delay by any Agent or any Bank in
_ exercising any right hereunder shall operate as a
_ waiver thereof or of any other right nor shall any
_ single or partial exercise of any such right preclude
_ any other further exercise thereof or of any other
_ right. Unless otherwise specified in such waiver or
_ consent, a waiver or consent given hereunder shall be
_ effective only in the specific instance and for the
_ specific purpose for which given.
_
_ (xx) SUBPARAGRAPH 8.05(B) is amended by changing the
_ reference "CLAUSE (I), (II), (III) OR (IV) OF SUBPARAGRAPH
_ 8.04(A)" where it appears once in the proviso to the second
_ sentence thereof to "CLAUSE (I), (II), (III) OR (IV) OF
_ SUBPARAGRAPH 8.04(B) OR SUBPARAGRAPH 8.04(C), as
_ appropriate".
_
_ (yy) SUBPARAGRAPH 8.05(C) is amended by (i) changing
_ the phrase "Borrower, Administrative Agent and each Issuing
_ Bank" in the two places it appears in CLAUSE (I) thereof to
_ "Borrower and Administrative Agent" and (ii) changing the
_ portion of such subparagraph which appears after CLAUSE (IV)
_ thereof to read in its entirety as follows:
_
_ Upon such execution, delivery, acceptance and recording
_ of each Assignment Agreement, from and after the
_ Assignment Effective Date determined pursuant to such
_ Assignment Agreement, (A) each Assignee Bank thereunder
_ shall be a Bank hereunder with a Revolving Loan
_ Proportionate Share and/or Term Loan Proportionate
_ Share as set forth on ATTACHMENT 1 TO SUCH ASSIGNMENT
_ AGREEMENT and shall have the rights, duties and
_ obligations of such a Bank under this Agreement and the
_ other Credit Documents, and (B) the Assignor Bank
_ thereunder shall be a Bank with a Revolving Loan
_ Proportionate Share and/or Term Loan Proportionate
_ Share as set forth on ATTACHMENT 1 TO SUCH ASSIGNMENT
_ AGREEMENT, or, if the Revolving Loan Proportionate
_ Share and Term Loan Proportionate Share of the Assignor
_ Bank have each been reduced to 0%, the Assignor Bank
_ shall cease to be a Bank; PROVIDED, HOWEVER, that any
_ such Assignor Bank which ceases to be a Bank shall
_ continue to be entitled to the benefits of any
_ provision of this Agreement which by its terms survives
_ the termination of this Agreement. Each Assignment
_ Agreement shall be deemed to amend SCHEDULE I to the
_ extent, and only to the extent, necessary to reflect
_ the addition of each Assignee Bank, the deletion of
_ each Assignor Bank which reduces its Revolving Loan
_ Proportionate Share and Term Loan Proportionate Share
_ to 0% and the resulting adjustment of Revolving Loan
_ Proportionate Shares and/or Term Loan Proportionate
_ Shares arising from the purchase by each Assignee Bank
_ of all or a portion of the rights and obligations of an
_ Assignor Bank under this Agreement and the other Credit
_ Documents. On or prior to the Assignment Effective
_ Date determined pursuant to each Assignment Agreement,
_ Borrower, at its own expense, shall execute and deliver
_ to Administrative Agent, in exchange for the
_ surrendered Revolving Loan Note and/or Term Loan Note
_ of the Assignor Bank thereunder, a new Revolving Loan
_ Note and/or Term Loan Note to the order of each
_ Assignee Bank thereunder (with each new Revolving Loan
_ Note to be in an amount equal to the Revolving Loan
_ Commitment assumed by such Assignee Bank and each new
_ Term Loan Note to be in the original principal amount
_ of the Term Loan then held by such Assignee Bank) and,
_ if the Assignor Bank is continuing as a Bank hereunder,
_ a new Revolving Loan Note and/or Term Loan Note to the
_ order of the Assignor Bank (with the new Revolving Loan
_ Note to be in an amount equal to the Revolving Loan
_ Commitment retained by it and the new Term Loan Note to
_ be in the original principal amount of the Term Loan
_ retained by it). Each such new Note shall be dated the
_ Closing Date and otherwise be in the form of the Note
_ replaced thereby (provided that Borrower shall not be
_ obligated to pay any additional interest to any
_ Assignee Bank in respect to any principal payments made
_ prior to the Effective Date of the Assignment to such
_ Assignee Bank). The Notes surrendered by the Assignor
_ Bank shall be returned by Administrative Agent to
_ Borrower marked "replaced". Each Assignee Bank which
_ was not previously a Bank hereunder and which is not
_ incorporated under the laws of the United States of
_ America or a state thereof shall, within three (3)
_ Business Days of becoming a Bank, deliver to Borrower
_ and Administrative Agent either two duly completed
_ copies of United States Internal Revenue Service Form
_ 1001 or 4224 (or successor applicable form), as the case may
_ be, certifying in each case that such Bank is entitled
_ to receive payments under this Agreement without
_ deduction or withholding of any United States federal
_ income taxes.
_
_ (zz) SUBPARAGRAPH 8.05(D) is amended by changing the
_ phrase "Proportionate Share" where it appears once in the
_ first sentence thereof to "Revolving Loan Proportionate
_ Share and Term Loan Proportionate Share".
_
_ (aaa) SUBPARAGRAPH 8.05(E) is amended by changing the
_ phrase "Proportionate Shares" where it appears once in the
_ last sentence thereof to "Revolving Loan Proportionate
_ Shares and Term Loan Proportionate Shares".
_
_ (bbb) SCHEDULE I is amended to read in its entirety as
_ set forth in ATTACHMENT 1 hereto.
_
_ (ccc) SCHEDULE II is deleted in its entirety.
_
_ (ddd) SCHEDULE 2.01A(K) is deleted in its entirety.
_
_ (eee) EXHIBIT P is amended by changing ATTACHMENT 1
_ thereto to read in its entirety as set forth in ATTACHMENT 2
_ hereto.
_
_ (fff) EXHIBIT S is amended by (i) changing the term
_ "Proportionate Share" where it appears once in PARAGRAPH 2
_ thereof, twice in PARAGRAPH 4 thereof, once in PARAGRAPH 5
_ thereof and twice in PARAGRAPH 10 thereof to "Revolving Loan
_ Proportionate Share and Term Loan Proportionate Share"; (ii)
_ changing the phrase "set forth under the caption
_ 'Proportionate Share' opposite such Assignee Bank's name on
_ ATTACHMENT 1 hereto" at the end of PARAGRAPH 2 thereof to
_ "set forth under the captions 'Revolving Loan Proportionate
_ Share' and 'Term Loan Proportionate Share,' respectively,
_ opposite such Assignee Bank's name on ATTACHMENT 1 hereto";
_ and (iii) changing ATTACHMENT 1 thereto to read in its
_ entirety as set forth in ATTACHMENT 3 hereto.
_
_ (ggg) EXHIBIT U is amended by (i) changing the amount
_ "US$50,000,000" where it appears twice therein to
_ "US$[_____________]"; (ii) changing the word and year
_ "[Date], 1994" where it appears once therein to "[Date]";
_ and (iii) changing the words "Fifty Million U.S. Dollars"
_ where it appears once therein to "[_____________] U.S.
_ Dollars".
_
_ (hhh) EXHIBIT V, EXHIBIT W and EXHIBIT X are deleted in
_ their entirety.
_
_
_ 3. REPRESENTATIONS AND WARRANTIES. Borrower hereby
_represents and warrants to the Existing Banks and the New Bank
_(collectively, 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 September 29, 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, the Banks and their
_respective counsel:
_
_ (a) This Amendment duly executed by Borrower, each
_ Bank and Agent;
_
_ (b) A new Revolving Loan Note for each Bank which will
_ have a Revolving Loan Commitment after the Effective Date in
_ the amount of such Revolving Loan Commitment, duly executed
_ by Borrower;
_
_ (c) 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;
_
_ (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 Effective 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) An amendment to the Borrower Mortgage to reflect
_ the increase in the "Obligations" secured thereby from
_ $350,000,000 to $450,000,000 duly executed by Borrower and
_ Administrative Agent and appropriately notarized for
_ recording in Massachusetts;
_
_ (g) 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;
_
_ (h) A copy of the Credit Agreement dated as of
_ September 22, 1995 among Borrower, The Sumitomo Bank,
_ Limited and certain other banks, duly executed by each of
_ the parties thereto;
_
_ (i) An amendment fee for each Bank which currently is
_ a party to the Credit Agreement, in an amount equal to
_ 0.0625% of the sum of (i) such Bank's current Revolving Loan
_ Commitment plus (ii) the current amount of such Bank's Term
_ Loan;
_
_ (j) A participation fee (i) for each Existing Bank
_ which increases its Revolving Loan Commitment pursuant to
_ this Amendment, in an amount equal to 0.25% of the remainder
_ of (A) such increase minus (B) the principal payment on such
_ Bank's Term Loan due on October 2, 1995; and (ii) for the
_ New Bank in an amount equal to 0.25% of the New Bank's
_ Revolving Loan Commitment;
_
_ (k) All LC Issuance Fees, LC Usage Fees and all other
_ fees and amounts, if any, payable to Administrative Agent,
_ the Banks, the Issuing Banks and the LC Paying Agent and
_ accrued through and unpaid on the Effective Date pursuant to
_ the Issuing Banks' Fee Letter, the LC Applications or any
_ other existing Credit Document; and
_
_ (l) 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.
_
_On the Effective Date, Administrative Agent shall calculate the
_Revolving Loan Proportionate Share of each Bank which then has a
_Revolving Loan Commitment (a "REVOLVER BANK") in each Revolving
_Loan Borrowing which is then outstanding. Based upon such
_calculation, the Revolver Banks shall purchase from and sell to
_each other on the Effective Date such participations in the
_outstanding Revolving Loans as Administrative Agent determines
_are necessary to cause each Revolver Bank to hold a Revolving
_Loan in each Revolving Loan Borrowing in a principal amount equal
_to such Revolver Bank's Revolving Loan Proportionate Share of
_such Revolving Loan Borrowing.
_
_
_ 5. 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. Without limiting the generality of
_the foregoing, Borrower expressly agrees that the execution,
_delivery and effectiveness of this Amendment shall not terminate
_any obligation of Borrower to any Issuing Bank or any other Bank
_or to LC Paying Agent or any other Agent in connection with the
_Existing Letters of Credit, including, without limitation, any
_obligation of Borrower to pay (a) any accrued and unpaid fees
_payable under the Issuing Bank's Fee Letter, the LC Applications,
_the Letters of Credit or the LC Paying Agent Agreement; (b) any
_increased costs, indemnity amounts, 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 LC Paying
_Agent or any of the Issuing Banks which are payable under the
_Issuing Bank's Fee Letter, the LC Applications, the Letters of
_Credit or the LC Paying Agent 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 to the LC Paying Agent or an Issuing
_Bank described in CLAUSES (A) AND (B) above.
_
_
_ 6. 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.
_
_
_ 7. 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: G. Edward McClammy
_ Name: G. Edward McClammy
_ Title: Director of Finance
_ and Treasurer
_
_
_
_
_MANAGING AGENTS: ABN AMRO BANK N.V., San Francisco
_ International Branch,
_ As a Managing Agent
_
_
_ By: Robin S. Yim
_ Name: Robin S. Yim
_ Title: Vice President
_
_
_ By: Robert N. Hartinger
_ Name: Robert N. Hartinger
_ Title: Group Vice President
_
_
_
_ BARCLAYS BANK PLC,
_ As a Managing Agent
_
_
_ By: James C. Tan
_ Name: James C. Tan
_ Title: Associate Director
_
_
_
_ CIBC INC.,
_ As a Managing Agent
_
_
_ By: Stanley Sakai
_ Name: Stanley Sakai
_ Title: Vice President
_ADMINISTRATIVE AGENT: CANADIAN IMPERIAL BANK OF COMMERCE,
_ As Administrative Agent
_
_
_ By: Stanley Sakai
_ Name: Stanley Sakai
_ Title: Vice President
_
_
_
_LC PAYING AGENT: BANK OF AMERICA NATIONAL TRUST &
_ SAVINGS ASSOCIATION,
_ As LC Paying Agent
_
_
_ By: Wendy M. Young
_ Name: Wendy M. Young
_ Title: Vice President
_
_
_
_EXISTING BANKS: ABN AMRO BANK N.V., San Francisco
_ International Branch,
_ As a Bank
_
_
_ By: Robin S. Yim
_ Name: Robin S. Yim
_ Title: Vice President
_
_
_ By: Robert N. Hartinger
_ Name: Robert N. Hartinger
_ Title: Group Vice President
_
_
_
_ BARCLAYS BANK PLC,
_ As a Bank
_
_
_ By: James C. Tan
_ Name: James C. Tan
_ Title: Associate Director
_
_
_ By: James K. Downey
_ Name: James K. Downey
_ Title: Associate Director
_
_
_
_ CIBC INC.,
_ As a Bank
_
_
_ By: Stanley Sakai
_ Name: Stanley Sakai
_ Title: Vice President
_
_
_ BANK OF AMERICA NATIONAL TRUST &
_ SAVINGS ASSOCIATION,
_ As a co-agent and as a Bank
_
_
_ By: Kevin McMahon
_ Name: Kevin McMahon
_ Title: Vice President
_
_
_ CHEMICAL BANK,
_ As a co-agent and as a Bank
_
_
_ By: John J. Huber III
_ Name: John J. Huber III
_ Title: Managing Director
_
_
_
_ THE FIRST NATIONAL BANK OF BOSTON,
_ As a co-agent and as a Bank
_
_
_
_ By: Melissa S. Forbes
_ Name: Melissa S. Forbes
_ Title: Vice President
_
_
_
_ THE INDUSTRIAL BANK OF JAPAN,
_ LIMITED,
_ As a co-agent and as a Bank
_
_
_ By: Makoto Masuda
_ Name: Makoto Masuda
_ Title: Joint General Manager
_
_ THE BANK OF NOVA SCOTIA,
_ As a Bank
_
_
_ By: Chris Johnson
_ Name: Chris Johnson
_ Title: Sr. Relationship Mgr.
_
_
_
_ FLEET BANK OF MASSACHUSETTS, N.A.,
_ As a Bank
_
_
_ By: Thomas W. Davies
_ Name: Thomas W. Davies
_ Title: Vice President
_
_
_
_ THE LONG-TERM CREDIT BANK OF JAPAN,
_ LTD.,
_ As a Bank
_
_
_ By: Motokazu Uematsu
_ Name: Motokazu Uematsu
_ Title: Deputy General Mgr.
_
_
_
_ THE NIPPON CREDIT BANK, LTD.,
_ As a Bank
_
_
_ By: Kenneth W. McNerny
_ Name: Kenneth W. McNerny
_ Title: V.P. and Sr. Manager
_
_
_ By: Masaki Iwataki
_ Name: Masaki Iwataki
_ Title: Vice President and Mgr.
_
_
_
_ SANWA BANK CALIFORNIA,
_ As a Bank
_
_
_ By: Robert R. Shutt
_ Name: Robert R. Shutt
_ Title: Vice President
_
_
_
_ SHAWMUT BANK, N.A.,
_ As a Bank
_
_
_ By: Frank H. Benesh, III
_ Name: Frank H. Benesh III
_ Title: Director
_
_
_
_ THE SUMITOMO BANK, LIMITED,
_ As a Bank
_
_
_ By: Yuji Harada
_ Name: Yuyi Harada
_ Title: General Manager
_
_
_
_ By: Herman White, Jr.
_ Name: Herman White, Jr.
_ Title: Vice President
_
_
_
_ UNION BANK,
_ As a Bank
_
_
_ By: N. Brusati Dias
_ Name: N. Brusati Dias
_ Title: VP and District Mgr.
_
_
_
_NEW BANK: THE FUJI BANK, LIMITED,
_ As a Bank
_
_
_ By: Kazuo Kamio
_ Name: Kazuo Kamio
_ Title: General Manager
_
_
_
<PAGE>
EXHIBIT 10.32
QUANTUM CORPORATION
_
_ U.S. $85,000,000
_
_ CREDIT AGREEMENT
_
_ DATED AS OF SEPTEMBER 22, 1995
_
_ AMONG
_
_ QUANTUM CORPORATION,
_
_ THE SUMITOMO BANK, LIMITED
_
_ AS AGENT AND ISSUER
_
_ AND
_
_ THE OTHER BANKS PARTY HERETO
_
_ CREDIT AGREEMENT
_
_
_
_
_ This CREDIT AGREEMENT is entered into as of September 22,
_1995, among QUANTUM CORPORATION, a Delaware corporation (the
_"Company"), the several financial institutions party to this
_Agreement (collectively, the "Banks," and individually, a
_"Bank"), and THE SUMITOMO BANK, LIMITED, acting through its San
_Francisco Branch, as agent for the Banks (in such capacity, the
_"Agent") and as Issuer (as defined below).
_
_ WHEREAS, at the request of the Company, the Banks have
_agreed to make available to the Company a letter of credit
_facility upon, and subject to, the terms and conditions set forth
_in this Agreement;
_
_ NOW, THEREFORE, in consideration of the mutual agreements,
_provisions and covenants contained herein, the parties agree as
_follows:
_
_ARTICLE I. DEFINITIONS.
_
_ 1.1 DEFINED TERMS. In addition to the terms defined
_elsewhere in this Agreement, the following terms have the
_following meanings:
_
_ "AGGREGATE COMMITMENT" means the Commitments of the
_Banks in the aggregate amount of eighty-five million dollars
_($85,000,000), as such amount may be reduced from time to time
_pursuant to this Agreement.
_
_ "AGREEMENT" means this Credit Agreement, as amended,
_supplemented or modified from time to time.
_
_ "AVAILABILITY PERIOD" means the period commencing on
_the Closing Date and ending on the Termination Date.
_
_ "BUSINESS DAY" means any day other than a Saturday,
_Sunday or other day on which commercial banks in San Francisco
_are authorized or required by law to close.
_
_ "CLOSING DATE" means the date on which the initial
_Letter of Credit is issued hereunder.
_
_ "COMMITMENT" means, for each Bank, the amount set forth
_opposite such Bank's name in Schedule 2.1 under the heading
_"Commitment", as the same may be reduced pursuant to Section 2.6
_or as a result of one or more assignments pursuant to Section
_9.8, or, where the context so requires, the obligation of each
_Bank to participate in Letters of Credit (including in drawings
_thereunder) in the aggregate up to such amount on the terms and
_conditions set forth in this Agreement.
_
_ "CREDIT EXTENSION" means (a) the issuance of (including
_the participation by a Bank in), any Letters of Credit under
_subsection 2.1; and (b) the amendment (including the
_participation by a Bank in), of any Letters of Credit under
_subsection 2.2.
_
_ "DEFAULT" means any event which, with the giving of
_notice, the lapse of time, or both, would constitute an Event of
_Default.
_
_ "DOCUMENTS" means this Agreement, the Letters of
_Credit, and all other documents delivered and to be delivered to
_the Agent, the Issuer or the Banks in connection therewith.
_
_ "DOLLARS", and "dollars" and "$" each mean lawful money
_of the United States.
_
_ "EFFECTIVE AMOUNT" means with respect to any
_outstanding Letter of Credit Obligations on any date the amount
_of such Letter of Credit Obligations on such date after and
_giving effect to any issuances and amendments of Letters of
_Credit occurring on such date and any other changes in the
_aggregate amount of the Letter of Credit Obligations as of such
_date, including as a result of any reimbursements of outstanding
_unpaid drawings under any Letters of Credit or any reductions in
_the maximum amount available for drawing under Letters of Credit
_taking effect on such date.
_
_ "EVENT OF DEFAULT" means any of the events specified in
_Section 7.1.
_
_ "EXISTING CREDIT FACILITY" means the Credit Agreement
_dated as of October 3, 1994, as amended by that certain First
_Amendment to Credit Agreement dated as of February 15, 1995, and
_that certain Second Amendment to Credit Agreement dated as of
_June 26, 1995, among the Company, the banks named therein, ABN
_AMRO Bank, N.V., Barclays Bank PLC and CIBC Inc., as managing
_agents and Canadian Imperial Bank of Commerce, as administrative
_agent and collateral agent, as the same may be amended, modified,
_supplemented or restated from time to time.
_
_ "EXISTING LETTERS OF CREDIT" means all letters of
_credit issued for the account of the Company pursuant to the
_Existing Credit Facility and outstanding thereunder as of the
_Closing Date.
_
_ "FED FUNDS RATE" shall have the meaning set forth for
_such term in Schedule 1.1 hereto.
_
_ "FEDERAL RESERVE BOARD" means the Board of Governors of
_the Federal Reserve System or any successor thereof.
_
_ "GAAP" means generally accepted accounting principles
_set forth in the opinions and pronouncements of the Accounting
_Principles Board and the American Institute of Certified Public
_Accountants and statements and pronouncements of the Financial
_Accounting Standards Board (or agencies with similar functions of
_comparable stature and authority within the accounting
_profession), or in such other statements by such other entity as
_may be in general use by significant segments of the U.S.
_accounting profession, which are applicable to the circumstances
_as of the date of determination.
_ "GOVERNMENTAL AUTHORITY" means any nation or
_government, any state or other political subdivision thereof, any
_central bank (or similar monetary or regulatory authority),
_thereof, any entity exercising executive, legislative, judicial,
_regulatory or administrative functions of or pertaining to
_government, and any corporation or other entity owned or
_controlled, through stock or capital ownership or otherwise, by
_any of the foregoing.
_
_ "IKEI" means Ireland-Kotobuki Electronics Industries,
_Ltd., a subsidiary of MKE.
_
_ "INSOLVENCY PROCEEDING" means (a) any case, action or
_proceeding before any court or other Governmental Authority
_relating to bankruptcy, reorganization, insolvency, liquidation,
_receivership, dissolution, winding-up or relief of debtors, or
_(b) any general assignment for the benefit of creditors,
_composition, marshalling of assets for creditors or other,
_similar arrangement in respect of its creditors generally or any
_substantial portion of its creditors; in each case of (a) and (b)
_undertaken under U.S. Federal, State or foreign law.
_
_ "ISSUER" means The Sumitomo Bank, Limited, and its
_successors and assigns.
_
_ "ISSUING OFFICE" means, with respect to the Issuer or
_any Bank, the office or offices of the Issuer or such Bank from
_which it may make, or at which it may maintain, any extension of
_credit hereunder (or in the case of the Issuer, issue a Letter of
_Credit), as the Issuer or such Bank may from time to time specify
_to the Company and the Agent.
