-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WTgJLTHvo6BT16JtNVdZGldFgxRtX9XVKqc4Aeak4N4yZOjGhxMRFBRuSTTC//iv EEC+EiZZCVNS8Ar3iX4PmQ== 0000891618-98-004008.txt : 19980824 0000891618-98-004008.hdr.sgml : 19980824 ACCESSION NUMBER: 0000891618-98-004008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980806 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980821 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LSI LOGIC CORP CENTRAL INDEX KEY: 0000703360 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942712976 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10317 FILM NUMBER: 98695307 BUSINESS ADDRESS: STREET 1: 1551 MCCARTHY BLVD STREET 2: MS D 106 CITY: MILPITAS STATE: CA ZIP: 95035 BUSINESS PHONE: 4084338000 MAIL ADDRESS: STREET 1: 1551 MCCARTHY BLVD STREET 2: MS D 106 CITY: MILPITAS STATE: CA ZIP: 95035 8-K 1 FORM 8-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 6, 1998 LSI LOGIC CORPORATION - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11674 94-2712976 - ----------------------------------------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION)
1551 MCCARTHY BOULEVARD MILPITAS, CALIFORNIA 95035 - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 433-8000 NOT APPLICABLE - -------------------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ================================================================================ 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 6, 1998, the Registrant acquired from Hyundai Electronics America, a California corporation ("HEA"), all of the outstanding capital stock of Symbios, Inc. ("Symbios"), a Delaware corporation and the wholly-owned subsidiary of HEA. The transaction was completed pursuant to (i) the Stock Purchase Agreement, dated as of June 28, 1998, by and among the Registrant, HEA, and Hyundai Electronics Industries Co., Ltd., a corporation incorporated under the laws of the Republic of Korea ("HEI") and the parent of HEA and (ii) the First Amendment to Stock Purchase Agreement, dated as of August 6, 1998, by and among Registrant, HEA and HEI. As a result of the transaction, Symbios is now a wholly-owned subsidiary of the Registrant. The Registrant paid approximately $760 million in cash for all of the outstanding capital stock of Symbios, which included the assumed liabilities of Symbios. In addition, the Registrant assumed all of the options outstanding under Symbios' 1995 Stock Plan. The Registrant funded the purchase through a combination of cash revenues and credit facilities by and among the Registrant, LSI Logic Japan Semiconductor, Inc., a wholly-owned subsidiary of Registrant ("LLJS"), ABN AMRO Bank N.V., as agent for the syndicate of lenders ("ABN AMRO"), and a syndicate of lenders to be determined by ABN AMRO (the "Lenders"), pursuant to the Credit Agreement, dated as of August 5, 1998, by and among the Registrant, LLJS, ABN AMRO and the Lenders. The transaction will be accounted for as a purchase. Symbios designs, manufactures and markets client/server integrated circuits, cell-based application specific integrated circuits, host adapter boards and storage subsystems. The Registrant intends for Symbios to continue these operations. The information that is set forth in the Registrant's Press Release dated August 7, 1998 is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Business Acquired. It is impracticable for the registrant to provide the required financial statements for the business acquired at the time of filing this report, but the registrant will file such required financial statements, if required pursuant to this item and Rule 3-05(b) of Regulation S-X, by amendment to this report as soon as practicable, but not later than sixty days after this report was required to be filed initially. (b) Pro Forma Financial Information. It is impracticable for the registrant to provide the required pro forma information for the business acquired at the time of filing this report, but the registrant will file such required pro forma information, if required pursuant to this item and Article 11 of Regulation S-X, by amendment to this report as soon as practicable, but not later than sixty days after this report was required to be filed initially. -2- 3 (c) Exhibits. 2.1 Stock Purchase Agreement, dated as of June 28, 1998, by and among the Registrant, HEA and HEI. 2.2 First Amendment to Stock Purchase Agreement, dated as of August 6, 1998, by and among Registrant, HEA and HEI. 10.42 Credit Agreement, dated as of August 5, 1998, by and among Registrant, LLJS, ABN AMRO and Lenders. 99.1 Text of Press Release, dated as of August 7, 1998. -3- 4 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. LSI LOGIC CORPORATION A Delaware Corporation Dated: August 21, 1998 By: /s/ R. Douglas Norby ------------------------------------- R. Douglas Norby Executive Vice President, Finance and Chief Financial Officer -4- 5 EXHIBIT INDEX Exhibit Number Description - -------------------------------------------------------------------------------- 2.1 Stock Purchase Agreement, dated as of June 28, 1998, by and among the Registrant, HEA and HEI. 2.2 First Amendment to Stock Purchase Agreement, dated as of August 6, 1998, by and among Registrant, HEA and HEI. 10.42 Credit Agreement, dated as of August 5, 1998, by and among Registrant, LLJS, ABN AMRO and Lenders. 99.1 Text of Press Release, dated August 7, 1998. EX-2.1 2 STOCK PURCHASE AGREEMENT 1 EXHIBIT 2.1 STOCK PURCHASE AGREEMENT dated as of June 28, 1998 by and among LSI LOGIC CORPORATION, HYUNDAI ELECTRONICS INDUSTRIES CO., LTD. and HYUNDAI ELECTRONICS AMERICA with respect to all outstanding capital stock of SYMBIOS, INC. 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS...................................................................................1 1.1 Definitions...................................................................................1 ARTICLE II SALE OF SHARES AND CLOSING...................................................................10 2.1 Purchase and Sale............................................................................10 2.2 Purchase Price...............................................................................10 2.3 Post-Closing Adjustment......................................................................10 2.4 Closing......................................................................................11 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT..........................................12 3.1 Corporate Existence of Parent and Seller.....................................................12 3.2 Authority....................................................................................12 3.3 Corporate Existence of the Company...........................................................13 3.4 Capital Stock................................................................................13 3.5 Subsidiaries.................................................................................14 3.6 No Conflicts.................................................................................14 3.7 Governmental Approvals and Filings...........................................................15 3.8 Financial Statements and Condition; Absence of Changes.......................................15 3.9 Taxes........................................................................................18 3.10 Legal Proceedings............................................................................18 3.11 Compliance With Laws and Orders..............................................................19 3.12 Benefit Plans; ERISA.........................................................................19 3.13 Real Property................................................................................19 3.14 Adequacy of Assets...........................................................................20 3.15 Tangible Personal Property...................................................................20 3.16 Intellectual Property Rights.................................................................20 3.17 Contracts....................................................................................21 3.18 Permits and/or Approvals.....................................................................23 3.19 Affiliate Transactions.......................................................................23 3.20 Environmental Matters........................................................................23 3.21 Accounts Receivable; Inventory...............................................................24 3.22 Insurance....................................................................................25 3.23 Disclosure...................................................................................25 3.24 Product Liability Claims.....................................................................25 3.25 Brokers: Finders.............................................................................25 3.26 No Other Representations.....................................................................25
-i- 3 TABLE OF CONTENTS (continued)
Page ---- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................................26 4.1 Corporate Existence of Purchaser.............................................................26 4.2 Authority....................................................................................26 4.3 No Conflicts.................................................................................26 4.4 Governmental Approvals and Filings...........................................................27 4.5 Legal Proceedings............................................................................27 4.6 Purchase for Investment......................................................................27 4.7 Financing....................................................................................27 4.8 No Other Representations.....................................................................27 ARTICLE V COVENANTS OF PARENT AND SELLER...............................................................28 5.1 Regulatory and Other Approvals...............................................................28 5.2 Tax Sharing Agreement........................................................................28 5.3 Investigation by Purchaser...................................................................28 5.4 Financial Statements and Reports.............................................................29 5.5 Conduct of Business..........................................................................29 5.6 Certain Restrictions.........................................................................29 5.7 Affiliate Transactions.......................................................................31 5.8 Fulfillment of Conditions....................................................................31 5.9 Litigation...................................................................................32 5.10 Agreement Not to Solicit.....................................................................32 5.11 Insurance....................................................................................32 5.13 Exclusivity..................................................................................32 5.14 Option Exercises.............................................................................33 5.15 Options......................................................................................33 5.16 Transaction Structure........................................................................33 5.17 Assumption of Various Employment Arrangements................................................33 5.18 Purchase of Christ Note......................................................................33 ARTICLE VI COVENANTS OF PURCHASER.......................................................................34 6.1 Regulatory and Other Approvals...............................................................34 6.2 Fulfillment of Conditions....................................................................34 6.3 Release of Guarantees........................................................................34 6.4 Change of Name...............................................................................34 6.5 Indemnification of Directors and Officers....................................................35 ARTICLE VII ADDITIONAL AGREEMENTS........................................................................35 7.1 Stock Plans and Options......................................................................35 7.2 Symbios Employees............................................................................36 7.3 Ancillary Agreement..........................................................................37 7.4 Certain Actions..............................................................................37
-ii- 4 TABLE OF CONTENTS (continued)
Page ---- ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE PARTIES.....................................................38 8.1 Obligations of Both Parties..................................................................38 8.2 Obligations of Purchaser.....................................................................38 8.3 Obligations of Seller........................................................................40 ARTICLE IX INDEMNIFICATION..............................................................................41 9.1 Survival of Representations and Warranties; Indemnification Period...........................41 9.2 Indemnification by Parent and Seller.........................................................41 9.3 Limitation of Seller's Liability.............................................................42 9.4 Indemnification by Purchaser.................................................................42 9.5 Limitation of Purchaser's Liability..........................................................42 9.6 Defense of Third Party Claims................................................................43 9.7 Procedure and Dispute Resolution.............................................................44 9.8 Arbitration..................................................................................44 9.9 Adjustment to Purchase Price.................................................................45 9.10 Additional Environmental Matters.............................................................45 ARTICLE X TERMINATION..................................................................................46 10.1 Termination..................................................................................46 10.2 Effect of Termination........................................................................47 10.3 Termination and Nonconsummation Fees.........................................................47 ARTICLE XI TAX MATTERS..................................................................................48 11.1 Section 338 Election.........................................................................48 11.2 Returns; Indemnification; Liability for Taxes................................................48 11.3 Refunds and Credits..........................................................................49 11.4 Termination of Tax Sharing Agreements........................................................50 11.5 Conduct of Audits and Other Procedural Matters...............................................50 11.6 Assistance and Cooperation...................................................................50 11.7 FIRPTA Certificate...........................................................................51 ARTICLE XII MISCELLANEOUS................................................................................51 12.1 Notices......................................................................................51 12.2 Entire Agreement.............................................................................52 12.3 Expenses.....................................................................................52 12.4 Public Announcements.........................................................................52 12.5 Confidentiality..............................................................................53 12.6 Further Assurances; Post-Closing Cooperation.................................................54 12.7 Waiver.......................................................................................54 12.8 Amendment....................................................................................55 12.9 No Third Party Beneficiary...................................................................55
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Page ---- 12.10 No Assignment; Binding Effect................................................................55 12.11 Invalid Provisions...........................................................................55 12.12 Governing Law................................................................................55 12.13 Counterparts.................................................................................55 12.14 Construction.................................................................................55
-iv- 6 This STOCK PURCHASE AGREEMENT, dated as of June 28, 1998, is made and entered into by and among LSI Logic Corporation, a Delaware corporation ("Purchaser"), Hyundai Electronics Industries Co., Ltd. ("Parent"), and Hyundai Electronics America, a California corporation ("Seller"). Capitalized terms not otherwise defined herein have the meanings set forth in Section 1.1. WHEREAS, Seller owns thirty-three million nine hundred ninety-nine thousand nine hundred ninety-nine (33,999,999) shares of convertible Series A Preferred Stock, par value ten cents ($0.10) per share, and one (1) share of Common Stock, par value two cents ($0.02) per share, of Symbios, Inc. a Delaware corporation ("Symbios" or the "Company"), constituting all of the issued and outstanding shares of capital and voting stock of the Company as of the date hereof (such shares being referred to herein as the "Shares"); and WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the Shares on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS 1.1 Definitions. (a) Defined Terms. As used in this Agreement, the following defined terms have the meanings indicated below: "AAA" has the meaning assigned in Section 9.8. "Acquisition" has the meaning assigned in Section 11.1. "Acquisition Allocation Schedule" has the meaning assigned in Section 11.1(b). "Actions" or "Proceedings" means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation. "Affiliate" means any person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the person specified. "Ancillary Agreements" means the agreements to implement the transfer and license of certain Intellectual Property rights, on the terms set forth in the Intellectual Property Term Sheet 1 7 attached hereto as Exhibit A, substantially in the form of that Termination and License Agreement dated as of February 25, 1998 by and among Parent, Seller and the Company with such further modifications, consistent with the aforesaid Term Sheet as Seller and Purchaser shall mutually, reasonably and in good faith agree upon. "Assumed Option" has the meaning assigned in Section 7.1. "Balance Sheet" has the meaning assigned in Section 3.8((a)). "Benefit Plan" means any Plan established by the Company or any of its subsidiaries or any predecessor or Affiliate of any of the foregoing which the Company or any of its subsidiaries maintains, or to which the Company or any of its subsidiaries contributes or has contributed or under which any employee, officer, former employee or director of the Company or any of its subsidiaries or any beneficiary thereof is covered, is eligible for coverage or has benefit rights. "Best Efforts" means that the obligated party is required to make a commercially reasonable, diligent, expeditious and good-faith effort to accomplish the applicable objective. Such obligation, however, does not require any extraordinary expenditure of funds or the incurrence of any significant liability on the part of the obligated party. The fact that the objective is not actually accomplished does not, without more, establish that the obligated party did not in fact utilize its Best Efforts in attempting to accomplish the objective. "Bridge Loan" has the meaning assigned in the definition of "Bridge Transactions." "Bridge Transactions" means (i) the bridge loan and revolving credit facility established by Seller and the Company with Lehman Brothers and certain other parties, any increase in the amount thereof after the date hereof, and all borrowings and other transactions thereunder (the "Bridge Loan"), and (ii) each related upstream loan (the "Upstream Bridge Loan") to Seller or any of its Affiliates by the Company. "Business Day" means a day that is not a Saturday, a Sunday or a statutory or civic holiday in the State of California or the Republic of Korea, or any other day on which the principal offices of either Seller or Purchaser are closed or become closed prior to 2 p.m. local time whether in accordance with established company policy or as a result of unanticipated events, including adverse weather conditions. "Capital Budget" means the Company's capital expenditure budget heretofore provided to Purchaser. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the rules and regulations promulgated thereunder. "CERCLIS" means the Comprehensive Environmental Response and Liability Information System, as provided by 40 C.F.R. Section 300.5. "Claim Notice" has the meaning assigned in Section 9.7(a). 2 8 "Closing" has the meaning assigned in Section 2.4. "Closing Balance Sheet" has the meaning assigned in Section 2.3((a)). "Closing Date" has the meaning assigned in Section 2.4. "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Common Stock" has the meaning assigned in Section 3.4. "Company" has the meaning assigned in the forepart of this Agreement. "Company Facilities" means any real property owned or leased at any time by the Company (including the land and improvements thereon) or its predecessors in interest and used in the Company's business as conducted by the Company or any predecessor prior to the Closing Date. "Company Intellectual Property" means any Intellectual Property that is owned by or exclusively licensed to the Company or its subsidiaries. "Company Tax Returns" has the meaning assigned in Section 11.2(a). "Continuing Environmental Conditions" means (i) any Release of any Hazardous Material that occurred at any time on or before the Closing Date and which Release continues to occur after the Closing Date from any pipes, conduits, structures, equipment or other improvements which are on or originate from the Company Facilities, to the extent any of the foregoing are concealed within or below the improvements, foundation, paving, or subsurface soils on, or originate from any Company Facilities; (ii) any Pre-Existing Contamination present on or originating from the Company Facilities as of the Closing Date which continues to be present on or originate from the Company Facilities after the Closing Date, and (iii) any violation of an Environmental Requirement applicable to the Pre-Closing Hazardous Material Activities conducted on the Company Facilities which occurs on or before the Closing Date and which continues to occur after the Closing Date. "Contract" means any written or oral contract, agreement or understanding between two or more parties. "CPA Firm" has the meaning assigned in Section 2.3((b)). "Defined Benefit Plan" means each Benefit Plan which is subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of ERISA. "Director Options" has the meaning assigned in Section 3.4((a)). "Director Plan" means the 1995 Director Restricted Stock Plan of the Company. 3 9 "Disclosure Schedule" has the meaning assigned in the forepart of Article III. "Election" has the meaning assigned in Section 11.1. "Encumbrances" means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge, option, encumbrance, restriction or other encumbrance of any kind, or any conditional sale contract, title retention contract or other contract to give any of the foregoing. "Environmental Claim" means any notice, claim, act, cause of action or investigation by any Third Party alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (A) the presence in the environment, or Release of, any Hazardous Material or (B) any violation, or alleged violation, of any Environmental Requirement. "Environmental Covenants" has the meaning assigned in Section 9.10. "Environmental Requirement" means any statute, enactment, administrative agency rule or promulgation, regulation, ordinance, or other law, Order and any legally binding covenants, agreements, or Permits and/or Approvals, covenants or conditions relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, generation, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Material. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. "Excess Payment" has the meaning assigned in Section 2.4. "Exchange Ratio" has the meaning assigned in Section 7.1(a). "Final Net Asset Value" has the meaning assigned in Section 2.3((b)). "Financial Statements" means the consolidated financial statements of the Company and its consolidated subsidiaries delivered to Purchaser pursuant to Section 3.8 or Section 5.4. "Financial Statement Date" means May 24, 1998. "Fully Diluted Per-Share Purchase Price" means the quotient obtained by dividing (i) the Purchase Price by (ii) the number of shares that would be outstanding immediately prior to the Closing if all then-outstanding options, warrants and other rights to purchase Company capital stock were exercised in full. 4 10 "GAAP" means United States generally accepted accounting principles, consistently applied throughout the specified period and in the immediately prior comparable period. "Governmental or Regulatory Authority" means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision. "Hazardous Material" means (i) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls (PCBs); (ii) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants" or words of similar import under any Environmental Requirement; and (iii) any chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental or Regulatory Authority under any Environmental Requirement. "HSR Act" means Section 7A of the Clayton Act (Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and regulations promulgated thereunder. "Indebtedness" of any person means all obligations of such person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (iv) under capital leases and (v) in the nature of guarantees of the obligations described in clauses (i) through (iv) above of any other person. "Indemnity Claim" has the meaning assigned in Section 9.7(a). "IRS" means the United States Internal Revenue Service. "Intellectual Property" means any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (iii) all copyrights, copyrights registrations and applications therefor and all other rights corresponding thereto throughout the world; (iv) all mask works, mask work registrations and applications therefor; (v) all industrial designs and any registrations and applications therefor throughout the world; (vi) all trade names, logos, common law trademarks and service marks; trademark and service mark registrations and applications therefor and all goodwill associated therewith throughout the world; (vii) all databases and data collections and all rights therein throughout the world; and (viii) all computer software including all source code, object code, firmware, development tools, files, records and data, all media on which any of the foregoing is recorded, all Web addresses, sites and domain names, and (ix) any 5 11 similar, corresponding or equivalent rights to any of the foregoing and (x) all documentation related to any of the foregoing. "Knowledge of Seller" means the actual conscious knowledge of the executive officers of the Company, except that, with respect to Section 3.16 hereof, "Knowledge of Seller" means the actual conscious knowledge of the executive officers of the Company or Seller. "Knowledge of Purchaser" means the actual conscious knowledge of the executive officers of Purchaser. "Liabilities" means all Indebtedness, obligations and other liabilities of a person (whether absolute, accrued, contingent, asserted, unasserted, fixed or otherwise, or whether due or to become due). "Loss" or "Losses" means any and all damages, fines, penalties, deficiencies, losses, judgments, costs and expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts) and other reasonable expenses of litigation or other proceedings with respect to any claim, default or assessment. "Material Adverse Effect" with respect to any person means a material adverse effect on the business, financial condition, assets, properties, operations or results of operations of such person and any subsidiaries of such person taken as a whole; provided, however, that a "Material Adverse Effect" shall not be deemed to have occurred solely as a result of any of the following (or any combination of the following): (i) any effect or change occurring as a result of (A) general economic or financial conditions or (B) other developments which are not unique to such person and its subsidiaries but also affect other persons who participate or are engaged in the lines of business in which such person and its subsidiaries participate or are engaged; (ii) any change in or effect on the business or financial condition or performance of the Company and its subsidiaries following the date of this Agreement resulting from employee attrition directly attributable to an announcement by Purchaser with respect to the operation of the Company, or a delay of, reduction in or cancellation or change in the terms of purchases from or other transactions with the Company or any of its subsidiaries, in each case directly attributable to the pendency or announcement of this Agreement or the transactions contemplated hereby; and (iii) failure in itself, but not any cause thereof, of the Company's and its subsidiaries' results of operations to meet any internal or external predictions, projections, estimates or expectations. "NPL" means the National Priorities List under CERCLA. "Net Asset Value" has the meaning assigned in Section 2.3(a). "Notice of Disagreement" has the meaning assigned in Section 2.3(a). "Operative Documents" has the meaning assigned in Section 3.13(b). "Order" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final). 6 12 "Parent" means Hyundai Electronics Industries Co., Ltd. "Payment Amount" has the meaning assigned in Section 2.4. "Pension Benefit Plan" means each Benefit Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA. "Permits and/or Approvals" means all permits, licenses, certificates of authority, authorizations, approvals, registrations, franchises and similar consents granted or issued by any Governmental or Regulatory Authority. "Permitted Encumbrance" means any of the following: (i) any Encumbrance for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings (which proceedings have been disclosed to Purchaser) for which adequate reserves have been established on the Balance Sheet in accordance with GAAP, (ii) any statutory Encumbrance arising in the ordinary course of business by operation of law with respect to a Liability shown on the Balance Sheet or permitted under this Agreement that is not yet due or delinquent, (iii) any minor non-monetary imperfection of title or similar non-monetary Encumbrance which individually or in the aggregate with other Encumbrances could not reasonably be expected to have a material adverse effect on the transferability, financeability, ownership, leasing, use, development, occupancy or operation of any property; and (iv) except immediately after the Closing, any Encumbrance in connection with any of the Bridge Transactions. Notwithstanding the foregoing, "Permitted Encumbrance" shall not in any event include in the case of clauses (i), (ii) and (iii) any mortgage, deed of trust, conditional sale or similar title retention agreement, any option or right to lease or occupy, any purchase right or option to purchase, or any monetary liens (including, without limitation, mechanics', materialmen's, or other statutory liens.) "Plan" means any bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock, leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, accident, disability, workmen's compensation or other insurance, severance, separation or other employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, funded or unfunded, including, but not limited to, any "employee benefit plan" within the meaning of Section 3(3) of ERISA. "Post-Closing Benefits" has the meaning assigned in Section 7.2((c)). "Pre-Closing Hazardous Material Activities" means the transportation, transfer, recycling, storage, use, handling, treatment, manufacture, removal, investigation, remediation, Release, sale, or distribution of any Hazardous Material, or any product or waste containing a Hazardous Material, conducted on any Company Facilities prior to the Closing Date or otherwise occurring prior to the Closing Date in connection with or to benefit the business of the Company. 7 13 "Pre-Closing Hazardous Materials Disposal Facility" means any transporter, recycler, incinerator, or disposal facility to whom or at which Hazardous Material waste, generated at any Company Facility or in the course of any Pre-Closing Hazardous Material Activity, have been or will be directly or indirectly transported, delivered or otherwise transferred. "Pre-Closing Period" has the meaning assigned in Section 11.2(a). "Pre-Existing Contamination" means the presence on or before the Closing Date of any Hazardous Material in the soil, groundwater, surface water, air or building materials of any Pre-Closing Hazardous Materials Disposal Facility or any Company Facilities. "Pre-Existing/Continuing Environmental Liabilities" means any Actions, Proceedings, liability, Loss or claim, including without limitation the cost or expense of fulfilling any Environmental Requirement, duty to investigate, remediate, remove, or take other action with respect to Hazardous Material, or duty to indemnify, defend or reimburse any Third Party with respect to (i) Pre-Existing Contamination; (ii) Continuing Environmental Conditions; (iii) the migration at any time prior to or after the Closing Date of Pre-Existing Contamination to any other real property, or the soil, groundwater, surface water, air or building materials thereof, (iv) any Pre-Closing Hazardous Material Activities; (v) the exposure of any person to Pre-Existing Contamination or to a Hazardous Material in the course of or as a consequence of any Pre-Closing Hazardous Material Activities, without regard to whether any health effect of the exposure has been manifested as of the Closing Date; (vi) the violation of any Environmental Requirement by the Company or its agents, employees, predecessors in interest, contractors, invitees or licensees prior to the Closing Date or in connection with any Pre-Closing Hazardous Material Activities prior to the Closing Date; and (vii) any Actions or Proceedings brought or threatened by any Third Party with respect to any of the foregoing. "Preferred Stock" has the meaning assigned in Section 3.4. "Proceedings" has the meaning assigned in Section 11.5. "Purchase Price" has the meaning assigned in Section 2.2. "Purchaser" has the meaning assigned in the first paragraph of this Agreement. "Purchaser Common Stock" means the common stock, par value $0.01 per share, of Purchaser. "Qualified Plan" means each Benefit Plan which is intended to qualify under Section 401 of the Code. "Release" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through air, soil, surface water, ground water, wetlands, land or subsurface strata. 8 14 "Representatives" has the meaning assigned in Section 5.3. "Seller" has the meaning assigned in the forepart of this Agreement. "Shares" has the meaning assigned in the forepart of this Agreement. "Stock Plan" means the 1995 Stock Plan of the Company. "Straddle Period" has the meaning assigned in Section 11.2(a). "Symbios" has the meaning assigned in the forepart of this Agreement. "Symbios Stock Option" has the meaning assigned in Section 7.1(a). "Tax Returns" means a report, return or other information required to be supplied to a governmental entity with respect to Taxes including combined or consolidated returns for any group of entities that includes the Company or any of its subsidiaries. "Tax Sharing Agreement" means that certain Tax Allocation Agreement, dated July 21, 1995, by and among Parent, Seller and other Parent direct or indirect subsidiaries, as amended or proposed to be amended, through the date hereof. "Taxes" means any federal, state, county, local or foreign taxes, charges, fees, levies, or other assessments, including all net income, gross income, sales and use, ad valorem, transfer, gains, profits, excise, franchise, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance or withholding taxes or charges imposed by a governmental entity, and includes any interest and penalties (civil or criminal) on or additions to any such taxes and any expenses incurred in connection with the determination, settlement or litigation of any tax liability. "Third Party" means any person (including, but not limited to, a Governmental or Regulatory Authority) not an Affiliate of the other referenced person or persons. "Third-Party Claim" has the meaning assigned in Section 9.6(a). "Trigger Date" has the meaning assigned in Section 10.3(a). "Upstream Bridge Loan" has the meaning assigned in the definition of "Bridge Transactions." (b) Construction of Certain Terms and Phrases. Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement; (iv) the terms "Article" or "Section" refer to the specified Article or Section of this Agreement; (v) the phrase "ordinary course of business" refers to the business of the Company 9 15 and its subsidiaries; (vi) whenever the words "include," "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation;" (vii) the phrase "made available" shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available; (viii) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified; (ix) the phrases "the date of this Agreement," "the date hereof," and terms of similar import, unless the context otherwise requires, shall be deemed to refer to June 28, 1998; (x) all accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP; (xi) any representation or warranty contained herein as to the enforceability of a Contract shall be subject to the effect and limitations of any bankruptcy, insolvency, reorganization, moratorium or other similar law affecting the enforcement of creditors' rights generally and to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (xii) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. ARTICLE II SALE OF SHARES AND CLOSING 2.1 Purchase and Sale. Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller, all of the right, title and interest of Seller in and to the Shares at the Closing on the terms and subject to the conditions set forth in this Agreement. 2.2 Purchase Price. The aggregate purchase price for the Shares is Seven Hundred Twenty-Two Million Seven Hundred Thousand Dollars ($722,700,000) minus the Excess Payment, if any, payable in lawful money of the United States in immediately available funds (the "Purchase Price") at the Closing in the manner provided in Section 2.4. 2.3 Post-Closing Adjustment. (a) As soon as practicable (but in no event later than forty-five (45) days) after the Closing Date, Purchaser shall deliver to Seller an audited balance sheet for the Company as of the Closing Date (the "Closing Balance Sheet") which shall be prepared (i) in accordance with GAAP as in effect on the date of such preparation and (ii) in a manner consistent with the Company's accounting policies used in the preparation of the Balance Sheet. The amount by which the assets set forth on the Closing Balance Sheet exceed the liabilities set forth on the Closing Balance Sheet (excluding any Indebtedness under the Bridge Loan) shall be referred to herein as the "Net Asset Value." (b) The Closing Balance Sheet shall become final and binding on Seller and Purchaser unless Seller gives written notice of its disagreement (a "Notice of Disagreement") to Purchaser within thirty (30) days following receipt by Seller of the Closing Balance Sheet. Any 10 16 such Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. If Seller and Purchaser are unable to resolve all of their disagreements with respect to the Closing Balance Sheet within ten (10) days following the completion of Purchaser's review of the Notice of Disagreement, they shall refer their remaining differences to an internationally recognized firm of independent public accountants as to which Seller and Purchaser mutually agree (the "CPA Firm"), which shall, acting as experts and not as arbitrators, determine, and only with respect to the remaining differences so submitted, whether and to what extent, if any, Net Asset Value as set forth in the Closing Balance Sheet requires adjustment; provided, however, that no such adjustment shall exceed the maximum adjustment claimed in the Notice of Disagreement. Seller and Purchaser shall direct the CPA firm to use its best efforts to render its determination within forty-five (45) days after the date the CPA firm is selected. The CPA Firm's determination shall be conclusive and binding upon Purchaser and Seller. The fees and disbursements of the CPA Firm shall be shared equally by Purchaser and Seller. The amount of Net Asset Value that becomes final and binding on Purchaser and Seller under this Section 2.3((b)) shall be referred to herein as the "Final Net Asset Value." (c) Promptly following the determination of the Final Net Asset Value, the Purchase Price shall be adjusted as follows (and payment will be made by Purchaser or Seller, as the case may be, as provided below, not later than five (5) Business Days following such determination): (i) If the Final Net Asset Value is less than Four Hundred Fifteen Million One Hundred Fifty-One Thousand Dollars ($415,151,000) minus the Excess Payment, if any, then Seller shall pay to Purchaser the amount of such deficiency; and (ii) If the Final Net Asset Value is greater than Four Hundred Fifteen Million One Hundred Fifty-One Thousand Dollars ($415,151,000) minus the Excess Payment, if any, then Purchaser shall pay to Seller the amount of such excess. The Closing Balance Sheet shall not include any Liabilities of the Company paid or assumed by Seller pursuant to Sections 5.15 or 5.17 of this Agreement except to the extent that such Liabilities are reflected in the Balance Sheet. In calculating the adjustment provided by this Section 2.3(c), it is the intention of the parties to avoid double-counting of items which would result in an inequitable and unintended benefit to one party or parties to the detriment of the other party or parties. 2.4 Closing. The closing of the purchase and sale of the Shares (the "Closing") will take place at the offices of Gray Cary Ware & Freidenrich LLP, 400 Hamilton Avenue, Palo Alto, California, or at such other place as Purchaser and Seller mutually agree, at 10 a.m. local time on the second Business Day after the day on which the last of the closing conditions set forth in Article VIII has been satisfied or waived, or such other date as Purchaser and Seller mutually agree upon in writing (the "Closing Date"). Simultaneously with the Closing the following will occur: (a) Purchaser will pay the Purchase Price, in full, by wire transfer of immediately available funds to such account as Seller may reasonably direct by written notice delivered to Purchaser by Seller; (b) all Indebtedness owing to the Company under the Upstream 11 17 Bridge Loan (including any new advances permitted by this Agreement) shall be repaid to the Company by Seller; (c) Seller shall reimburse the Company for all obligations and expenses incurred by the Company with respect to the Bridge Transactions which are not reflected in the May 24, 1998 Financial Statements delivered pursuant to Section 3.8(a); (d) Purchaser shall either contribute to the Company additional capital or loan to the Company immediately available funds in an amount sufficient, together with the Upstream Bridge Loan repayment and the amount of cash on hand on the books of the Company immediately prior to the Closing, to permit repayment of the Bridge Loan in full (the "Payment Amount"), provided that if the Payment Amount exceeds Forty-Four Million Dollars ($44,000,000)), the Purchase Price (and as a result, the cash amount payable to Seller) shall be reduced by an amount equal to the amount by which the Payment Amount exceeds $44,000,000 (the "Excess Payment"); (e) the Company shall repay the Indebtedness then owing to the lender(s) under the Bridge Loan; and (f) Seller will assign and transfer to Purchaser good and valid title in and to the Shares, free and clear of all Encumbrances (other than Encumbrances created or suffered to exist by Purchaser), by delivering to Purchaser certificates representing the Shares, duly endorsed in blank or accompanied by duly executed stock powers endorsed in blank. At the Closing, there shall also be delivered to Seller and Purchaser the opinions, and certificates and other documents and instruments to be delivered pursuant to Article VIII. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT Except as set forth in the disclosure schedule of Seller delivered to Purchaser herewith (the "Disclosure Schedule"), Seller and Parent hereby jointly and severally represent and warrant to Purchaser that on the date hereof and shall on the Closing Date represent and warrant to Purchaser that on the Closing Date, except for changes permitted or required by this Agreement), as follows: 3.1 Corporate Existence of Parent and Seller. Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California. Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the Republic of Korea. Seller and Parent have full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which they are a party and to perform their obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Seller has delivered to Purchaser or its counsel correct and complete copies of the charter documents of the Company and each subsidiary of the Company, each as amended to the date of this Agreement and will deliver the charter documents of Seller and Parent prior to Closing. None of the subsidiaries of the Company owns any capital stock or other voting securities of, or any other direct or indirect equity interest in, any firm, corporation or other entity (including any joint venture or partnership). 3.2 Authority. The execution and delivery by Seller and Parent of this Agreement and the Ancillary Agreements to which they are a party, and the performance by Seller and Parent of 12 18 their obligations hereunder and thereunder, have been duly and validly authorized by the Board of Directors of Seller and Parent, no other corporate action on the part of Seller, Parent or their respective shareholders being necessary. This Agreement has been duly and validly executed and delivered by Seller and Parent and constitutes, and upon the execution and delivery by Seller and Parent of the Ancillary Agreements to which it is a party, such Ancillary Agreements will constitute, legal, valid and binding obligations of Seller and/or Parent as the case may be, enforceable against Seller and/or Parent in accordance with their terms. 3.3 Corporate Existence of the Company. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has full corporate power and authority to conduct its business as and to the extent now conducted and to own, use and lease its assets and properties. The Company is duly qualified, licensed or admitted to do business and is in good standing in those jurisdictions in which the ownership, use or leasing of its assets and properties makes such qualification, licensing or admission necessary, except where the failure to be so qualified, licensed or admitted and in good standing could not reasonably be expected to have a Material Adverse Effect on the Company. 3.4 Capital Stock. (a) The authorized capital stock of the Company consists of forty million (40,000,000) shares of common stock of the Company (the "Common Stock"), and forty million (40,000,000) shares of preferred stock of the Company (the "Preferred Stock"). As of the date of this Agreement, (i) thirty-three million nine hundred ninety-nine thousand nine hundred ninety-nine (33,999,999) shares of Preferred Stock and one (1) share of Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable; (ii) no shares of Common Stock or Preferred Stock are held in the treasury of the Company or by any Subsidiary; (iii) not greater than 3,602,777 shares of Common Stock are reserved for issuance under the Stock Plan, not greater than 2,812,874 shares of which are subject to outstanding options of which 252,655 shares are issuable to directors of the Company upon the exercise of options (the "Director Options") and 789,903 shares of which are available for future grants; and (iv) 175,000 shares of Common Stock are reserved for issuance under the Director Plan, no shares of which are subject to outstanding stock purchase rights or restricted stock purchase agreements and 160,002 shares of which are available for future grants; provided, however, an additional 164,532 shares are subject to options which have been agreed upon but not yet granted as of the date of this Agreement. Section 3.4 of the Disclosure Schedule, which shall be delivered within ten (10) days after the date hereof, lists each person who is an employee or consultant of the Company and who holds options (excluding any Director Options) to acquire shares of Common Stock of the Company as of the date of this Agreement including: (i) the name of the holder, (ii) the exercise price, (iii) the vesting schedule, (iv) the number of vested shares at such date, (v) whether the exercisability of such option will be accelerated as a result of the transactions contemplated by this Agreement, and (vi) the extent of acceleration, if any. All outstanding options or warrants to purchase shares of capital stock of the Company or any securities exchangeable or convertible into or exercisable for shares of capital stock of the Company that are not Symbios Stock Options (as defined in Section 7.1) shall terminate at the Closing. Immediately prior to the Closing, the Director Options shall be terminated and 13 19 canceled, and Seller shall thereupon pay, in accordance with Section 5.15 to each holder of Director Options a cash amount, in lawful money of the United States, equal to the product of the number of shares of Company capital stock purchasable pursuant to such holder's Director Options, multiplied by the difference between the Fully Diluted Per-Share Purchase Price and the exercise price of such Director Options. Seller has good and valid title to the Shares, beneficially and of record, free and clear of all Encumbrances other than Permitted Encumbrances. At the Closing, the Shares shall constitute all of the issued and outstanding capital stock of the Company. Except for the Bridge Transactions, none of Seller, Parent or the Company is a party to, or bound by, any agreement, instrument or understanding restricting or contemplating the restriction of the transfer of any of the Shares. There are no voting trusts or other agreements or understandings to which Seller, the Company or Parent is a party with respect to the voting of the capital stock of the Company or any of its subsidiaries. Except for this Agreement and options outstanding pursuant to the Stock Plan or Director Plan, there are no outstanding options or rights in favor of any person to purchase shares of any class or series of capital stock from the Company. (b) Except for the rights of any lenders or their Affiliates under the Bridge Transactions: (i) Seller is the sole record and beneficial owner of the Shares, and the Shares are to be sold pursuant to this Agreement; (ii) the Shares are not subject to any Encumbrances or any rights of first refusal of any kind, and neither Seller nor Parent has granted any rights to purchase the Shares to any other person or entity; and (iii) Seller has the sole right to transfer the Shares to Purchaser. Subject to Section 5.14, the Shares constitute all of the capital stock of the Company owned, beneficially or of record, by Seller and Parent, and neither Seller nor Parent have any other rights to acquire capital stock of the Company. The delivery of a certificate or certificates at the Closing representing the Shares in the manner provided in Section 2.4 will transfer to Purchaser sole record and beneficial ownership of all outstanding capital stock of the Company, free and clear of all Encumbrances other than Encumbrances created by Purchaser. 3.5 Subsidiaries. Each subsidiary of the Company is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation identified in Section 3.5 of the Disclosure Schedule, and has full corporate power and authority to conduct its business as and to the extent now conducted and to own, use and lease its assets and properties. Each such subsidiary is duly qualified, licensed and is in good standing in those jurisdictions in which the ownership, use or leasing of such subsidiary's assets and properties makes such qualification, licensing or admission necessary, except where the failure to be so qualified, licensed or admitted and in good standing could not reasonably be expected to have a Material Adverse Effect on the Company. All of the outstanding shares of capital stock of each subsidiary of the Company have been duly authorized and validly issued, are fully paid and nonassessable, and are owned, directly or indirectly, by the Company or a subsidiary thereof free and clear of all Encumbrances. There are no outstanding options or rights in favor of any person to purchase shares of any class or series of capital stock of any subsidiary of the Company. Section 3.5 of the Disclosure Schedule sets forth the name and jurisdiction of each subsidiary of the Company, the number of authorized and outstanding shares of capital stock of each such subsidiary and a correct and complete list of the holders of record of each subsidiary's outstanding shares of capital stock. 