_
_ "LETTER OF CREDIT" means any standby letter of credit
_issued pursuant to Article II and all amendments thereto.
_
_ "LETTER OF CREDIT OBLIGATIONS" means at any time the
_sum of (a) all Letter of Credit Outstandings, plus (b) all
_drawings under all Letters of Credit which are unreimbursed or
_unpaid by the Company.
_
_ "LETTER OF CREDIT OUTSTANDINGS" means the aggregate
_undrawn amount of all Letters of Credit.
_
_ "MAJORITY BANKS" means at any time Banks holding at
_least 66-2/3% of the aggregate participations of the Banks in the
_Letter of Credit Obligations then outstanding, or if no such
_Letter of Credit Obligations are outstanding, Banks holding at
_least 66-2/3% of the Aggregate Commitment.
_
_ "MATERIAL ADVERSE EFFECT" means a material adverse
_change in, or a material adverse effect upon, any of (a) the
_operations, business, properties, or condition (financial or
_otherwise) of the Company or the Company and its Subsidiaries
_taken as a whole; (b) the ability of the Company to perform under
_any Document or to avoid any Event of Default; or (c) the
_legality, validity, binding effect or enforceability of any
_Document.
_
_ "MATERIAL SUBSIDIARIES" means, with reference to the
_Company, (a) Quantum Peripherals (Malaysia) Sdn. Bhd., Quantum
_Data Storage B.V., and Rocky Mountain Magnetics, Inc., provided
_that, if the Company sells all of the equity securities held by
_the Company in any of the foregoing Subsidiaries, and such sale
_does not breach the terms of the Existing Credit Agreement, such
_Subsidiary shall cease to be a Material Subsidiary; (b) Quantum
_Peripherals (Europe) S.A.; (c) each other Subsidiary of the
_Company whose obligation is secured by a Letter of Credit; and
_(d) each other Subsidiary of the Company which has assets with a
_total book value greater than $50,000,000.
_
_ "MKE" means Matsushita-Kotobuki Electronics Industries,
_Ltd.
_
_ "NET INCOME" means, for any period, the net positive
_income, if any, of the Company on a consolidated basis for such
_period after provision for income taxes.
_
_ "NET WORTH" means, at any time, the remainder at such
_time, determined on a consolidated basis in accordance with GAAP,
_of (a) the total assets of the Company on a consolidated basis
_MINUS (b) the sum (without limitation and without duplication of
_deductions) of (i) the total liabilities of the Company and its
_Subsidiaries and (ii) all reserves established by the Company and
_its Subsidiaries for anticipated losses and expenses (to the
_extent not deducted in calculating total assets in clause (a)
_above).
_
_ "OBLIGATIONS" means all Letter of Credit Obligations,
_and other indebtedness advances, debts, liabilities, obligations,
_covenants and duties owing by the Company to any Bank, the Agent,
_the Issuer or any other Person required to be indemnified under
_any Document, of any kind or nature, present or future, whether
_or not evidenced by any note, guaranty or other instrument,
_arising under this Agreement, under any other Document, whether
_or not for the payment of money, whether arising by reason of an
_extension of credit, loan, guaranty, indemnification or in any
_other manner, whether direct or indirect (including those
_acquired by assignment), absolute or contingent, due or to become
_due, now existing or hereafter arising and however acquired.
_
_ "PERCENTAGE SHARE" means as to any Bank, the percentage
_equivalent of such Bank's Commitment divided by the Aggregate
_Commitment. The initial Percentage Share of each Bank is set
_forth opposite such Bank's name in Schedule 2.1 under the heading
_"Percentage Share."
_
_ "PERSON" means an individual, partnership, company,
_corporation, business trust, joint stock company, trust,
_unincorporated association, joint venture or Governmental
_Authority.
_
_ "PRIME RATE" means the rate of interest publicly
_announced from time to time by Sumitomo Bank of California in San
_Francisco, California, as its prime or base rate. Any change in
_prime or base rate announced by Sumitomo Bank of California shall
_take effect at the opening of business on the day specified in
_the public announcement of such change. The Prime Rate is
_determined by Sumitomo Bank of California from time to time as a
_means of pricing credit extensions to some customers and is
_neither directly tied to any external rate of interest or index
_nor necessarily the lowest rate of interest charged by Sumitomo
_Bank of California at any given time for any particular class of
_customers or credit extensions.
_
_ "QUICK RATIO" shall mean, at any time, the ratio,
_determined on a consolidated basis in accordance with GAAP, of
_(a) the sum at such time of all cash, cash equivalents (less than
_90 days in term), short term marketable securities (less than one
_year in term) and accounts receivable of the Company and its
_Subsidiaries (less all reserves therefor); to (b) the current
_liabilities of the Company and its Subsidiaries at such time.
_
_ "REQUIREMENT OF LAW" means, as to any Person, any law
_(statutory or common), treaty, rule or regulation or
_determination of an arbitrator or of a Governmental Authority, in
_each case applicable to or binding upon the Person or any of its
_property or to which the Person or any of its property is
_subject.
_
_ "SUBSIDIARY" of any Person means any corporation,
_company, partnership, joint venture or other entity of which more
_than 50% of the outstanding voting securities or equivalent
_interests having ordinary voting power to elect a majority of the
_board of directors or comparable body of such corporation,
_company, partnership, joint venture or other entity (irrespective
_of whether or not at the time voting securities or equivalent
_interests or any other class or classes shall or might have
_voting power upon the occurrence of any contingency) is at the
_time owned or controlled, directly or indirectly, by such Person
_or by one or more Subsidiaries of such Person or by such Person
_and one or more Subsidiaries of such Person.
_
_ "SUMITOMO" means The Sumitomo Bank, Limited.
_
_ "TERMINATION DATE" means the date which is the first
_anniversary of the Closing Date, unless such Termination Date is
_otherwise extended in accordance with Section 2.14 hereof.
_
_ "UNITED STATES" and "U.S." each means the United States
_of America.
_
_ 1.2 OTHER DEFINITIONAL PROVISIONS.
_
_ (A) DEFINED TERMS. The meaning of defined terms shall
_be equally applicable to the singular and plural forms of the
_defined terms.
_
_ (B) THE AGREEMENT. The words "hereof," "herein,"
_"hereunder" and words of similar import when used in this
_Agreement shall refer to this Agreement as a whole and not to any
_particular provision of this Agreement; and section, schedule and
_exhibit references are to this Agreement unless otherwise
_specified.
_
_ (C) CAPTIONS. The captions and headings of this
_Agreement are for convenience of reference only and shall not
_affect the construction of this Agreement.
_
_ (D) INDEPENDENCE OF PROVISIONS. The parties
_acknowledge that this Agreement and other Documents may use
_several different limitations, tests or measurements to regulate
_the same or similar matters, and that such limitations, tests and
_measurements are cumulative and must each be performed, except as
_expressly stated to the contrary in this Agreement.
_
_ 1.3 ACCOUNTING PRINCIPLES. (a) Unless the context
_otherwise clearly requires, all accounting terms not expressly
_defined herein shall be construed, and all financial computations
_required under this Agreement shall be made, in accordance with
_GAAP, consistently applied, (b) References herein to "fiscal
_year" and "fiscal quarter" refer to such fiscal periods of the
_Company.
_
_ARTICLE II. THE LETTER OF CREDIT FACILITY.
_
_ 2.1 THE LETTERS OF CREDIT.
_
_ (A) Subject to the terms and conditions of this
_Agreement (including those set out in Article IV hereof) and to
_the receipt by the Agent of the Company's completed irrevocable
_written request in the form of EXHIBIT A hereto no later than
_11:00 a.m. (San Francisco time) on the third Business Day (except
_for the initial Letter of Credit, in which case such request must
_be received by no later than 11:00 a.m. (San Francisco time) one
_Business Day) prior to the requested date of issuance, and in
_reliance upon the representations and warranties of the Company
_set forth herein, at any time and from time to time on any
_Business Day during the Availability Period, the Issuer (as
_fronting bank on behalf of the Banks) shall issue for the account
_of the Company such Letters of Credit as the Company may request
_pursuant to the terms and conditions hereof, each in the form of
_EXHIBIT B hereto (or in such other form as may be agreed upon by
_the Banks, the Issuer, the Agent and the Company). Each such
_Letter of Credit shall be denominated in Dollars and in an amount
_not less than $1 million; provided that the sum of (i) the
_maximum face amount of all Letters of Credit to be issued on the
_proposed day of issuance plus (ii) the amount of the Letter of
_Credit Obligations outstanding on that day (as a result of
_issuances, amendments or otherwise) shall not exceed the
_Aggregate Commitment. The beneficiary of each such Letter of
_Credit shall be MKE, IKEI, or, upon the consent of the Majority
_Banks, any other 100% wholly owned Subsidiary of MKE.
_Notwithstanding anything to the contrary contained in this
_Agreement, no Letter of Credit shall have a term in excess of six
_months, or an expiration date that is later than the Termination
_Date.
_
_ (B) Simultaneously with (and automatically upon) the
_issuance of each Letter of Credit, the Banks shall be deemed to
_have purchased a 100% participation from the Issuer, without
_recourse to or warranty from the Issuer, in such Letter of Credit
_(as it may be amended from time to time pursuant hereto),
_including in all amounts payable by the Issuer in respect
_thereof; each Bank's share in such 100% participation shall be
_proportionate to such Bank's Percentage Share of the Aggregate
_Commitment.
_
_ (C) Upon the making of any drawing under a Letter of
_Credit by such beneficiary, the full amount of such drawing shall
_be immediately due and payable by the Company to the Issuer, and
_the Company shall, on demand of the Issuer, pay the full amount
_of such drawing to the Issuer (through the Agent) on the date of
_such drawing.
_
_ (d) Within the limits of the Aggregate Commitment, and
_subject to the other terms and conditions hereof, this is a
_revolving letter of credit facility, and the Company may, during
_the Availability Period, request Letters of Credit to replace
_Letters of Credit which have expired or which have been drawn
_upon and been fully reimbursed by the Company.
_
_ 2.2 AMENDMENTS TO LETTERS OF CREDIT.
_
_ (A) The Issuer and the Banks agree that, at the
_request of the Agent and on and subject to the terms and
_conditions hereinafter set forth (including Article IV hereof and
_the receipt by the Agent of the Company's completed irrevocable
_written request in the form of EXHIBIT C hereto no later than
_11:00 a.m. (San Francisco time) on the third Business Day prior
_to the requested date of issuance of such amendment and, where
_required as determined by the Agent and the Issuer, the consent
_of the corresponding beneficiaries), from time to time on any
_Business Day during the Availability Period, the Issuer shall
_issue on the date requested by the Company the following types of
_amendments to Letters of Credit as requested by the Company: (i)
_amendments extending or accelerating the expiry dates of Letters
_of Credit, provided that no extended expiry date shall be later
_than the earlier of (A) six months after the expiry date of such
_Letter of Credit immediately prior to such amendment, and (B) the
_Termination Date; and (ii) amendments increasing or decreasing
_the maximum amounts available for drawings under Letters of
_Credit, provided that no such increase shall cause the Effective
_Amount of the Letter of Credit Obligations as of the date of the
_amendment to exceed the Aggregate Commitment.
_
_ (B) The Agent shall request the consent of the Banks
_and the Issuer to the Company's request for any amendments to
_Letters of Credit not described in subsection (a). Such
_amendments may be issued only pursuant to the agreement of the
_Agent, the Banks, the Issuer and the Company.
_
_ 2.3 REIMBURSEMENTS.
_
_ (A) PAYMENTS UNDER LETTERS OF CREDIT. Without
_limiting any other obligations of the Company hereunder including
_under Section 2.1, the Company shall pay and reimburse the Agent,
_for the account of (and for payment to) the Issuer and each Bank,
_for all amounts paid by the Issuer and such Bank under or in
_respect of each Letter of Credit issued by the Issuer for the
_Company's account hereunder. Each payment or reimbursement shall
_be made on the same Business Day as, or, upon the request of the
_Issuer or the Agent, one Business Day prior to, the date on which
_each such payment is to be made by the Issuer under a Letter of
_Credit.
_
_ (B) INTEREST. The Company shall pay interest on the
_amounts paid by the Issuer and each Bank under or in respect of a
_Letter of Credit (and any other overdue amounts payable
_hereunder), at a rate per annum equal to the Prime Rate plus two
_percent (2.00%) until such amounts are paid or reimbursed by the
_Company in full. The Company shall pay interest on each such
_amount on demand of the Agent, and on the day on which it pays or
_reimburses the Agent for drawings under Letters of Credit such
_amount in accordance with Section 2.
_
_ (C) CHARGES AND EXPENSES. The Company shall reimburse
_the Agent for the account of the Agent, the Issuer and each Bank,
_as applicable, for all charges and expenses incurred by the
_Agent, the Issuer and such Bank with respect to the issuance,
_amendment and payment of a Letter of Credit issued by the Issuer
_for the Company's account. The Agent shall bill the Company for
_all such charges and expenses incurred by the Agent, the Issuer
_and each Bank, provided that the failure of the Agent to so bill
_the Company, shall not affect the Company's obligations to pay
_the relevant amount. The Company shall pay each such bill within
_ten Business Days after the date of the billing statement.
_
_ 2.4 FEES.
_
_ (A) FACILITY AND ADMINISTRATIVE FEES. The Company
_shall pay to the Agent (i) for the ratable benefit of the Banks,
_on the Closing Date, a one-time facility fee in the amount of
_$42,500; and (ii) for the account of the Agent and the Issuer, an
_administrative fee as separately agreed by a letter dated as of
_September 22, 1995 between the Agent and the Company.
_
_ (B) LETTER OF CREDIT FEE. So long as any Letter of
_Credit Outstandings exist the Company shall pay to the Agent (i)
_for the ratable benefit of each Bank, a Letter of Credit fee with
_respect to the Letters of Credit equal to 0.36% per annum, and
_(ii) for the benefit of the Issuer a Letter of Credit fee equal
_to 0.04% per annum, of the amount at such time of the Letter of
_Credit Outstandings, in arrears on the last Business Day of each
_calendar quarter (commencing September 30, 1995) and on the
_Termination Date.
_
_ 2.5 LOAN ACCOUNTS. All sums owing to the Agent, the Issuer
_and each Bank shall be evidenced by one or more accounts
_maintained by the Agent in the ordinary course of business. The
_accounts maintained by the Agent shall be conclusive evidence
_absent manifest error of the amount of all sums owing to Agent,
_the Issuer and the Banks by the Company and the interest and
_payments thereon and other amounts due and payable hereunder.
_Any failure so to record or any error in doing so shall not,
_however, limit or otherwise affect the obligation of the Company
_hereunder to pay any amount owing with respect thereto.
_
_ 2.6 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. The
_Company may, upon not less than 10 Business Days' prior notice to
_the Agent (which notice, absent consent of the Agent, shall be
_binding and irrevocable) terminate the Aggregate Commitment or
_permanently reduce the Aggregate Commitment by an aggregate
_minimum amount of Five Million Dollars ($5,000,000) or any
_multiple thereof; provided that no such reduction or termination
_shall be permitted if the Effective Amount of Letter of Credit
_Obligations on the effective date thereof would exceed the amount
_of the Aggregate Commitment then in effect; and, provided,
_further, that once reduced in accordance with this Section 2.6,
_the Aggregate Commitment may not be increased. Any reduction of
_the Aggregate Commitment shall be applied to each Bank's
_Commitment in accordance with its respective Percentage Share.
_The Agent shall give each Bank prompt notice of any such request
_for reduction or termination of the Aggregate Commitment received
_from the Company.
_
_ 2.7 COMPUTATION OF FEES AND INTEREST. All computations of
_fees and interest payable hereunder and under any other Document
_shall be made on the basis of a year of 360 days and accrual days
_elapsed, which results in more interest being paid than if
_computed on the basis of a 365-day year. Interest and fees shall
_accrue during each period during which interest or such fees
_are computed from the first day thereof to the last day thereof.
_Each determination by the Agent of an interest rate or fee or
_other amount owing pursuant to any provision of this Agreement
_shall be conclusive and binding on the Company and the Banks in
_the absence of manifest error.
_
_ 2.8 ISSUANCE AND DRAWINGS.
_
_ (A) REQUESTS FOR ISSUANCE AND AMENDMENT. The Agent
_shall give notice to the Issuer and each Bank of written requests
_received by the Agent from the Company for issuance of Letters of
_Credit pursuant to Section 2.1 or for amendment to Letters of
_Credit pursuant to Section 2.2, within one Business Day of their
_receipt by the Agent, provided that the Agent shall incur no
_liability whatsoever for its failure to do so.
_
_ (B) ISSUANCE BY THE ISSUER OF LETTERS OF CREDIT.
_Subject to the terms and conditions set forth herein, the Issuer
_shall issue each Letter of Credit not later than 3:00 p.m. (San
_Francisco time) on the date of issuance requested by the Company.
_The Issuer shall deliver each Letter of Credit to the advising
_bank named in such Letter of Credit or to the beneficiary thereof
_if no advising bank is named. The Issuer shall also deliver to
_the Agent a true and complete copy of each such Letter of Credit.
_
_ (C) DRAWINGS.
_
_ (i) The Issuer shall promptly notify the Company,
_ the Agent and each Bank of a drawing by a beneficiary under
_ a Letter of Credit. In determining whether to pay a drawing
_ under any Letter of Credit, the Issuer shall be solely
_ responsible for determining that the documents and
_ certificates required to be delivered under the Letter of
_ Credit have been delivered and that they comply on their
_ face with the requirements of such Letter of Credit.
_
_ (ii) As between the Company and the Banks and the
_ Issuer, the Company assumes all risks of the acts and
_ omissions of, or misuse of any Letter of Credit by, the
_ respective beneficiaries of the Letters of Credit. In
_ furtherance and not in limitation of the foregoing, the
_ Issuer shall not be responsible: (1) for the form,
_ validity, sufficiency, accuracy, genuineness or legal effect
_ of any document submitted by any party in connection with
_ the application for and issuance of or any drawing under the
_ Letters of Credit, even if it should in fact prove to be in
_ any or all respects invalid, insufficient, inaccurate,
_ fraudulent or forged, or for any breach, default or non-
_ compliance with any related agreement; (2) for the validity
_ or sufficiency of any instrument transferring or assigning
_ or purporting to transfer or assign any Letter of Credit or
_ the rights or benefits thereunder or proceeds thereof, in
_ whole or in part, which may prove to be invalid or
_ ineffective for any reason; (3) for failure of the
_ beneficiary of any Letter of Credit to comply fully with
_ conditions required in order to draw upon any Letter of
_ Credit; (4) for errors, omissions, interruptions or delays
_ in transmission or delivery of any messages, by mail, cable,
_ telegraph, facsimile, telex or otherwise; (5) for any loss
_ or delay in the transmission or otherwise of any document
_ required in order to make a drawing under any Letter of
_ Credit or of the proceeds thereof; (6) for the
_ misapplication by the beneficiary of any Letter of Credit of
_ the proceeds of any drawing under such Letter of Credit; and
_ (7) for any consequences arising from causes beyond the
_ control of the Issuer, including any acts of a Government
_ Authority. None of the above shall affect, impair, or
_ prevent the vesting of any of the Issuer's rights or powers
_ hereunder.
_
_ In furtherance and extension and not in limitation
_ of the specific provisions hereinabove set forth, any action
_ taken or omitted by the Issuer under or in connection with
_ the Letters of Credit, if taken or omitted in good faith,
_ shall not put the Issuer under any resulting liability to
_ the Company or the Banks.
_
_ (iii) The Issuer shall have no obligation
_ whatsoever to make any factual or legal determinations as to
_ the correctness of any demand or payment under any Letter of
_ Credit or other related agreements or as to any other
_ matters before the Issuer makes any payment under the Letter
_ of Credit.
_
_ 2.9 PAYMENTS BY THE COMPANY.
_
_ (A) PAYMENTS TO AGENT. (i) All payments to be made
_by the Company on account of reimbursements for drawings under
_Letters of Credit, interest, fees and other amounts required
_hereunder shall be made, except as otherwise expressly provided
_herein, to the Agent for the account of the Agent, the Issuer or
_the ratable account of the Banks, as applicable, at the Agent's
_office specified for payments set forth on the signature pages
_hereof, in dollars and in immediately available funds, no later
_than 11:00 a.m. (San Francisco time) on the relevant date. The
_Agent will promptly distribute to the Agent, the Issuer and each
_Bank its Percentage Share (or other applicable share as expressly
_provided herein) of, such reimbursement, interest, fees or other
_amounts, as applicable, in like funds as received. Any payment
_which is received by the Agent later than 11:00 a.m. (San
_Francisco time) shall be deemed to have been received on the
_immediately succeeding Business Day and any applicable interest
_or fee payable by the Company shall continue to accrue. (ii)
_All payments to be made by the Company on account of
_reimbursements and payments for drawings under Letters of Credit,
_interest, fees and other amounts payable hereunder shall be made
_without setoff, counterclaim or defense, and free and clear of
_any deductions or withholdings for taxes or otherwise.
_
_ (B) TAXES. If the Company is prohibited by law from
_paying such sums free and clear of deductions or withholdings for
_taxes, then (x) the Company shall pay or withhold in respect of
_such taxes as required, and (y) such sums payable shall be
_increased as necessary so that, after making all required
_deductions and withholdings (including deductions applicable to
_additional sums payable under this Section), the relevant party
_receives an amount equal to the sum it would have received had no
_such deductions or withholdings been made. In each instance when
_the Company pays any taxes contemplated by this Section, the
_Company shall forward to the Agent (for the account of the
_relevant party) within thirty days of such payment original
_official receipts therefor or such other evidence of payment as
_is satisfactory to the Agent (or such relevant party).
_
_ (C) EXTENSION. Whenever any payment hereunder shall
_be stated to be due on a day other than a Business Day, such
_payment shall be made on the next succeeding Business Day, and
_such extension of time shall in such case be included in the
_computation of interest or fees, as the case may be.