14 20 3.6 No Conflicts. The execution and delivery by Seller of this Agreement do not, and the execution and delivery by Seller of the Ancillary Agreements to which it is a party, the performance by Seller of its obligations under this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby will not (a) conflict with or result in a violation or breach of the certificate or articles of incorporation or by-laws of Seller, the Company or any subsidiaries of the Company; (b) subject to obtaining the consents, approvals and actions, making the filings and giving the notices described in Section 3.7 and Section 4.4, conflict with or result in a violation or breach of any law or Order applicable to Seller, the Company, any subsidiaries of the Company or any of their respective assets and properties (other than such conflicts, violations or breaches as would occur solely as a result of the change in identity or the legal or regulatory status of Purchaser or any of its Affiliates); or (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Seller, the Company or any of its subsidiaries to obtain any consent, approval or action of, make any filing with or give any notice to any person as a result or under the terms of, (iv) result in or give to any person any right of termination, cancellation, acceleration or modification in or with respect to, or (v) result in the creation or imposition of any Encumbrance upon Seller, the Company or any subsidiary of the Company or any of their respective assets and properties under, any agreement to which Seller, the Company or any subsidiary of the Company is a party or by which any of their respective assets or properties is bound. 3.7 Governmental Approvals and Filings. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Seller, the Company or any subsidiary of the Company is required in connection with the execution, delivery and performance of this Agreement or any of the Ancillary Agreements to which it is a party or the consummation of the transactions contemplated hereby or thereby or the continuation by the Company of its business as presently conducted as a consequence of the Closing, except (i) the filing of a Notification and Report Form pursuant to the HSR Act and the expiration or early termination of the waiting period thereunder; (ii) any required filings under any applicable foreign antitrust, fair trade or other similar laws and the expiration or termination of waiting periods thereunder; and (iii) where required solely as a result of the identity or the legal or regulatory status of Purchaser or any of its Affiliates. 3.8 Financial Statements and Condition; Absence of Changes. (a) Prior to the execution of this Agreement, Seller has delivered to Purchaser copies of the unaudited balance sheet of the Company and its consolidated subsidiaries as of May 24, 1998 (the "Balance Sheet") and the audited balance sheet of the Company and its consolidated subsidiaries as of December 31, 1997, and the related unaudited consolidated statements of operations, shareholders' equity and cash flows for the period beginning January 1, 1998 and ended May 24, 1998 and audited consolidated statements of operations, shareholders' equity and cash flows for the fiscal year ended December 31, 1997, together with a true and correct copy of the report on such audited information by Coopers & Lybrand, L.L.P. Except as set forth in the notes thereto, all such financial statements were prepared in accordance with GAAP and fairly present in all material respects the consolidated financial condition and results 15 21 of operations of the Company and its consolidated subsidiaries as of the respective dates thereof and for the respective periods covered thereby. (b) The Company has no Liabilities, except for (i) Liabilities set forth on the face of the Balance Sheet (or which are disclosed in the footnotes thereto), (ii) Liabilities which have arisen after the date of the Balance Sheet in the ordinary course of business and which are not required to be disclosed pursuant to the terms of Section 3.8((c)) hereof and (iii) payment or performance obligations arising out of contracts and agreements to which the Company is a party and which are disclosed pursuant to Section 3.17 hereof or are not required to be disclosed pursuant to the terms of Section 3.17 hereof. (c) Since the Financial Statement Date, except as disclosed in Section 3.8((c)) of the Disclosure Schedule: (i) the Company has not (i) amended, or agreed to amend, its charter (or comparable instrument), (ii) merged with or into or consolidated with, or agreed to merge with or into or consolidate with, any other person, or (iii) except as reasonably required in connection with the transactions contemplated by this Agreement or as described elsewhere in this Agreement, changed, or agreed to change, in any material manner the character of the business of the Company; (ii) the Company has conducted its business only in the usual and ordinary course and in accordance with past practices (except for the Termination Agreement with Adaptec dated June 24, 1998); (iii) there has been no change (or series of changes, casualty or otherwise) in the business, condition (financial or otherwise), results of operations, assets, Liabilities or earnings of the Company, other than changes arising in the ordinary course of business consistent with past practice and experience, none of which changes, individually or in the aggregate, has had or reasonably could be expected to have a Material Adverse Effect on the Company; (iv) the Company has not made or promised to make any increase in any salaries, rates of pay or other compensation or benefits of any business of its employees, nor has the Company made any accrual for or commitment or agreement to make or pay the same, nor any payment or commitment to pay any severance or termination pay to any of the business of its Employees, except for customary increases and progressions for employees not covered by collective bargaining agreements, which increases and progressions were made in the ordinary course of business or in accordance with applicable collective bargaining agreements or changes in benefits generally provided to all of the Company's hourly and/or salaried employees; (v) the Company has not suffered any strike or other labor trouble, and the Company has not entered into any material agreement or material negotiation with any labor union or other collective bargaining representative of any business of its employees; 16 22 (vi) there has been no change or, to the knowledge of Seller, any threat of any change, in any of the Company's relations with, or any loss of or, to the knowledge of Seller, threat of loss of, any of the suppliers, distributors or customers of the business of the Company, or any material decrease or limitation, of any such supplier's provision of services, supplies or materials to the Company or any such customer's usage or purchase of services or products of the Company that, individually or in the aggregate, has had or reasonably could be expected to have a Material Adverse Effect on the Company; (vii) there has been no change in the method of accounting or keeping of books of account or accounting practices with respect to the Company; (viii) the Company has not waived, or agreed to waive, any right of material value with respect to the Company or any of its assets or properties; (ix) the Company has not changed, or agreed to change, any of its business policies or practices, including advertising, marketing, pricing, purchasing, personnel, sales, returns or budget policies or practices, which changes would have a Material Adverse Effect on the Company; (x) except in the ordinary course of business or as otherwise permitted or required by this Agreement, the Company has not (i) entered into, or agreed to enter into, any lease (as lessor or lessee) or any license (as licensee or licensor) on behalf of the Company, (ii) sold, abandoned or made, or agreed to sell, abandon or make, any other disposition of any of the assets or properties of the Company; or (iii) except for the Termination Agreement with Adaptec, Inc. dated June 24, 1998, waived or relinquished any other rights of material value; (xi) neither the Company, Parent or Seller has granted or suffered, or agreed to grant or suffer, any Encumbrance on any assets or stock of the Company or its subsidiaries other than Permitted Encumbrances; (xii) except as provided herein, the Company has not entered into or amended, or agreed to enter into or amend, any contract or other agreement by or to which the Company is bound or subject, pursuant to which it agrees to indemnify any party on behalf of the Company (except in the ordinary course of business) or pursuant to which it agrees to refrain from competing with any party; (xiii) the Company has not, except in the ordinary course of business, incurred or assumed, or agreed to incur or assume, any material Liability (whether or not currently due and payable); (xiv) the Company has not terminated, or agreed to terminate, or failed to renew or received any written threat (that was not subsequently withdrawn) to terminate or fail to renew, any Contract, license or Permit and/or Approval, where any such termination or failure to renew could reasonably be expected to have a Material Adverse Effect on the Company; 17 23 (xv) no Pre-Existing/Continuing Environmental Liabilities which would be required to be reflected on the balance sheet of the Company have arisen; and (xvi) the Company has not entered into, or agreed to enter into, any transaction where the same could reasonably be expected to have a Material Adverse Effect on the Company. 3.9 Taxes. The Company and its subsidiaries have filed or caused to be filed all Tax Returns required to be filed under applicable law, and such Tax Returns are true and correct in all material respects. The Company and its subsidiaries have, within the time and in the manner prescribed by law, paid directly or indirectly (and until the Closing will pay directly or indirectly within the time and in the manner prescribed by law) all Taxes that are due and payable. To the Knowledge of Seller, except as set forth on Section 3.9 of the Disclosure Schedule, no examination of any Tax Return is underway as of the date of this Agreement. There are no outstanding (a) powers of attorney granted by the Company or any of its subsidiaries concerning any Tax matter, (b) agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its subsidiaries, (c) agreements entered into with any taxing authority that would have a material and continuing effect on the Company and its subsidiaries after the Closing Date or (d) Encumbrances (and immediately following the Closing Date there will be no Encumbrances) on the assets of the Company relating to or attributable to Taxes other than Encumbrances for Taxes not yet due and payable. None of the Company and its subsidiaries has any liability for the Taxes of any other person other than the Company and its subsidiaries under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law). Neither the Seller nor the Company has been notified of any request for an audit or other examination of any Tax Return of the Company. The Company has no liabilities for unpaid Taxes which have not been accrued or reserved against in accordance with GAAP on the Company's financial statements, whether asserted or unasserted, contingent or otherwise. Neither the Company nor the Seller has Knowledge of any basis for the assertion of any claim relating or attributable to Taxes which, if adversely determined, would result in any Lien on the assets of the Company. None of the Company's assets are treated as "tax-exempt use property", within the meaning of Section 168(h) of the Code. The Company is not, and has not been at any time, a "United States Real Property Holding Corporation" within the meaning of Section 897(c)(2) of the Code. There is no contract, agreement, plan or arrangement to which the Company is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of the Company, individually or collectively, which could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code. 3.10 Legal Proceedings. There are no Orders outstanding and no Actions or Proceedings pending against the Company or any of its subsidiaries or any of their respective assets and properties. To the Knowledge of Seller, there are no claims, Actions or Proceedings threatened against the Company or any of its subsidiaries or any of their respective assets and properties which could reasonably be expected to result in liability in any individual case or in the aggregate in excess of $100,000. 18 24 3.11 Compliance With Laws and Orders. Each of the Company and its subsidiaries is in compliance in all material respects with all applicable laws, rules, regulations, ordinances, decrees, Orders, judgments or Permits and/or Approvals. 3.12 Benefit Plans; ERISA. Set forth in Section 3.12 of the Disclosure Schedule is a list of all Benefit Plans of the Company and its subsidiaries. Each Benefit Plan listed in Section 3.12 of the Disclosure Schedule is in compliance in all material respects with the applicable provisions of ERISA, the Code and all other federal and state laws. The Company has no Liability with respect to any employee benefit plans established by any predecessor. To the Knowledge of Seller, there are no proceedings, claims (other than for benefits payable in the normal course of business) or suits pending or threatened by any governmental authority or any participant or beneficiary against any of the Benefit Plans, the assets of any of the trusts under any of the Benefit Plans or the plan sponsor or any fiduciary of any of the Benefit Plans. All contributions required to be made with respect to the Benefit Plans have been made or reflected in the Audited Financial Statements. 3.13 Real Property. (a) Section 3.13((a)) of the Disclosure Schedule contains a list of (i) each parcel of real property owned by the Company or any of its subsidiaries, (ii) each parcel of real property leased by the Company or any of its subsidiaries (as lessor or lessee), and (iii) all Encumbrances (other than Permitted Encumbrances, Encumbrances that will be removed at or prior to the Closing, or Encumbrances disclosed, or given as security for a monetary Liability shown, on the Balance Sheet) on any parcel of real property referred to in clause (i). (b) The Company and its subsidiaries have, and at the Closing will have, good and marketable title to each parcel of real property described in clause (i) of paragraph (a) above, free and clear of any Encumbrances, other than the Permitted Encumbrances, Encumbrances that will be extinguished prior to the Closing, Encumbrances that will be removed at or prior to the Closing, or Encumbrances disclosed, or given as security for a monetary Liability shown, on the Balance Sheet, and have valid and subsisting leasehold estates in the respective real properties otherwise leased by them as lessee under leases referred to in clause (ii) of paragraph (a) above free and clear of Encumbrances upon the lessee's interest other than Permitted Encumbrances, Encumbrances that will be extinguished at or prior to the Closing, or Encumbrances disclosed, or given as security for a monetary Liability shown, on the Balance Sheet. To the Knowledge of Seller, each such lease is a legal, valid and binding agreement, enforceable in accordance with its terms, and no default has occurred, nor has there occurred any event which with notice, the passage of time, or both, would constitute a default under such lease. With respect to the Operative Documents, as that term is defined in that Lease Agreement dated as of December 22, 1995 between the SLI Trust, as lessor, and Symbios Logic Inc., as lessee, (i) no default has occurred nor has there occurred any event which with notice, the passage of time, or both, would constitute a default, under any of the Operative Documents which would obligate the Company or its subsidiaries to purchase the real property that is the subject of the Operative Documents, (ii) the Company and its subsidiaries are currently in compliance with all of its obligations under the Operative Documents. 19 25 (c) Except as otherwise described in Section 3.13((c)) of the Disclosure Schedule, (i) there are no structural, electrical, mechanical, plumbing, roof, paving or other defects in any improvements located on any such real property as could, either individually or in the aggregate, have a material adverse effect on the use, development, occupancy or operation thereof as presently contemplated, (ii) to the Knowledge of Seller, there are no natural or artificial conditions upon any such real property or any other facts or conditions which could, in the aggregate, have a material adverse effect on the transferability, financeability, ownership, leasing, use, development, occupancy or operation of any such real property, (iii) there are no parties in possession of any portion of any such real property, whether as tenants, trespassers or otherwise, except the Company, and (iv) there are no pending, or, to the Knowledge of Seller, threatened assessments, improvements or activities of any public or quasi-public body either planned, in the process of construction or completed which may give rise to any material assessment against any such real property. 3.14 Adequacy of Assets. Except as otherwise set forth in any section of the Disclosure Schedule to this Agreement, and subject to any and all limitations and qualifications set forth elsewhere in this Article III, the Company has possession of, and right to use, all of the tangible and intangible, real and personal property assets required for the conduct of its business as presently conducted. 3.15 Tangible Personal Property. The Company and its subsidiaries are in possession of and have good title to, or valid leasehold interests in or valid rights to use, all tangible personal property which is used in and which is material to the business of the Company and its subsidiaries taken as a whole free of Encumbrances other than Permitted Encumbrances, Encumbrances that will be removed at or prior to the Closing, or Encumbrances disclosed, or given as security for a monetary Liability shown, on the Balance Sheet. 3.16 Intellectual Property Rights. Except as set forth in Section 3.16 of the Disclosure Schedule: (i) each item of Company Intellectual Property is free and clear of any Encumbrances; (ii) the Company (a) is the exclusive owner of all trademarks and trade names used in connection with the operation or conduct of the business of the Company, including the sale of any products or technology or the provision of any services by the Company and (b) owns exclusively, and has good title to, all copyrighted works that are or are part of Company products or other works of authorship that the Company otherwise purports to own; (iii) except as contemplated in the Ancillary Agreements, the Company has not transferred ownership of, or granted any license of or right to use or authorized the retention of any rights to use, any material Intellectual Property that is or was Company Intellectual Property, to any other person; (iv) there are no material Contracts, pursuant to which the Company has licensed or transferred to any third person or any Affiliate of Company any material Intellectual Property that is or was Company Intellectual Property; (v) all material Intellectual Property, including any item thereof, will be fully transferable, alienable and licensable by or between Company or Purchaser without restriction and without payment of any kind to any third party; (vi) the consummation of the transactions contemplated by this Agreement will not result in the loss of, or otherwise adversely affect, any ownership rights of the Company in any material Company Intellectual Property; (vii) the consummation of the transactions contemplated by this Agreement will not result in the breach 20 26 or termination of any license, contract or agreement to which Company is a party respecting any material Intellectual Property; (viii) the operation of the business of the Company: (a) did not, and (b) to the Knowledge of Seller, will not, when conducted in substantially the same manner following the Closing, infringe or misappropriate any Intellectual Property of any person, violate the rights of any person, or constitute unfair competition or trade practices under the laws of any jurisdiction, and the Company has not received notice from any person claiming that such operation or any act, product, technology or service (including products, technology or services currently under development) of the Company infringes or misappropriates any Intellectual Property of any person or constitutes unfair competition or trade practices under the laws of any jurisdiction (nor is the Company aware of any basis therefor; provided, however, Seller has not, and has informed Purchaser that it has not, conducted any "right to use" study or similar investigation with respect to the Intellectual Property rights of any third party); (ix) to the Knowledge of Seller, there are no contracts, licenses or agreements between the Company and any other person with respect to Company Intellectual Property under which there is any dispute regarding the scope of such agreement or performance under such agreement, including with respect to any payments to be made or received by the Company thereunder; (x) to the Knowledge of Seller, no person is infringing or misappropriating any Company Intellectual Property; (xi) no Company Intellectual Property or product, technology or service of the Company is subject to any proceeding or outstanding decree, order, judgment, agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by the Company or may affect the validity, use or enforceability of such Company Intellectual Property; and (xii) the ownership of the Company by Purchaser upon the Closing will not result in the granting by Purchaser of any Intellectual Property rights of Purchaser (other than Company Intellectual Property rights) to any person. Seller makes no representation or warranty in Section 3.16(viii) with respect to the operations, products or conduct of the business of the Company by Purchaser in a manner different from the manner in which Seller and the Company and its subsidiaries have heretofore operated or conducted the operations or business including the manufacture and sale of products of the Company to the extent that such infringement or misappropriation arises from such difference. 3.17 Contracts. (a) Section 3.17((a)) of the Disclosure Schedule (with paragraph references corresponding to those set forth below) contains a list of each of the following Contracts to which the Company or any of its subsidiaries is a party or by which any of their respective assets and properties is bound as of the date of this Agreement: (i) all Contracts (excluding Benefit Plans) providing for a commitment of employment or consulting services for a specified term or payments at any one time or in any one year in excess of Two Hundred Thousand Dollars ($200,000); (ii) all Contracts with any person containing any provision or covenant prohibiting or materially limiting the ability of the Company or any of its subsidiaries to engage in any business activity or compete with any person or prohibiting or materially limiting the ability of any person to compete with the Company or any of its subsidiaries; 21 27 (iii) all partnership or joint venture agreements; (iv) all Contracts relating to Indebtedness of the Company or any of its subsidiaries in excess of Five Hundred Thousand Dollars ($500,000) (other than Indebtedness owing to or preferred stock owned by the Company or any wholly-owned subsidiary of the Company); (v) all Contracts providing for (A) the future disposition or acquisition of any assets and properties material to the business or condition of the Company and its subsidiaries taken as a whole, other than dispositions or acquisitions in the ordinary course of business, and (B) any merger or other business combination; (vi) all Contracts between or among the Company or any of its subsidiaries, on the one hand, and Seller or any Affiliate (other than the Company or any of its subsidiaries) of Seller providing for payments in any one year or at any one time by or to the Company or any of its subsidiaries individually or in the aggregate exceeding Fifty Thousand Dollars ($50,000); (vii) all Contracts (other than this Agreement) that (A) limit or contain restrictions on the ability of the Company or any of its subsidiaries to declare or pay dividends on, to make any other distribution in respect of or to issue or purchase, redeem or otherwise acquire its capital stock, to incur Indebtedness, to incur or suffer to exist any Encumbrance, to purchase or sell any assets and properties, to change the lines of business in which it participates or engages or to engage in any merger or other business combination or (B) require the Company or any of its subsidiaries to maintain specified financial ratios or levels of net worth or other indicia of financial condition; (viii) any collective bargaining agreement; and (ix) all other Contracts that (A) involve the payment or potential payment, pursuant to the terms of any such Contract, by or to the Company or any of its subsidiaries of more than Five Hundred Thousand Dollars ($500,000) and (B) cannot be terminated within one hundred eighty (180) days after giving notice of termination without resulting in any material cost or penalty to the Company or any of its subsidiaries. (b) Seller has previously delivered to Purchaser a true, correct and complete copy of each written Contract listed in Section 3.17 of the Disclosure Schedule, (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to in Section 3.17 of the Disclosure Schedule; each such Contract constitutes the entire agreement between the Company or its subsidiaries, on the one hand, and the other party(ies) to such Contract, on the other hand; no such Contract has been modified or amended in any respect; and no party has repudiated any provision of any Contract. Each Contract disclosed in Section 3.17((a)) of the Disclosure Schedule is in full force and effect and constitutes a legal, valid and binding agreement, enforceable in accordance with its terms, and neither the Company or any of its subsidiaries nor, to the Knowledge of Seller, any other party to such Contract is in 22 28 material violation of or material default under any such Contract (or with notice or lapse of time or both, would be in material violation of or material default under any such Contract). 3.18 Permits and/or Approvals. The Company and its subsidiaries have or will have applied for all Permits and/or Approvals required for the conduct of the business of the Company and its subsidiaries as presently conducted and for the ownership, leasing, use, development, occupancy and operation of their respective assets and properties (other than Permits and/or Approvals, the absence of which could not reasonably be expected to have a material adverse effect on the transferability, financeability, use, development, occupancy or operation of any such assets or properties. Each such Permit and/or Approval is valid, binding and in full force and effect and will remain in full force and effect after the Closing; and to the Knowledge of Seller neither the Company nor any of its subsidiaries is in default (or with the giving of notice or lapse of time or both, would be in default) under any such Permit and/or Approval in any material respect. 