_
_ (D) OBLIGATIONS OF COMPANY ABSOLUTE. The
_reimbursement obligations of the Company in respect of any Letter
_of Credit shall be absolute, unconditional and irrevocable, and
_shall be paid strictly in accordance with the terms of this
_Agreement under all circumstances, including: (i) any lack of
_validity or enforceability of any Letter of Credit or any of the
_other Documents, or any other agreement or instrument relating to
_any thereof (all of the foregoing collectively called the "LETTER
_OF CREDIT DOCUMENTS"); (ii) any amendment or waiver of, or any
_consent to departure from, the terms of all or any of the Letter
_of Credit Documents; (iii) the existence of any claim, setoff,
_defense or other right that the Company may have at any time
_against any beneficiary, or any transferee, of any Letter of
_Credit (or any Person for which any such beneficiary or
_transferee may be acting), or any other Person, whether in
_connection with this Agreement, the transactions contemplated
_herein or in any Letter of Credit Document, or any unrelated
_transaction; (iv) any statement or any 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; (v) payment in good faith by
_the Issuer under any Letter of Credit against presentation of a
_draft or certificate that does not comply with the terms of such
_Letter of Credit or (vi) any other circumstance or happening
_whatsoever, whether or not similar to any of the foregoing. The
_provisions of this Section 2.9 shall survive the payment of all
_Obligations and the occurrence of the Termination Date.
_
_ (E) NON-RECEIPT OF FUNDS. Unless the Agent shall have
_received notice from the Company prior to the date on which any
_payment is due to the Issuer or the Banks hereunder that the
_Company will not make such payment in full, the Agent may assume
_that the Company has made such payment in full to the Agent on
_such date and the Agent may (but shall not be so required), in
_reliance upon such assumption, cause to be distributed to the
_Issuer and each Bank on such due date an amount equal to the
_amount then due the Issuer or such Bank. If and to the extent
_the Company shall not have made such payment in full to the
_Agent, the Issuer and each Bank shall repay to the Agent on
_demand such amount distributed to the Issuer or such Bank,
_together with interest thereon for each day from the date such
_amount is distributed to the Issuer or such Bank until the date
_the Issuer or such Bank repays such amount to the Agent, at the
_Fed Funds Rate.
_
_ 2.10 FUNDING OF BANKS' PARTICIPATIONS
_
_ (A) In the event that the Issuer shall not be paid or
_reimbursed by the Company for any drawing under any Letter of
_Credit as provided and by the date required under Section 2, the
_Agent, upon notice from the Issuer, shall promptly notify each
_Bank and the Issuer of the unpaid or unreimbursed amount of such
_drawing and of such Bank's respective pro rata portion thereof
_and participation therein. Each Bank irrevocably and
_unconditionally agrees (irrespective of the occurrence of a
_Default or Event of Default or failure of condition precedent or
_any other circumstance whatsoever) that it shall make available
_to the Agent (for the account of the Issuer) an amount equal to
_its respective participation in same day funds plus interest
_thereon as set forth in the following sentence, at the office of
_the Agent specified in such notice, not later than 3:00 p.m. (San
_Francisco time) on the date of such notice from the Issuer (or,
_if earlier, from the Agent on behalf of the Issuer). In the
_event that any Bank fails to make available to the Agent the
_amount of such Bank's participation in such Letter of Credit as
_provided in this Section 2.10), the Issuer (through the Agent)
_shall be entitled to recover such amount on demand from such Bank
_together with interest thereon, for each day from the date of
_such drawing until the date such amount is paid to the Issuer, at
_the rate per annum equal to the Fed Funds Rate.
_
_ (B) OBLIGATIONS OF BANKS TO ISSUER SEVERAL. The
_failure of any Bank to make any payment to the Issuer or
_reimbursement in respect of Letters of Credit shall not relieve
_any other Bank of its obligation hereunder to make such payment
_or reimbursement; provided that no Bank shall be responsible for
_the failure of any other Bank to make any payment or
_reimbursement to be made by it. The payment by any Bank of any
_such payment or reimbursement to the Issuer in respect of Letters
_of Credit shall not relieve the Company of its Obligations with
_respect thereto.
_
_ (C) OBLIGATIONS OF BANKS TO ISSUER ABSOLUTE. The
_obligations of each Bank to make payments in respect of their
_participations pursuant to this Section 2.10 shall be absolute,
_unconditional and irrevocable, and shall be paid strictly in
_accordance with the terms of this Agreement under all
_circumstances, including, without limitation, without regard to
_(i) any lack of validity or enforceability of, or any release or
_discharge of the Company from liability; (ii) any change in the
_time, manner or place of payment of, or in any other term of, all
_or any of the Obligations or any other amendment, modification,
_renewal, addition, supplement, extension, acceleration or waiver
_of, or any consent to departure from, this Agreement or any other
_Document; (iii) any subordination, compromise, exchange, release,
_nonperfection or liquidation of any collateral, or any release,
_amendment or waiver of, or consent to departure from, any other
_guaranty, for any or all of the Obligations; (iv) any exercise or
_nonexercise by the Agent or Issuer of any right or privilege
_under this Agreement or any of the other Documents; (v) any
_bankruptcy, insolvency, reorganization, composition, adjustment,
_dissolution, liquidation or other like proceeding relating to the
_Company, any other Bank, the Issuer or the Agent or any action
_taken with respect to this Agreement by any trustee, receiver or
_court in any such proceeding, whether or not such Bank shall have
_had notice or knowledge of any of the foregoing; (vi) any
_assignment or other transfer by the Agent, the Issuer or any
_other Bank, in whole or in part, of its rights in respect of the
_Obligations or this Agreement or any of the other Documents;
_(vii) any acceptance of partial performance of the Obligations;
_(viii) the failure of any party or parties to execute this
_Agreement or any other Document; (ix) any other circumstance that
_might otherwise constitute a defense available to, or a discharge
_of, the Company, any Bank, the Agent or the Issuer; or (x) any of
_the circumstances referred to in Section 2.09(c). The provisions
_of this Section 2.10 shall survive the payment of all Obligations
_and the occurrence of the Termination Date.
_
_ (D) NON-RECEIPT OF FUNDS. Unless the Agent shall have
_received notice from the Bank prior to the date of any
_reimbursement of a Letter of Credit hereunder that the Bank will
_not make available to the Agent such Bank's ratable portion of
_such reimbursement, the Agent may assume that the Bank has made
_such portion available to the Agent on such date and the Agent
_may (but shall not be so required), in reliance upon such
_assumption, distribute a corresponding amount to the Issuer on
_such due date. If and to the extent such Bank shall not have
_made such portion available to the Agent, such Bank shall repay
_to the Agent on demand such corresponding amount, together with
_interest thereon for each day from the date such amount is
_distributed to the Issuer until the date such Bank repays such
_amount to the Agent, at the Fed Funds Rate.
_
_ (E) RETURN OF PAYMENTS. In the event that any payment
_or reimbursement made by or on behalf of the Company in
_connection with any Letter of Credit is rescinded or must
_otherwise be restored or returned to the Company or other
_relevant party, as applicable, including as a result of any
_insolvency, bankruptcy or reorganization or similar proceedings
_in respect of the Company, the obligations of the Banks under
_this Article II in respect of such rescinded, restored or
_returned payment shall be reinstated in full and the Banks shall
_be liable to indemnify the Issuer hereunder as fully as if such
_payment had never been made.
_
_ (F) BANK AUTHORITY AND OBLIGATIONS, ETC. Each Bank
_represents and warrants to the Issuer (i) that it has full power,
_authority and legal right to execute and deliver this Agreement
_and participate in the Letters of Credit as provided herein and
_to perform and observe the terms and conditions hereof; (ii) that
_it has taken all necessary legal and corporate action to
_authorize the execution and delivery of this Agreement and the
_performance and observance of the terms and conditions hereof;
_and (iii) that this Agreement constitutes the legal, valid and
_binding obligation of such Bank enforceable in accordance with
_the terms hereof except as such enforceability may be limited by
_application of any bankruptcy, receivership, conservatorship,
_reorganization or other similar laws for the relief of debtors,
_or by application of general principles of equity. Without
_limiting any other provisions hereof or any other obligations of
_the Banks or of the Company, the Banks shall from time to time
_indemnify the Issuer and hold the Issuer harmless on demand (to
_the extent that the Company has not done so) against any
_liabilities, costs, claims, expenses, suits, or damages of
_whatsoever nature incurred or suffered by the Issuer: (i) in
_connection with or relating to the Letters of Credit to the
_extent of such Bank's Percentage Share; or (ii) as a result of
_the enforcement hereof or such Bank's failure to make timely
_payment to the Issuer on the relevant date of any amount due from
_such Bank pursuant hereto (including without limitation the
_Issuer's costs of funding any unpaid portion of such amount as
_notified by the Issuer to such Bank from such relevant date until
_the date of payment in full by such Bank of any such unpaid
_amounts to the Issuer hereunder). The indemnification set forth
_in this paragraph shall survive the termination of this Agreement
_and the payment of all amounts due in connection with the Credit
_Agreement.
_
_ 2.11 PAYMENTS TO BANKS.
_
_ (A) CHARGES AND EXPENSES. Reimbursements received by
_the Agent from the Company for charges and expenses incurred for
_the issuance, amendment, and payment of Letters of Credit shall
_be distributed first, to the charges and expenses incurred by the
_Issuer, and second, to each Bank in proportion to the ratio of
_(i) the unreimbursed charges and expenses incurred in connection
_with Letters of Credit participated in by such Bank, to (ii) the
_aggregate amount of unreimbursed charges and expenses incurred in
_connection with Letters of Credit then outstanding.
_
_ (B) PAYMENTS RECEIVED. Any payments made to the Agent
_or hereunder for its own account or for the account of the Issuer
_or the Banks, as relevant, shall be applied FIRST against costs,
_expenses and indemnities (other than indemnities in respect of
_drawings under Letters of Credit) due hereunder (to the extent
_the Agent has been notified such amounts are due); SECOND against
_fees due to the Agent and the Issuer and the Banks; THIRD against
_interest; FOURTH against amounts due in respect of drawings under
_Letters of Credit; and FIFTH against any other amounts payable or
_to be deposited hereunder. If any payment is insufficient to pay
_any such category in full, the Agent shall apply the payment
_received pro rata on the basis of the amount due to each party
_entitled to payment in such category.
_
_ 2.12 STATEMENTS OF CHARGES AND EXPENSES. Each Bank shall
_deliver to the Agent, on or before the fifth Business Day of each
_calendar quarter, a statement of the charges and expenses for the
_preceding calendar quarter for which such Bank seeks
_reimbursement pursuant to subsection 2.3(c), provided that a
_Bank's failure to provide such statement by such date shall not
_impair its rights to the relevant payment. The Agent shall then
_bill the Company in accordance with subsection 2.3(c).
_
_ 2.13 SHARING OF PAYMENTS, ETC. If, other than as expressly
_contemplated elsewhere herein, any Bank shall obtain on account
_of its Letter of Credit Obligations any payment (whether
_voluntary, involuntary, through the exercise of any right of set-
_off, or otherwise) in excess of its Percentage Share of payments
_on account of the Letter of Credit Obligations obtained by all
_the Banks, such Bank shall forthwith (a) notify the Agent of such
_fact, and (b) purchase from the other Banks such participations
_in the Letter of Credit Obligations made by them as shall be
_necessary to cause such purchasing Bank to share the excess
_payment ratably with each of them; provided, however, that if all
_or any portion of such excess payment is thereafter recovered
_from the purchasing Bank, such purchase shall to that extent be
_rescinded and each other Bank shall repay to the purchasing Bank
_the purchase price paid thereto together with an amount equal to
_such paying Bank's Percentage Share (according to the proportion
_of (i) the amount of such paying Bank's required repayment to
_(ii) the total amount so recovered from the purchasing Bank) of
_any interest or other amount paid or payable by the purchasing
_Bank in respect of the total amount so recovered. The Company
_agrees that any Bank so purchasing a participation from another
_Bank pursuant to this Section 2.13 may, to the fullest extent
_permitted by law, exercise all its rights of payment (including
_the right of set-off, but subject to Section 9.9) with respect to
_such participation as fully as if such Bank were the direct
_creditor of the Company in the amount of such participation. The
_Agent will keep records (which shall be conclusive and binding in
_the absence of manifest error), of participations purchased
_pursuant to this Section 2.13 and will in each case notify the
_Banks following any such purchases.
_
_ 2.14 EXTENSION OF TERMINATION DATE.
_
_ (A) The Company shall notify the Agent, not more than
_120 days or less than 90 days prior to the original Termination
_Date, whether or not the Company wishes to extend the Termination
_Date for an additional one-year period; provided, that, if the
_Company fails so to notify the Agent, the Company shall be deemed
_to have given notice that the Company does not wish to extend the
_Termination Date. Upon receipt of any such notice requesting
_such extension, the Agent shall send a notice to the Issuer and
_the Banks requesting instructions as to whether or not the Issuer
_and the Banks consent (in their sole discretion) to the extension
_of the Termination Period for an additional one-year period. The
_Issuer and each Bank shall notify the Agent, in writing, whether
_or not it wishes so to extend the Commitment Period within thirty
_(30) Business Days of the date of the Agent's notice, and, if the
_Issuer or any Bank fails so to notify the Agent within thirty
_(30) Banking Days of the date of the Agent's notice, such Issuer
_or Bank shall be deemed to have withheld its consent to the
_extension of the Termination Date for an additional one-year
_period.
_
_ (B) If the Issuer and all of the Banks consent to the
_extension of the Termination Date, then the Termination Date
_shall be extended for an additional one-year period measured from
_the then scheduled Termination Date thereof; provided, however,
_that in no event shall the Termination Date be extended to a date
_later than September 22, 1997.
_
_ (C) If (x) the Company gives (or is deemed to have
_given) the Agent timely notice that the Company does not wish to
_extend the Termination Date, or (y) the Company has failed to
_give the Agent timely notice as provided by subsection 2.14(a) by
_90 days prior to the original Termination Date, or (z) the Banks
_and the Issuer and the Agent do not unanimously consent (which
_consent may be given or withheld in their respective sole
_discretion) to the extension of the Termination Date as
_aforesaid, then (i) such date shall not be further extended, (ii)
_the Agent shall so notify the Issuer, and (iii) the Issuer may
_give notice to each beneficiary of any outstanding Letter of
_Credit that contains renewal or extension provisions that such
_Letter of Credit shall not be renewed beyond the then scheduled
_Termination Date.
_
_ARTICLE III. YIELD PROTECTION.
_
_ 3.1 INCREASED COSTS AND REDUCTION OF RETURN (a) If the
_Issuer, any Bank or participant of a Bank shall determine that,
_due to either (i) the introduction of or any change in or in the
_interpretation of any law or regulation or (ii) the compliance
_with any guideline or request from any central bank or other
_Governmental Authority (whether or not having the force of law),
_there shall be any increase in the cost to such Issuer, Bank or
_participant of agreeing to issue, issuing or maintaining any
_Letter of Credit or of agreeing to make or making, funding or
_maintaining any unpaid drawing under any Letter of Credit or any
_other extension of credit under this Agreement, then the Company
_shall be liable for, and shall from time to time, upon demand
_therefor by such Issuer or Bank (or, in the case of a
_participant, by the Bank from which it has purchased its
_interest,) with a copy of such demand to the Agent), pay to the
_Agent for the account of such Issuer, Bank or participant,
_additional amounts as are sufficient to compensate such Issuer,
_Bank or participant for such increased costs. (b) If the Issuer,
_any Bank or participant of a Bank shall have determined that the
_introduction of any applicable law, rule, regulation or guideline
_regarding capital adequacy, or any change therein or any change
_in the interpretation or administration thereof by any central
_bank or other Governmental Authority charged with the
_interpretation or administration thereof, or compliance by such
_Issuer, Bank or participant (or its Issuing Office) or any
_corporation controlling such Issuer, Bank or participant, with
_any request, guideline or directive regarding capital adequacy
_(whether or not having the force of law) of any such central bank
_or other authority, affects or would affect the amount of capital
_required or expected to be maintained by such Issuer, Bank or
_participant or any corporation controlling the same and (taking
_into consideration such Issuer's, Bank's, participant's or such
_corporation's policies with respect to capital adequacy and
_desired return on capital) determines that the amount of such
_capital is increased as a consequence of its obligations under
_this Agreement, then, upon demand of such Issuer, Bank or
_participant, the Company shall immediately pay to such Issuer,
_Bank or participant, from time to time as specified by such
_Issuer, Bank or participant, additional amounts sufficient to
_compensate it for such increase.
_
_ 3.2 CERTIFICATES OF BANKS. The Issuer or any Bank claiming
_reimbursement or compensation pursuant to this Article III shall
_at the request of the Company deliver to the Company (with a copy
_to the Agent) a certificate setting forth in reasonable detail
_the amount payable to such Issuer or Bank (or its participant)
_hereunder and such certificate shall be conclusive and binding on
_the Company in the absence of manifest error.
_
_ 3.3 SURVIVAL. The agreements and obligations of the
_Company in this Article III shall survive the payment of all
_other Obligations.
_
_ARTICLE IV. CONDITIONS PRECEDENT.
_
_ 4.1 CONDITIONS OF INITIAL CREDIT EXTENSIONS. The
_obligation of the Issuer to make its initial Credit Extension
_hereunder is subject to the condition that the Agent shall have
_received on or before the Closing Date all of the following, in
_form and substance satisfactory to the Agent and in sufficient
_copies for the Issuer and each Bank:
_
_ (A) copies of the resolutions of the board of
_ directors of the Company approving and authorizing the
_ execution, delivery and performance by the Company of this
_ Agreement and the other Documents to be delivered hereunder,
_ and authorizing the incurrence of the Company's obligations
_ in respect of the Letters of Credit, certified as of the
_ Closing Date by the Secretary or an Assistant Secretary of
_ the Company;
_
_ (B) a certificate of the Secretary or Assistant
_ Secretary of the Company, certifying the names and true
_ signatures of the officers of the Company authorized to
_ execute and deliver, as applicable, this Agreement, and all
_ other Documents to be delivered hereunder;
_
_ (C) a certificate from the Company's certified
_ public accountants or the Company's President, Chief
_ Financial Officer, Treasurer or Controller that: (i) the
_ Company for the fiscal quarter ended July 2, 1995 maintained
_ a Net Worth in an amount which satisfies the requirements of
_ section 6.8, and (ii) as of July 2, 1995, the Company
_ maintained a Quick Ratio of not less than 0.75 to 1.0;
_
_ (D) a favorable opinion of counsel to the Company
_ (reasonably acceptable to the Agent) and addressed to the
_ Agent, the Issuer and the Banks substantially in the form of
_ EXHIBIT D and addressing such other matters as the Agent may
_ reasonably request;
_
_ (E) the Company shall have paid all costs,
_ accrued and unpaid fees and expenses (including legal fees
_ and expenses) to the extent then due and payable on the
_ Closing Date, including any arising under Sections 2.3, 2.4
_ and 9.4; and
_
_ (F) evidence satisfactory to the Agent of the
_ agreement of MKE to cancel and return the Existing Letters
_ of Credit.
_
_ 4.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of
_the Issuer to make any Credit Extension to be made by it
_hereunder (including its initial Credit Extension) is subject to
_the fulfilment of the following conditions precedent on the
_relevant date of such Credit Extension:
_
_ (A) the representations and warranties made by
_ the Company contained in Article V shall be true and correct
_ on and as of such Credit Extension date with the same effect
_ as if made on and as of such Credit Extension date (except
_ to the extent such representations and warranties expressly
_ refer to an earlier date, in which case they shall be true
_ and correct as of such earlier date);
_
_ (B) no Default or Event of Default shall exist or
_ shall result from such Credit Extension;
_
_ (C) the sum of (i) the maximum face amount of all
_ Letters of Credit to be issued on that day plus (ii) the
_ amount of the Letter of Credit Obligations outstanding on
_ that day (as a result of issuances, amendments or otherwise)
_ shall not exceed the Aggregate Commitment;
_
_ (D) the Agent, the Issuer and each Bank shall
_ have received to its satisfaction such confirmations of the
_ foregoing, and such other documents, opinions and
_ information (including beneficiary consents) as the Agent,
_ the Issuer (through the Agent) or such Bank (through the
_ Agent) may reasonably request; and
_
_ (E) the Issuer shall not have determined that it
_ is unlawful for it to make the proposed Credit Extension.
_
_Each request for a Credit Extension submitted by the Company
_hereunder shall constitute a representation and warranty by the
_Company hereunder, as of the date of each such notice and as of
_the date of such Credit Extension, that the conditions in this
_Section 4.2 are satisfied.
_
_ARTICLE V. REPRESENTATIONS AND WARRANTIES
_
_ The Company represents and warrants to the Agent, the Issuer
_and each Bank, on the date hereof and on the date of each Credit
_Extension, that:
_
_ 5.1 CORPORATE EXISTENCE AND POWER; CONDUCT OF BUSINESS.
_The Company: (a) is a corporation duly organized, validly
_existing and in good standing under the laws of the jurisdiction
_of its incorporation; (b) has the power and authority and all
_governmental licenses, authorizations, consents and approvals to
_own its assets, carry on its business and to execute, deliver,
_and perform its obligations under, the Documents; (c) is duly
_qualified as a foreign corporation licensed and in good standing
_under the laws of each jurisdiction where its ownership, lease or
_operation of property or the conduct of its business requires
_such qualification; and (d) is in compliance with all
_Requirements of Law. The Company has good and marketable title
_to all the property and assets, ownership of which is reflected
_on its most recent balance sheets referred to above, except for
_assets or properties that have been disposed of in the ordinary
_course of business. All such properties and assets are insured,
_and insurance against operational risks and liabilities is in
_force, with coverage and in amounts normal and customary in
_accordance with sound management in the fields of operations in
_which the Company is engaged and for the property and assets
_owned.
_
_ 5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The
_execution, delivery and performance by the Company of this
_Agreement, and any other Document to which the Company is party,
_have been duly authorized by all necessary corporate action, and
_do not and will not: (a) contravene the terms of any of the
_certificate of incorporation or bylaws of the Company; (b)
_conflict with or result in any breach or contravention of any
_material lease, contract, indenture or other document, agreement
_or instrument to which the Company is a party or any order,
_injunction, writ or decree of any Governmental Authority to which
_the Company or its property is subject; or (c) violate any
_Requirement of Law.
_
_ 5.3 BINDING. This Agreement and each other Document to
_which the Company is a party constitute the legal, valid and
_binding obligations of the Company, enforceable against the
_Company in accordance with their respective terms, except as
_limited by bankruptcy, insolvency or other laws affecting the
_enforcement of creditors' rights generally and general principles
_of equity.
_
_ 5.4 LITIGATION. As of the date hereof and as of the
_Closing Date, except as specifically disclosed in the Company's
_Form 10K for the year ended March 31, 1995 or its Form 10Q for
_the quarter ended July 2, 1995 on file with the Securities and
_Exchange Commission and previously provided to the Agent, the
_Issuer and the Banks, there are no actions, suits, proceedings,
_claims or disputes pending, or to the best knowledge of the
_Company, threatened or contemplated, at law, in equity, in
_arbitration or before any Governmental Authority, against the
_Company or any of its properties which, if determined adversely
_to the Company, would reasonably be expected to have a Material
_Adverse Effect.
_
_ 5.5 NO DEFAULT. The Company is not in default under or
_with respect to any lease, contract, indenture or other document,
_agreement or instrument to which it is a party in any respect
_which, individually or together with all such defaults, would
_reasonably be expected to have a Material Adverse Effect.
_
_ 5.6 USE OF LETTERS OF CREDIT. The Letters of Credit and
_all other extensions of credit hereunder are intended to be and
_shall be used solely (a) to support importation by the Company or
_its Subsidiaries of equipment and inventory and products
_manufactured by or for MKE or its affiliates, and (b) not in
_contravention of any Requirement of Law. The Company is not
_engaged in the business of extending credit for the purpose of
_purchasing or carrying margin stock within the meaning of
_Regulations G, T, U or X of the Federal Reserve Board. No part
_of the proceeds of the Letters of Credit will be used to purchase
_or carry any margin stock or to extend credit to others for the
_purpose of purchasing or carrying any margin stock, except in
_accordance with the provisions of Regulations G, T, U or X of the
_Federal Reserve Board.
_
_ 5.7 NO MATERIAL ADVERSE EFFECT. Since the date of the most
_recent audited financial statements provided by the Company to
_Agent and the Banks, there has been no Material Adverse Effect.
_
_ 5.8 FINANCIAL STATEMENTS. The Company has delivered to the
_Agent and each of the Banks copies of the unaudited consolidated
_balance sheet of the Company as at the end of, and its related
_unaudited consolidated statements of income, changes in
_shareholder's equity and cash flow of the Company for, the
_quarterly period ended July 2, 1995 certified by the Chief
_Financial Officer or Controller of the Company. Such financial
_statements have been accurately prepared from the books and
_records of the Company. There are no material liabilities,
_contingent or otherwise, of the Company as of such date, not
_reflected in such balance sheet of the Company as of such date.
_Since such date, there have not been any changes (whether or not
_covered by insurance) in assets, liabilities or financial
_position of the Company from those set forth in such balance
_sheet of the Company as of such date, other than changes in the
_ordinary course of business which have not, either individually
_or in the aggregate, been materially adverse. The Company does
_not know of any fact (other than matters of a general economic
_nature) that materially affects adversely the business,
_operations or properties of the Company, or the ability of the
_Company to perform its obligations under this Agreement.
_
_ 5.9 PARI PASSU. The obligations of the Company hereunder
_rank at least pari passu in right of payment and priority with
_the Company's other senior (unsecured) obligations.
_
_ 5.10 GOVERNMENTAL REGULATION. Neither the Company nor any
_Subsidiary of the Company is subject to regulation under the
_Public Utility Holding Company Act of 1934, the Federal Power
_Act, or the Investment Company Act of 1940, each as amended, or
_to any other federal or state statute or regulation limiting its
_ability to incur debt or to create liens on any of its properties
_or assets to secure debt.
_
_ 5.11 INFORMATION. Any and all information delivered by the
_Company to the Agent, the Issuer or any Bank in connection with
_this Agreement and the Letters of Credit is, taken as a whole,
_true and correct in all material respects, contains no misleading
_statement and does not omit to make any statement necessary to
_make such information not misleading.
_
_ARTICLE VI. COVENANTS.
_
_ The Company covenants and agrees that, so long as any Bank
_shall have any Commitment hereunder, any Letter of Credit shall
_be outstanding hereunder or any other Obligation shall remain
_unpaid or unsatisfied, unless the Majority Banks waive compliance
_in writing:
_
_ 6.1 FINANCIAL STATEMENTS; OTHER INFORMATION. The Company
_shall furnish to the Agent, with sufficient copies for each Bank
_and the Issuer: (a) as soon as available, but not later than 90
_days after the end of each fiscal year, copies of the audited
_consolidated financial statements of the Company for such fiscal
_year, and accompanied by the unqualified opinion (or a qualified
_opinion reasonably acceptable to the Agent) of Ernst & Young or
_another nationally-recognized independent public accounting firm,
_in each case together with: (i) certificates of all such
_accountants to the Agent stating that, in making the examination
_necessary for their audit, nothing has come to their attention
_that would lead or cause them to believe that the Company has
_failed to comply with the provisions of Section 6.8 or 6.9, with
_the understanding that such audit was not directed toward
_obtaining knowledge of any such non-compliance, or if any such
_non-compliance has come to their attention, a statement as to the
_nature thereof, and (ii) a certificate executed by the Company's
_President, Chief Financial Officer, Treasurer or Controller
_setting forth all financial calculations necessary to determine
_compliance with the terms of this Agreement and stating that no
_Default or Event of Default has occurred hereunder (or describing
_in detail each Default or Event of Default, if any, that has
_occurred) (a "Compliance Certificate") for the fiscal quarter
_most recently ended; (b) as soon as available, but not later than
_60 days after the end of each of the first three fiscal quarters
_of each year, (i) copies of the unaudited consolidated financial
_statements of the Company for such quarter, which may be in the
_form of a Form 10-Q Quarterly Report filed for such period with
_the Securities Exchange Commission ("SEC"), and (ii) a Compliance
_Certificate for the fiscal quarter most recently ended; (c)
_promptly after the same are sent, copies of all financial
_statements and reports which the Company sends to its
_shareholders, and within five days after the same are filed
_copies of all financial statements, regular, periodical or
_special reports and other items which the Company may make to, or
_file with, the SEC, including each Form 8-K Current Report, Form
_10-K Annual Report, Form 10-Q Quarterly Report, Annual Report to
_Shareholders, proxy statement and registration statement; and
_(d) such other financial or other information pertaining to the
_Company and its Subsidiaries and affiliates and the transactions
_contemplated hereby as the Agent, the Issuer or any Bank may
_reasonably request.
_
_ 6.2 NOTICES. The Company shall promptly notify the Agent
_and each Bank of: (a) the occurrence of any Default or Event of
_Default, and of the occurrence or existence of any event or
_circumstance that is reasonably likely to become an Event of
_Default; (b) the commencement of, or any material development in,
_any litigation or proceeding affecting the Company or any
_Subsidiary which, if adversely determined, would reasonably be
_expected to have a Material Adverse Effect; (c) the occurrence of
_any "Default" or "Event of Default" under (and as defined in) the
_Existing Credit Facility; (d) the delivery of each "Compliance
_Certificate" (as defined in the Existing Credit Facility) or
_similar certificate required to be delivered by the Company
_pursuant to the Existing Credit Facility, together with a copy
_thereof; and (e) any Material Adverse Effect subsequent to the
_date of the most recent audited financial statements of the
_Company delivered to the Banks pursuant to subsection 6.1.
_
_ 6.3 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Company
_shall: (a) preserve and maintain in full force and effect its
_corporate existence and good standing under the laws of its state
_or jurisdiction of incorporation; and (b) preserve and maintain
_in full force and effect all rights, privileges, qualifications,
_permits, licenses and franchises necessary or desirable in the
_normal conduct of its business.
_
_ 6.4 COMPLIANCE WITH LAWS. The Company shall comply in all
_material respects with all Requirements of Law of any
_Governmental Authority having jurisdiction over it or its
_business, except such as may be contested in good faith by the
_Company.
_
_ 6.5 PAYMENT OF TAXES, ETC. The Company will pay and
_discharge all taxes, assessments and governmental charges or
_levies imposed upon it or upon its income or profits, prior to
_the date on which penalties attach thereto, except to the extent
_such taxes, assessments or governmental charges or levies are
_being contested in good faith and are adequately reserved against
_in accordance with GAAP consistently applied.
_
_ 6.6 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company
_will keep adequate records and books of account, in which
_complete entries will be made, reflecting all financial
_transactions of the Company in accordance with GAAP.
_
_ 6.7 INSPECTION RIGHTS. The Company will at any reasonable
_time and from time to time upon reasonable prior notice, permit
_the Agent, the Issuer and the Banks or any of their respective
_agents or representatives to visit the Company's offices and
_examine and make copies of and abstracts from the records and
_books of account of the Company and discuss the affairs of the
_Company with its officers.
_
_ 6.8 NET WORTH. The Company shall maintain a Net Worth at
_all times during any fiscal quarter of 75% of no less than (a)
_the amount of its Net Worth as at the end of its fiscal quarter,
_ending January 2, 1995, plus (b) 75% of Net Income, accrued
_quarterly, and 100% of the net proceeds of all equity from the
_conversion of existing subordinated indebtedness or a secondary
_offering of stock having net proceeds to the Company in excess of
_$10 million.
_
_ 6.9 QUICK RATIO. The Company shall not permit its Quick
_Ratio to be less than 0.75 to 1.0 at any time.
_
_ARTICLE VII. EVENTS OF DEFAULT.
_
_ 7.1 EVENT OF DEFAULT. Any of the following events shall
_constitute an "Event of Default":
_
_ (A) NON-PAYMENT. The Company fails to pay, (i)
_ when and as required to be paid herein, any amount paid by
_ the Issuer or any Bank under or in connection with a Letter
_ of Credit, or (if) any interest, fee or any other amount
_ payable hereunder or pursuant to any other Document, when
_ and as required to be paid herein or therein; or
_
_ (B) REPRESENTATION OR WARRANTY; INFORMATION. Any
_ representation or warranty by the Company made or deemed
_ made herein, in any Document or which is contained in any
_ certificate, document or financial or other statement, by
_ the Company, or its officers, furnished at any time in or
_ under or in connection with this Agreement or any Document,
_ shall prove to have been false or misleading in any material
_ respect on or as of the date made or deemed made; or any
_ financial or other information delivered by the Company or
_ any officer to the Agent or Bank hereunder or in connection
_ herewith, shall prove to be false or misleading in any
_ material respect; or
_
_ (C) BREACH OF COVENANTS. The Company (i) fails
_ to perform or observe any term or covenant set forth in
_ Sections 6.8 or 6.9 hereof; or (ii) fails to perform or
_ observe any other term or covenant contained in this
_ Agreement or any Document and such failure shall continue
_ for 15 Business Days after the earlier of the date the
_ Borrower obtains knowledge or notice of such failure or the
_ date the Agent gives Borrower notice of such failure; or
_
_ (D) AGREEMENTS, ETC. This Agreement or any other
_ Document ceases to be in full force and effect or shall be
_ declared null and void, or the validity or enforceability
_ thereof shall be contested by the Company; or
_
_ (E) CROSS-DEFAULT. The Company or any of its
_ Subsidiaries (i) fails to make any payment of principal,
_ interest, reimbursements of amounts paid under letters of
_ credit, or the like in respect of, or "Origination Fees" or
_ "Commitment Fees" under (and as defined in), the Existing
_ Credit Facility and such failure continues after the
_ applicable grace or notice period, if any, specified in the
_ document relating thereto; or (ii) (A) fails to perform or
_ observe any other condition or covenant, or any other event
_ shall occur or condition exist, under any agreement or
_ instrument relating to the Existing Credit Facility, and
_ such failure continues after the applicable grace or notice
_ period, if any, specified in the document relating thereto,
_ and (B) the holder or holders of such indebtedness or
_ beneficiary or beneficiaries of such indebtedness (or a
_ trustee or agent on behalf of such holder or holders or
_ beneficiary or beneficiaries) causes such indebtedness to be
_ accelerated or otherwise declared to be due and payable
_ prior to its stated maturity; or (iii) fails to make a
_ payment or payments in an aggregate amount of $1,000,000 or
_ more when due under the terms of any bond, debenture, note
_ or other evidence of indebtedness for borrowed money or
_ credit extended to be paid by such Person (excluding this
_ Agreement and the Existing Credit Facility and leases for
_ real and personal property), and the effect of such failure
_ or default is to cause such indebtedness to be accelerated
_ or otherwise declared to be due and payable prior to its
_ stated maturity; or (iv) or fails to pay before the same
_ becomes materially overdue any material amount payable to
_ MKE or any Subsidiary of MKE, or any drawing is made, or
_ notice of drawing is given, under a Letter of Credit).
_
_ (F) BANKRUPTCY OR INSOLVENCY. The Company or any
_ of its Material Subsidiaries (i) admits in writing its
_ inability to pay its debts as they become due, subject to
_ applicable grace periods, if any, whether at stated maturity
_ or otherwise; (ii) voluntarily ceases to conduct its
_ business in the ordinary course; (iii) commences any
_ Insolvency Proceeding with respect to itself; or (iv) takes
_ any action to effectuate or authorize any of the foregoing;
_ or
_
_ (G) INVOLUNTARY PROCEEDINGS. (i) Any involuntary
_ Insolvency Proceeding is commenced or filed against the
_ Company or any Subsidiary of the Company and shall remain
_ undismissed for a period of 60 days, or any writ, judgment,
_ warrant of attachment, execution or similar process, is
_ issued or levied against a substantial part of the Company's
_ or any of its Subsidiaries' properties or assets and shall
_ remain unpaid, unbonded, unvacated or unstayed for a period
_ of 60 days after the entry thereof; (ii) the Company or any
_ of its Subsidiaries admits the material allegations of a
_ petition against it in any Insolvency Proceeding or an order
_ for relief (or similar order under non-U.S. law) is ordered
_ in any Insolvency Proceeding; or (iii) the Company or any of
_ its Material Subsidiaries acquiesces in the appointment of a
_ receiver, trustee, custodian, conservator, liquidator,
_ mortgagee in possession (or agent therefor), or other
_ similar Person for itself or a substantial portion of its
_ properties or business.
_
_ 7.2 REMEDIES. If any Event of Default occurs, the Agent
_shall, at the request of, or may, with the consent of, the
_Majority Banks, (a) declare the Commitment of each Bank to be
_terminated, whereupon such unutilized Commitments shall forthwith
_be terminated and the Issuer shall have no further obligation to
_issue new or amend existing Letters of Credit hereunder;
_(b) declare an amount equal to the Letter of Credit Obligations
_(whether or not any beneficiary shall have presented, or shall be
_entitled at such time to present, the drafts or other documents
_required to draw under the outstanding Letters of Credit), all
_unreimbursed drawings under the Letters of Credit and all other
_Obligations (the "Total Amount"), to be immediately due and
_payable, without presentment, demand, protest or other notice of
_any kind, all of which are hereby expressly waived by the
_Company, upon which the Company shall immediately (A) pay all
_amounts owing under this Agreement and the other Documents and
_(B) immediately pay and deposit into the Letter of Credit
_Account (as defined below) with the Agent, cash in the amount
_determined by the Agent to be the aggregate maximum amount of the
_undrawn Letters of Credit and the Issuer's maximum contingent
_liability thereunder and all other Letter of Credit Obligations
_then outstanding, to be applied by the Agent (for the benefit of
_the Banks and the Issuer) to the payment and reimbursement of
_drawings thereunder and other amounts owing by the Company with
_respect to Letter of Credit Obligations (as provided below); and
_(c) exercise on behalf of itself, the Issuer and the Banks and
_together with such parties, all rights and remedies available to
_the Agent, the Issuer and the Banks under the Documents or
_applicable law; provided, however, that upon the occurrence of
_any event specified in subsection 7.1(f) or (g), the result which
_would otherwise occur only upon giving of notice by the Agent to
_the Company as specified above shall occur automatically, without
_the giving of notice or further act of the Agent or any Bank.
_
_ At the time that the Company is required to make any deposit
_pursuant to Section 7.2(b)(B), the Company shall deposit all such
_amounts into such account as the Agent may specify at its San
_Francisco Branch (the "Letter of Credit Account"). All amounts
_on deposit in the Letter of Credit Account shall be held by the
_Agent as security for the Company's obligations to reimburse the
_Agent, the Issuer and the Banks, as applicable, in respect of
_drawings under Letters of Credit as hereinafter provided.
_
_ The Company hereby pledges, assigns and grants to the Agent
_on its own behalf and on behalf of the Issuer and the Banks a
_security interest in amounts from time to time on deposit in the
_Letter of Credit Account for the obligation of the Company to
_reimburse the Agent, the Issuer and the Banks, as applicable, in
_the event of any drawing under the Letters of Credit and as
_security for the Company's Obligations. Upon any drawing under
_any outstanding Letter of Credit in respect of which any amounts
_have been deposited to the Letter of Credit Account, the Agent
_shall apply such amounts to reimburse the Issuer, and if the
_Issuer has been reimbursed by any Bank, the relevant Bank for the
_amount of such drawing. In the event of the cancellation or
_termination of any Letter of Credit in respect of which any
_amounts have been deposited to the Letter of Credit Account, or
_in the event of any reduction in the maximum amount available at
_any time for drawing under such Letter of Credit, the Agent shall
_apply the amount remaining in the Letter of Credit Account in
_respect of such Letter of Credit (as the amounts in the following
_categories are calculated by the Agent), FIRST to reimburse the
_Issuer and the Banks for any unreimbursed drawings under such
_Letter of Credit, SECOND to secure with cash any other
_outstanding Letters of Credit and all Letter of Credit
_Obligations, THIRD, to the payment in full of all other
_Obligations of the Company to the Agent and Issuer and the Banks,
_and FOURTH, after indefeasible payment and application in full of
_all such amounts (including in respect of all Letter of Credit
_Obligations), any excess to the Company (without interest).
_
_ The Company agrees to execute and deliver from time to time
_all such documents as shall be reasonably requested by the Agent
_for the establishment and maintenance of the Letter of Credit
_Account and for the perfection of the security interest granted
_therein by the Company.
_
_ARTICLE VIII. THE AGENT.
_
_ 8.1 APPOINTMENT AND AUTHORIZATION. Each Bank hereby
_appoints, designates and authorizes the Agent to take such action
_on its behalf under the provisions of this Agreement and each
_other Document and to exercise such powers and perform such
_duties as are expressly delegated to it by the terms of this
_Agreement or any other Document, together with such powers as are
_reasonably incidental thereto. Notwithstanding any provision to
_the contrary contained elsewhere in this Agreement or in any
_other Document, the Agent shall not have any duties or
_responsibilities, except those expressly set forth herein, nor
_shall the Agent have or be deemed to have any fiduciary
_relationship with the Issuer, any Bank or the Company, and no
_implied covenants, functions, responsibilities, duties,
_obligations or liabilities shall be read into this Agreement or
_any other Document or otherwise exist against the Agent.
_
_ 8.2 DELEGATION OF DUTIES. The Agent may execute any of its
_duties under this Agreement or any other 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. The Agent shall not be responsible for the negligence or
_misconduct of any agent or attorney-in-fact that it selects with
_reasonable care.
_
_ 8.3 LIABILITY OF AGENT AND ISSUER. None of the Agent, the
_Issuer, their respective affiliates, or any of their respective
_officers, directors, employees, agents, or attorneys-in-fact
_shall (i) 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 Document (except for its own gross negligence or willful
_misconduct, it being agreed that the Issuer's exclusive reliance
_on documents presented in connection with a Letter of Credit
_shall not be deemed wilful misconduct or gross negligence,
_whether or not any such document, or any statement contained
_therein, proves to be forged, fraudulent, invalid, insufficient,
_untrue or inaccurate in any respect), or (ii) be responsible in
_any manner to any of the Banks for any recital, statement,
_representation or warranty made by the Company or any Subsidiary,
_or affiliate of the Company, or any officer thereof, contained in
_this Agreement or in any other Document, or in any certificate,
_report, statement or other document referred to or provided for
_in, or received by the Agent or the Issuer under or in connection
_with, this Agreement or any other Document, or for the value of
_any collateral or the validity, effectiveness, genuineness,
_enforceability or sufficiency of this Agreement or any other
_Document, or for any failure of the Company or any other party to
_any Document to perform its obligations hereunder or thereunder.
_No such Person shall be under any obligation to any 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 Document, or to inspect the properties,
_books or records of the Company or any of its Subsidiaries or
_affiliates.
_
_ 8.4 RELIANCE BY AGENT. The 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 the Company), independent
_accountants and other experts selected by the Agent. The Agent
_shall be fully justified in failing or refusing to take any
_action under this Agreement or any other Document unless it shall
_first receive such advice or concurrence of the Majority Banks as
_it deems appropriate and, if it so requests, it shall first be
_indemnified to its satisfaction by the Banks against any and all
_liability and expense which may be incurred by it by reason of
_taking or continuing to take any such action. The Agent shall in
_all cases be fully protected in acting, or in refraining from
_acting, under this Agreement or any other Document in accordance
_with a request or consent of the Majority Banks and such request
_and any action taken or failure to act pursuant thereto shall be
_binding upon all of the Banks, provided that the Agent shall not
_be required to take any action which exposes the Agent to
_personal liability or which is contrary to this Agreement or any
_other Document or applicable law. For purposes of determining
_compliance with the conditions specified in Article IV, each Bank
_that has executed this Agreement shall be deemed to have
_consented to, approved or accepted or to be satisfied with each
_document or other matter required thereunder to be consented to
_or approved by or acceptable or satisfactory to such Bank, unless
_an officer of the Agent responsible for the transactions
_contemplated by the Documents shall have received notice from
_such Bank prior to the initial Credit Extension specifying its
_objection thereto and such objection shall not have been
_withdrawn by notice to the Agent to that effect.
_
_ 8.5 NOTICE OF DEFAULT. The Agent shall not be deemed to
_have knowledge or notice of the occurrence of any Default or
_Event of Default, unless the Agent shall have received written
_notice from a Bank or the Company 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 the Agent
_receives such a notice, the Agent shall promptly give notice
_thereof to the Banks. The Agent shall take such action with
_respect to such Default or Event of Default as shall be
_requested by the Majority Banks in accordance with this Agreement
_and the other Documents; provided, however, that unless and until
_the Agent shall have received any such request and is indemnified
_to the Agent's satisfaction, the 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 Banks.
_
_ 8.6 CREDIT DECISION. Each Bank expressly acknowledges that
_none of the 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 the
_Agent hereinafter taken, including any review of the affairs of
_the Company and its Subsidiaries shall be deemed to constitute
_any representation or warranty by the Agent to any Bank. Each
_Bank represents to the Agent that it has made and will continue
_to make, independently and without reliance upon the 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 the Company
_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 the Company hereunder. The Agent shall promptly deliver to
_each Bank a copy of each notice which it receives from the
_Company pursuant to the terms of this Agreement, provided that
_the Agent shall incur no liability whatsoever for its failure to
_do so. Except for notices, reports and other documents expressly
_herein required to be furnished to the Banks by the Agent, the
_Agent shall not have any duty or responsibility to provide any
_Bank with any credit or other information concerning the
_business, prospects, operations, property, financial and other
_condition or creditworthiness of the Company which may come into
_the possession of the Agent or any of its Subsidiaries or
_affiliates.