3.19 Affiliate Transactions. Except as listed in Section 3.19 of the Disclosure Schedule, there is no Indebtedness or other amounts owing under Contracts between the Company or any of its subsidiaries, on the one hand, and Seller, any officer, director, or Affiliate (other than the Company and its subsidiaries) of Seller, on the other hand. 3.20 Environmental Matters. (a) The Company and its subsidiaries have been, are in and at the Closing will be in compliance in all material respects with all Environmental Requirements, and possesses or has applied for and at the Closing will possess or will have applied for all Permits and/or Approvals required for the conduct of the Hazardous Activities of the Company and its subsidiaries in all material respects; and neither the Company nor its subsidiaries has received any notice of any alleged claim, violation of or Liability under any Environmental Requirement which has not heretofore been cured or for which there is any remaining Liability. (b) Neither the Company nor its subsidiaries has received notice of any Environmental Claim filed or threatened against it, or against any person or entity whose Liability for any Environmental Claim the Company or its subsidiaries has retained or assumed either contractually or by operation of law, and there are no past or present actions, activities, circumstances, conditions, events or incidents that could reasonably be expected to form the basis of any Environmental Claim against the Company or its subsidiaries, the business thereof any of the facilities described in Schedule 3.13(a), or against any person or entity whose Liability for any Environmental Claim the Company or its subsidiaries has retained or assumed either contractually or by operation of law. (c) Neither the Company nor its subsidiaries has disposed of, emitted, discharged, handled, stored, transported, used or released any Hazardous Material, arranged for the disposal, discharge, storage or release of any Hazardous Material, or exposed any employee or other individual to any Hazardous Material or condition so as to give rise to any material Liability or corrective or remedial obligation under any Environmental Requirement. 23 29 (d) No Hazardous Material is present in, on, or under any Company Facilities or to the Knowledge of Seller any Pre-Closing Hazardous Material Disposal Facility, which would give rise to, any material Liability or any material corrective or remedial obligation of the Company or its subsidiaries under any Environmental Requirement. (e) No written notification of a Release of a Hazardous Material has been filed by or on behalf of the Company or any of its subsidiaries and to the Knowledge of Seller no site or facility now or previously owned, operated or leased by the Company or any of its subsidiaries is listed or to the Knowledge of Seller is proposed for listing on the NPL, CERCLIS or any similar state or local list of sites requiring investigation or clean-up. (f) To the Knowledge of Seller, any asbestos material which is on or part of the Company Facilities is in good repair according to the current standards and practices governing such material, and its presence or condition does not violate any applicable Environmental Requirement. (g) Other than Hazardous Materials which are reasonably necessary for the conduct of the current Company operations and are properly stored in all material respects in accordance with applicable Environmental Requirements, no Hazardous Material will be stored at the Company Facilities as of the Closing. (h) No environmental certification, clearance or approval is required by any Governmental or Regulatory Authority or under any Environmental Requirement to permit the legal consummation of the transactions contemplated hereby. 3.21 Accounts Receivable; Inventory. Subject to any allowances set forth in the Company's Balance Sheet, the accounts receivable shown in the Balance Sheet, arose in the ordinary course of business; were not, as of the date of the Balance Sheet, subject to any material discount, contingency, claim of offset or recoupment or counterclaim; and represented, as of the date of the Balance Sheet, bona fide claims against debtors for sales, leases, licenses and other charges. All accounts receivable of the Company arising after the date of the Balance Sheet through the date of this Agreement arose in the ordinary course of business and, as of the date of this Agreement, are not subject to any material discount, contingency, claim of offset or recoupment or counterclaim, except for normal allowances consistent with past practice. The amount carried for doubtful accounts and allowances disclosed in the Balance Sheet is believed by the Company as of the date of this Agreement to be sufficient to provide for any material losses which may be sustained on realization of the accounts receivable shown in the Balance Sheet. As of the date of the Balance Sheet, the inventories shown on the Balance Sheet consisted of items of a merchantable condition and of a quantity and quality suitable, usable and salable in the ordinary course of business for the purpose for which they are intended. All such inventories are valued on the Balance Sheet in accordance with GAAP and sufficient allowances have been established on the Balance Sheet, in each case in an amount believed by the Company as of the date of the Balance Sheet to be adequate, for material slow-moving, obsolete or unusable inventories. 24 30 3.22 Insurance. The Company has delivered to Purchaser copies of each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) with respect to which the Company is a party, a named insured, or otherwise the beneficiary of coverage as of the date of this Agreement and such policies are the policies generally required for coverage of the risks faced by the Company in a manner customary, generally, for the Company's industry. With respect to each such insurance policy: (A) the policy is legal, valid, binding, enforceable and in full force and effect in all respects and there has been no notice of cancellation or nonrenewal of the policy received; (B) the Company is not in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (C) no party to the policy has repudiated any material provision thereof. Section 3.22 of the Disclosure Schedule describes any self-insurance arrangements presently maintained by, or for the benefit of, the Company as of the date of this Agreement. 3.23 Disclosure. No representation or warranty made by Parent, Seller or the Company in this Agreement or the exhibits or schedules hereto or certificates delivered hereunder, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements or facts contained herein or therein not misleading in light of the circumstances under which they were furnished. 3.24 Product Liability Claims. At no time during the five years preceding the date of this Agreement has the Company or, to the Knowledge of Seller, any of the Company's predecessors in interest, been subject to any material product liability claim relating to any of the Company's products and, to the Knowledge of Seller, no such claim is threatened nor does any circumstance or condition exist that Seller reasonably expects to give rise to any such claim. 3.25 Brokers; Finders. No broker, investment bank, financial advisor or other person or entity, other than Lehman Brothers, the fees and expenses of which will be paid by Seller, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon the arrangements made by or on behalf of Seller or Parent. 3.26 No Other Representations. Notwithstanding anything to the contrary contained in this Agreement, it is the explicit intent of each party hereto that Parent and Seller are making no representation or warranty whatsoever, express or implied, except those representations and warranties contained in this Article III and in any certificate delivered pursuant to Section 8.2(c). In particular, Seller makes no representations or warranty to Purchaser with respect to (i) the information set forth in the Confidential Descriptive Memoranda relating to the Company's Storage Systems and Semiconductor Divisions or made available to Purchaser or any of its Representatives in connection with Purchaser's consideration of the transactions contemplated by this Agreement, and (ii) any financial projection or forecast relating to the business or condition of the Company. With respect to any projection or forecast delivered by or on behalf of Seller to Purchaser, Purchaser acknowledges that (i) there are uncertainties inherent in attempting to make such projections and forecasts, (ii) it is familiar with such uncertainties, (iii) it is taking full 25 31 responsibility for making its own evaluation of the adequacy and accuracy of all such projections and forecasts furnished to it, and (iv) it shall have no claim against Seller or any of its Representatives or Affiliates with respect thereto. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser hereby represents and warrants to Seller as follows: 4.1 Corporate Existence of Purchaser. Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Purchaser has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. 4.2 Authority. The execution and delivery by Purchaser of this Agreement and the Ancillary Agreements to which it is a party, and the performance by Purchaser of its obligations hereunder and thereunder, have been duly and validly authorized by the Board of Directors of Purchaser, no other corporate action on the part of Purchaser or its stockholders being necessary. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes, and upon the execution and delivery by Purchaser of the Ancillary Agreements to which it is a party such Ancillary Agreements will constitute, legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their terms. 4.3 No Conflicts. The execution and delivery by Purchaser of this Agreement do not, and the execution and delivery by Purchaser of the Ancillary Agreements to which it is a party, the performance by Purchaser of its obligations under this Agreement and such Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the certificate of incorporation or by-laws (or other comparable corporate charter document) of Purchaser; (b) subject to obtaining the consents, approvals and actions, making the filings and giving the notices disclosed in Section 4.4 hereto, conflict with or result in a violation or breach of any term or provision of any law or Order applicable to Purchaser or any of its assets and properties (other than such conflicts, violations or breaches which could not in the aggregate reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement or any of such Ancillary Agreements or the ability of Purchaser to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby); or (c) except as could not reasonably be expected to have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated hereby or by any of the Ancillary Agreements or to perform any of its obligations hereunder or thereunder, (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Purchaser to obtain any consent, approval or action of, make any filing with or give any notice to any person as a result or under the terms of, or (iv) result in 26 32 the creation or imposition of any Encumbrance upon Purchaser or any of its Assets or Properties under, any contract or License to which Purchaser is a party or by which any of its assets and properties is bound. 4.4 Governmental Approvals and Filings. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement or the Ancillary Agreements to which it is a party or the consummation of the transactions contemplated hereby or thereby, except (i) the filing of a Notification and Report Form pursuant to the HSR Act and the expiration or early termination of the waiting periods thereunder; (ii) any required filings under any applicable foreign antitrust laws and the expiration or termination of waiting periods thereunder; and (iii) where required solely as a result of the identity or the legal or regulatory status of Seller or any of its Affiliates. 4.5 Legal Proceedings. There are no Orders outstanding and no Actions or Proceedings pending or, to the Knowledge of Purchaser, threatened against, relating to or affecting Purchaser or any of its assets and properties which could reasonably be expected to delay or to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Ancillary Agreements or otherwise to impair the ability of Purchaser to perform its obligations under this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. 4.6 Purchase for Investment. The Shares will be acquired by Purchaser for its own account for the purpose of investment, it being understood that the right to dispose of such Shares shall be entirely within the discretion of Purchaser. Purchaser will refrain from transferring or otherwise disposing of any of the Shares, or any interest therein, in such manner as to cause Seller to be in violation of the registration requirements of the Securities Act of 1933, as amended, or applicable state securities or blue sky laws. 4.7 Financing. Purchaser has or will have sufficient cash and/or available borrowing capacity to pay the Purchase Price and to make all other necessary payments of fees and expenses (including the fees, commissions and expenses of any investment bank or financial adviser) in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. 4.8 No Other Representations. Notwithstanding anything to the contrary contained in this Agreement, it is the explicit intent of each party hereto that Purchaser is making no representation or warranty whatsoever, express or implied, except those representations and warranties contained in this Article IV and in any certificate delivered pursuant to Section 8.3((c)) hereof. 27 33 ARTICLE V COVENANTS OF PARENT AND SELLER Parent and Seller covenant and agree with Purchaser that, at all times from and after the date hereof until the Closing, Parent and Seller will comply with all applicable covenants and provisions of this Article V, except to the extent Purchaser may otherwise consent in writing. 5.1 Regulatory and Other Approvals. Parent and Seller will, and will cause the Company and its subsidiaries to, (a) proceed diligently, expeditiously and in good faith as promptly as practicable to obtain all consents, approvals or actions of, to make all filings with and to give all notices to Governmental or Regulatory Authorities or any other person required of Parent and Seller, the Company or any of its subsidiaries to consummate the transactions contemplated hereby and by the Ancillary Agreements, (b) provide such other information and communications to such Governmental or Regulatory Authorities or other persons as such Governmental or Regulatory Authorities or other persons may reasonably request in connection therewith, and (c) provide reasonable cooperation to Purchaser in obtaining all consents, approvals or actions of, making all filings with and giving all notices to Governmental or Regulatory Authorities or other persons required of Purchaser to consummate the transactions contemplated hereby and by the Ancillary Agreements. Seller will provide prompt notification to Purchaser when any such consent, approval, action, filing or notice referred to in clause (a) above is obtained, taken, made or given, as applicable, and will advise Purchaser of any communications (and, unless precluded by law, provide copies of any such communications that are in writing) with any Governmental or Regulatory Authority or other person regarding any of the transactions contemplated by this Agreement or any of the Ancillary Agreements. 5.2 Tax Sharing Agreement. Parent hereby covenants and agrees that, without the prior written consent of Purchaser, it will not amend that certain Tax Sharing Agreement by and among Parent, Company and certain other subsidiaries of Parent, in any manner that will increase the Company's obligations thereunder. 5.3 Investigation by Purchaser. Seller will, and will cause the Company and its subsidiaries to, (a) provide (i) Purchaser and (ii) the officers, employees, counsel, accountants, financial advisors, consultants and other representatives (together, "Representatives") of Purchaser with access, upon reasonable prior notice and during normal business hours, to all officers, employees, agents and accountants of the Company and its subsidiaries and their assets, properties, books and records, but only to the extent that such access does not unreasonably interfere with the business and operations of the Company and its subsidiaries, and (b) make available to Purchaser and such other persons all such information and data concerning the business and operations of the Company and its subsidiaries as Purchaser or any of such other persons reasonably may request in connection with such investigation (including such access and information as may be required for an environmental audit), except to the extent that furnishing any such information or data would violate any law, Order, Contract or Permit and/or Approval applicable to Seller, the Company or any of their respective subsidiaries or by which any of their respective assets or properties is bound. 28 34 5.4 Financial Statements and Reports. As promptly as practicable and in any event no later than forty-five (45) days after the end of each fiscal quarter ending after the date hereof and before the Closing Date (other than the fourth quarter) or ninety (90) days after the end of each fiscal year ending after the date hereof and before the Closing Date, as the case may be, Seller or the Company will deliver to Purchaser true and complete copies of the unaudited consolidated balance sheet, and the related audited or unaudited consolidated statements of operations, stockholders' equity and cash flows, of the Company and its consolidated subsidiaries, in each case as of and for the fiscal year then ended or as of and for each such fiscal quarter and the portion of the fiscal year then ended, as the case may be, together with the notes, if any, relating thereto. The Company shall consult with Purchaser regarding capital expenditures and commitments for additions to property, plant or equipment constituting capital assets between the date hereof and the Closing Date. 5.5 Conduct of Business. Seller will cause the Company and its subsidiaries to conduct business only in the ordinary course. Without limiting the generality of the foregoing, Seller will cause the Company and its subsidiaries to use Best Efforts to (a) preserve intact the present business organization and reputation of the Company and its subsidiaries in all material respects, (b) keep available (subject to dismissals and retirements in the ordinary course of business) the services of the key officers and employees of the Company and its subsidiaries, (c) maintain the assets and properties of the Company and its subsidiaries in good working order and condition, subject to ordinary wear and tear, and (d) maintain the good will of key customers, suppliers and lenders and other persons with whom the Company or any of its subsidiaries otherwise has significant business relationships. 5.6 Certain Restrictions. Except as contemplated by this Agreement, Seller will cause the Company and its subsidiaries to refrain from: (a) amending their certificates or articles of incorporation or by-laws (or other comparable corporate charter documents) or taking any action with respect to any such amendment or any recapitalization, reorganization, liquidation or dissolution of any such corporation; (b) authorizing, issuing, selling or otherwise disposing of any shares of capital stock of or any option, warrant or other right with respect to the capital stock of the Company or any of its subsidiaries, or modifying or amending any right of any holder of outstanding shares of capital stock of or options with respect to the Company or any of its subsidiaries except for the issuance of options to purchase shares of Common Stock issued to newly-hired employees under the Stock Plan not exceeding (i) five thousand (5,000) shares of Common Stock to any one individual and one hundred thousand (100,000) shares of Common Stock in the aggregate in the ninety (90) days following the date of this agreement and (ii) an additional five thousand (5,000) shares of Common Stock to any one individual and one hundred thousand (100,000) shares in the aggregate thereafter; 29 35 (c) declaring, setting aside or paying any dividend or other distribution in respect of the capital stock of the Company or any of its subsidiaries not wholly owned, directly or indirectly, by the Company, or directly or indirectly redeeming, purchasing or otherwise acquiring any capital stock of or any option with respect to the Company or any of its subsidiaries not wholly owned, directly or indirectly, by the Company; (d) other than in the ordinary course of business, acquiring or disposing of, or incurring any Encumbrance (other than a Permitted Encumbrance) on, any assets and properties; (e) other than in the ordinary course of business and involving Contracts and/or licenses that do not exceed $500,000 in the aggregate and do not have a term exceeding six months, entering into, amending, modifying, terminating (partially or completely), granting any waiver under or giving any consent with respect to any Contract or license provided that a foundry agreement shall not be considered to be an agreement entered into in the ordinary course of business; (f) other than in the ordinary course of business (i) incurring or obtaining a draw on any Indebtedness (including the Bridge Loan) in an aggregate principal amount exceeding One Million Dollars ($1,000,000) (net of any amounts of Indebtedness discharged during such period), or (ii) purchasing, canceling, prepaying or otherwise providing for a complete or partial discharge in advance of a scheduled payment date with respect to, or waiving any right under, any Indebtedness in an aggregate principal amount exceeding One Million Dollars ($1,000,000) (in either case other than Indebtedness of the Company or any of its subsidiaries owing to the Company or any of its wholly-owned subsidiaries); (g) engaging with any person (other than a direct or indirect wholly-owned subsidiary of the Company) in any merger or other business combination; (h) making capital expenditures or commitments for additions to property, plant or equipment constituting capital assets (except as set forth in the Company's Capital Budget) or entering into any operating lease which is not directly related to an expenditure contemplated by the Company's Capital Budget; (i) except to the extent required by applicable law, making any material change in (A) any pricing, investment, accounting, financial reporting, inventory, credit, allowance or Tax practice or policy, or (B) any method of calculating any bad debt, contingency or other reserve for accounting, financial reporting or Tax purposes; (j) except to the extent required by applicable law, adopting, entering into or becoming bound by any material Benefit Plan, employment-related Contract or collective bargaining agreement, or amending, modifying or terminating (partially or completely) any such Benefit Plan, employment-related Contract or collective bargaining agreement; (k) making any change in its fiscal year; 30 36 (l) causing or committing the damage, destruction, or loss of (whether or not covered by insurance) any property other than dispositions of property in the ordinary course of business; (m) making any loan to, any director, officer, or employee, except cash advances in the ordinary course of business; (n) granting any increase in the base compensation of any director, or, except in the ordinary course of business, any officer or employee; (o) making any other change in employment terms that will be in force on the Closing Date for any director, officer, or employee outside the ordinary course of business; (p) initiating any lawsuit or similar grievance except in the ordinary course of business; or (q) entering into any Contract to do or engage in any of the foregoing. Notwithstanding anything to the contrary in this Agreement, Parent, Seller and the Company may incur Indebtedness under the Bridge Transactions, and grant Encumbrances with respect to Indebtedness under the Bridge Transactions and make drawings under the Bridge Loans; provided, that the outstanding Indebtedness on the Bridge Loan at any one time does not exceed Three Hundred Forty Five Million Dollars ($345,000,000) and provided further that any new Bridge Loan drawing or Bridge Loan Indebtedness is advanced to Seller as an increase in the Upstream Bridge Loan (which will be repaid at the Closing). 5.7 Affiliate Transactions. Subject to Section 2.4, payments by the Company to Seller under the Tax Sharing Agreement, immediately prior to the Closing, all Indebtedness and other amounts owing under the Contracts listed in Section 3.19 of the Disclosure Schedule will be paid in full, and Seller will terminate and will cause any such officer, director, or Affiliate to terminate each such Contract with the Company or any of its subsidiaries. 5.8 Fulfillment of Conditions. Seller and Parent will use its Best Efforts to satisfy each condition to the obligations of Purchaser contained in this Agreement and will not, and will not permit the Company or any of its subsidiaries to, take or fail to take any action that could reasonably be expected to result in the nonfulfillment of any such condition. Seller shall give prompt written notice to Purchaser of any event, condition or circumstance occurring from the date hereof through the Closing Date that would cause the representations and warranties set forth in Article III of this Agreement to become untrue in any material respect or that would constitute a material violation or breach of this Agreement. No disclosure pursuant to this Section 5.8 shall be deemed to amend or supplement the Disclosure Schedule, to prejudice any right of Purchaser to assert a claim for indemnity under Article IX hereof, or to prevent or cure any misrepresentation or breach of this Agreement. 31 37 5.9 Litigation. From the date hereof through the Closing Date, Seller shall promptly notify Purchaser of any investigations of which Seller has knowledge or any lawsuits, claims, notices of violation or proceedings that after the date hereof are commenced or, to the Knowledge of Seller, threatened, against the Company or any of its subsidiaries. 5.10 Agreement Not to Solicit. For the period beginning on the date of this Agreement and ending three (3) years after Closing, neither Parent, Seller nor any of their respective Affiliates will, without Purchaser's prior consent (which consent may be withheld in Purchaser's sole discretion), solicit for employment any employee of the Company; for purposes of this Section 5.10, the term "solicit" shall be deemed not to include advertisements or other generalized employment searches, including advertisements in various media (including trade media) or any job posting system of Parent, Seller or their Affiliates, not specifically directed to employees of the Company and shall not include any action by Parent, Seller or their Affiliates following any response by any person to such advertisements or generalized searches. 