_
_ 8.7 INDEMNIFICATION. The Banks shall indemnify upon demand
_the Agent, the Issuer, their respective affiliates, and their
_respective officers, directors, employees, agents and attorneys-
_in-fact (to the extent not reimbursed by or on behalf of the
_Company and without limiting the obligation of the Company 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 Letter
_of Credit Obligations) be imposed on, incurred by or asserted
_against any such Person any way relating to or arising out of
_this Agreement or any document contemplated by or referred to
_herein or therein 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 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 wilful misconduct (it being agreed that the
_Issuer's exclusive reliance on documents presented in connection
_with a Letter of Credit shall not be deemed wilful misconduct or
_gross negligence, whether or not any such document, or any
_statement contained therein, proves to be forged, fraudulent,
_invalid, insufficient, untrue or inaccurate in any respect).
_Without limitation of the foregoing, each Bank shall reimburse
_the Agent and the Issuer upon demand for its ratable share of any
_costs or out-of-pocket expenses (including fees and disbursements
_of any law firm or other counsel) incurred by the Agent and the
_Issuer in connection with the preparation, execution, delivery,
_administration, modification, amendment or enforcement (whether
_through negotiations, legal or bankruptcy proceedings or
_otherwise) of, or legal advice in respect of rights or
_responsibilities under, this Agreement, any Letter of Credit or
_any other Document, or any document contemplated by or referred
_to herein to the extent that the Agent and the Issuer is not
_reimbursed for such expenses by or on behalf of the Company. The
_obligation of the Banks in this Section shall survive the payment
_of all Obligations hereunder.
_
_ 8.8 AGENT IN INDIVIDUAL CAPACITY. Sumitomo 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 the Company and its Subsidiaries and affiliates
_as though Sumitomo were not the Agent hereunder and without
_notice to the Banks. With respect to its Letters of Credit and
_participation herein and therein, Sumitomo shall have the same
_rights and powers under this Agreement as any other Bank and may
_exercise the same as though it were not the Agent, and the terms
_"Bank" and "Banks" shall include Sumitomo in its individual
_capacity.
_
_ 8.9 SUCCESSOR AGENT. The Agent may, and at the request of
_the Majority Banks with cause shall, resign as Agent upon 30
_days' notice to the Banks. If the Agent shall resign as Agent
_under this Agreement, the Majority Banks shall appoint from among
_the Banks a successor agent for the Banks. If no successor Agent
_is appointed prior to the effective date of the resignation of
_the Agent, the Agent shall appoint, after consulting with the
_Banks and the Company, a successor agent from among the Banks, or
_if no Bank is willing to act as Agent, a commercial bank with at
_least $500,000,000 in assets and an office in San Francisco.
_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 Agent and the term "Agent"
_shall mean such successor agent and the retiring Agent's powers
_and duties as Agent shall be terminated. After any retiring
_Agent's resignation hereunder as Agent, the provisions of this
_Article VIII and Sections 9.4 and 9.5 shall inure to its benefit
_as to any actions taken or omitted to be taken by it while it was
_Agent under this Agreement.
_
_ARTICLE IX. MISCELLANEOUS.
_
_ 9.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
_provision of this Agreement or any other Document, and no consent
_with respect to any departure by the Company therefrom shall be
_effective unless the same shall be in writing and signed by the
_Agent, the Issuer and the Majority Banks, and then such waiver
_shall be effective only in the specific instance and for the
_specific purpose for which given; provided, however, that no such
_waiver, amendment, or consent shall, unless in writing and signed
_by the Agent, the Issuer and all the Banks, do any of the
_following: (i) increase the amount of the Commitment of any
_Bank, extend the Termination Date (except as provided by Section
_2.14 hereof) or subject the Issuer to any additional obligations;
_(ii) postpone or delay any date fixed for any reimbursement or
_payment by the Company in respect of any drawings under the
_Letters of Credit; (iii) reduce the amount of, or the rate of
_interest specified herein on, any Letter of Credit Obligations,
_or the amount of any facility fee or Letter of Credit fee payable
_to (or for the account of) the Banks pursuant to Section 2.4;
_(iv) change the Percentage Shares which shall be required for the
_Banks or any of them to take any action hereunder, or (v) amend
_this Section 9.1, Section 2.13 or the last two sentences of
_Section 2.1(a); and provided, further, that no amendment, waiver
_or consent shall, unless in writing and signed by the Agent in
_addition to the Majority Banks or all the Banks as the case may
_be, affect the rights or duties of the Agent under this Agreement
_or any other Document; and provided, further that no amendment,
_waiver or consent shall, unless in writing and signed by the
_Issuer in addition to the Agent and the Banks required
_hereinabove to take such action or affect the rights or duties of
_the Issuer under this Agreement or any other Document.
_
_ 9.2 NOTICES. (a) All notices, requests and other
_communications provided for hereunder shall be in writing
_(including, unless the context expressly otherwise provides,
_telegraphic, telex, facsimile transmission or cable communication)
_
and mailed, telegraphed, telexed or delivered, (i) if to
_the Company, to its address specified on the signature pages
_hereof, (ii) if to any Bank, to its address set forth in the
_signature pages hereof, and (iii) if to the Agent or the Issuer,
_to its address specified on the signature pages hereof; or, as to
_the Company, the Issuer or the Agent, to such other address as
_shall be designated by such party in a written notice to the
_other parties, and as to each other party, at such other address
_as shall be designated by such party, in a written notice to the
_Company, the Issuer and the Agent. All such notices, requests,
_and communications shall, when transmitted by overnight delivery,
_telegraphed, telecopied by facsimile or telexed, be effective
_when delivered for overnight delivery or to the telegraph
_company, transmitted by telecopier or confirmed by telex
_answerback, respectively, or if delivered, upon delivery, except
_that notices to the Agent or the Issuer pursuant to Article II or
_VII shall not be effective until actually received. (b) The
_Company acknowledges and agrees that the agreement of the Agent,
_the Issuer and the Banks at Article II herein to receive certain
_notices by telephone and facsimile is solely for the convenience
_and at the request of the Company. The Agent and the Banks shall
_be entitled to rely on the authority of any Person purporting to
_be a Person authorized by the Company to give such notice and the
_Agent, the Issuer and the Banks shall not have any liability to
_the Company or other Person on account of any action taken or not
_taken by the Agent, the Issuer or the Banks in reliance upon such
_telephonic or facsimile notice. The obligation of the Company to
_repay the drawings under the Letters of Credit and all other
_Obligations shall not be affected in any way or to any extent by
_any failure by the Agent, the Issuer and the Banks to receive
_written confirmation of any telephonic or facsimile notice or the
_receipt by the Agent, the Issuer and the Banks of a confirmation
_which is at variance with the terms understood by the Agent, the
_Issuer and the Banks to be contained in the telephonic or
_facsimile notice.
_
_ 9.3 NO WAIVER; RIGHTS NOT EXCLUSIVE. No failure to
_exercise and no delay in exercising, on the part of the Agent,
_the Issuer or any Bank, any right, remedy, power or privilege
_hereunder or under the other Documents, shall operate as a waiver
_thereof; nor shall any single or partial exercise of any right,
_remedy, power or privilege hereunder or under the other Documents
_preclude any other or further exercise thereof or the exercise of
_any other right, remedy, power or privilege. The rights provided
_for in this Agreement and the other Documents are cumulative and
_are not exclusive of any other rights, powers, privileges or
_remedies provided by law or in equity, or under any other
_instrument, document or agreement now existing or hereafter
_arising.
_
_ 9.4 COSTS AND EXPENSES. The Company shall (a) pay or
_reimburse the Agent on demand for all reasonable out-of-pocket
_costs and expenses incurred by the Agent in connection with the
_development, preparation, delivery, administration and execution
_of, and any amendment, supplement, waiver or modification to,
_this Agreement, any Document and any other documents prepared in
_connection herewith or therewith, and the consummation of the
_transactions contemplated hereby and thereby, including the
_reasonable fees and disbursements of any law firm or other
_counsel incurred by the Agent with respect thereto; (b) pay or
_reimburse each Bank, the Issuer and the Agent on demand for all
_reasonable out-of-pocket costs and expenses incurred by them in
_connection with the enforcement, attempted enforcement, or
_preservation of any rights or remedies (including in connection
_with any "workout" or restructuring regarding the Letter of
_Credit Obligations) under this Agreement, any other Document, and
_any such other documents, including reasonable fees and
_disbursements of any law firm or other counsel incurred by the
_Agent and any Bank; and (c) pay or reimburse the Agent on demand
_for all appraisal, audit, search and filing costs, fees and
_expenses and the like, incurred or sustained by the Agent in
_connection with the matters referred to under clauses (a) and (b)
_of this Section.
_
_ 9.5 INDEMNITY. The Company shall pay, indemnify, and hold
_each Bank, the Issuer, the Agent and each of their respective of
_officers, directors, employees, counsel, agents and attorneys-in-
_fact (each an "Indemnified Person") harmless from and against any
_and all liabilities, obligations, losses, damages, penalties,
_actions, judgments, suits, costs, charges, expenses or
_disbursements (including fees and disbursements of any law firm
_or other counsel) of any kind or nature whatsoever with respect
_to the execution, delivery, enforcement, performance and
_administration of this Agreement and any other Documents, or the
_transactions contemplated hereby and thereby, and with respect to
_any investigation, litigation or proceeding related to this
_Agreement or the Letter of Credit Obligations or the use of the
_proceeds thereof, (all the foregoing, collectively, the
_"Indemnified Liabilities"), provided, that the Company shall have
_no obligation hereunder to any Indemnified Person with respect to
_Indemnified Liabilities arising from the gross negligence or
_willful misconduct of such Indemnified Person (it being agreed
_that the Issuer's exclusive reliance on documents presented in
_connection with a Letter of Credit shall not be deemed wilful
_misconduct or gross negligence, whether or not any such document,
_or any statement contained therein, proves to be forged,
_fraudulent, invalid, insufficient, untrue or inaccurate in any
_respect). The agreements in this Section shall survive payment
_of all other Obligations.
_
_ 9.6 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor
_the Banks shall be under any obligation to marshall any assets in
_favor of the Company or any other Person or against or in payment
_of any or all of the Obligations. To the extent that the Company
_makes a payment or payments to the Agent, the Issuer or the
_Banks, or the Agent, the Issuer or the Banks exercise their
_rights of set-off, and such payment or payments or the proceeds
_of such enforcement or set-off or any part thereof are
_subsequently invalidated, declared to be fraudulent or
_preferential, set aside or required to be repaid to a trustee,
_receiver or any other party in connection with any Insolvency
_Proceeding, or otherwise, then to the extent of such recovery the
_obligation or part thereof originally intended to be satisfied
_shall be revived and continued in full force and effect as if
_such payment had not been made or such enforcement or set-off had
_not occurred.
_
_ 9.7 SUCCESSORS AND ASSIGNS. The provisions of this
_Agreement and the other Documents shall be binding upon and inure
_to the benefit of the parties hereto and their respective
_successors and assigns, except that the Company may not assign or
_transfer any of its rights or obligations under or in connection
_with this Agreement and the other Documents without the prior
_written consent of the Agent, the Issuer, and each Bank.
_
_ 9.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
_
_ (A) ASSIGNMENTS. Any Bank may, with the prior written
_consent of the Agent and the Issuer, at any time assign and
_delegate to one or more Banks or other financial institutions all
_or any ratable part of such Bank's rights and obligations in
_respect of the Letters of Credit and its Commitment and the other
_rights and obligations of such Bank hereunder and under the other
_Documents; provided, however, that the Company, the Issuer and
_the Agent may continue to deal solely and directly with such Bank
_in connection with the interest so assigned to an assignee until
_(i) written notice of such assignment, together with payment
_instructions, addresses and related information with respect to
_the assignee, shall have been given to the Company and the Agent
_by such Bank and the assignee; (ii) such Bank and its assignee
_shall have delivered to the Company and the Agent the written
_agreement of the assignee that such assignee is bound by this
_Agreement as it would have been if it had been an original Bank
_party hereto, in form satisfactory to the Agent (an "Agreement to
_be Bound"); and (iii) any reasonable processing fees requested by
_the Agent shall have been paid. From and after the date of
_(A) notification by the Agent to the assignor Bank that the Agent
_has received an executed Agreement to be Bound, (B) payment to
_the Agent of any processing fees, and (C) delivery to the Agent
_and the Company of the tax forms and documents contemplated by
_Section 9.11, then the assignee shall be a party hereto and, to
_the extent of the rights and obligations hereunder assigned to
_it, shall have the rights and obligations of a Bank under the
_Documents, and the assignor Bank shall, to the extent that rights
_and obligations hereunder have been assigned by it, relinquish
_its rights and be released from its obligations under the
_Documents. Effective such date, this Agreement shall be deemed
_to be amended to the extent, but only to the extent, necessary to
_reflect the addition of the assignee and the resulting adjustment
_of the Commitments arising therefrom. The Commitment allocated
_to each assignee shall reduce such Commitments of the assigning
_Bank pro tanto. Notwithstanding anything to the contrary
_contained herein, the Issuer may not assign its obligations as
_Issuer hereunder without the prior written consent of the
_Company, such consent not to be unreasonably withheld or delayed.
_
_ (B) PARTICIPATIONS. Any Bank may at any time sell to
_one or more commercial banks or other institutions participating
_interests in such Bank's rights and obligations hereunder and in
_respect of Letters of Credit and the other Documents, interest in
_its Letters of Credit, the Commitment of that Bank and the other
_interests of that Bank hereunder and under the other Documents.
_In the case of any such participation, the participant shall not
_have any rights to claim amounts directly from the Company under
_this Agreement, or any of the other Documents, and all amounts
_payable by the Company hereunder shall be determined as if such
_Bank had not sold such participation (except as otherwise
_provided).
_
_ (C) CONFIDENTIALITY. Each Bank agrees to exercise
_reasonable care to maintain the confidentiality of all non-public
_information which is provided to it by the Company or any
_Subsidiary of the Company, or by the Agent on such Company's or
_Subsidiary's behalf, in connection with this Agreement or any
_other Document, and neither it nor any of its affiliates shall
_use or disclose any such information for any purpose or in any
_manner other than pursuant to the terms contemplated by this
_Agreement, except to the extent such information (i) was or
_becomes generally available to the public other than as a result
_of a disclosure by the Bank, or (ii) was or becomes available on
_a non-confidential basis from a source other than the Company,
_provided that such source is not bound by a confidentiality
_agreement with the Company known to the Bank; and provided
_further, however, that any Bank may disclose such information
_(A) at the request or pursuant to any requirement of any
_Governmental Authority or in connection with an examination of
_such Bank by any such authority; (B) pursuant to subpoena or
_other court process; (C) when required to do so in accordance
_with the provisions of any applicable Requirement of Law; and (D)
_to such Bank's auditors, counsel and other professional advisors,
_affiliates and regulators. Notwithstanding the foregoing, the
_Company authorizes each Bank to disclose to any participant or
_assignee (each a "Transferee") and to any prospective Transferee,
_and to a beneficiary or other Bank or the Agent or Issuer or
_participants of any such Person, financial and other information
_in such Bank's possession concerning the Company or its
_Subsidiaries which has been delivered to Agent or the Banks
_pursuant to this Agreement or which has been delivered to the
_Agent or the Banks by the Company in connection with the Banks'
_credit evaluation of the Company prior to entering into this
_Agreement; provided that, unless otherwise agreed by the Company,
_such prospective Transferee agrees in writing to such Bank to
_keep such information confidential on the same terms as set forth
_herein.
_
_ 9.9 SET-OFF. In addition to any rights and remedies of the
_Banks provided by law, if an Event of Default exists, the Agent,
_the Issuer and each Bank is authorized at any time and from time
_to time, without prior notice to the Company, any such notice
_being waived by the Company to the fullest extent permitted by
_law, to set off and apply any and all deposits (general or
_special, time or demand, provisional or final) at any time held
_by, and other indebtedness at any time owing to, such Bank to or
_for the credit or the account of the Company against any and all
_Obligations owing to the Agent, the Issuer and such Bank, now or
_hereafter existing, irrespective of whether or not the Agent, the
_Issuer or such Bank shall have made demand under this Agreement
_or any Document and although such Obligations may be contingent
_or unmatured. Each Bank agrees promptly to notify the Company
_and the Agent after any such set-off and application made by such
_Bank; provided, however, that the failure to give such notice
_shall not affect the validity of such set-off and application.
_The rights of each of the Agent, the Issuer and each Bank under
_this Section 9.9 are in addition to the other rights and remedies
_(including other rights of set-off) which the Agent, the Issuer
_and such Bank may have.
_
_ 9.10 NOTIFICATION OF ADDRESSES, ISSUING OFFICES, ETC. Each
_Bank and the Issuer shall notify the Agent in writing of any
_changes in the address to which notices to the Bank or the Issuer
_should be directed, of address of its Issuing Office, of payment
_instructions in respect of all payments to be made to it
_hereunder and of such other administrative information as the
_Agent shall reasonably request.
_
_ 9.11 TAXES. Each Bank that is incorporated under the laws
_of any jurisdiction outside the United States agrees, at the
_request of the Company, to deliver to the Agent and the Company
_on or prior to the Closing Date, and in a timely fashion
_thereafter, Form 1001, Form 4224 or such other documents and
_forms of the United States Internal Revenue Service, duly
_executed and completed by such Bank, as are required under United
_States law to establish such Bank's status for United States
_withholding tax purposes.
_
_ 9.12 COUNTERPARTS. This Agreement may be executed by one or
_more of the panics to this Agreement in any number of separate
_counterparts, each of which, when so executed shall be deemed an
_original, and all of said counterparts taken together shall be
_deemed to constitute but one and the same instrument. A set of
_the copies of this Agreement signed by all the parties shall be
_lodged with the Company and the Agent.
_
_ 9.13 SEVERABILITY. The illegality or unenforceability of
_any provision of this Agreement or any other Document or any
_other instrument or agreement required hereunder shall not in any
_way affect or impair the legality or enforceability of the
_remaining provisions of this Agreement, such other Document or
_any other instrument or agreement required hereunder.
_
_ 9.14 NO THIRD PARTIES BENEFITTED. This Agreement and the
_other Documents are made and entered into for the sole protection
_and legal benefit of the Company, the Banks, the Issuer and the
_Agent, and their permitted successors and assigns, and no other
_Person shall be a direct or indirect legal beneficiary of, or
_have any direct or indirect cause of action or claim in
_connection with, this Agreement.
_
_ 9.15 GOVERNING LAW AND JURISDICTION. (a) This Agreement
_shall be governed by, and construed in accordance with, the law
_of the State of California, and, to the extent not inconsistent
_therewith, the Uniform Customs and Practices for Documentary
_Practices as most recently published by the International Chamber
_of Commerce. (b) Any legal action or proceeding with respect to
_this Agreement and any other Documents related hereto may be
_brought in the federal or state courts located in San Francisco
_or Los Angeles, California; and by execution and delivery of this
_Agreement, the Company consents, for itself and in respect of its
_property, to the jurisdiction of those courts. The Company
_irrevocably waives any objection, including any objection to the
_laying of venue or based on the grounds of forum non conveniens,
_which it may now or hereafter have to the bringing of any action
_or proceeding in such jurisdiction in respect of this Agreement
_or any Document related hereto. The Company, waives personal
_service of any summons, complaint or other process, which may be
_made by any other means permitted by California law; without
_limiting the foregoing, the Company consents to the service of
_process out of such courts by registered mail, postage prepaid,
_to its address set forth on the signature page hereof (as such
_address may be updated from time to time by notice given to each
_other party pursuant to the terms hereof).
_
_ 9.16 WAIVER OF JURY TRIAL. THE COMPANY, THE BANKS, THE
_ISSUER AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A
_TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
_ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER DOCUMENTS,
_OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
_ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
_OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
_RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
_COMPANY, THE BANKS, THE ISSUER AND THE AGENT EACH AGREE THAT ANY
_SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
_WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
_FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
_WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
_COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
_PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
_AGREEMENT OR THE OTHER DOCUMENTS OR ANY PROVISION HEREOF OR
_THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
_RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
_OTHER DOCUMENTS.
_
_ 9.17 ENTIRE AGREEMENT. This Agreement, together with the
_other Documents, embodies the entire Agreement and understanding
_among the Company, the Banks, the Issuer and the Agent, and
_supersedes all prior or contemporaneous agreements and
_understandings of such Persons, verbal or written, relating to
_the subject matter hereof and thereof, except for the fee letter
_between the Company and the Agent relating to the payment of
_fees, and any prior arrangements made with respect to the payment
_by the Company of (or any indemnification for) any fees, costs or
_expenses payable to or incurred (or to be incurred) by or on
_behalf of the Agent, the Issuer or the Banks.
_
_ 9.18 INTERPRETATION. This Agreement is the result of
_negotiations between and has been reviewed by counsel to the
_Agent and the Issuer, counsel to the Company and other parties,
_and is the product of all parties hereto. Accordingly, this
_Agreement and the other Documents shall not be construed against
_the Banks, the Issuer or the Agent merely because of the Agent's,
_the Issuer's or the Banks' involvement in the preparation of such
_documents and agreements.
_
_ IN WITNESS WHEREOF, the parties hereto have caused this
_Agreement to be duly executed and delivered in San Francisco,
_California by their proper and duly authorized officers as of the
_day and year first above written.
_
_
_QUANTUM CORPORATION Address for notices:
_
_ 500 McCarthy Boulevard
_ Milpitas, CA 95035
_ Attn: Edward McClammy,
_ Director of Finance
_By: Joseph T. Rodgers and Treasurer
_Title: Executive Vice President, Telephone: (408) 894-4000
_ Finance Fax: (408) 894-4562
_
_
_THE SUMITOMO BANK, LIMITED, Address for notices:
_ACTING THROUGH ITS SAN FRANCISCO
_ BRANCH as Agent San Francisco Branch
_ 555 California Street,
_ Suite 3350
_ San Francisco, CA 94104
_ Attn: Herman A. White, Jr.