5.11 Insurance. From the date hereof through the Closing Date, Seller shall maintain in force (including necessary renewals thereof) any insurance policies listed on Section 5.11 of the Disclosure Schedule, except to the extent that they may be replaced with policies or self-insurance determinations appropriate to insure that the assets, properties and business of the Company to the same extent as currently insured. 5.12 [Intentionally Left Blank] 5.13 Exclusivity. Neither Parent nor Seller, nor any of their respective Affiliates, agents, or representatives will (and Seller will not cause or permit the Company to) (i) solicit, initiate, or encourage the submission of any proposal or offer from any person relating to the acquisition of any capital stock or other voting securities of the Company (other than pursuant to director and employee stock options and contractual obligations disclosed in the Disclosure Schedule), or any substantial portion of the assets, of the Company (including any acquisition structured as a merger, consolidation, or share exchange) or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any person to do or seek any of the foregoing; provided, that the foregoing restrictions shall cease to apply if Purchaser or Seller shall have received a second request for information under the HSR Act or a similar request under any other state, federal or foreign antitrust, fair-trade or other similar law, or if Purchaser or Seller shall have been advised by the Federal Trade Commission, the Antitrust Division of the U.S. Department of Justice or any other regulatory agency under any state, federal or foreign antitrust, fair-trade or other similar law that the staff or agency intends to take or recommend judicial or administrative action to prohibit the consummation of the transactions contemplated by this Agreement. In addition, Seller will not (i) transfer any of the Shares or (ii) vote any of the Shares in favor of any such acquisition structured as a merger, consolidation, or share exchange. 32 38 5.14 Option Exercises. Notwithstanding any other provision in this Agreement, in the event that any options to purchase Common Stock are exercised prior to Closing, Seller and Parent shall, at Seller's cost, eliminate all minority shareholdings. Without limiting the generality of the foregoing, prior to Closing the Seller may purchase any such minority interests or may cause the merger of the Company with another newly formed wholly owned subsidiary of Seller, with Company remaining as the surviving entity in order to eliminate outstanding shares of Common Stock issued upon the exercise of stock options. 5.15 Termination of Options. On or before the Closing, Seller shall take such action as may be necessary to terminate all outstanding options or warrants to purchase shares of capital stock of the Company or any securities exchangeable or convertible into or exercisable for shares of capital stock of the Company that are not Symbios Stock Options (as defined in Section 7.1) including payment to each holder of Director Options a cash amount, in lawful money of the United States, equal to the product of the number of shares of Company capital stock purchasable pursuant to such holder's Director Options, multiplied by the difference between the Fully Diluted Per-Share Purchase Price and the exercise price of such Director Options. 5.16 Transaction Structure. Each party shall cooperate in structuring and effecting such corporate transactions as may be reasonably requested by any party (at the requesting party's cost) prior to Closing, provided that such changes do not result in any adverse consequences to the party receiving such request (or to the Company) and can be reversed if the Closing does not occur. 5.17 Assumption of Various Employment Arrangements. At the Closing, Seller shall assume or reimburse Purchaser for expenses resulting from the following obligations of the Company, existing on the date hereof or incurred after the date hereof without the prior written consent of Purchaser, on terms and conditions reasonably acceptable to Seller and Purchaser: (i) the stay-put arrangements; and (ii) those provisions of the employment agreements between the Company and its employees providing for additional compensation, accelerated options, COBRA continuation, cash bonuses to compensate for 401K plan forfeitures, and other benefits which would not be payable or available were it not for the transactions contemplated by this Agreement. 5.18 Purchase of Christ Note. Effective on the day following the Closing, Seller shall purchase from the Company for a cash purchase price of $425,000 that certain promissory note in the amount of $425,000 payable by Mr. Christ to the Company. 33 39 ARTICLE VI COVENANTS OF PURCHASER Purchaser covenants and agrees with Seller that, at all times from and after the date hereof until the Closing and, in the case of Section 6.3, thereafter, Purchaser will comply with all covenants and provisions of this Article VI, except to the extent Seller may otherwise consent in writing. 6.1 Regulatory and Other Approvals. Purchaser will (a) proceed diligently, expeditiously and in good faith obtain as promptly as practicable all consents, approvals or actions of, to make all filings with and to give all notices to Governmental or Regulatory Authorities or any other person required of Purchaser to consummate the transactions contemplated hereby and by the Ancillary Agreements, (b) provide such other information and communications to such Governmental or Regulatory Authorities or other persons as such Governmental or Regulatory Authorities or other persons may reasonably request in connection therewith, and (c) provide reasonable cooperation to Seller, the Company and its subsidiaries in obtaining all consents, approvals or actions of, making all filings with and giving all notices to Governmental or Regulatory Authorities or other persons required of Seller, the Company or any of its subsidiaries to consummate the transactions contemplated hereby and by the Ancillary Agreements. Purchaser will provide prompt notification to Seller when any such consent, approval, action, filing or notice referred to in clause (a) above is obtained, taken, made or given, as applicable, and will advise Seller of any communications (and, unless precluded by law, provide copies of any such communications that are in writing) with any Governmental or Regulatory Authority or other person regarding any of the transactions contemplated by this Agreement or any of the Ancillary Agreements. 6.2 Fulfillment of Conditions. Purchaser will use its Best Efforts to satisfy as promptly as practicable each condition to the obligations of Seller contained in this Agreement and will not take or fail to take any action that could reasonably be expected to result in the nonfulfillment of any such condition. 6.3 Release of Guarantees. Before the Closing, Purchaser shall cooperate with Seller in obtaining releases of Seller from, and will indemnify and hold Seller harmless against payments Seller is required to make from and after the Closing in respect of, the guarantees that Seller has given in respect of Indebtedness of the Company and its subsidiaries described in Section 6.3 of the Disclosure Schedule. 6.4 Change of Name. From and after ninety (90) days from the Closing, neither Purchaser, the Company nor any of their Affiliates will use the names of Seller or its Affiliates or any confusingly similar names, or the Intellectual Property of Seller or its Affiliates to be listed in Section 6.4 of the Disclosure Schedule prior to Closing, without the prior written consent of Seller. 34 40 6.5 Indemnification of Directors and Officers. Until the sixth anniversary of the Closing Date, Purchaser will not, nor will it permit any of its subsidiaries or Affiliates to, take any action to amend any provision of the certificate of incorporation or by-laws (or other comparable corporate charter documents) of the Company or any of its subsidiaries, or any agreement listed in Section 6.5 of the Disclosure Schedule between the Company or any of its subsidiaries and any of their respective directors, officers or employees, that provides for indemnification of any director, officer or employee (including an amendment effected through a merger, consolidation, sale of all or substantially all the assets, liquidation or dissolution of any such corporation), if the effect of such amendment would be to have an adverse effect on any right provided thereby to any person who shall have served as a director or officer of the Company or any of its subsidiaries prior to the Closing Date in respect of actions taken in such capacity on or prior to the Closing Date, unless such person would immediately thereafter be entitled to indemnification by Purchaser or another subsidiary of Purchaser comparable to that provided by the affected provision prior to any such amendment. ARTICLE VII ADDITIONAL AGREEMENTS 7.1 Stock Plans and Options. (a) Purchaser agrees to assume, as of the Closing Date, each outstanding option to purchase shares of Symbios Common Stock set forth in Section 3.4 of the Disclosure Schedule or as permitted by Section 5.6(b) of this Agreement (a "Symbios Stock Option") which shall thereupon become an option to purchase shares of Purchaser Common Stock (the "Assumed Option"). Seller shall cause the Company to use all means necessary to effectuate the foregoing including, without limitation, if necessary, conducting a merger into a subsidiary of Company, amending any stock plans or agreements and assisting Purchaser in obtaining any necessary consents from the holders of the Symbios Stock Options. The Assumed Option shall be on the same terms and conditions as the Symbios Stock Option except that (i) the number of shares of Purchaser Common Stock purchasable under the Assumed Option shall be equal to the number of shares of Symbios Common Stock purchasable under the Symbios Stock Option immediately prior to the Closing multiplied by the Exchange Ratio (rounded down to the nearest whole share) and (ii) the exercise price of the Assumed Option shall be equal to the exercise price of the Symbios Stock Option immediately prior to the Closing divided by the Exchange Ratio (rounded up to the nearest whole cent). The "Exchange Ratio" shall equal the quotient of (x) the Fully Diluted Per-Share Purchase Price and (y) the average of the closing prices of Purchaser Common Stock for the five trading days immediately prior to the Closing Date as reported on the New York Stock Exchange. 35 41 (b) As soon as practicable after the Closing, Purchaser shall deliver to the holders of Symbios Stock Options appropriate notice evidencing the foregoing assumption and setting forth such participants' rights pursuant thereto, and the grants pursuant to the Symbios Stock Option Plan shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 7.1 after giving effect to the transactions contemplated by this Agreement). It is intended that Symbios Stock Options which qualified as incentive stock options prior to the Closing continue to qualify as incentive stock options after the Closing. (c) As soon as practicable after the Closing, Purchaser shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Purchaser Common Stock for delivery under all Assumed Options assumed by Purchaser in accordance with this Section 7.1. As soon as practicable after the Closing, Purchaser shall file a registration statement on Form S-8 (or any successor or other appropriate forms), with respect to the shares of Purchaser Common Stock subject to such Assumed Options and shall use its Best Efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for as long as any such Assumed Option remains outstanding. (d) Employees of Symbios immediately prior to the Closing shall be permitted to participate in the Purchaser Employee Stock Purchase Plan commencing on the first enrollment date of such plan following the Closing, subject to the terms and conditions of such plan (with employees receiving credit, for purposes of such eligibility provisions, for service with the Company or its predecessors or Purchaser). 7.2 Symbios Employees. (a) Immediately prior to the Closing, Purchaser will offer employment to substantially all persons who are employees of the Company immediately prior to Closing, on terms which are substantially equivalent to that which they were entitled to receive as employees of the Company immediately prior to the Closing. (b) Purchaser shall honor and perform, and shall cause the Company after the Closing to honor and perform, all of its and its subsidiaries' obligations under the employment, severance and stay-put agreements and arrangements and all change-in-control and acceleration provisions in all Benefit Plans in favor of all employees of the Company and its subsidiaries as of the date hereof listed in Section 7.2((b)) of the Disclosure Schedule in accordance with the terms thereof at Seller's expense as provided in Sections 5.15 and 5.17. (c) Purchaser agrees that from and after the Closing it will cause the Company to maintain (the Company package of benefits or will otherwise provide or cause the Company to provide) a package of benefits designed substantially to provide to such employees Purchaser's standard employee benefit package (the "Post-Closing Benefits") for all persons who are employed by the Company immediately prior to the Closing. Nothing in this Agreement shall limit Purchaser's right to terminate any employee or to amend or terminate any of the Post-Closing Benefits at any time. 36 42 (d) Purchaser shall recognize all service with Seller, the Company or any Subsidiary thereof, including service with any predecessor employer that was recognized by Seller, the Company or any subsidiary thereof, for purposes of the Post-Closing Benefits, including, but not limited to, vacation entitlement and retirement plan participation and vesting (but not for benefit accruals), welfare plan participation and eligibility and severance pay. No pre-existing condition exclusions or waiting periods may be imposed under Purchaser's employee welfare benefit plans within the meaning of Section 3(1) of ERISA upon any employee of the Company or any of its subsidiaries. Purchaser shall permit all employees who have satisfied any relevant eligibility requirements as of the Closing Date to commence participation immediately in any plan that provides Post-Closing Benefits under Section 7.1. 7.3 Ancillary Agreement. The parties shall execute the Ancillary Agreements at or before the Closing. 7.4 Certain Actions. In addition to and not in limitation of the parties' obligations pursuant to Section 5.1 and Section 6.1, each party shall act diligently, expeditiously and in good faith (i) to obtain any government clearances required for the consummation of the transactions contemplated by this Agreement (including through compliance with the HSR Act), and (ii) to resolve any issues relating to or arising under the HSR Act or any other antitrust or fair trade law raised by any Governmental or Regulatory Authority, so as to consummate the purchase and sale of Shares contemplated by this Agreement, as promptly as practicable and in any event prior to the date set forth in Section 10.1(c) or 10.1(d). Such actions shall include, to the extent necessary to obtain the approval of any Governmental or Regulatory Authority with jurisdiction over the enforcement of any laws applicable to the purchase and sale of Shares contemplated by this Agreement: taking promptly all actions necessary to make the filings required of such party and its Affiliates under the HSR Act and all applicable state and foreign antitrust and fair trade laws; responding to and substantially complying as promptly as practicable with requests for information pursuant to the HSR Act or any state or foreign antitrust or fair trade law; contesting, resisting or settling any challenge or action; entering into negotiations and performing any agreements resulting therefrom; making proposals; taking action to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent); and submitting to judicial or administrative orders. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any filings, analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the HSR Act or any other federal, state or foreign antitrust or fair trade law, and in connection with resolving any investigation or inquiry concerning the transactions contemplated by this Agreement under or relating to the HSR Act or any such law. Purchaser shall be entitled to direct any proceedings or negotiations with any Governmental or Regulatory Authority relating to any of the foregoing, provided that it shall afford Parent, Seller and the Company a reasonable opportunity to participate therein. Nothing in this Section shall require any party to this Agreement to take any action that would reasonably be expected to have a Material Adverse Effect on such party or on the Company. 37 43 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE PARTIES 8.1 Obligations of Both Parties. The obligations of both parties to consummate the purchase and sale of the Shares pursuant to Article II are subject to the fulfillment, at or before the Closing, of each of the following conditions: (a) Orders and Laws. There shall not be in effect on the Closing Date any Order or law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Ancillary Agreements. (b) Regulatory Consents and Approvals. All consents, approvals and actions of, filings with and notices to any Governmental or Regulatory Authority necessary to permit Seller and Purchaser to perform their obligations under this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby shall have been duly obtained, made or given and shall be in full force and effect, and all waiting periods imposed by any Governmental or Regulatory Authority necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, including the waiting period under the HSR Act and any applicable waiting periods under foreign antitrust laws, shall have expired or been terminated. 8.2 Obligations of Purchaser. The obligations of Purchaser to purchase the Shares pursuant to Article II are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Purchaser in its sole discretion): (a) Representations and Warranties. The representations and warranties made by Seller and Parent in this Agreement, disregarding (solely for purposes of this Section 8.2(a)) disregarding any additional materiality or Material Adverse Effect limitations therein, shall be true and correct on and as of the Closing Date or, in the case of representations and warranties made as of a specified date earlier than the Closing Date, on and as of such earlier date, except where the failure of such representations and warranties to be true and correct could not reasonably be expected to have a Material Adverse Effect on the Company. (b) Performance. Parent and Seller in all material respects shall have performed and complied with, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Seller at or before the Closing. (c) Officers' Certificates. Seller shall have delivered to Purchaser (i) a certificate, dated the Closing Date and executed by the President of Seller and/or an executive officer of the Company as appropriate, certifying to the satisfaction of the conditions set forth in Sections 8.2((a)) and ((b)) and (ii) a certificate, dated the Closing Date and executed by the Secretary or any Assistant Secretary of Seller, certifying as to the truth and accuracy of, and attaching copies of the articles of incorporation, bylaws and all board resolutions adopted in 38 44 connection with this Agreement and the Ancillary Agreements, of Seller, in each case in a form reasonably satisfactory to Purchaser. (d) Third Party Consents. The consents (or in lieu thereof waivers) listed in Schedule 8.2((d)) shall have been obtained and shall be in full force and effect. (e) Opinion of Counsel. Purchaser shall have received the opinions of counsel to Seller and the Company, dated the Closing Date, with respect to the matters described in Sections 3.1, 3.2 and 3.3 in a form to be agreed upon by Seller and Purchaser. (f) [Intentionally Left Blank] (g) Financial Statements. Purchaser shall have received true and complete copies of the audited consolidated balance sheet and statements of operations, stockholders' equity and cash flows of the Company and its consolidated subsidiaries for the fiscal years ended December 31, 1995, 1996 and 1997, together with the notes relating thereto (which audited financial statements shall include the unqualified opinion of Coopers & Lybrand LLP), and the financial position and results of operations of the Company as of and for the fiscal year ended December 31, 1997 set forth in such audited financial statements shall not be materially less favorable than that presented in the financial statements for such fiscal year described in Section 3.8 hereof. (h) General Release. Seller, Parent and each director of Seller and each officer and director of the Company shall have executed and delivered a general release of any claims against the Company and its Affiliates (except as any claim relates to indemnification or employment arrangements between the Company and such individual) in a form reasonably satisfactory to Purchaser. (i) Resignations. Each of the directors of the Company shall have resigned and each of the officers of the Company, if requested by Purchaser, shall have resigned from such positions. (j) Repayment of Bridge Transactions. The Indebtedness owing to the Company under the Upstream Bridge Loan shall be repaid in full at the Closing. The lenders under the Bridge Transactions shall have delivered to Seller or the Company at the Closing all documents and other instruments necessary to release its or their respective security interests upon the assets and/or stock of the Company and/or its subsidiaries (contingent upon payment by the Company of the principal and interest outstanding on the Bridge Loan); and Seller or the Company shall deliver to Purchaser at the Closing evidence of such releases. (k) Director and Other Options. The Director Options shall have been canceled and terminated as described in Section 3.4 hereof and Seller and the Company shall have taken all action required by Section 7.1 to allow the Symbios Stock Options to be assumed by Purchaser as provided in Section 7.1. 39 45 (l) Shares Outstanding. The Shares shall constitute all of the issued and outstanding capital stock of the Company. (m) Completion of Covenants. Seller shall have or concurrently with the Closing shall have performed its obligations under Sections 5.15 and 5.17, and Seller shall have certified to Purchaser that it will perform its obligation under Section 5.18 immediately following the Closing. (n) Arrows West Synthetic Loan. All material steps required to convey fee simple title to the property subject to the Arrows West Synthetic Loan, free and clear of Encumbrances other than the Permitted Encumbrances and the Encumbrances that shall be released on or before the Closing, shall have been completed. 8.3 Obligations of Seller. The obligations of Seller hereunder to sell the Shares pursuant to Article II are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Seller in its sole discretion): (a) Representations and Warranties. The representations and warranties made by Purchaser in this Agreement, disregarding (solely for purposes of this Section 8.3(a)) any additional materiality or Material Adverse Effect limitations therein, shall be true and correct on and as of the Closing Date or, in the case of representations and warranties made as of a specified date earlier than the Closing Date, on and as of such earlier date, except where the failure of such representations and warranties to be true and correct could not reasonably be expected to have a Material Adverse Effect on the Company. (b) Performance. Purchaser in all material respects shall have performed and complied with, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Seller at or before the Closing. (c) Officers' Certificates. Purchaser shall have delivered to Seller (i) a certificate, dated the Closing Date and executed by the President or any Executive or Senior Vice President of Purchaser, certifying as to the satisfaction of the conditions set forth in Sections 8.3(a) and (b) and (ii) a certificate, dated the Closing Date and executed by the Secretary or any Assistant Secretary of Purchaser, certifying as to the truth and accuracy of, and attaching copies of, the articles of incorporation, bylaws and all board resolutions adopted in connection with this Agreement and the Ancillary Agreements, of Purchaser, in a form reasonably satisfactory to Seller. (d) Opinion of Counsel. Seller shall have received the opinion of counsel to Purchaser, dated the Closing Date, with respect to the matters described in Section 4.1 and Section 4.2 in a form to be agreed upon by Seller and Purchaser. (e) [Intentionally Left Blank] 40 46 (f) Release from Guarantees. Seller shall have been released from all guarantees of any obligations or Indebtedness of the Company or any of its subsidiaries, pursuant to releases reasonably satisfactory to Seller or Purchaser in its discretion shall have agreed on terms reasonably acceptable to Seller to indemnify Seller from such guarantees. ARTICLE IX INDEMNIFICATION The rights and obligations of the parties under this Agreement shall be subject to the following terms and conditions: 9.1 Survival of Representations and Warranties; Indemnification Period. Notwithstanding any right of Purchaser fully to investigate the business of Seller, and notwithstanding any knowledge of facts determined or determinable by Purchaser pursuant to such investigation or right of investigation, the representations and warranties of Purchaser, Seller and Parent contained in this Agreement and in any certificates delivered pursuant to Section 8.2((c)) and Section 8.3((c)) shall survive the Closing for a period of 18 months from the Closing Date except for: (a) the representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.5 and Section 3.6 (only with respect to Seller's or the Company's charter or by-laws), which shall survive forever, (b) the representations and warranties contained in Section 3.16 (intellectual property), which shall survive for a period of five (5) years from the Closing Date, (c) the representations and warranties contained in Section 3.20 (environmental), which shall survive for a period of 10 years from the Closing Date, and (d) the representations and warranties contained in Section 3.9 (taxes), which shall survive until expiration of all applicable statutes of limitations. Subsequent to the Closing Date, the provisions of this Article IX shall be the sole and exclusive remedy for the breach of any representations or warranties contained in this Agreement and the certificates delivered pursuant to Section 8.2((c)) and Section 8.3((c)). Neither Parent, Seller nor Purchaser shall have any liability whatsoever with respect to any breach of such representations or warranties after the survival period for such representation or warranty expires, except for claims then pending or theretofore asserted in writing by any party and delivered to the other party in accordance with the terms and conditions of this Agreement. 9.2 Indemnification by Parent and Seller. Subject to the provisions and limitations herein contained, Parent and Seller hereby agrees, jointly and severally, to indemnify, defend and hold harmless Purchaser and the Company from and against any and all Losses, Actions, Proceedings, claims and Liabilities which Purchaser may at any time sustain or incur from and against any and all Losses, Actions, Proceedings, claims and Liabilities which are occasioned by, caused by or arise out of (i) any inaccuracy in or breach of any of the representations and warranties of Seller in this Agreement or any breach of any covenants made by Seller in this Agreement to the extent not waived in writing by Purchaser, or (ii) any Pre-Existing/Continuing Environmental Liabilities. Parent and Seller shall not have any right of contribution from the 41 47 Company with respect to any Losses, Actions, Proceedings, claims and Liabilities claimed by Purchaser after the Closing. 9.3 Limitation of Seller's Liability. The liability of Seller under Section 9.2 shall be limited as follows: (a) The maximum amount payable by Seller in respect of all claims for indemnification under this Agreement will not exceed ten percent (10%) of the Purchase Price. (b) No claim shall be made against Seller for indemnification under this Agreement until the aggregate amount of all such claims against Seller exceeds Three Million Dollars ($3,000,000), in which case Seller shall be obligated to indemnify Purchaser for the full amount of all such claims. (c) Purchaser shall not be entitled to recover under Section 9.2 or otherwise with respect to: (i) the breach of any representation or warranty unless such claim has been asserted by written notice, specifying the details of such breach, delivered to Seller on or prior to the date on which such representation or warranty no longer survives pursuant to Section 9.1; or (ii) any claim, to the extent the claim has been satisfied by proceeds of insurance maintained by Company prior to the Closing (Purchaser hereby agreeing to use its Best Efforts to collect the maximum amount of insurance proceeds to which it is entitled under such policies maintained by the Company prior to Closing). (d) Seller will not be liable under the indemnification provisions of Article IX to the extent that any Loss or Liability sustained by the indemnified party results from an indemnified party's willful misconduct or gross negligence. 9.4 Indemnification by Purchaser. Subject to the provisions and limitations herein contained, Purchaser hereby agrees to indemnify, defend and hold harmless Seller from and against any and all Losses which Seller may at any time sustain or incur which are occasioned by, caused by or arise out of: (i) any inaccuracy in or breach of any of the representations, warranties or covenants made by Purchaser in this Agreement; or (ii) the operation of the business of the Company after the Closing. 9.5 Limitation of Purchaser's Liability. (a) The maximum amount payable by Purchaser in respect of all claims for indemnification under this Agreement will not exceed ten percent (10%) of the Purchase Price. (b) No claim shall be made for indemnification under Section 9.4 until the aggregate amount of all such claims exceeds Three Million Dollars ($3,000,000). 42 48 (c) Seller shall not be entitled to recover under Section 9.4 with respect to: (i) the breach of any representation or warranty unless such claim has been asserted by written notice, specifying the details of such breach, delivered to Purchaser on or prior to the first anniversary of the Closing Date; or (ii) any claim, to the extent the claim has been satisfied by proceeds of insurance (Seller hereby agreeing to use its Best Efforts to collect the maximum amount of insurance proceeds to which it is entitled). (d) Purchaser will not be liable under the indemnification provisions of Article IX to the extent that any Loss or Liability results from an indemnified party's willful misconduct or gross negligence. 9.6 Defense of Third Party Claims. (a) The indemnified party seeking indemnification under this Agreement shall promptly notify the indemnifying party of the assertion of any Claim, Actions and/or Proceedings, or the commencement of any Action and/or Proceeding by any Third Party, in respect of which indemnity may be sought hereunder and will give the indemnifying party such information with respect thereto as the indemnifying party may reasonably request, but failure to give such notice shall not relieve the indemnifying party of any liability hereunder (except to the extent that the indemnifying party has suffered actual prejudice by such failure). The indemnifying party shall have the right, but not the obligation, exercisable by written notice to the indemnified party within 30 days of receipt of notice from the indemnified party of the commencement of or assertion of any Claim, Action, and/or Proceeding by a Third Party in respect of which indemnity may be sought hereunder (a "Third-Party Claim"), to assume the defense and control at its sole expense the settlement of such Third-Party Claim that (i) involves (and continues to involve) solely money damages or (ii) involves (and continues to involve) claims for both money damages and equitable relief against the Indemnified Party that cannot be severed, where the claims for money damages are the primary claims asserted by the Third Party and the claims for equitable relief are incidental to the claims for money damages, and where the indemnified party reasonably determines (and continues to reasonably determine) that defense of the claim by the indemnifying party will not have a material adverse effect on the indemnified party. (b) The indemnifying party or the indemnified party, as the case may be, shall have the right to participate in (but not control), at its own expense, the defense of any of the aforesaid Third-Party Claims that the other is defending, as provided in this Agreement. (c) The indemnifying party, if it has assumed the defense of any of the aforesaid Third-Party Claims as provided in this Agreement, shall not, without the indemnified party's prior written consent, enter into any compromise or settlement that (i) results in any liability to the indemnified party, (ii) commits the indemnified party to take, or to forbear to take, any action or (iii) does not provide for a complete release by such Third Party of the indemnified party. The indemnifying party shall not, without the indemnified party's prior written consent, 43 49 enter into any compromise or settlement where the amount of such compromise or settlement would cause the applicable cap on the indemnifying party's liability, as provided herein, to be exceeded. The indemnified party shall have the sole and exclusive right to settle any Third-Party Claim, with the consent of the indemnifying party, which shall not be unreasonably withheld or delayed, on such terms and conditions as it deems reasonably appropriate, to the extent such Third-Party Claim involves equitable or other nonmonetary relief against the indemnified party, and shall have the right to settle, at the indemnifying party's sole expense, any Third-Party Claim involving money damages for which the indemnifying party has not assumed the defense pursuant to this Section 9.6 with the written consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, the indemnified party shall have the right to employ separate counsel at the indemnifying party's expense and to control its own defense of any such asserted liability if (i) there are or may be legal defenses available to such indemnified party that are different from or additional to those available to the indemnifying party or (ii) in the reasonable opinion of counsel to such indemnified party, conflict or potential conflict exists between the indemnifying party and such indemnified party that would make such separate representation advisable. 9.7 Procedure and Dispute Resolution. (a) If an indemnified party shall have a claim of indemnification pursuant to this Article IX (an "Indemnity Claim"), it will promptly give written notice thereof (the "Claim Notice") to the indemnifying party or parties, including therein a brief description of the facts upon which such claim is based and the amount thereof, to the extent that it can be ascertained but failure to do so shall not affect any rights or remedies of the indemnified party (except to the extent of any actual prejudice caused thereby). (b) In the event that the indemnifying party disputes the validity or amount of any Indemnity Claim, prior to taking any other action, the matter shall be referred to responsible executives of the affected parties for consideration and resolution. If the parties have not otherwise resolved the dispute, they shall meet in person within thirty (30) days after the delivery of the Claim Notice and exercise their Best Efforts to settle the matter amicably. (c) If any such dispute is not settled within twenty (20) Business Days from the delivery of the Claim Notice, such dispute shall, at the demand of either party, be referred to and decided by arbitration in accordance with the provisions of Section 9.8. 9.8 Arbitration. (a) Within twenty (20) days after notice of a dispute or claim is given by any party, appropriate senior executives of the parties shall meet and make a good faith attempt to negotiate an amicable resolution of such dispute or claim before initiating arbitration proceedings. Nothing herein, however, shall prohibit either party from initiating arbitration proceedings if such party would be substantially prejudiced by a failure to act during the twenty day negotiation period. 44 50 (b) Any dispute or claim arising under this Article IX shall be finally settled by binding arbitration in San Jose, California under the American Arbitration Association International Arbitration Rules, by three arbitrators. Each party shall appoint one arbitrator; the third arbitrator, who shall be the chair of the arbitration tribunal, shall be appointed by the other two arbitrators. Any appointment not made within twenty (20) days after notice to do so from the American Arbitration Association ("AAA") shall be made by the AAA. (c) The arbitrators shall have the power to decide all questions of arbitrateability. The arbitrators shall have the power to order pre-hearing discovery of documents, witness lists, and a limited number of discovery depositions, not to exceed three per side. At the request of either party, the arbitrators will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings. (d) The parties may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration agreement and without any abridgment of the powers of the arbitrators. The arbitrators shall also have the power to grant temporary or permanent injunctive or other equitable relief, including any interim or conservatory relief, as necessary. (e) The parties agree not to submit a dispute subject to this Section 9.8 to any federal, state, local or foreign court except as may be necessary to enforce the arbitration procedures of this Section 9.8 or to enforce an arbitration award. (f) The arbitrators may award to the prevailing party, if any, as determined by the arbitrators, its costs and fees incurred in connection with any arbitration or related judicial proceeding hereunder. Cost and fees awarded may include, without limitation, attorneys' fees, expert and other witness fees, travel expenses, and out-of-pocket expenses (including, without limitation, such expenses as copying, telephone, facsimile, postage, and courier fees). Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 9.9 Adjustment to Purchase Price. Amounts payable in respect of the parties' indemnification obligations shall be treated as an adjustment to the Purchase Price. 9.10 Additional Environmental Matters. Subject to the limitations set forth in this Article IX, the obligations and rights of the Purchaser and Seller with respect to (i) Pre-Existing/Continuing Environmental Liabilities under this Article IX and (ii) the representations made in Section 3.20 hereof (collectively the "Environmental Covenants") are in addition to, independent from, and severable from the rights and obligations of said parties under all other provisions of this Agreement. It is expressly acknowledged by all parties hereto that neither the acts or omissions of any party hereto, nor any failure of any condition or breach of a representation contained elsewhere in this Agreement, shall impair the right of the parties to enforce any Environmental Covenant for its benefit, it being understood that the Environmental Covenants are being given in consideration of the closing of the transactions contemplated by this Agreement and not in consideration of future performance or any representation, and are 45 51 intended to allocate risk of loss and to create rights and obligations with respect to the matters covered by the Environmental Covenants between the parties without regard to the conduct of any person. No failure of any person to exercise its rights under the Environmental Covenants and no delay in exercising any right or remedy hereunder, at law or in equity, shall operate as a waiver of the agreements contained in the Environmental Covenants; nor shall the parties be estopped to exercise any right or remedy at any future time because of any such failure or delay; nor shall any single or partial exercise of any such right or remedy preclude any other or future exercise thereof or the exercise of any other right or remedy. The Environmental Covenants shall survive the sale, transfer, assignment, or hypothecation of any ownership interest in a party benefited hereby or obligated hereunder and the sale, transfer, assignment, or hypothecation of the Company, or any portion thereof or interest therein, by Purchaser to any person. Except as otherwise set forth herein, the Environmental Covenants are not intended to create, and shall not be construed to create, any rights or remedies in any person other than the parties hereto; and no other person shall assert any rights as a third party beneficiary under the Environmental Covenants. Except as expressly provided herein or contemplated hereby, nothing in the Environmental Covenants is intended to modify, relieve or discharge the obligations or liability of any person (other than the parties hereto or otherwise as expressly provided herein) with respect to the matters covered by the Environmental Covenants. ARTICLE X TERMINATION 10.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned: (a) at any time before the Closing, by mutual written agreement of Seller and Purchaser; (b) at any time before the Closing, by Seller or Purchaser, in the event that any Order or law becomes effective restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Ancillary Agreements, upon notice to the non-terminating party by the terminating party; (c) at any time after September 1, 1998, by Seller, by notice to Purchaser if the Closing shall not have occurred on or before such date and the failure of the Closing to occur is not caused by a material breach of this Agreement by Seller or Parent, provided, that the foregoing date shall be extended to November 1, 1998 if the Closing has failed to occur on or before September 1, 1998 because the waiting period has not expired or been terminated or approval or clearance has not been obtained under the HSR Act or any foreign antitrust, free trade or similar law; 46 52 (d) at any time after September 1, 1998, by Purchaser, by notice to Seller if the Closing shall not have occurred on or before such date and the failure of the Closing to occur is not caused by a material breach of this Agreement by Purchaser, provided, that the foregoing date shall be extended to November 1, 1998 if the Closing has failed to occur on or before September 1, 1998 because the waiting period has not expired or been terminated or approval or clearance has not been obtained under the HSR Act or any foreign antitrust, fair trade or similar law; (e) at any time before the Closing, by Seller, by notice to Purchaser, in the event of a material breach of this Agreement by Purchaser which if uncured would cause one or more of the conditions to Closing set forth in Article VIII not to be satisfied and which remains uncured for ten (10) days after notice thereof is given to Purchaser by Seller; and (f) at any time before the Closing, by Purchaser, by notice to Seller, in the event of a material breach of this Agreement by Seller which if uncured would cause one or more of the conditions to Closing set forth in Article VIII not to be satisfied and which remains uncured for ten (10) days after notice thereof is given to Seller by Purchaser. 10.2 Effect of Termination. If this Agreement is validly terminated pursuant to Section 10.1, this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of Seller or Purchaser (or any of their respective officers, directors, employees, agents or other representatives or Affiliates), except that the provisions with respect to fees and expenses in Sections 10.3 and 12.3 and confidentiality in Section 12.5 will continue to apply following any such termination. Notwithstanding any other provision in this Agreement to the contrary, upon termination of this Agreement pursuant to Section 10.1 (other than pursuant to Section 10.1((a))) Seller will remain liable to Purchaser for any willful breach of Section 5.8 ("Fulfillment of Conditions") of this Agreement by Seller existing at the time of such termination, and Purchaser will remain liable to Seller for any willful breach of Section 6.2 ("Fulfillment of Conditions") of this Agreement by Purchaser existing at the time of such termination, and Seller or Purchaser may seek such remedies, including damages and fees of attorneys, against the other with respect to any such breach as are provided in this Agreement or as are otherwise available at law or in equity. 10.3 Termination and Nonconsummation Fees. (a) Nonconsummation Fee. In the event that the Closing does not occur on or before the seventy-fifth (75th) day after the date of this Agreement (the "Trigger Date") because the waiting period has not expired or been terminated or approval or clearance has not been obtained under the HSR Act or any foreign antitrust, fair-trade or other similar law, and Seller and its Affiliates have performed in all material respects their obligations pursuant to Section 5.1 relating to the filing of notification and report forms and other information pursuant to the HSR Act or such other law, and neither Seller nor Parent is in material breach of this Agreement, then, on the first business day following the Trigger Date and the first business day of each month thereafter until the earlier of the termination of this Agreement pursuant to Section 10.1 or the Closing, Purchaser shall pay to Seller, in lawful money of the United States of America, by wire 47 53 transfer of immediately available funds to an account designated by Seller, an amount equal to one-half of one percent of the Purchase Price with the aggregate of such payments to be credited against the Purchase Price at the Closing. (b) Termination Fee. In the event that this Agreement is terminated by Seller pursuant to Section 10.1(e), Purchaser shall pay to Seller no later than five (5) Business Days after such termination becomes effective, in lawful money of the United States of America, by wire transfer of immediately available funds to an account designated by Seller, an amount equal to three percent (3%) of the Purchase Price. ARTICLE XI TAX MATTERS 11.1 Section 338 Election. (a) Upon the written request of Purchaser to be made within 180 days of the Closing Date (i) Seller and Parent shall join with Purchaser in making a timely election under Section 338(h)(10) of the Code and any corresponding elections under state and local tax laws (collectively, the "Election") with respect to the purchase and sale of Shares pursuant to this Agreement (the "Acquisition"), (ii) Seller and Parent shall cooperate with Purchaser to take all actions necessary and appropriate (including executing and filing Form 8023 and such other forms, returns, elections, schedules and other documents as may be required) to effect and preserve a timely Election in accordance with Section 338(h)(10) of the Code or any successor provisions (and all corresponding state and local tax laws) and (iii) Purchaser, Seller and Parent shall report the Acquisition pursuant to this Agreement consistent with the Election. (b) In connection with the Election, Purchaser shall provide to Seller and Parent a schedule which sets forth the allocation (the "Acquisition Allocation Schedule") of the Purchase Price among the assets of the Company. Such allocation shall be made in accordance with Section 338(h)(10) of the Code and any applicable Treasury Regulations. The parties hereto shall take no position inconsistent with the Acquisition Allocation Schedule. 11.2 Returns; Indemnification; Liability for Taxes. (a) Seller and Parent shall prepare and file (or cause to be prepared and filed) on a timely basis all Tax Returns with respect to the Company for all taxable periods ending on or before the Closing Date ("Company Tax Returns") and shall pay directly or promptly reimburse Purchaser as provided hereunder, and shall indemnify and hold Purchaser harmless against and from (i) all Taxes of the Company for all taxable years or periods which end on or before the Closing Date (including but not limited to Taxes attributable to the Section 338 Elections as provided in Section 11.1); (ii) all Taxes for all taxable years or periods of all members or subsidiaries of any affiliated, unitary or combined group of which the Company is or 48 54 has been a member prior to the Closing Date; and (iii) with respect to any taxable period commencing before the Closing Date and ending after the Closing Date (a "Straddle Period") all Taxes of the Company attributable to the portion of the Straddle Period prior to and including the Closing Date (the "Pre-Closing Period"). For purposes of this Agreement, the portion of any Tax that is attributable to the Pre-Closing Period shall be (i) in the case of a Tax that is not based on net income, gross income, sales, premiums or gross receipts, the total amount of such Tax for the period in question multiplied by a fraction, the numerator of which is the number of days in the Pre-Closing Period, and the denominator of which is the total number of days in such Straddle Period, and (ii) in the case of a Tax that is based on any of net income, gross income, sales, premiums or gross receipts, the Tax that would be due with respect to the Pre-Closing Period if such Pre-Closing Period were a separate taxable period, except that exemptions, allowances, deductions or credits that are calculated on an annual basis (such as the deduction for depreciation or capital allowances) shall be apportioned on a per diem basis. For purposes hereof, all Taxes which are the subject of this Article XI arising from the Acquisition, including Taxes resulting from the transactions contemplated by the Election, shall be deemed to be Taxes attributable to the Pre-Closing Period and shall be the responsibility of Seller and Parent. (b) Purchaser shall prepare and file (or cause to be prepared and filed) on a timely basis all Tax Returns of Company relating to periods ending after the Closing Date and shall pay, and shall indemnify and hold Seller harmless against and from (i) all Taxes of the Company for any taxable year or period commencing after the Closing Date; and (ii) all Taxes of the Company for any Straddle Period (other than Taxes attributable to the Pre-Closing Period which if paid by Purchaser pursuant to this Section 11.2(b)) shall be promptly reimbursed by Seller). (c) Notwithstanding any other provision of this Section 11.2, Purchaser shall pay, and shall hold Seller harmless against and from any Taxes (i) attributable to transactions not in the ordinary course of business occurring on the Closing Date after Purchaser's purchase of the Shares hereunder or (ii) imposed by any state or local taxing authority in which Seller is doing business as of the date of this Agreement and for which a Tax Return for the period including the date of this Agreement and the Closing Date is timely filed as a result of any election under Section 338(g) of the Code (or any comparable election under state law) if such state or local taxing authority does not allow or respect an election under Section 338(h)(10) (or any comparable or resulting election under state law) with respect to the purchase of Shares contemplated hereby. 11.3 Refunds and Credits. (a) All refunds or credits of Taxes for or attributable to taxable years or periods of the Company ending on or before the Closing Date (or the Pre-Closing Period, in the case of a Straddle Period) which are not reflected on the Closing Balance Sheet shall be for the account of Seller; all other refunds or credits of Taxes, for or attributable to the Company shall be for the account of Purchaser. Following the Closing, Purchaser shall cause the Company to forward to Seller any such refunds or credits due Seller pursuant to this section after receipt or realization thereof by Purchaser, and Seller shall promptly forward (or cause to be forwarded) to 49 55 Purchaser any refunds or credits due to Purchaser pursuant to this section after receipt or realization thereof by Seller, in each case in accordance with the provisions of subsection (b) below. (b) Any payments or refunds or credits for Taxes required to be paid under this Agreement shall be made within 10 Business Days of the receipt of any refund, as the case may be. Any payments not made within such time period shall be subject to an interest charge of 6% per annum. 