_By: Yuji Harada Telephone: (415) 616-3009
_Title: General Manager Fax: (415) 397-1475
_
_ Address for payments to Agent:
_
_By: Herman A. White, Jr. Sumitomo Bank of California
_Title: Vice President San Francisco, California
_ ABA No. 121-002-042
_ To the account of The Sumitomo
_ Bank, Limited
_ Reference: Quantum LC
_ Attn: Herman A. White, Jr.
_
_
_THE SUMITOMO BANK, LIMITED, Address for notices:
_ACTING THROUGH ITS SAN FRANCISCO
_ BRANCH as Issuer San Francisco Branch
_ 555 California Street,
_ Suite 3350
_ San Francisco, CA 94104
_ Attn: Herman A. White, Jr.
_By: Yuji Harada Telephone: (415) 616-3009
_Title: General Manager Fax: (415) 397-1475
_
_ Address for payments to
_ Issuer:
_
_By: Herman A. White, Jr. Sumitomo Bank of California
_Title: Vice President San Francisco, California
_ ABA No. 121-002-042
_ To the account of The Sumitomo
_ Bank, Limited
_ Reference: Quantum LC
_ Attn: Herman A. White, Jr.
_
_BANKS
_
_THE SUMITOMO BANK, LIMITED, Address for notices:
_ACTING THROUGH ITS SAN FRANCISCO
_ BRANCH San Francisco Branch
_ 555 California Street,
_ Suite 3350
_ San Francisco, CA 94104
_By: Yuji Harada Attn: Herman A. White, Jr.
_Title: General Manager Telephone: (415) 616-3009
_ Fax: (415) 397-1475
_
_By: Herman A. White, Jr.
_Title: Vice President
_
_
_THE FUJI BANK, LIMITED, Address for notices:
_ACTING THROUGH ITS SAN FRANCISCO
_ AGENCY
_ 601 California Street
_ San Francisco, CA 94108
_By: Kazuo Kamio Attn: Michael P. Rogers
_Title: General Manager Telephone: (415) 362-4740
_ Fax: (415) 362-4613
_
_
_
_THE INDUSTRIAL BANK OF JAPAN, Address for notices:
_ LIMITED, ACTING THROUGH ITS
_ SAN FRANCISCO AGENCY 555 California Street
_ Suite 3110
_ San Francisco, CA 94104
_ Attn: Michael D. McCorriston
_By: Masuda Makoto Telephone: (415) 693-1822
_Title: Joint General Manager Fax: (415) 982-1917
_
_
_ SCHEDULE 1.1
_
_ FED FUNDS RATE
_
_ "FED FUNDS RATE" means, on any day, the rate of
_interest charged by the Agent at its San Francisco office on such
_day (or its Los Angeles office, if the San Francisco office is
_not on such day selling Federal Funds) for the sale by the Agent
_to other prime banks of (or, if the Agent is not on such day
_selling Federal Funds, then the average, rounded upwards, if
_necessary, to the nearest 100th of 1% of the rate being offered
_for sale to the Agent by two other prime banks selected by the
_Agent for) Federal Funds for overnight deposits in an amount
_comparable to the amount to which such rate relates. If the
_Agent is not selling Federal Funds to, or purchasing from, other
_banks at the relevant time with respect to overnight deposits
_then such rate shall be the Prime Rate for each such day.
_
_
_
_
_
_ SCHEDULE 2.1
_
_ COMMITMENTS
_
_
_
_ PERCENTAGE
_ BANK COMMITMENT SHARE
_
_The Sumitomo Bank, Limited, $ 30,000,000 35.294117647%
_ San Francisco Branch
_
_
_The Fuji Bank, Limited, $ 27,500,000 32.352941176%
_ San Francisco Agency
_
_
_The Industrial Bank of Japan, $ 27,500,000 32.352941176%
_ Limited, San Francisco Agency
_ ------------- ------------
_ $ 85,000,000 100.000000000%
_
_
<PAGE>
EXHIBIT 10.33
QUANTUM CORPORATION
_
_
_
_
_ LEASE AGREEMENT
_
_ WESTERN MANUFACTURING WING
_
_
_
_1. PARTIES
_
_ This Lease, dated this 31st day of August, 1995, is entered
_into between CRAY COMPUTER CORPORATION, a Delaware corporation
_("Landlord"), whose address is 1110 Bayfield Road, P.O. Box
_17500, Colorado Springs, CO 80935, and QUANTUM CORPORATION, a
_Delaware corporation ("Tenant"), whose address is 500 McCarthy
_Drive, Milpitas, CA 95035.
_
_2. PREMISES
_
_ Landlord hereby leases to Tenant, and Tenant hereby leases
_from Landlord, those certain premises shown in cross-hatch on the
_plan attached hereto as EXHIBIT A (hereinafter referred to as the
_"Premises"), and hereby by reference thereto made a part hereof.
_The Premises consist of approximately 128,000 rentable square
_feet inclusive of the western wing or section of that certain
_building known as the Cray Computer Corporation building located
_at 1110 Bayfield Road, Colorado Springs, Colorado, and
_approximately 26.4891 acres of land, all as shown on EXHIBIT A
_attached hereto and legally described on EXHIBIT B attached
_hereto (the "Project"). The Project does not include the vacant
_land which is owned by Cray and which is adjacent to the Premises
_and, accordingly, no Additional Rent shall be payable with
_respect to said vacant land. Tenant shall also have the right to
_use in conjunction with other tenants in the building, all common
_facilities in the Project including hallways, conference rooms,
_restroom facilities, elevators and stairs.
_
_ Said letting is upon and subject to the terms, covenants and
_conditions herein set forth, and Tenant covenants as a material
_part of the consideration for this Lease, to keep and perform
_each and all of the terms, covenants and conditions by it to be
_kept and performed, and that this Lease is made upon the
_condition of such performance.
_
_3. USE
_
_ (a) The Premises are to be used for general office purposes
_the design and manufacture of electronic components, chips, semi-
_conductors and parts, and the assembly and storage of same, and
_all uses appurtenant to any of the foregoing from time to time
_hereafter, and for no other purpose without the prior written
_consent of Landlord. Tenant shall be deemed at all times to be
_in compliance with all terms and conditions of this paragraph
_3(a) so long as Tenant's use of the Premises shall be
_substantially similar to the use of the Premises by Landlord
_prior to the commencement Date.
_
_ (b) Tenant shall not use, or permit said Premises or any
_part thereof to be used, for any purpose or purposes other than
_the purposes for which the said Premises are leased; and no use
_shall be made or permitted to be made of the Premises, nor acts
_done, which will increase the existing rate of insurance upon the
_Project, or cause a cancellation of any insurance policy covering
_the Project, or any part thereof (and Landlord represents and
_warrants that Tenant's use of the Premises permitted in
_paragraph 3(a) above shall not cause any such termination), nor
_shall Tenant sell, or permit to be kept, used or sold in or about
_the Premises any article which may be prohibited by Landlord's
_insurance policies. Tenant shall not commit, or suffer to be
_committed, any waste upon the Premises or any public or private
_nuisance, or other act or thing which may disturb the quiet
_enjoyment of any other tenant at the Project, nor without
_limiting the generality of the foregoing, shall Tenant allow the
_Premises to be used for any improper, immoral, unlawful or
_objectionable purpose, nor shall Tenant use any apparatus,
_machinery or device in or about the Premises which shall make any
_noise or set up any vibration which impairs the use of the
_Project by other tenants at the Project.
_
_ (c) Tenant shall not use the Premises or permit anything to
_be done in or about the Premises which will in any material way
_conflict with any applicable law, statute, ordinance or
_government rule or regulation now in force or which may hereafter
_be enacted or promulgated, unless the continuation of such use is
_permitted thereunder. Tenant shall, at it sole cost and expense,
_promptly and substantially comply with all laws, statutes,
_ordinances and governmental rules, regulations or requirements
_now in force or which may hereafter be in force, and with the
_requirements of any board of fire underwriters or other similar
_body now or hereafter constituted relating to or affecting the
_conditions, use or occupancy of the Premises, but Tenant shall
_not be required to alter the physical improvements in the
_Premises or make structural changes to the Project, which
_alterations and changes shall remain the responsibility of the
_Landlord and shall be made at Landlord's sole cost and expense.
_
_ (d) Tenant will not at any time, without obtaining
_Landlord's prior written consent, conduct or permit any fire,
_bankruptcy or auction sale at the Premises; or park, operate,
_load or unload any truck or other delivery vehicle any place
_other than the loading area designated for such use; or use the
_plumbing facilities for any purpose other than that for which
_they were constructed, or dispose of any foreign substance
_therein other than in conformity with applicable laws and
_permits; or install any amplifiers, loudspeakers, phonographs,
_microphones, or similar devices for any purpose, or use any
_advertising medium, which may be heard or seen outside of the
_building; permit any rubbish or garbage to accumulate on the
_Premises in other than rubbish removal areas; or install,
_maintain, alter or operate any sign or display visible to public
_view inside or outside the Project, except as provided in the
_section entitled "SIGNAGE" contained herein; or store materials,
_supplies, equipment or other materials outside the Project or
_outside of the Premises.
_
_ (e) Tenant will not, at any time, deface or injure any
_portion of the Premises; or burn anything in or about the
_Premises except in connection with the permitted use of the
_Premises hereunder; or keep or display any merchandise or other
_object on, or otherwise obstruct any sidewalks, stairways,
_walkways, streets, parks or parkways; or use or permit the use of
_any portion of the Premises as living quarters, sleeping rooms or
_for similar uses.
_
_4. RENT
_
_ Tenant shall pay to Landlord, without offset, deduction,
_notice, or demand, rent ("Rent") for the Premises as follows:
_
_ (a) BASE RENT. Tenant shall pay to Landlord as rent
_during the Primary Lease Term the amounts and the rates as
_follows:
_
_ Rental for the Primary Lease Term shall be $2,248,000
_ ("Base Rent") payable in advance upon execution of this
_ Lease by Landlord.
_
_Rent shall be payable in advance, on or before the first day of
_each and every calendar month during the term hereof. Base Rent
_shall be paid to Landlord in lawful money of the United States of
_America at the address of Landlord set forth in Section 1 hereof,
_or such place as Landlord may from time to time designate in
_writing. Notwithstanding anything herein to the contrary, in the
_event the term of this Lease ends on a day other than the last
_day of a calendar month, then upon the first day of the last
_calendar month of the term hereof, Tenant shall pay to Landlord,
_as rental for the period from said first day of the last calendar
_month to and including the last day of the term hereof, that
_proportion of the monthly rental which the number of days between
_said first day of said calendar month and the last day of the
_term of said Lease bears to the actual number of days in said
_month.
_
_ (b) ADDITIONAL RENT. Tenant covenants and agrees to
_pay an Additional Rent amount equal to Tenant's proportionate
_share ("Tenant's Proportionate Share") of the amount of "Direct
_Operating Expense" and "Real Estate Taxes" (as said terms are
_hereinafter defined) incurred for the year 1995 and each year
_thereafter during the Term of this Lease, but in no event shall
_such terms include unpaid expenses or taxes for years prior to
_1995. Additional Rent shall be paid to the management company
_which is a party to the Management Agreement ("Management
_Company") to be held separate from Landlord's funds for the
_purposes set forth herein.
_
_ (i) DIRECT OPERATING EXPENSE: All direct costs of
_operation and maintenance of the Project determined by standard
_accounting practices according to GAAP which shall include the
_following costs by way of illustration, but shall not be limited
_to: fees paid to the Management Company pursuant to the
_Management Agreement, as hereinafter defined, payroll charges
_and/or taxes and workmen's compensation but only for personnel
_employed by the Management Company to work solely with respect to
_the Project or a pro rata share of such items if the personnel
_are employed to work on buildings other than the Project,
_insurance, electricity, lamps, florescent tubes, ballasts, steam,
_fuel, utility taxes, water (including sewer charges and/or
_rental), casualty and liability insurance, repairs and cleaning
_fees, security system and burglar alarm costs for the existing
_system and alarm, service contracts with independent contractors,
_telephone, stationery, and equipment necessary for the
_maintenance and operation of the Project. "Direct Operating
_Expenses" shall not include depreciation on the Project or
_equipment therein, loan payments, real estate brokers
_commissions, capital expenditures or tenant finish expenses for
_other Tenants. Concurrently herewith, Landlord has entered into
_the Management Agreement with Koll, The Real Estate Services
_Company, dated August 31, 1995, a copy of which is attached
_hereto as EXHIBIT C (the "Management Agreement").
_
_ Landlord will not take any action, except actions
_required by law, which will materially increase the amount of
_Direct Operating Expenses at the Project over the amount of such
_expenses for the calendar year 1994.
_
_ (ii) REAL ESTATE TAXES shall mean and include all
_general and special taxes and assessments levied upon or assessed
_against the Project. If at any time during the term of this
_Lease, the method of taxation of real estate prevailing at the
_time of execution hereof shall be or has been altered so as to
_cause the whole or any part of the taxes now or hereafter levied,
_assessed or imposed on real estate to be levied, assessed or
_imposed upon Landlord wholly or partially as a capital levy or
_measured by the rents received therefrom, then such new or
_altered taxes attributable to the Premises shall be deemed to be
_included within the term "Real Estate Taxes" for the purposes of
_this paragraph, except that such shall not be deemed to include
_any enhancement of said tax attributable to other income or other
_ownerships of Landlord. Tenant shall in no event be responsible
_to reimburse Landlord for any general income tax liabilities
_incurred by Landlord nor any franchise, excise, sales or excess
_profits tax levied upon or assessed against Landlord.
_
_ Tenant shall have the right, by itself or together with
_other tenants of the Project, and at its expense, to contest the
_validity of and seek an abatement of the Real Estate Taxes in the
_name of the Landlord, and the Landlord agrees to cooperate with
_Tenant in any such contest and in connection therewith shall make
_available to Tenant such information and shall execute such
_authorizations or instruments as Tenant may reasonably request.
_The proceeds of any abatement award shall be applied first to
_reimburse the parties for the costs and expenses, including
_attorney's fees, of obtaining such abatement; second, to
_reimburse Tenant and other tenants in the Project for any
_payments made to the Landlord which were attributable to the
_increased taxes; and, third, to the Landlord.
_
_ (iii) The Tenant shall pay the amount of Direct
_Operating Expenses and Real Estate Taxes multiplied by a
_fraction, the numerator of which is the Tenant's approximate
_rentable square footage and denominator of which is the square
_footage contained in the Project, which contains approximately
_168,000 rentable square feet. The tenant's rentable square
_footage is agreed to be 128,000 square feet, which constitutes
_76.20% of the Project, except if all tenants in the Project agree
_otherwise with the Management Company which agreement shall not
_be binding upon Landlord but shall be effective between and among
_the tenants at the Project.
_
_ Landlord shall give to Tenant on or before the
_first day of January of each year during the Term a statement of
_the estimated Additional Rent payable by Tenant hereunder, but
_failure by Landlord to give such statement by said date shall not
_constitute a waiver by Landlord of its right to collect
_Additional Rent. The amount so estimated shall be divided into
_twelve (12) equal installments, and Tenant shall pay the Landlord
_an amount equal to 1/12th of such estimate on or before the first
_day of each calendar month of each such year. Upon receipt by
_Landlord of the actual statements for Direct Operating Expenses
_and Real Estate Taxes for the year, Landlord shall refund any
_excess of the estimated monthly payments of Additional Rental
_paid hereunder or Tenant shall pay Tenant's Proportionate Share
_of the amount by which the actual statements exceed the estimated
_monthly payments. Tenant upon prior written notice to Landlord
_shall be entitled to inspect Landlord's books and records for the
_Project (which Landlord agrees to maintain for a period of not
_less than five (5) years after the end of the applicable calendar
_year) as contemplated herein. Such right of inspection shall be
_limited to two (2) semi-annual inspections per year and Tenant
_shall not be entitled to withhold or delay the payment of
_Additional Rent until Tenant inspects or completes its inspection
_of Landlord's books and records.
_
_ (iv) Even if the Term has expired and Tenant has
_vacated the Premises when the final determination is made of
_Tenant's share of Direct Operating Expenses and/or Real Estate
_Taxes for the year in which this Lease terminates, Tenant shall
_immediately pay any such amounts due to Landlord.
_
_ (v) In the event that the Commencement Date of
_this Lease shall be a day other than the first day of the year or
_if the term of this Lease shall expire or be terminated on a day
_other than the last day of the year, then the Additional Rent due
_hereunder for the then current year shall be reasonably estimated
_by Landlord and shall be prorated and payable by Tenant on a
_monthly basis as set forth in subparagraph (iii) of this
_paragraph 4.
_
_ (c) LATE CHARGE. Tenant agrees that in the event any
_payment or installment of Additional Rent hereunder is not paid
_on or before the tenth day of each month, Tenant shall pay to
_Landlord a rental delinquency charge of One Hundred Dollars
_($100.00), which sum shall be due and payable upon such default.
_Any rent or sums due from Tenant which are more than one (1)
_month delinquent shall bear interest at the rate of 12% per annum
_from the due date.
_
_5. PREPARATION AND ACCEPTANCE OF PREMISES
_
_ (a) Landlord agrees that Tenant may cause the Premises to
_be modified in accordance with the plans, specifications and
_agreement approved by both parties and attached hereto as
_EXHIBIT C and made a part of this Lease. The work required to
_complete the Premises to the Tenant's specifications shall be
_completed at the cost and expense of Tenant.
_
_ Landlord represents that the Premises are suitable for
_purposes for which they are intended. Neither Landlord nor
_Landlord's agents have made any other representations, warranties
_or promises with respect to the physical condition of the
_Project, the land upon which it is erected, or the Premises, or
_any matter or thing affecting or related to the Premises except
_as herein expressly set forth in this Lease.
_
_ (b) The "Commencement Date" of this Lease is September 1,
_1995. The Tenant, by taking possession of the Premises, shall be
_deemed to have agreed that the Premises are then in a
_satisfactory order, repair and condition, except as set forth on
_a list prepared by Landlord and Tenant prior to occupancy and
_Tenant shall provide Landlord, upon request, a written
_acknowledgement of acceptance.
_
_6. TERM
_
_ This Lease shall have a term of two years ("Primary Lease
_Term"), commencing on the Commencement Date. If the Commencement
_Date is not the first day of the month, Rent for the month in
_which the Commencement Date occurs shall be prorated based on the
_number of days during such month that the term is in effect. The
_first full monthly installment of rent shall be due on the first
_day of the next month and after the expiration of the number of
_years of the Primary Lease Term, the term shall be extended on
_the last day of the same month in which the Commencement Date of
_the Primary Lease Term occurred, it being the intent of the
_parties that the Primary Lease Term expire on the last day of a
_month. If, after the expiration of this Lease, Tenant shall
_remain in possession of the Premises the possession shall be
_pursuant to the Holdover Term as provided in Section 7 below. The
_Primary Lease Term and the Holdover Term are collectively
_referred to as the Combined Term.
_
_7. HOLDOVER TERM
_
_ Provided that (i) Tenant is not in default hereunder at the
_end of the Primary Lease Term beyond any grace period applicable
_thereto or (ii) neither Landlord nor Tenant has given to the
_other a notice at least twelve (12) months prior to the end of
_the Primary Lease Term in the case of the Landlord's notice or
_thirteen (13) months prior to the end of the Primary Lease Term
_in the case of the Tenant's notice terminating this Lease as of
_the end of the Primary Lease Term, Tenant may continue in
_possession of the Premises and this Lease shall be extended for
_an additional term of three (3) years (the "Holdover Term"). The
_terms and conditions of this Lease will govern the Holdover Term
_except that the Base Rent shall be $720,000.00 per annum payable
_in monthly installments of $60,000.00 per month.
_
_ This Lease may be terminated during the Holdover Term but
_not the Primary Lease Term by either Tenant or Landlord by
_election in writing to terminate, which election may be made
_during the Primary Lease Term or the Holdover Term. The
_termination date of this Lease shall be thirteen (13) months
_following the date of a notice of election to terminate from
_Tenant and twelve (12) months following the date of a notice of
_election to terminate from Landlord.
_
_8. SECURITY DEPOSIT
_
_ The prepaid rent paid hereunder is not a security deposit.
_If Tenant defaults with respect to any provisions of this Lease,
_including but not limited to the provisions relating to the
_payment of Rent, Landlord may apply any part of the prepaid rent
_to the payment of any sum in default, accrued interest, late
_payment fees, or for the payment of or to compensate Landlord for
_any other loss or damage which Landlord may suffer by reason of
_Tenant's default. Landlord shall not be required to keep the
_prepaid rent separate from its general funds, and Tenant shall
_not be entitled to a return of prepaid rent in any event or
_interest on the prepaid rent.
_
_8.A. PUT
_
_ In the event that a tenant at the Project gives to the
_Landlord a notice of termination under the paragraph entitled
_"Holdover Term" contained in such tenant's lease, Landlord shall
_notify the Tenant of the fact of the notice of termination and
_the anticipated date of vacation of the Project by the vacating
_tenant. Tenant shall have thirty (30) days after the date of the
_notice from the Landlord to agree to rent the premises of the
_vacating tenant (the "Additional Premises") on the same terms and
_conditions as rented to the vacating tenant. In the event that
_the Tenant elects to occupy the Additional Premises of the
_vacating tenant, the Tenant will accept all and not less than all
_of the Additional Premises. The Additional Premises shall be
_added to the Premises hereunder and the rent and terms and
_conditions of this Lease shall control except for amendments to
_add the Rent for the Additional Premises and Additional Premises
_to the Premises hereunder. Nothing contained herein shall affect
_the Tenant's or the Landlord's rights to terminate this Lease
_including the Additional Premises under the paragraph entitled
_"Holdover Term" below.
_
_9. ENVIRONMENTAL MATTERS
_
_ (a) ENVIRONMENTAL COMPLIANCE. Tenant and its agents and
_employees shall use the Premises and conduct any operations
_thereon in compliance with all applicable federal, state and
_local environmental health and safety statutes, regulations,
_ordinances and any permits, approvals or judicial or
_administrative orders issued thereunder ("Environmental Laws").