11.4 Termination of Tax Sharing Agreements. Seller and Parent hereby agree and covenant that obligations of or to the Company pursuant to the Tax Sharing Agreement shall be extinguished as of the Closing Date. 11.5 Conduct of Audits and Other Procedural Matters. Each party shall, at its own expense, control any audit or examination by any Taxing Authority, and have the right to initiate any claim for refund or amended return, and contest, resolve and defend against any assessment, notice of deficiency or other adjustment or proposed adjustment of Taxes ("Proceedings") for any taxable period for which that party is charged with payment or indemnification responsibility under this Agreement. Each party shall promptly forward to the other in accordance with Section 12.1 all written notifications and other written communications, including if available the original envelope showing any postmark, from any taxing authority received by such party or its affiliates relating to any liability for Taxes for any taxable period for which such other party or any of its affiliates is charged with payment or indemnification responsibility under this Agreement and each indemnifying party shall promptly notify, and consult with, each indemnified party as to any action it proposes to take with respect to any liability for Taxes for which it is required to indemnify another party and shall not enter into any closing agreement or final settlement with any Taxing Authority with respect to any such liability without the written consent of the indemnified parties, which consent shall not be unreasonably withheld. In the case of any Proceedings relating to any Straddle Period, Purchaser shall control such Proceedings and shall consult in good faith with Seller as to the conduct of such Proceedings. Seller shall reimburse Purchaser for such portion of the costs, including legal costs, of conducting such Proceedings as is represented by the portion of the Tax with respect to such Straddle Period for which Seller is liable pursuant to this Agreement. Each party shall, at the expense of the requesting party, execute or cause to be executed any powers of attorney or other documents reasonably requested by such requesting party to enable it to take any and all actions such party reasonably requests with respect to any Proceedings which the requesting party controls. The failure by a party to provide timely notice under this subsection shall relieve the other party from its obligations under this Article XI with respect to the subject matter of any notification not timely forwarded, to the extent the other party has suffered a loss or other economic detriment because of such failure to provide notification in a timely fashion. 11.6 Assistance and Cooperation. After the Closing Date, each of Seller and Purchaser shall (and cause their respective Affiliates to): 50 56 (i) assist the other party in preparing any Tax Returns which such other party is responsible for preparing and filing in accordance with Section 11.2. (ii) cooperate fully in preparing for any audits of, or disputes with taxing authorities regarding, any Tax Returns of the Company or its subsidiaries; (iii) make available to the other and to any taxing authority as reasonably requested all information, records, and documents relating to Taxes of the Company or its subsidiaries; (iv) provide timely notice to the other in writing of any pending or threatened Tax audits or assessments of the Company or its subsidiaries for taxable periods for which the other may have a liability under this Article XI; and (v) furnish the other with copies of all correspondence received from any taxing authority in connection with any Tax audit with respect to any taxable period for which the other may have a liability under this Article XI. 11.7 FIRPTA Certificate. At or prior to the Closing, Seller shall provide Purchaser with a certificate described in Treas. Reg. Section 1.1445-2(b)(2) to the effect that, as contemplated by such certificate, Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and Treasury Regulations). ARTICLE XII MISCELLANEOUS 12.1 Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the parties at the following addresses or facsimile numbers: If to Purchaser, to: LSI Logic Corporation 1551 McCarthy Boulevard Milpitas, California 95035 Facsimile No.: (408) 433-6896 Attn: General Counsel with a copy to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road 51 57 Palo Alto, California 94304 Facsimile No.: (650) 493-9300 Attn: Larry W. Sonsini, Esq. Judy O'Brien, Esq. If to Seller, to: Hyundai Electronics America 3101 North First Street Legal Department San Jose, California 95134 Facsimile No.: 408-232-8194 Attn: Dr. C.S. Park with a copy to: Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94301 Facsimile No.: (650) 327-3699 Attn: Gregory M. Gallo, Esq. Rod J. Howard, Esq. All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section 12.1, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section 12.1, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section 12.1, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 12.1). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto. 12.2 Entire Agreement. This Agreement and the Ancillary Agreements supersede all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof, and contain the sole and entire agreement between the parties hereto with respect to the subject matter hereof and thereof. 12.3 Expenses. Except as otherwise expressly provided in this Agreement (including as provided in Section 5.14, Section 5.15, Section 5.17, Section 9.8, Section 10.2 and Section 10.3), whether or not the transactions contemplated hereby are consummated, Purchaser will pay its own costs and expenses, and the Company will pay its and Seller's costs and expenses, incurred in connection with the negotiation, execution and closing of this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby (including regulatory filings and proceedings). 52 58 12.4 Public Announcements. At all times at or before the Closing, Seller and Purchaser will not issue or make any reports, statements or releases to the public or generally to the employees, customers, suppliers or other persons to whom Seller or the Company or any of their respective subsidiaries sells goods or provides services or with whom Seller or the Company or any of their respective subsidiaries otherwise has significant business relationships with respect to this Agreement, or the transactions contemplated hereby without the consent of the other, which consent shall not be unreasonably withheld. If either party is unable to obtain the approval of its public report, statement or release from the other party and such report, statement or release is, in the opinion of legal counsel to such party, required by law in order to discharge such party's disclosure obligations, then such party may make or issue the legally required report, statement or release and promptly furnish the other party with a copy thereof. Seller and Purchaser will also obtain the other party's prior approval of any press release to be issued immediately following the Closing announcing the consummation of the transactions contemplated by this Agreement; provided, however, that nothing herein shall prevent Purchaser from disclosing any of the information contained in the Company's draft Financial Statements of December 31, 1997. 12.5 Confidentiality. Each party hereto will hold, and will cause its Affiliates and, in the case of Purchaser, any person who has provided or who is considering providing financing to Purchaser to finance all or any portion of the Purchase Price, and their respective Representatives, to hold in strict confidence from any person (other than any such Affiliate, person who has provided, or who is considering providing, financing or Representatives thereof), unless (i) compelled to disclose by judicial or administrative process (including without limitation in connection with obtaining the necessary approvals of this Agreement and the transactions contemplated hereby of Governmental or Regulatory Authorities) or by other requirements of law or (ii) disclosed in an Action or Proceeding brought by a party hereto in pursuit of its rights or in the exercise of its remedies hereunder (but only to the extent such party uses reasonable efforts to seek judicial protection from the public disclosure of such information), all documents and information concerning the other party or any of its Affiliates furnished to it by the other party or such other party's Representatives in connection with this Agreement or the transactions contemplated hereby, except to the extent that such documents or information can be shown to have been (a) previously known by the party receiving such documents or information; (b) in the public domain (either prior to or after the furnishing of such documents or information hereunder) through no fault of such receiving party, or (c) later acquired by the receiving party from another source if such source is under no obligation to another party hereto to keep such documents and information confidential; provided that following the Closing the foregoing restrictions will not apply to Purchaser's use of documents and information concerning the Company and its subsidiaries furnished by Seller hereunder. In the event the transactions contemplated hereby are not consummated, upon the request of the other party, each party hereto will, and will cause its Affiliates, any person who has provided, or who is providing, financing to such party and their respective Representatives to, promptly (and in no event later than three (3) business days after such request) redeliver or cause to be redelivered all copies of confidential documents and information furnished by the other party in connection with this Agreement or the transactions contemplated hereby and destroy or cause to be destroyed all notes, memoranda, summaries, analyses, compilations and other writings related 53 59 thereto or based thereon prepared by the party furnished such documents and information or its Representatives. 12.6 Further Assurances; Post-Closing Cooperation. (a) Subject to the terms and conditions of this Agreement, at any time or from time to time after the Closing, each of the parties hereto shall execute and deliver such other documents and instruments, provide such materials and information and take such other actions as may reasonably be necessary to fulfill its obligations under this Agreement and the Ancillary Agreements to which it is a party. (b) Following the Closing, each party will afford the other party, its counsel and its accountants, during normal business hours, reasonable access to the books, records and other data relating to the Company in its possession with respect to periods prior to the Closing and the right to make copies and extracts therefrom, and will make their respective personnel reasonably available for interviews, depositions and testimony in any legal matter concerning transactions, operations or activities, including treatment, storage, transportation, disposal, recycling and handling of Hazardous Material or remedial action under Environmental Requirements, relating to the Company with respect to periods prior to the Closing Date, to the extent that such access and cooperation may be reasonably required by the requesting party in connection with (i) the preparation of Tax Returns, (ii) the determination or enforcement of rights and obligations under this Agreement, (iii) compliance with the requirements of any Governmental or Regulatory Authority, or (iv) in connection with any actual or threatened Action or Proceeding. Further, each party agrees for a period extending six (6) years after the Closing Date not to destroy or otherwise dispose of any such books, records and other data unless such party shall first offer in writing to surrender such books, records and other data to the other party and such other party shall not agree in writing to take possession thereof during the ten (10) day period after such offer is made. (c) If, in order properly to prepare its Tax Returns, other documents or reports required to be filed with Governmental or Regulatory Authorities or its financial statements or to fulfill its obligations hereunder, it is necessary that a party be furnished with additional information, documents or records relating to the Business or Condition of the Company not referred to in paragraph (b) above, and such information, documents or records are in the possession or control of the other party, such other party agrees to use its Best Efforts to furnish or make available such information, documents or records (or copies thereof) at the recipient's request, cost and expense. Any information obtained by Seller in accordance with this paragraph shall be held confidential by Seller in accordance with Section 12.5. (d) Notwithstanding anything to the contrary contained in this Section, if the parties are in an adversarial relationship in litigation or arbitration, the furnishing of information, documents or records in accordance with any provision of this section shall be subject to applicable rules relating to discovery. 12.7 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set 54 60 forth in a written instrument duly executed by or on behalf of the party against whom such waiver is asserted. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or otherwise afforded, shall be cumulative and not alternative. 12.8 Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto. 12.9 No Third Party Beneficiary. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other person other than any person entitled to indemnity under Article IX. 12.10 No Assignment; Binding Effect. Parent, Seller and Company acknowledge that Purchaser may change its jurisdiction of incorporation prior to the Closing Date. Except for an assignment by Purchaser in connection with a merger consummated for the purpose of effecting a change in Purchaser's jurisdiction of incorporation, neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other party hereto and any attempt to do so will be void. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and assigns. 12.11 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in economic and legal effect to such illegal, invalid or unenforceable provision as may be possible. 12.12 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to a contract executed and performed in such state, without giving effect to the conflicts of laws principles thereof. 12.13 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 12.14 Construction. The parties hereby acknowledge and agree that the drafting of this Agreement has been a collaborative effort and that no party shall be deemed to be the sole or primary drafter. Any rule or provision of law which provides that a contract or agreement is to be construed against the author of the contract or agreement shall not apply to this Agreement, 55 61 the Ancillary Agreements or the documents attached hereto as exhibits or schedules hereto or thereto. 56 62 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first above written. LSI LOGIC CORPORATION By: /s/ R. DOUGLAS NORBY -------------------------------------- Name: R. Douglas Norby Title: Executive Vice President HYUNDAI ELECTRONICS AMERICA By: /s/ DR. C. S. PARK -------------------------------------- Name: Dr. C. S. Park Title: President HYUNDAI ELECTRONICS INDUSTRIES CO., LTD. By: /s/ DR. C. S. PARK -------------------------------------- Name: Dr. C. S. Park Title: Executive Vice President 57 63 EXHIBIT A INTELLECTUAL PROPERTY TERM SHEET 1. Dissolve the February 16, 1995 (i) Patent Agreement among HEI, HEA and Symbios and (ii) Patent Agreement between HEA and Symbios (the "Patent Agreements"). (Completed in the Termination And License Agreement, dated 2/25/98 (the "TLA") which will be amended and restated as set forth below.) 2. Amend and restate the February 25, 1998 Termination and License Agreement between HEI, HEA and Symbios. The definition of "HEA Patents" and "SYMBIOS Patents" in the proposed Amendment to Termination And License Agreement ("Amendment Agreement") will be used in the Amended and Restated Termination and License Agreement ("Amended and Restated TLA"). 3. Symbios assigns to HEA Symbios's interest in the "HEA Patents" per the terms of section 2.02 of the TLA. HEA grants to Symbios and Purchaser a non-exclusive, royalty-free, transferable, life-of-patents license under the "HEA Patents" with the right to sublicense to any third party. HEA/HEI agree not to grant further licenses under the HEA Patents to a third party except to grant licenses when included with a license of HEA's or HEI's entire patent portfolio as part of a patent cross-license. Following the sublicense of the foregoing license rights to any third party, Symbios will provide attorneys' eyes-only notice of the identity of the relevant sublicensee. No consent will be required to grant such a sublicense. The "HEA Patents" will be defined as set forth in Amendment Agreement. 4. HEA (and HEI, to the extent relevant) assigns to Symbios its entire ownership interest in all copyrights, trademarks, mask works and trade secrets either (i) acquired pursuant to the November 8, 1994 Agreement for the Purchase and Sale of Assets by and between AT&T GIS and HEA or (ii) which are otherwise used in or necessary to the operation of the Symbios business. (All registered copyrights, maskworks, and trademarks will be scheduled.) 5. HEA (and HEI, to the extent relevant) assigns to Symbios its entire ownership interest in the Symbios Patents, as well as the exclusive right to license and enforce the Symbios Patents. The "Symbios Patents" will be defined as set forth in the Amendment Agreement. 1 64 6. Symbios grants to HEA a non-exclusive, royalty-free, license to December 31, 2015, under the Symbios Patents. HEA shall not have the right to sublicense the Symbios Patents to third parties. 7. HEI and HEA assign to Symbios any other ownership interests they may have in the intellectual property used in the Symbios business. 8. HEI (and HEA, to the extent relevant) grants to Symbios and Purchaser a non-exclusive, royalty-free, license to December 31, 2015, under the HEI Patents to make, have made, use, import and sell Symbios Products and to practice any process or method for the design or manufacture of Symbios Products currently practiced or under development by Symbios and any improvement to such processes. Symbios Products shall mean all current products manufactured or sold by Symbios, all improvements and enhancements to such products, any product under development and new products which are functional continuations or extensions of the current Symbios products. This license shall not extend to any current products manufactured or sold by Purchaser, all improvements and enhancements to such products, any product under development or new products which are functional continuations or extensions of Purchaser's current products. "HEI Patents" shall be defined as set forth in section 1.04 of the TLA. Except as provided in paragraph 12, this license is not assignable or transferable to any third party. 9. HEA assigns to Purchaser its rights under the Technology License Agreement among AT&T GIS, Symbios and HEA, including the license rights to AT&T patents. 10. HEI agrees to take such actions as may be reasonably necessary to allow Symbios to maintain its rights under existing HEI cross-licenses, to the extent permitted by such licenses, without payment of money required by HEI. 11. Unless otherwise provided, the rights of the parties may be extended to their respective affiliates. 12. If Purchaser sells any part of the Symbios business, including the storage business operations of Symbios, prior to the third anniversary of the Closing Date, HEI shall grant to the purchaser of such business a royalty-free license of the same scope granted to Symbios and Purchaser in Section 8 above with respect to the business acquired by such purchaser. 13. HEA shall retain 100% ownership of its half interest in the MPD Patents. 2 65 14. The patent licenses described in paragraphs 3, 6 and 8 are assignable or transferable (if at all) only as provided in those paragraphs. All other licenses and rights to any intellectual property licensed or transferred by HEI and/or HEA shall be fully transferable or assignable, in whole or in part, by Symbios to Purchaser, or sublicensed by Purchaser. 15. The definitions of Symbios Patents and HEA Patents will be updated at the closing with the final lists of patents and applications. 3 EX-2.2 3 STOCK PURCHASE AGREEMENT, AMENDMENT #1 1 EXHIBIT 2.2 FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT THIS FIRST AMENDMENT TO THE STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of the 6th day of August, 1998, is entered into by and between LSI Logic Corporation, a Delaware corporation ("LSI"), Hyundai Electronics Industries Co., Ltd., a Korean corporation ("HEI"), and Hyundai Electronics America, a California corporation ("HEA"). RECITALS WHEREAS, LSI, HEA and HEI have entered into that certain Stock Purchase Agreement dated as of June 28, 1998 (the "Purchase Agreement"), with respect to the sale of all outstanding capital stock of Symbios, Inc., a Delaware corporation (the "Company") to LSI. All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. WHEREAS, LSI, HEA and HEI desire to amend the Purchase Agreement as set forth herein. WHEREAS, the parties agree that it is in the best interests of each of them, and their respective shareholders, to make the following amendments, modifications, or changes to or clarifications of, the Purchase Agreement, each such change, modification, change or clarification to be effective upon the Closing. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: AGREEMENT 1. Amendment and Termination of Symbios Logic 401(k) Savings Plan. 1.1 Subject to and upon the occurrence of the Closing, the Company shall make a contribution to Participant's Retirement Performance Accounts (the "RPA Contribution") pursuant to the Retirement Performance Account Plan (the "RPA Plan") for the period commencing January 1, 1998 and ending June 30, 1998, on behalf of each Plan Participant (as defined in the Plan) who is an employee of the Company on June 30, 1998, subject to the following: the IBIT Objective of the 1998 Business Plan Target shall be pro rated through June 30, 1998, and shall be based upon Participant's earnings through June 30, 1998 (rather than Annual Earnings (as defined in the RPA Plan), such contribution to be equal to 2.5% of the Compensation of Eligible Participants (as defined in the Plan). Thereupon the Retirement Performance Account Plan shall be terminated. 1.2 Subject to and upon the occurrence of the Closing, the Company shall amend the Symbios Logic 401(k) Savings Plan (the "Savings Plan") to provide that the Company shall make an additional matching contribution on behalf of each participant who is an employee of the Company as of the day immediately preceding the Closing. The additional matching contribution shall be made dollar-for-dollar on the Participant's Employee Contributions (as defined in the Savings Plan) up to a maximum of 2.25% of Compensation (as defined in the 2 Savings Plan). Thereafter, the Savings Plan shall be terminated effective as of the day immediately preceding the Closing (the "Termination Date"). 1.3 The accounts of each Participant in the Savings Plan shall be 100% vested as of the Termination Date. 1.4 Subject to and upon the occurrence of the Closing, the assets of the Savings Plan shall be distributed to the Savings Plan participants (or, as applicable, beneficiaries thereof) entitled to benefits under the Savings Plan as soon as practical, subject, however, to receipt of such Internal Revenue Service determination letter as any officer of the Company or successor thereof may, in his discretion, request. 1.5 Following the Termination Date, the Savings Plan, and its related trust, shall continue to be administered in accordance with the terms thereof (provided that no further contributions shall be made to the Savings Plan after the Termination Date, except for such contributions as may have been allocated prior to the Termination Date, and no employees shall enter the Savings Plan after the Termination Date) until all Savings Plan assets have been distributed to the Savings Plan participants. 2. Amendment to Symbios Logic Executive Retirement Plan. 2.1 The Company shall amend the Symbios Logic Supplemental Executive Retirement Plan (the "Plan") to clarify that the Closing shall not trigger a termination of employment for purposes of the Plan with respect to those employees of the Company who continue to be employed by LSI as the acquiring corporation after the Closing. 2.2 Contingent and effective upon the Closing, Section 1.5 of the Plan shall be amended entirety to read as follows: "1.5 Company means Symbios, Inc., and any successor thereto." 3. Termination of Certain Group Severance Benefits and Group Salary Continuation Arrangements and Cessation of Grants Under the Stock Plans. 3.1 Any and all group severance benefits or group salary continuation arrangements maintained by the Company shall be terminated as of but subject to the Closing. 3.2 No grants under the Symbios 1995 Stock Plan and the 1995 Director Restricted Stock Plan (collectively the "Stock Plans") shall be made at or after the Closing. 3.3 Subject to the provisions of Section 7.1 of the Purchase Agreement concerning the assumption by LSI of the Assumed Options, shares of Company capital stock reserved for issuance under the Stock Plans as of the Closing, to the extent not covered by outstanding awards under the Stock Plans, shall no longer be reserved for issuance. All awards outstanding under any of the Stock Plans as of Closing shall remain in full force and effect. - 2 - 3 4. Creation of Subsidiaries and Sale and Transfer of Assets. 4.1 Immediately prior, but subject to, the Closing, the Company shall form a subsidiary in the Cayman Islands to be called Symbios International, Ltd. ("Symbios International"). 4.2 Immediately prior, but subject to, the Closing, the Company shall form a subsidiary in Delaware to be called SymSub, Inc. ("SymSub"). 4.3 Subject to and upon the occurrence of the Closing, the Company shall enter into a License Agreement in the form attached as Exhibit A with Symbios International. 4.4 Subject to and upon the occurrence of the Closing, the Company shall enter into an Assignment and License Agreement (the "SymSub License Agreement") with SymSub in the form attached hereto as Exhibit B. 4.5 Subject to and upon the occurrence of the Closing, the Company shall transfer to SymSub all Storage Tangible Assets (as described in the SymSub License Agreement) pursuant to a Bill of Sale. 5. Fully Diluted Per Share Purchase Price. The parties hereto all agree that the Fully Diluted Per-Share Purchase Price, for all purposes under the Purchase Agreement, shall be $20.15. 6. Additional Agreements. Subject to and upon the occurrence of the Closing, the parties shall enter in the following additional agreements in mutually agreeable form: The Indemnity Agreement; the Assignment and Assumption of Employment Agreements; the Supplementary Liability Agreement; and the side letter with respect to the Supplementary Liability Agreement. 7. Purchase of Christ Note. The parties agree that, effective immediately after the Closing, HEA shall purchase from the Company that certain promissory note payable by Mr. Charles F. Christ to the Company, for a cash price equal to the amount due and payable under such note as of such date which Seller represents to be $247,917. 8. Grant of Stock Options. HEA represents that since June 28, 1998, the Company has only granted options to purchase one hundred ninety-seven thousand five hundred eighty-nine shares of its Common Stock to employees hired or promoted since November 11, 1997. LSI hereby consents to the issuance of such options to the extent such consent may be required under the Purchase Agreement. After giving effect to the aforesaid options, the only outstanding capital stock of the Company consists of the capital stock of the Company being purchased by the Buyer in this transaction and options to purchase 2,082,017 shares of the capital stock of the Company held by employees and consultants, which options shall be the only Assumed Options of LSI for the purposes of Section 7.1 of the Purchase Agreement. - 3 - 4 9. Purchase Price. 