_
_ (b) ENVIRONMENTAL HAZARDS. Tenant covenants that:
_
_ (i) No Hazardous Substances other than those required
_in connection with the Tenant's business which will be handled
_and disposed of in accordance with all Environmental Laws shall
_be generated, treated, stored or disposed of, or otherwise
_deposited in or located on the Premises or the Project by Tenant
_or anyone for whom Tenant is legally responsible, including
_without limitation, the surface and subsurface waters of the
_Premises;
_
_ (ii) No activity shall be undertaken on the Premises or
_the Project by Tenant or anyone for whom Tenant is legally
_responsible, which would cause:
_
_ a. the Project or the Premises to become a
_hazardous waste treatment, storage or disposal facility within
_the meaning of, or otherwise cause the Premises to be in
_violation of the Resource Conservation and Recovery Act of 1976
_("RCRA"), 42 U.S.C. Section 6901 et seq., or any similar state
_law or local ordinance;
_
_ b. a release or threatened release from any
_source on the Project or the Premises of Hazardous Substances
_from the Premises within the meaning of, or otherwise cause the
_Premises to be in violation of, the Comprehensive Environmental
_Response Compensation and Liability Act, as amended ("CERCLA"),
_42 U.S.C. Section 9601 et seq. or any similar law or local
_ordinance or any other environmental law; or
_
_ c. the discharge of pollutants or effluents into
_any water source or system, or the discharge into the air of any
_emissions, without the appropriate permit under the Federal Water
_Pollution Control Act ("FWPCA"), 33 U.S.C. Section 1251 et seq.
_or the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., or
_any similar state law or local ordinance;
_
_ (iii) Under no circumstances will Tenant act as or be
_deemed to be the owner or operator of the underground storage
_tank located on the Premises containing diesel fuel used to power
_the emergency generator. Tenant will not be responsible for
_care, maintenance, filling, testing, or any other activity
_associated with the tank. Pursuant to the terms of the indemnity
_specified in this Lease, Landlord assumes all responsibilities of
_ownership and operation of the tank and all liabilities arising
_therefrom, except for Tenant's negligence.
_
_ (iv) The provisions of this Section shall not prohibit
_the use, storage, and disposal by Tenant of reasonable and
_necessary quantities of office equipment, supplies and other
_substances normally utilized by businesses engaged in the uses
_permitted hereunder, provided such use, storage, and disposal
_shall comply with all Environmental Laws.
_
_ Further, Landlord agrees that it will incorporate into any
_lease of space within the Project, a provision requiring any
_tenant to perform obligations substantially similar to those
_contained in this paragraph 9.
_
_ For purposes of this Lease, "Hazardous Substances" shall
_mean any and all hazardous or toxic substances, hazardous
_constituents, contaminants, wastes, pollutants or petroleum
_(including without limitation crude oil or any fraction thereof),
_including without limitation hazardous or toxic substances,
_pollutants and/or contaminants as such terms are defined in
_Environmental Laws including any modification or amendments of
_Environmental Laws as may occur during the Combined Term.
_Notwithstanding the foregoing to the contrary, Tenant shall not
_be responsible for the removal of any Hazardous Substances on or
_within the Premises or the Project which are addressed or listed
_in the attached Phase I and Phase II report attached hereto as
_Schedule I, including Hazardous Substances which are identified
_in the Phase I or Phase II report as probable to migrate to the
_Premises from an identified source (the "Pre-existing
_Condition").
_
_10. SERVICES
_
_ (a) Landlord agrees to furnish to the Premises at all times
_during the Combined Term, water and electricity suitable for the
_intended use of the Premises, heat and air conditioning necessary
_for the intended use of the Premises, usual janitorial and
_maintenance service and elevator service and all other services
_specified in the Management Agreement. Landlord shall also
_maintain and keep lighted the common stairs, entries and toilet
_rooms in the Project.
_
_ (b) Landlord shall not be liable for failure or
_interruption of utility services systems or services so long as
_Landlord uses reasonable diligence to provide or restore such
_services. Landlord may discontinue services due to accident,
_repairs, strikes, acts of God, or any other event beyond the
_reasonable control of Landlord; provided, however, that Landlord
_shall diligently pursue the restoration of such services. In
_such event, Landlord shall not be liable for such failure or
_discontinuance, nor shall such failure or discontinuance be
_construed as a constructive eviction of Tenant unless such
_failure shall prevent Tenant from doing business for a period of
_ten (10) calendar days, then such failure shall be an abatement
_of Rent. Landlord's obligation to furnish systems for the
_delivery of electricity and gas is further conditioned upon the
_availability of adequate sources from the utility company
_servicing the Project.
_
_ (c) If heat-generating machines or equipment, including
_telephone equipment, are brought into the Premises after the
_Commencement Date, which are in addition to the machines or
_equipment that have been approved by Landlord and which affect
_the temperature otherwise maintained by the air conditioning
_system, Landlord reserves the right to install supplementary air
_conditioning units in the Premises and the cost thereof,
_including the reasonable cost of installation, and the cost of
_operation and maintenance thereof, shall be paid by Tenant to
_Landlord upon demand by Landlord. Landlord has reviewed the
_equipment to be installed by Tenant in the Premises on the
_commencement date of the Lease, which approved equipment is more
_particularly described on EXHIBIT D (the "Approved Equipment")
_and agreed that such equipment will not require supplementary air
_conditioning units. Tenant will pay the costs for venting
_noxious fumes, if any, from the Premises.
_
_ (d) If Tenant shall require water or electric current in
_excess of that furnished or supplied for use of the Premises as
_intended as of the Commencement Date of this Lease, Tenant shall
_first procure the written consent of the Landlord, to the use
_thereof and Landlord, in the event Landlord consents to the
_excessive water or electric current usage, may cause a water
_meter or electric current meter to be installed in the Premises,
_so as to measure the amount of water and electric current
_consumed for any such other use. The cost of any such meters and
_of installation, maintenance and repair thereof, shall be paid
_for by Tenant, and Tenant agrees to pay to Landlord promptly upon
_demand therefore by Landlord for all such water and electric
_current consumed, as shown by said meters, at the rates charged
_for such services by the local public authority, or the local
_public utility, as the case may be, furnishing the same, plus any
_additional expense incurred keeping account of the water and
_electric current so consumed.
_
_11. TENANT REPAIRS AND ALTERATIONS
_
_ (a) Except for the improvements and alterations
_contemplated by EXHIBIT D, Tenant shall not make any alterations,
_additions or improvements to the Premises, or change any plumbing
_or wiring exceeding the cost of $50,000 in any one calendar year
_or any structural changes, without the prior written consent of
_Landlord. Plans and specifications for such work shall be
_submitted to and approved in writing by Landlord prior to
_commencement of any such work. No fixtures shall be removed from
_the Premises. Landlord shall have the right to approve Tenant's
_contractors as well as the general manner and method in which
_such work is to be performed. Prior to commencement of any work,
_Tenant shall provide Landlord with insurance certificates
_evidencing that all contractors and subcontractors have workmen's
_compensation insurance, and builder's risk insurance in amounts
_and with coverages satisfactory to Landlord. Any such new
_alterations, additions or improvements, including wall covering,
_paneling and built-in cabinet work, but excepting movable
_furniture and trade fixtures, shall at once become a part of the
_realty and belong to Landlord and shall be surrendered with the
_Premises. Upon the expiration of the term hereof, Tenant shall,
_upon written demand by Landlord, at Tenant's sole cost and
_expense, remove any alterations, additions or improvements made
_by Tenant, designated by Landlord to be removed at the time of
_giving of its consent; and Tenant shall, at its sole cost and
_expense, repair any damage to the Premises caused by such
_removal, except that Tenant shall have no obligation to make any
_repairs with respect to the removal of the assets purchased by
_Tenant from Landlord as of the date of execution of this Lease.
_Notwithstanding the preceding sentence, Tenant, upon expiration
_of the Lease, shall have no obligation to remove the improvements
_and alterations contemplated by EXHIBIT D, except that Tenant, at
_Landlord's election by notice to Tenant given at least ninety
_(90) days prior to Lease expiration, shall re-install (a) the
_drop ceiling to a height of ten (10) feet in the
_warehouse/storage area on the second level (such restoration to
_consist of the ceiling grid and ceiling tiles, lights, fire
_sprinklers, and HVAC diffusers and (b) the vinyl tile on the
_floor of the warehouse/storage area. At least twenty (20) days
_prior to the commencement of any work on the Premises for which
_Landlord's consent is required hereunder, Tenant shall notify
_Landlord of the names and addresses of the persons supplying
_labor and materials so that Landlord may give notice that it
_shall not be subject for any lien for Tenant's work, in
_accordance with Colorado's mechanics' lien statutes. Landlord
_shall have the right to keep posted on the Premises notice to
_such persons in accordance with such statute.
_
_ (b) Tenant shall pay or cause to be paid all costs for work
_done by or on behalf of Tenant or caused to be done by or on
_behalf of Tenant on the Premises of a character which will or may
_result in liens against Landlord's interest in the Premises or
_the Project, or any part thereof and Tenant will keep the same
_free and clear of all mechanics' liens and other liens on account
_of work done for or on behalf of Tenant or persons claiming under
_Tenant. Tenant hereby agrees to indemnify, defend and save
_Landlord harmless of and from all liability, loss, damages, costs
_or expenses, including attorneys' fees, incurred in connection
_with any claims of any nature whatsoever for work performed for,
_or materials or supplies furnished to Tenant, including lien
_claims of laborers, materialmen or others. Should any such liens
_be filed or recorded against the Premises or the Project with
_respect to work done for or materials supplied to or on behalf of
_Tenant or should any action affecting the title thereto be
_commenced, Tenant shall cause such liens to be released of record
_within twenty (20) days after notice thereof. If Tenant desires
_to contest any such claim of lien, Tenant shall nonetheless cause
_such lien to be released of record by discharge, bonding or the
_posting of adequate security with a court of competent
_jurisdiction as may be provided by Colorado's mechanics' lien
_statutes. If Tenant shall be delinquent in paying any charge for
_which such a mechanics' lien or suit to foreclose such a lien has
_been recorded or filed and shall not have caused the lien to be
_released as aforesaid, Landlord may (but without being required
_to do so) pay such lien or claim and costs associated therewith,
_and the amount so paid, together with interest thereon at the
_Interest Rate and reasonable attorneys' fees incurred in
_connection therewith, shall be immediately due from Tenant to
_Landlord as Additional Rent.
_
_12. PERSONAL PROPERTY TAXES
_
_ During the term hereof, Tenant shall pay prior to
_delinquency all personal property taxes assessed against and
_levied upon fixtures, furnishings, equipment and all other
_personal property of Tenant contained on the demised Premises,
_and Tenant shall cause said fixtures, furnishings, equipment and
_other personal property to be assessed and billed separately from
_the real property of Landlord. In the event any or all of the
_Tenant's fixtures, furnishings, equipment and other personal
_property shall be assessed and taxed with the Landlord's real
_property, the Tenant shall pay to Landlord its share of such
_taxes within ten (10) days after delivery to Tenant by Landlord
_of a statement, in writing accompanied by reasonable proof of the
_allocation to personal property taxes set forth in such
_statement, setting forth the amount of such taxes applicable to
_the Tenant's property.
_
_13. INDEMNITY
_
_ Tenant shall indemnify and hold harmless Landlord against
_and from any and all claims arising from Tenant's use of the
_Premises or any claim arising from any breach or default on
_Tenant's part under the terms of this Lease, or from any act,
_omission, or negligence of Tenant, or any officer, agent,
_employee, guest or invitee of Tenant, and from all costs,
_attorneys' fees, and liabilities incurred in or about the defense
_of any such claim or any action or proceeding brought thereon.
_Tenant assumes all risk of damage to property or injury to
_persons in, upon or about the Premises, from any cause other than
_Landlord's negligence or the negligence of any person or entity
_for whom Landlord is legally responsible. Tenant shall give
_prompt notice to Landlord in case of casualty or accidents in the
_Premises.
_
_ Landlord shall indemnify, hold harmless, and defend (with
_counsel reasonably acceptable to Tenant) Tenant from and against
_any liabilities, claims, demands, obligations, responsibilities,
_losses, damages, punitive damages, consequential damages, treble
_damages, charges, costs and expenses (including without
_limitation, attorneys', experts' and consultants' fees and costs
_of investigation and feasibility studies), fines, penalties, and
_monetary sanctions or interest which are incurred at any time
_relating to the Landlord's use or ownership of the Premises that
_(i) is the result of the existence of Landlord's operations on
_the Premises; (ii) is the result of the existence Hazardous
_Substances upon, about, or beneath the Premises prior to the
_Commencement Date which are Pre-Existing Conditions as defined
_above; or (iii) is the result of the existence of a violation of
_Environmental Laws pertaining to the Premises that existed or
_arose out of operations prior to the Closing Date (collectively
_"Pre-Existing Liabilities"), that may be incurred by, imposed
_upon, or asserted or awarded against Tenant, except for Pre-
_Existing Liabilities attributable to the gross negligence or
_willful misconduct of Tenant.
_
_14. INSURANCE
_
_ Tenant shall procure and maintain at its own cost at all
_times during the term of this Lease and any extensions hereof,
_fire, hazard and extended coverage insurance on Tenant's property
_and the contents of the Premises in an amount not less than full
_replacement value, comprehensive general liability insurance,
_including coverage for bodily injury, property damage, personal
_injury (employee and contractual liability, exclusions deleted),
_products and completed operations, contractual liability, owner's
_protective liability and broad form property damage with the
_following limits of liability: One Million Dollars
_($1,000,000.00) each occurrence combined single limit for bodily
_injury, property damage and personal injury; One Million Dollars
_($1,000,000.00) aggregate for bodily injury and property damage
_for products and completed operations. All such insurance shall
_be procured from a responsible insurance company authorized to do
_business in Colorado and rated no lower by Best than A-, and
_shall be otherwise satisfactory to Landlord. All such policies
_shall name Landlord and Landlord's managing agent as an
_additional insured only with respect to Tenant's negligence, and
_shall provide that the same may not be canceled or altered except
_upon thirty (30) days prior written notice to Landlord. All
_insurance maintained by Tenant shall be primary to any insurance
_provided by Landlord. If Tenant obtains any general liability
_insurance policy on a claims-made basis, Tenant shall provide
_continuous liability coverage for claims arising during the
_entire term of this Lease, regardless of when such claims are
_made, either by obtaining an endorsement providing for an
_unlimited extended reporting period in the event such policy is
_canceled or not renewed for any reason whatsoever or by obtaining
_new coverage with a retroactive date the same as or earlier than
_the expiration date of the canceled or expired policy. Tenant
_shall provide certificate(s) of such insurance to Landlord upon
_commencement of the Lease term and at least thirty (30) days
_prior to any annual renewal date thereof and upon request from
_time to time and such certificate(s) shall disclose that such
_insurance names Landlord and Landlord's managing agent as an
_additional insured, in addition to the other requirements set
_forth herein. The limits of such insurance shall not, under any
_circumstances, limit the liability of Tenant hereunder.
_
_ Landlord shall maintain during the Combined Term of this
_Lease liability insurance and all-risk fire, hazard and extended
_coverage insurance on the Project in the amount of the
_replacement value from insurance companies conforming to the
_standards set forth in this paragraph 14. Landlord shall provide
_certificate(s) of the insurance which Landlord is obligated to
_carry hereunder to the Tenant upon the execution of this Lease,
_and at least thirty (30) days prior to any annual renewal date
_thereof, and upon request from time to time by Tenant, and such
_certificate(s) shall disclose that such insurance complies with
_the requirements set forth herein. The limits of such insurance
_shall not, under any circumstances, limit the liability of
_Landlord hereunder.
_
_15. SUBROGATION
_
_ As long as their respective insurers so permit, Landlord and
_Tenant hereby mutually waive their respective rights of recovery
_against each other for any loss or damage to property insured by
_fire, extended coverage, or any other property insurance policies
_existing for the benefit of the respective parties. The
_foregoing waiver shall be in force only if both parties'
_insurance policies contain a clause providing that such a waiver
_shall not invalidate the insurance and such a policy can be
_obtained without additional premiums.
_
_16. LANDLORD REPAIRS
_
_ Landlord shall maintain all portions of the Project in good
_order, condition and repair, including without limitation the
_roof, foundation, and floor slab thereof, and of any structural
_portion of the Project which affects the Premises. There shall
_be no abatement of Rent and no liability of Landlord by reason of
_any injury to, or interference with, Tenant's business arising
_from the making of any repairs, alterations or improvements
_except as set forth in paragraphs 21 and 22 below.
_
_17. COMMON AREAS
_
_ All Common Areas shall be at all times under Landlord's
_exclusive control but subject to the right of Tenant to use the
_same at any time during the Term. Landlord shall keep common
_areas in clean and orderly condition. The term "Common Areas"
_means all the areas of the Project which are not intended for
_renting and, instead, designed for the common use and benefit of
_the Landlord and all of the tenants, their employees, agents,
_customers, and invitees. The Common Areas include, but, are not
_limited to, public restrooms, landscaped and vacant areas,
_parking areas (other than the exclusive areas thereof),
_driveways, walks, and curbs, and facilities appurtenant to each,
_as such areas may exist from time to time.
_
_18. SIGNAGE
_
_ Tenant may erect a sign on the door to the Premises and the
_entrance to the Project, provided that such sign shall meet all
_applicable municipal sign codes and the plans of which shall have
_been, previous to installation, submitted to Landlord for written
_approval which approval shall not be unreasonably withheld or
_delayed. All costs incurred in connection with any signage and
_the installation thereof shall be paid by Tenant.
_
_19. LIMITED LIABILITY
_
_ Landlord shall not be liable for any loss or damage
_resulting from: (a) fire, explosion, falling plaster, steam,
_(gas, electricity, water or rain); (b) the pipes, appliances or
_plumbing systems in the Project; (c) the roof, street,
_subsurface; (d) any variation or interruption of utility services
_so long as Landlord shall promptly use its best efforts to
_restore same; (e) theft or other criminal acts of third parties;
_or (f) any other cause whatsoever, unless due to the negligence
_or willful misconduct of Landlord or any person or entity for
_whom Landlord is legally responsible. Notwithstanding the
_foregoing, Landlord shall remain liable for the breach of
_contractual liabilities contained herein.
_
_20. ASSIGNMENT AND SUBLETTING
_
_ (a) Tenant shall not assign this Lease or sublet all or any
_part of the Premises without the prior written consent of
_Landlord, which consent shall not be unreasonably withheld or
_delayed. Landlord's consent to any requested assignment or
_subletting shall be subject to the following conditions:
_
_ (i) Such consent and resulting subletting or assignment
_shall not relieve Tenant of its primary obligations hereunder,
_including the obligation for payment of all Rent due hereunder;
_
_ (ii) Landlord, at its option and from time to time, may
_collect the rent from the subtenant or assignee, and apply the
_net amount collected to the rent herein reserved, but no such
_collection shall be deemed an acceptance by Landlord of the
_subtenant or assignee as the tenant hereof, or a release of
_Tenant from further performance of covenants on the part of
_Tenant herein contained;
_
_ (iii) Any such subtenant or assignee shall be a company
_or other entity of good repute, engaged in a business or
_profession compatible with and in keeping with the standards of
_the Project and financially capable of performing its obligations
_with respect to the Premises;
_
_ (b) In the event of any assignment of this Lease or
_subletting of all or any part of the Premises by Tenant without
_Landlord's consent when Landlord's consent is required hereunder,
_Landlord in addition to any rights contained herein, shall have
_the right to collect and receive the excess of rent due to Tenant
_from such sublessee or assignee over the Rent charged to and due
_from Tenant hereunder;
_
_ (c) All subleases or assignments shall be in writing and a
_copy thereof provided to Landlord within ten (10) days prior to
_its effective date. All subleases shall further contain an
_express provision that in the event of any default by Tenant
_under this lease and upon notice thereof to the subtenant from
_Landlord, all rentals payable by the subtenant shall be paid
_directly to Landlord for the Tenant's account until subsequent
_notice from Landlord that such default has been cured.
_Notwithstanding the foregoing, receipt by Landlord of rent
_directly from the subtenant shall not be considered a waiver of
_the default on the part of Tenant, nor an acceptance of such
_subtenant.
_
_ (d) Any attempted assignment or subletting without
_Landlord's prior written consent, when Landlord's consent is
_required hereunder, shall be wholly void and shall constitute a
_breach of this Lease. Acceptance of Rent by Landlord from anyone
_other than Tenant shall not be construed as a release of Tenant
_from any obligation or liability under this Lease. The consent
_of Landlord to an assignment or underletting shall not be
_construed to relieve Tenant from obtaining the written consent of
_Landlord to any further assignment or underletting.
_
_ (e) Notwithstanding anything in this Lease to the contrary:
_
_ i) Tenant shall have the right to assign this Lease
_or to sublet all or any portion of the Premises, whether
_expressly or by operation of law (including without limitation by
_merger, consolidation, reorganization or the like) without the
_requirement of Landlord's consent, as follows:
_
_ a) To any corporation or entity which is a
_ parent, subsidiary or affiliate of Tenant;
_
_ b) To any corporation or entity resulting from a
_ merger or consolidation, or the formation of a
_ joint venture or partnership; or
_
_ c) By a transfer of stock, whether or not a
_ controlling interest, in Tenant;
_
_ d) or to M/A-COM.
_
_ ii) In no event shall any officer, director or
_shareholder of Tenant at any time be liable for any of Tenant's
_obligations under this Lease except to the extent such officer,
_director or shareholder shall be an assignee of this Lease or
_shall have executed a separate instrument of guaranty of this
_Lease.
_
_21. DAMAGE BY CASUALTY
_
_ (a) Subject to Subsections (b), (c) and (d) of this
_paragraph, in the event the Premises are damaged by fire or other
_casualty, Landlord shall repair such damage. This Lease shall
_remain in full force and effect, except that Tenant shall be
_entitled to a proportionate abatement of Base Rent and Additional
_Rent based upon the extent to which the Premises are not usable.
_ (b) If the Premises are totally damaged, or if the Project
_is so damaged that Landlord shall decide to demolish it, then
_Landlord or Tenant may elect to terminate the Lease by written
_notice to the other given within forty-five (45) days following
_such fire or other casualty.
_
_ (c) In case of any damage mentioned in this Section 21
_Tenant may cancel this Lease by written notice to Landlord if
_Landlord has not substantially completed the making of the
_required repairs within forty-five (45) days from the date of
_damage, which period shall be extended by the number of days lost
_in the event of labor strikes, acts of God, or any other similar
_causes beyond the control of Landlord; provided, however, that
_such notice be given to Landlord prior to substantial completion
_of the required repairs.
_
_ (d) Landlord shall not be required to make any repairs or
_replacements of any leasehold improvements or fixtures, installed
_by or the personal property of Tenant. Landlord's obligation to
_make any repairs or replacement to or of the Project or the
_Premises shall be limited by the insurance proceeds received and
_Landlord shall not be required to make such repairs or
_replacement the total cost of which exceeds the actual insurance
_proceeds received.
_
_22. EMINENT DOMAIN AND CONDEMNATION
_
_ (a) TOTAL CONDEMNATION. If the whole of the Premises shall
_be taken by condemnation or eminent domain, then the term hereof
_shall cease as of the day of the vesting of title or as of the
_day possession shall be so taken, whichever is earlier.
_
_ (b) PARTIAL CONDEMNATION. If only a portion of the Project
_but none of the Premises is taken by condemnation or eminent
_domain, this Lease shall continue in full force and effect as
_written and Landlord shall restore the Project to the extent
_practicable. If a portion of the Premises is taken, Landlord or
_Tenant shall be entitled to terminate this Lease, effective on
_the day of vesting of title or the day possession is taken,
_whichever is earlier, upon giving written notice to the other
_within ninety (90) days from the taking.
_
_ (c) DAMAGES. In the event of any taking, Landlord shall be
_entitled to any and all awards and/or settlements which may be
_given, and Tenant shall have no claim for the value of any
_unexpired term of this Lease. Tenant shall have the right to
_claim from the condemning authority a separate award for damage
_to Tenant's business and moving expense.
_
_23. ENTRY BY LANDLORD
_
_ Landlord and its agents shall have the right to enter the
_Premises at all reasonable times during normal business hours
_(except in the case of emergency) for the purpose of examining or
_inspecting the same, to supply janitorial services and any other
_service to be provided by Landlord hereunder, to show the same to
_prospective purchasers or Tenants of the building, and make such
_alterations, repairs, improvements or additions to the Premises
_or to the Project as Landlord may deem necessary or desirable
_which do not materially interfere with the Tenant's business. If
_during the last month of the term hereof Tenant shall have
_removed all of its property therefrom, Landlord may immediately
_enter and alter, renovate, and redecorate the Premises without
_elimination or abatement of rent or incurring liability to Tenant
_for any compensation. Landlord, during the entire term of this
_Lease, shall have the right, upon ninety (90) days prior written
_notice to Tenant, to change the name, number or designation of
_the Project without liability to Tenant.
_
_24. DEFAULT BY TENANT
_
_ (a) EVENT OF DEFAULT DEFINED. The following events (herein
_referred to as an "Event of Default") shall constitute a default
_by Tenant hereunder (with respect to the Events of Default listed
_in subsections (ii) through (iii) below, Landlord shall give
_Tenant a written notice of default and Tenant shall have thirty
_(30) days to cure such default):
_
_ (i) Tenant shall default in the due and punctual
_payment of Rent, or any amounts payable hereunder, and such
_default shall continue for ten (10) days after written notice to
_Tenant of the default, unless otherwise specifically provided
_herein.
_
_ (ii) Tenant shall vacate or abandon the Premises.
_
_ (iii) If this Lease shall be assigned or sublet in
_violation of paragraph 20.
_
_ (iv) This Lease or the Premises, or any part thereof,
_shall be taken upon execution or by any other process of law
_directed against Tenant, or shall be taken upon or subject to any
_attachment at the instance of any creditor or claimant against
_Tenant, and any such taking or attachment shall not be discharged
_or disposed of within ninety (90) days after the levy thereof.
_
_ (v) Tenant shall file a petition in bankruptcy or
_insolvency or for reorganization or arrangement under the
_bankruptcy laws of the United States, or under any insolvency act
_of any state, or shall voluntarily take advantage of any such law
_or act by answer or otherwise, or shall be dissolved or shall
_make an assignment for the benefit of creditors.
_
_ (vi) Involuntary proceedings under any such bankruptcy
_law or insolvency act, or for the dissolution of Tenant shall be
_instituted against Tenant, or a receiver or trustee shall be
_appointed for all or substantially all of the property of Tenant,
_and such proceedings shall not be dismissed or such receivership
_or trusteeship vacated within ninety (90) days after such
_institution or appointment.
_
_ (vii) Tenant shall fail to perform any of the other
_agreements, terms, covenants or conditions herein on Tenant's
_part to be performed, and such nonperformance shall continue for
_a period of thirty (30) days after notice thereof by Landlord to
_Tenant, or if such performance cannot be reasonably had within
_such thirty (30) day period, Tenant shall not, in good faith have
_commenced such performance within such thirty (30) day period and
_shall not diligently proceed therewith to completion;
_
_ (b) REMEDIES. In the event of any such Event of Default,
_Landlord may at any time thereafter, in its sole discretion, with
_or without further notice or demand and without limiting Landlord
_in the exercise of a right or remedy which Landlord may have by
_reason of such default or breach, elect to pursue one or more of
_the following remedies:
_
_ (i) Re-enter and take possession of the Premises or any
_part thereof and repossess the same as Landlords' former estate
_without prejudice to any remedies for arrears of rent or
_preceding breach of covenants or conditions. Should Landlord
_elect to re-enter the Premises as provided in this (i) or should
_Landlord take possession pursuant to legal proceedings or
_pursuant to any notice provided for by law, Landlord may, from
_time to time, without terminating this Lease, re-let the Premises
_or any part hereof in Landlord's or Tenant's name, but for the
_account of Tenant, for such term or terms (which may be greater
_or less than the period which would otherwise have constituted
_the balance of the term of this Lease) and on such conditions and
_upon such other terms (which may include concessions of free rent
_and alteration and repair of the Premises) as Landlord, in its
_discretion, may determine, and Landlord may collect and receive
_the rents therefore. No such reentry or taking possession of the
_Premises by Landlord shall be construed as an election on
_Landlord's part to terminate this Lease unless a written notice
_of such intention be given to Tenant. No notice from Landlord
_hereunder or under a forcible entry and detainer statute or
_similar law shall constitute an election by Landlord to terminate
_this Lease unless such notice specifically so states. Landlord
_reserves the right following any such re-entry and/or reletting,
_to exercise its right to terminate this Lease by giving Tenant
_such written notice in which event, this Lease will terminate as
_specified in said notice.
_
_ (ii) In the event that Landlord does not elect to
_terminate this Lease as permitted in subparagraph (1) hereof, but
_on the contrary, elects to take possession as provided in
_subparagraph (1), Tenant shall pay to Landlord: (1) the Rent and
_other sums as herein provided, which would be payable hereunder
_if such repossession had not occurred, less (b) the net proceeds,
_if any, of any reletting of the Premises after deducting all of
_Landlord's reasonable expenses in connection with such reletting,
_including without limitation all repossession costs, brokerage
_commissions, legal expenses, attorneys' fees, expenses of
_employees, alteration and repair costs and expenses of
_preparation for such reletting.
_
_ (iii) In the event this Lease is terminated, subject to
_Landlord's duty to mitigate damages, Landlord shall be entitled
_to recover forthwith against Tenant as damages for loss of the
_bargain and not as a penalty, an aggregate sum which, at the time
_of such termination of this Lease, represents the excess, if any,
_of the aggregate of the Rent and all other sums payable by Tenant
_hereunder that would have accrued for the balance of the term
_over the aggregate rental value of the Premises (such rental
_value to be computed on the basis of a lessee paying not only
_Rent to Landlord for the use and occupation of the Premises, but
_also such other charges as are required to be paid by Tenant
_under the terms of this Lease) for the balance of such term, both
_discounted to present worth at the rate of eight percent (8%) per
_annum. Alternatively, at Landlord's option, Tenant shall remain
_liable to Landlord for damages in an amount equal to the Rent
_(including Base Rent and Additional Rent) and other sums arising
_under the Lease from the balance of the term had the Lease not
_been terminated, less the net proceeds, if any, from any
_subsequent reletting, after deducting all expenses associated
_therewith and as enumerated above. Landlord shall be entitled to
_receipt of such amounts from Tenant monthly on the days on which
_such sums would have otherwise been payable.
_
_25. SUBORDINATION AND ATTORNMENT
_
_ This Lease is subordinate to any mortgage or deed of trust
_now or hereafter placed on the Project and to any renewal,
_modification, consolidation, replacement or extension of such
_mortgage or deed of trust and the addition of any other mortgage
_or deed of trust granted after the date of execution of this
_Lease, provided that, and only in the event that, the holder of
_such mortgage grants to Tenant the right to continued quiet
_enjoyment in the event of a foreclosure of the mortgage. Within
_five (5) days after written request by Landlord, Tenant shall
_execute any documents which may be desirable to conform the
_subordination of this Lease. Landlord shall obtain subordination
_and non-disturbance agreements from lenders when requested to do
_so. Tenant agrees that in the event of a sale, transfer, or
_assignment of the Landlord's interest in the Project or any part
_thereof, including the Premises, to attorn to and to recognize
_such sale, transfer or assignment and such purchaser, transferee,
_assignee or mortgagee as Landlord under the Lease. The successor
_in interest of the Landlord under this Lease shall be subject to
_Tenant's rights under this Lease and Tenant's rights hereunder
_shall continue undisturbed while no Event of Default has
_occurred. Each party agrees to execute a separate agreement
_confirming the provisions of this paragraph upon written request
_but the failure to do so shall not affect the provisions of this
_paragraph. In the event of any sale or transfer of the Project
_by Landlord, Landlord shall be relieved of all liability
_hereunder ONLY with respect to matters arising or accruing after
_the date of such sale or transfer in connection with the
_performance or observance, or the failure or refusal to perform
_or observe, any obligation of the Landlord under, pursuant to, or
_in connection with this Lease required to be performed at any
_time after the date of such sale or transfer.
_
_26. ESTOPPEL CERTIFICATE
_
_ Landlord and Tenant shall, at any time and from time to time
_upon not less than ten (10) days prior written notice from the
_other, execute, acknowledge and deliver to the other a statement,
_in writing, certifying that this Lease is unmodified and in full
_force and effect (or, if modified, stating the nature of such
_modification and certifying that this Lease, as so modified, is
_in full force and effect) and the dates to which rental and other
_charges are paid in advance, if any, and acknowledging that there
_are not, to the certifying party's knowledge, any incurred
_defaults on the part of the other party hereunder, or specifying
_such defaults if any are claimed. It is expressly understood and
_agreed that any such statements may be relied upon by prospective
_purchaser or encumbrancer of all or any portion of the real
_property of which the Premises are a part. Landlord's or
_Tenant's failure to deliver such statement within such time shall
_be conclusive upon such party that this Lease is in full force
_and effect, without modification, except as may be represented by
_the other party, that there are no incurred defaults in the other
_party's performance and that no more rental has been paid in
_advance except as provided in this Lease.
_
_27. ABANDONMENT
_
_ If Tenant shall abandon, vacate or surrender said Premises,
_or be dispossessed by process of law, or otherwise, any personal
_property belonging to Tenant and left on the Premises shall be
_deemed to be abandoned, at the option of Landlord, thirty (30)
_days after written notice to Tenant. All such abandoned property
_may be appropriated, sold, stored, destroyed or otherwise
_disposed of by Landlord as permitted by law.
_
_28. BROKERS
_
_ Each party hereby agrees to indemnity and hold the other
_harmless of and from any and all loss, costs, damages or expenses
_(including, without limitation, all attorney's fees and
_disbursements) by reason of any claim of or liability to any
_broker or person claiming through the indemnitor and arising out
_of or in connection with the negotiation, execution and delivery
_of this Lease. Additionally, indemnitor acknowledges and agrees
_that indemnitee shall have no obligation for payment of any
_brokerage fee or similar compensation to any person with whom
_indemnitor has dealt or may in the future deal with respect to
_leasing of any additional or expansion space in the Project or
_renewals or extensions of this Lease.
_
_29. NOTICE
_
_ All notices shall be in writing, delivered personally or
_mailed, postage prepaid, certified or registered mail, return
_receipt requested, addressed as set forth below, or to such other
_place as either party may designate by notice:
_
_To Landlord at: Cray Computer Corporation
_ 1110 Bayfield Road
_ Colorado Springs, CO
_ Attention:
_
_With Copies to: Holland & Hart
_ P.O. Box 8749
_ Denver, CO 80201
_ Attn: David Butler
_
_to Tenant at: Quantum Corporation
_ 333 South Street
_ Shrewsbury, MA 41545
_ Attn: Thomas H. Dill
_
_30. GENERAL PROVISIONS
_
_ (a) The waiver by Landlord of any term, covenant or
_condition herein contained shall not be deemed to be a waiver of
_any subsequent breach. The acceptance of Rent shall not be
_deemed to be a waiver of any default by Tenant.
_
_ (b) The headings to the sections of this Lease shall have
_no effect upon the construction or interpretation of any part
_hereof.
_
_ (c) Time is of the essence.
_
_ (d) The covenants and conditions herein contained bind the
_heirs, successors, executors, administrators, and assigns-of the
_parties hereto.
_
_ (e) Neither Landlord nor Tenant shall record this Lease,
_but both parties shall execute, at the request of either party a
_short form memorandum hereof which may be recorded at the
_election of either party.
_
_ (f) Upon Tenant paying the Rent reserved hereunder and
_observing and performing all of the covenants, conditions and
_provisions on Tenant's part to be observed and performed
_hereunder, Tenant shall have quiet possession of the Premises for
_the entire term hereof, subject to all the provisions of this
_Lease.
_
_ (g) Whenever Landlord grants or withholds its consent or
_exercises its discretion hereunder, Landlord agrees to exercise
_it in a reasonable manner and without unreasonable delay.
_
_ (h) Defined terms as used herein shall have the meanings
_defined in this Lease or in that certain Transaction Agreement
_dated July 21, 1995 by and between Landlord and Tenant
_("Transaction Agreement").
_
_ (i) If Tenant is a corporation, each individual executing
_this Lease on behalf of said corporation represents and warrants
_that he is duly authorized to execute and deliver this Lease on
_behalf of said corporation, in accordance with the bylaws and
_resolutions of said corporation, and that this Lease is binding
_upon said corporation.
_
_ (j) No remedy or election hereunder shall be deemed
_exclusive but shall, whenever possible, be cumulative with all
_other remedies at law or in equity.
_
_ (k) This Lease shall be governed by the laws of the State
_of Colorado.
_
_ (l) In the event of any action or proceeding brought by
_either party against the other under this Lease, the prevailing
_party shall be entitled to recover court costs and attorneys'
_fees.
_
_ (m) This Lease contains all of the agreements of the
_parties hereto with respect to any matter covered or mentioned in
_this Lease, and no prior agreements or understanding pertaining
_to any such matters shall be effective for any purpose. No
_provision of this Lease may be amended or added to except by an
_agreement in writing signed by the parties hereto or their
_respective successors in interest.
_
_ (n) This Lease and the obligations of the Landlord or
_Tenant hereunder shall not be affected or impaired because the
_Landlord or Tenant is unable to fulfill any of its obligations
_hereunder or is delayed in doing so, if such inability or delay
_is caused by reason of strike, labor troubles, acts of God, or
_any other cause beyond the reasonable control of the Landlord or
_Tenant provided however that Tenant shall not be relieved or
_excused from the payment of installments of Rent hereunder by
_such event or shall such installments be delayed.
_
_ (o) Any provision of this Lease which shall prove to be
_invalid, void, or illegal shall in no way effect, impair, or
_invalidate any other provision hereof and such other provision
_shall remain in full force and effect.
_
_ (p) The submission or delivery of this document for
_examination and review does not constitute an option, an offer to
_lease space in the Project or an agreement to lease. This
_document shall have no binding effect on the parties unless and
_until executed by both Landlord and Tenant.
_
_ (q) Landlord reserves the absolute right to effect such
_other tenancies in the Project as Landlord, in the exercise of
_its sole business judgment, determines to best promote the
_interest of the Project. Tenant does not rely on the fact, nor
_does Landlord represent, that any specific tenant or number of
_tenants shall, during the term of this Lease, occupy any space in
_the Project. This Lease and the Transaction Agreement is and
_shall be considered to be the only agreement between the parties
_hereto and their representatives and agents. All negotiations
_and oral agreements acceptable to both parties have been merged
_into and are included herein, the Transaction Agreement, and all
_documents, instruments and agreements given in connection
_therewith. There are no other representations or warranties
_between the parties other than as contained in the Transaction
_Agreement and all reliance with respect to representations is
_solely upon the representations and agreements contained in this
_Lease and the Transaction Agreement.
_
_ (r) Notwithstanding anything contained in this Lease to the
_contrary, Landlord shall not lease or use any portion of the
_Project for uses involving high-impact equipment (i.e. which
_creates detectable vibrations within the Premises) or which
_involves chemical processes generating toxic or noxious fumes
_which may adversely affect the "clean rooms" located in the M/A-
_Com Premises.
_
_ (s) M/A-COM shall have a right of general access to and
_within the Premises in connection with the control of specific
_items, systems or operations which affect the operation, use, or
_occupancy of the M/A-COM Premises, and/or any of the equipment or
_improvements contained therein. Without implied limitation, the
_foregoing shall include the exclusive right of M/A-COM to have
_access to and control of that portion of the Delta D.D.C.
_Programmable Controller which controls the HVAC affecting the
_"clean rooms" in the Premises.
_
_ (t) M/A-COM shall have a limited right of access in favor
_of its officers, directors, employees, agents and invitees,
_through the main entrance of the Project located in the Premises,
_and through so much of the Premises as is necessary for access to
_the M/A-Com Premises, such right to be utilized only in
_connection with visitors, customers, V.I.P.s and other unusual
_circumstances, such access expressly to exclude day to day use by
_Tenant's employees.
_
_ (u) Landlord shall deliver the Premises to Tenant together
_with the following items which Tenant shall be entitled to use
_during the Combined term:
_
_ i) For an additional sum of $10,208.33 per month:
_
_ Mail room and fixtures; conference room furniture
_ and white boards; shipping/receiving dock material
_ handling equipment, including pallet jacks,
_ forklift, shipping scale and racking; 125 cubicle
_ office set ups and 27 enclosed office set ups;
_ personnel lockers; and 8 copying machines.
_
_ ii) For no additional consideration: cafeteria
_ kitchen; seating areas and related equipment
_ (including return of kitchen equipment currently
_ located offsite); fire protection and security
_ systems (except computer room Halon system);
_ Liebert power conditioners; UPS systems; and
_ Liebert AC units as necessary to support light
_ manufacturing process.
_
_ (v) From time to time, upon reasonable prior oral notice to
_Tenant, and without interfering with the conduct of Tenant's
_business therein, M/A-COM shall have the right to use the loading
_dock located in the Premises, solely for purposes reasonably
_requiring a loading dock larger than that located in the M/A-Com
_Premises.
_
_ (w) In the event that Landlord shall be in default of any
_of its obligations under this Lease during the Combined Term,
_including without implied limitation payment to lienholders and
_mortgagees and Landlord shall fail to cure any such default
_within 30 days after written notice from tenant and then except
_in a case of emergency or imminent damage to Tenant's property or
_business in which event Tenant may proceed to cure immediately,
_Tenant may, but shall be under no obligation to, cure such
_default for and on behalf of Landlord. Tenant may not offset
_against any amounts due Landlord hereunder the amounts paid by
_Tenant in connection with any such cure; however, Tenant shall
_have all of its other rights and remedies in connection thereto
_available hereunder at law or in equity, including the right to
_record and enforce a first priority lien against the Project,
_which Landlord hereby grants, for the amounts paid by Tenant in
_connection with any such cure, together with interest and
_collection costs, pursuant to the Order Under 11 U.S.C. S 363 and
_Federal Rule of Bankruptcy Procedure 6004(c) Authorizing the Sale
_of Certain Assets and the Leases of Certain Property to M/A-COM,
_Inc. ("M/A-COM") and Quantum Corporation ("Quantum") Free and
_Clear of Liens and Encumbrances.
_
_ (x) With respect to the rights reserved to M/A-COM in
_subsections (s), (t), and (v), M/A-COM shall have the right of
_specific performance in the event of any failure on the part of
_Tenant to comply.
_
_
_ IN WITNESS WHEREOF, the parties hereto have executed this
_Lease as of the date first above written.
_
_
_ LANDLORD:
_
_ CRAY COMPUTER CORPORATION, debtor in
_ possession under Bankruptcy Court filing
_ 95-12697-CEM
_
_
_ By: Terry A. Willkom
_ Its: President
_
_
_
_ TENANT:
_
_ QUANTUM CORPORATION
_
_
_ By: Andy Kryder
_ Its: General Counsel and
_ Assistant Secretary
_
<PAGE>
EXHIBIT 11.1
QUANTUM CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(In thousands except per share data)
Three Months Ended Six Months Ended
Oct. 1, Oct. 2, Oct. 1, Oct. 2,
1995 1994 1995 1994
PRIMARY
Weighted average number of
common shares during the
period 52,498 45,305 50,266 45,027
Incremental common shares
attributable to exercise
of outstanding options 3,742 2,022 3,750 2,064
------- ------- ------- -------
Total shares 56,240 47,327 54,016 47,091
Net income $22,025 $48,603 $34,967 $106,844
Net income per share $0.39 $1.03 $0.65 $2.27
FULLY DILUTED
Weighted average number of
common shares during the
period 52,498 45,305 50,266 45,027
Incremental common shares
attributable to exercise
of outstanding options and
conversion of 6 3/8%
convertible subordinated
debentures 11,069 13,732 12,677 13,773
------- ------- ------- -------
Total shares 63,567 59,037 62,943 58,800
Net income (loss):
Net income (loss) $22,025 $48,603 $34,967 $106,844
Add 6 3/8% convertible
subordinated debentures
interest, net of income
tax effect 1,500 1,663 3,337 3,340
Net income, as adjusted $23,525 $50,266 $38,304 $110,184
Net income per share $0.37 $0.85 $0.61 $1.87
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS OF QUANTUM CORPORATION FOR THE QUARTER ENDED
OCTOBER 1, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> OCT-01-1995
<CASH> 158,805
<SECURITIES> 0
<RECEIVABLES> 644,984
<ALLOWANCES> 9,971
<INVENTORY> 508,807
<CURRENT-ASSETS> 1,372,896
<PP&E> 495,986
<DEPRECIATION> 149,174
<TOTAL-ASSETS> 1,816,936
<CURRENT-LIABILITIES> 744,478
<BONDS> 422,933
<COMMON> 246,265
0
0
<OTHER-SE> 403,260
<TOTAL-LIABILITY-AND-EQUITY> 1,816,936
<SALES> 1,974,363
<TOTAL-REVENUES> 1,974,363
<CGS> 1,707,448
<TOTAL-COSTS> 1,707,448
<OTHER-EXPENSES> 202,201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,465
<INCOME-PRETAX> 49,249
<INCOME-TAX> 14,282
<INCOME-CONTINUING> 34,967
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,967
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.61
</TABLE>