9.1 Clause (d) of Section 2.4 is hereby amended to read in its entirety as follows: "Purchaser shall pay to Seller an amount in immediately available funds which is sufficient, together with the Upstream Bridge Loan repayment and the amount of cash on hand on the books of the Company immediately prior to the Closing, to permit repayment of the Bridge Loan in full (the "Payment Amount"), provided that if the Payment Amount exceeds Forty-Four Million Dollars ($44,000,000), the Purchase Price (and as a result, the cash amount payable to Seller) shall be reduced by an amount equal to the amount by which the Payment Amount exceeds $44,000,000 (the "Excess Payment")" 9.2 Clause (e) of Section 2.4 is hereby amended to read in its entirety as follows: "the Indebtedness then owing to the lender(s) under the Bridge Loan shall be repaid" 9.3 There shall be added to the end of Section 2.4 the following sentence: "The Payment Amount shall be treated as consideration for the Shares for all tax and other reporting purposes." 10. Closing Balance Sheet. For purposes of calculating the Closing Balance Sheet, the Closing Date shall be August 6, 1998 and the Closing Balance Sheet shall be calculated as of the end of such date. 11. Fleet UCCs. HEA shall use all reasonable efforts to eliminate any claim of lien by Fleet National Bank upon the assets of Symbios existing as of the Closing and shall pay any sums necessary to discharge any such liens within twenty (20) days following written demand by the Company. 12. Lehman Fees and Charges. HEA is hereby released from its obligation under Section 2.4(c) of the Purchase Agreement to reimburse Symbios for the fee charged by Lehman Brothers on the unused amount of the revolver, in the approximate amount of $29,027.78. Any other fees, costs and expenses of the Lehman Bridge Loan not reflected on the 5/24/98 financial statements as a Symbios expense, whether incurred or paid prior to or after 5/24/98 shall be paid by the HEA. In this regard, LSI acknowledges that HEA has paid $68,999.03 of such amount as set forth in the final close of funds statement. 13. Payments By and To the Company under the Terminated Affiliate Contract. Notwithstanding the covenants in Section 5.7 of the Purchase Agreement to the contrary, the - 4 - 5 parties agree that the amounts owing under the contracts between the Company and Affiliates of the Company and HEI an HEA, other than the Company's Subsidiaries have not been paid prior to or at the Closing. The parties further agree, however, that any sums owing to or by the Company under such contracts shall be included on the Final Balance Sheet, such that any difference shall adjust the sums owing as a purchase price adjustment pursuant to Section 2.3 of the Purchase Agreement. 14. Additional Representations and Warranties. The representations and covenants of HEA and LSI set forth herein are in addition to the representations and covenants of HEA and LSI in the Purchase Agreement, but shall nevertheless be subject to the indemnification, defense and hold harmless provisions of Section 9.2 and 9.4 respectively of the Purchase Agreement and the provisions for implementation thereof set forth in Sections 9.6 and 9.7 of the Purchase Agreement, but, only with respect to the items listed in Section 11 of this Agreement, without application of the limitations as described in Section 9.3 of the Purchase Agreement. 15. No Effect on Purchase Price. The parties agree that all activities set forth herein or reasonably necessary or advisable to implement any of the items described herein have been taken with the consent and approval of all other parties, and that nothing set forth herein shall result in any adverse effect on the Purchase Price, or result in any adjustment to the Purchase Price pursuant to any term or provision of the Purchase Agreement. Should any actions taken to implement any item described in this Agreement result in an adjustment to the Closing Balance Sheet such that HEA would be required to pay to LSI any amount pursuant to Section 2.3(c)(i) of the Purchase Agreement, the Closing Balance Sheet shall be adjusted and redetermined by removing completely the effect of such actions from the Closing Balance Sheet. 16. Effect of Amendment; Entire Agreement. Except as expressly amended hereby, all terms and conditions of the Purchase Agreement shall remain in full force and effect without modification. Subject to the preceding sentence, the Purchase Agreement as amended by this Agreement, and the Amended and Restated Termination and License Agreement dated as of the date hereof by and among the Company, HEA, HEI and LSI; the Stock Option Cancellation Agreements dated as of the date hereof by and among the Company, HEA and each of Chang See Chung, Charles F. Christ, Philip S. Paul, H. Gene Patterson, Dr. Chong Sup Park, Kyu Chung Cho, Mong Hun Chung, Thomas J. Connors and Young Hwan Kim, respectively; the Termination Agreement dated as of the date hereof by and among HEI, HEA and the Company; the Assignment and Assumption of Employment Contracts dated as of the date hereof by and among the Company, LSI and HEA; the General Release dated as of the date hereof by HEA and HEI in favor of the Company; the Supplementary Liability Agreement; the side letter with respect to the Supplementary Liability Agreement; and the Indemnity Agreement dated as of the date hereof by and among the HEA, HEI and LSI supersede all prior discussions and agreements among the parties with respect to the subject matter hereof and thereof, and contain the sole and entire agreement between the parties hereto with respect to the subject matter hereof and thereof. - 5 - 6 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first above written. LSI LOGIC CORPORATION By: /s/ R. DOUGLAS NORBY -------------------------------------- Name: R. Douglas Norby Title: Executive Vice President HYUNDAI ELECTRONICS AMERICA By: /s/ DR. C. S. PARK -------------------------------------- Name: Dr. C. S. Park Title: President HYUNDAI ELECTRONICS INDUSTRIES CO., LTD. By: /s/ DR. C. S. PARK -------------------------------------- Name: Dr. C. S. Park Title: Executive Vice President - 6 - EX-10.42 4 CREDIT AGREEMENT 1 EXHIBIT 10.42 ================================================================================ CREDIT AGREEMENT among LSI LOGIC CORPORATION and LSI LOGIC JAPAN SEMICONDUCTOR, INC. and THE LENDERS NAMED HEREIN and ABN AMRO BANK N.V., as Agent for Lenders August 5, 1998 ================================================================================ 2 TABLE OF CONTENTS
Page ---- SECTION I. INTERPRETATION............................................................1 1.01. Definitions..................................................................1 1.02. GAAP........................................................................23 1.03. Headings....................................................................23 1.04. Plural Terms................................................................23 1.05. Governing Law...............................................................23 1.06. English Language............................................................23 1.07. Construction................................................................23 1.08. Entire Agreement............................................................23 1.09. Calculation of Interest and Fees............................................24 1.10. References..................................................................24 1.11. Other Interpretive Provisions...............................................24 SECTION II. CREDIT FACILITIES........................................................25 2.01. U.S. Borrowings.............................................................25 2.02. Japanese Borrowings.........................................................29 2.03. Amount Limitations, Commitment Reductions, Etc..............................31 2.04. Fees........................................................................33 2.05. Prepayments.................................................................34 2.06. Other Payment Terms.........................................................35 2.07. Loan Accounts; Notes........................................................37 2.08. Loan Funding................................................................38 2.09. Pro Rata Treatment..........................................................39 2.10. Change of Circumstances.....................................................40 2.11. Taxes on Payments...........................................................43 2.12. Funding Loss Indemnification................................................44 2.13. Security....................................................................45 2.14. Replacement of Lenders......................................................45
i 3 TABLE OF CONTENTS (continued)
Page ---- SECTION III. CONDITIONS...............................................................46 3.01. Initial Closing Date Conditions.............................................46 3.02. Second Closing Date Conditions Precedent....................................46 3.03. Conditions Precedent to Each Credit Event...................................46 3.04. Covenant to Deliver.........................................................47 SECTION IV. REPRESENTATIONS AND WARRANTIES...........................................47 4.01. Borrowers' Representations and Warranties...................................47 4.02. Reaffirmation...............................................................52 SECTION V. COVENANTS................................................................52 5.01. Affirmative Covenants.......................................................52 5.02. Negative Covenants..........................................................57 5.03. Financial Covenants.........................................................61 SECTION VI. DEFAULT..................................................................63 6.01. Events of Default...........................................................63 6.02. Remedies....................................................................65 6.03. Lender Rate Contract Remedies...............................................66 SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS....................................67 7.01. Appointment, Powers and Immunities..........................................67 7.02. Reliance by Agent...........................................................67 7.03. Defaults....................................................................67 7.04. Indemnification.............................................................68 7.05. Non-Reliance................................................................68 7.06. Resignation or Removal of Agent.............................................68 7.07. Agent in its Individual Capacity............................................69 SECTION VIII. MISCELLANEOUS............................................................69 8.01. Notices.....................................................................69 8.02. Expenses....................................................................71 8.03. Indemnification.............................................................71 8.04. Waivers; Amendments.........................................................71
ii 4 TABLE OF CONTENTS (continued)
Page ---- 8.05. Successors and Assigns......................................................73 8.06. Setoff; Security Interest...................................................77 8.07. No Third Party Rights.......................................................77 8.08. Partial Invalidity..........................................................77 8.09. Jury Trial..................................................................77 8.10. Counterparts................................................................77 8.11. Borrowers' Liabilities......................................................78 8.12. Confidentiality.............................................................78 8.13. Consent to Jurisdiction.....................................................78 SCHEDULES I Lenders II Pricing Grid 3.01 Initial Closing Date Conditions Precedent 4.01(d) Governmental Consents 4.01(g) Litigation 4.01(i) Environmental Compliance 4.01(l) Significant Subsidiaries 5.02(a) Liens EXHIBITS A Notice of U.S. Borrowing (2.01(c)) B Notice of U.S. Borrowing Conversion (2.01(e)) C Notice of U.S. Borrowing Interest Period Selection (2.01(f)) D Notice of Japanese Borrowing (2.02(b)) E Notice of Japanese Borrowing Interest Period Selection (2.02(d)) F Note (2.07(b)) G LSI Guaranty (2.13(a)) H Assignment Agreement (8.05(c)) I Form of Opinion of Wilson, Sonsini, Goodrich & Rosati J Form of Opinion of Japanese Counsel for LLJS
iii 5 CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of August 5, 1998, is entered into by and among: (1) LSI LOGIC CORPORATION, a Delaware corporation ("LSI"); (2) LSI LOGIC JAPAN SEMICONDUCTOR, INC., a Japanese corporation ("LLJS"); (3) Each of the financial institutions from time to time listed in Schedule I hereto, as amended from time to time (such financial institutions to be referred to herein collectively as "Lenders"); and (4) ABN AMRO BANK N.V., as agent for Lenders (in such capacity, "Agent"). RECITALS A. LSI and LLJS (collectively, "Borrowers"), severally, but not jointly, have requested Lenders to provide certain credit facilities to each of them. B. Lenders are willing to provide such credit facilities upon the terms and subject to the conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the above Recitals and the mutual covenants herein contained, the parties hereto hereby agree as follows: SECTION I. INTERPRETATION. 1.01. Definitions. Unless otherwise indicated in this Agreement or any other Credit Document, each term set forth below, when used in this Agreement or any other Credit Document, shall have the respective meaning given to that term below or in the provision of this Agreement or other document, instrument or agreement referenced below. "ABN AMRO" shall mean ABN AMRO Bank N.V. "Acquisition" shall mean any transaction or series of related transactions for the purpose of or resulting in (a) the acquisition, directly or indirectly, of all or substantially all of the assets of a Person or of any business or division of a Person, (b) the acquisition, directly or indirectly, of all or substantially all of the capital stock, obligations or other 6 securities of or interest in a Person, or (c) a merger or consolidation or any other combination by either Borrower or any of its Subsidiaries with another Person. "Affiliate" shall mean any Person which, directly or indirectly, controls, is controlled by or is under common control with another Person. For purposes of the foregoing, "control" with respect to any Person shall mean the possession, directly or indirectly, of the power (a) to vote twenty-five percent (25%) or more of the securities having ordinary voting power for the election of directors of such Person, or (b) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "Agent" shall have the meaning given to that term in clause (4) of the introductory paragraph hereof. "Agent's Fee Letter" shall mean the letter agreement dated as of July 17, 1998 between LSI and Agent. "Agent's Syndication Letter" shall mean the letter agreement dated as of August 5, 1998 between LSI and Agent. "Agreement" shall mean this Credit Agreement. "Applicable Lending Office" shall mean: (a) With respect to any U.S. Lender and any U.S. Borrowing, (i) in the case of any Base Rate Loan, such Lender's Domestic Lending Office, and (ii) in the case of any LIBOR Loan, such Lender's Euro-Dollar Lending Office; and (b) With respect to any Japanese Lender and any Japanese Borrowing, such Lender's Japanese Lending Office. "Applicable Margin" shall mean, with respect to any Borrowing at any time, the per annum margin which is determined pursuant to the Pricing Grid and added to the Base Rate, LIBO Rate or TIBO Rate, as the case may be, for such Borrowing; provided, however, that each Applicable Margin determined pursuant to the Pricing Grid shall be increased by two percent (2.00%) per annum on the date an Event of Default occurs and shall continue at such increased rate unless and until such Event of Default is cured or waived in accordance with this Agreement. The Applicable Margins shall be determined as provided in the Pricing Grid and may change for each Pricing Period. "Assignee Lender" shall have the meaning given to that term in Subparagraph 8.05(c). "Assignment" shall have the meaning given to that term in Subparagraph 8.05(c). "Assignment Agreement" shall have the meaning given to that term in Subparagraph 8.05(c). 2 7 "Assignment Effective Date" shall have, with respect to each Assignment Agreement, the meaning set forth therein. "Assignor Lender" shall have the meaning given to that term in Subparagraph 8.05(c). "Bankruptcy Code" shall mean Title 11 of the United States Code entitled "Bankruptcy." "Base Rate" shall mean, on any day, the greater of (a) the Prime Rate in effect on such date and (b) the Federal Funds Rate for such day plus one-half percent (0.50%). "Base Rate Loan" shall mean, at any time, a U.S. Loan which then bears interest at a rate specified in clause (i) of Subparagraph 2.01(d). "Borrowers" shall have the meaning given to that term in Recital A. "Borrowing" shall mean a U.S. Borrowing or a Japanese Borrowing. "Business Day" shall mean any day on which commercial banks are not authorized or required to close in San Francisco, California, or New York, New York and (a) if such Business Day is related to a LIBOR Loan, dealings in Dollar deposits are carried out in the London interbank market and commercial banks are open for business in London or (b) if such Business Day is related to a Japanese Borrowing, dealings in Yen deposits are carried out in the Tokyo interbank market and commercial banks are open for business in Tokyo. "Capital Adequacy Requirement" shall have the meaning given to that term in Subparagraph 2.10(d). "Capitalized Interest" shall mean interest that is incurred or accrued in any period and added to the cost of the asset in connection with which such interest is incurred. "Capital Lease" shall mean, for any Person, any lease of property (whether real, personal or mixed) which, in accordance with GAAP, would, at the time a determination is made, be required to be recorded as a capital lease in respect of which such Person is liable as lessee. 3 8 "Change of Control" shall mean (a) With respect to LSI, (i) the acquisition after the date hereof by any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934 (as amended, the "Exchange Act")) of (A) beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of thirty percent (30%) or more of the outstanding equity securities of LSI entitled to vote for members of the Board of Directors of LSI, or (B) all or substantially all of the assets of LSI; or (ii) during any period of twelve (12) consecutive calendar months, individuals who are directors of LSI on the first day of such period ("Initial Directors") and any directors of LSI who are specifically approved by two-thirds of the Initial Directors and previously-approved Directors shall cease to constitute a majority of the Board of Directors of LSI before the end of such period; or (b) With respect to LLJS, LSI shall cease to own directly or indirectly one hundred percent (100%) of the equity securities of LLJS, except for any nominal amount of director stock necessary to do business in Japan. "Change of Law" shall have the meaning given to that term in Subparagraph 2.10(b). "Closing Date" shall mean the U.S. Closing Date or the Japanese Closing Date. "Commitment Fees" shall mean, collectively, the U.S. Revolving Commitment Fees, the U.S. 364 Day Commitment Fees and the Japanese Commitment Fees. "Commitments" shall mean, collectively, the U.S. Revolving Commitments, the U.S. 364 Day Commitments and the Japanese Commitments. "Compliance Certificate" shall have the meaning given to that term in Subparagraph 5.01(a). "Consolidated CMLTD" shall mean, as of any date of determination, the portion of long-term indebtedness coming due in the current quarter and the next succeeding three-quarter period as determined in accordance with GAAP. "Consolidated Current Liabilities" shall mean, as of any date of determination, the sum of current liabilities of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP, plus (without duplication) Guaranty Obligations with respect to that portion of the underlying obligations which come due within one year of such date of determination. "Consolidated EBITDA" shall mean, for any period, Consolidated Net Income plus Consolidated Interest Expense plus income tax expense plus depreciation expense, amortization expense and other non-recurring, non-cash expenses or charges relating to the Symbios Acquisition taken between the date of this Agreement and September 30, 4 9 1998 which were deducted in determining Consolidated Net Income, of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP. For purposes of this calculation, Symbios shall be deemed to be a Subsidiary of LSI for any period prior to the Symbios Acquisition. "Consolidated Interest Expense" shall mean, for any period, interest expense (including interest expense attributable to Capital Leases) of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP. "Consolidated Net Income" shall mean, for any period, the net income of LSI and its Subsidiaries on a consolidated basis for such period taken as a single accounting period, as determined in accordance with GAAP. "Consolidated Quick Assets" shall mean, as of any date of determination, the sum of all unencumbered and unrestricted (except those encumbered or restricted in favor of Agent or Lenders as security for the Obligations) cash, cash equivalents and net accounts receivable classified as current assets according to GAAP, of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP. "Consolidated Tangible Net Worth" shall mean, as of any date of determination, Consolidated Total Assets minus Consolidated Total Liabilities, minus (a) all assets which would be classified in a separate account as intangible assets in accordance with GAAP, including goodwill, organizational expense, research and development expense, capitalized software, patent applications, patents, trademarks, trade names, brands, copyrights, trade secrets, customer lists, licenses, franchises and covenants not to compete, (b) all unamortized debt discount and expense and (c) all treasury stock; provided, however, that to the extent otherwise included in the amount set forth in the foregoing clause (a) of this definition, there shall be excluded from such amount the sum of (i) all engineering costs incurred in connection with the development of major production capabilities at new manufacturing facilities or refurbishment of an existing facility or with respect to introducing a new manufacturing process to existing or new manufacturing facilities and which are classified as a fixed asset and capitalized on the consolidated balance sheet of LSI in accordance with GAAP and (ii) amounts representing the capitalized portion of the acquisition and development costs of software necessary for the operation of the business of LSI and its Subsidiaries, as shown on the consolidated balance sheet of LSI. "Consolidated Total Assets" shall mean, as of any date of determination, the total assets of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP. "Consolidated Total Debt" shall mean, as of any date of determination, all Indebtedness of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP. 5 10 "Consolidated Total Liabilities" shall mean, as of any date of determination, the total liabilities of LSI and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP. "Contractual Obligation" of any Person shall mean, any indenture, note, lease, loan agreement, security, deed of trust, mortgage, security agreement, guaranty, instrument, contract, agreement or other form of contractual obligation or undertaking to which such Person is a party or by which such Person or any of its property is bound. "Credit Documents" shall mean and include this Agreement, the Notes, the LSI Guaranty, the Lender Rate Contracts, the Agent's Fee Letter and the Agent's Syndication Letter; all other documents, instruments and agreements delivered to Agent or any Lender pursuant to Section III; and all other documents, instruments and agreements delivered to Agent or any Lender 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 U.S. Loan into a LIBOR Loan; the selection of a new Interest Period for a LIBOR Loan; or the selection of a new Interest Period exceeding one (1) month for a Japanese Borrowing. "Default" shall mean an Event of Default or any event or circumstance not yet constituting an Event of Default which, with the giving of any notice or the lapse of any period of time or both, would become an Event of Default. "Defaulting Lender" shall mean a Lender which has failed to fund its portion of any Borrowing which it is required to fund under this Agreement and has continued in such failure for three (3) Business Days after written notice from Agent. "Dollar Equivalent" shall mean, as to any amount denominated in Yen as of any date of determination, the equivalent amount in Dollars as determined by Agent on the basis of the Telegraphic Transfer Mid Rate quoted by Bank of Tokyo Mitsubishi at or about 10:00 a.m. (Tokyo time) on such date. "Dollars" and "$" shall mean the lawful currency of the United States of America and, in relation to any payment under this Agreement, same day or immediately available funds. "Domestic Lending Office" shall mean, with respect to any U.S. Lender and any U.S. Borrowing, (a) initially, its office designated as such in Part B of Schedule I (or, in the case of any U.S. Lender which becomes a U.S. Lender by an assignment pursuant to Subparagraph 8.05(c), its office designated as such in the applicable Assignment Agreement) and (b) subsequently, such other office or offices as such U.S. Lender may designate to Agent as the office at which such Lender's Base Rate Loans will thereafter be maintained and for the account of which all payments of principal of, and interest on, such Lender's Base Rate Loans will thereafter be made. "Eligible Assignee" shall mean a commercial bank having a combined capital and surplus of at least $100,000,000 that is acting through a branch or agency located in 6 11 (a) the United States, in the case of a potential Assignee Lender that is to become a U.S. Lender or (b) Japan, in the case of a potential Assignee Lender that is to become a Japanese Lender. "Environmental Laws" shall mean all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directives, requests, licenses, authorizations and permits of, and agreements with (including consent decrees), any Governmental Authorities, in each case relating to or imposing liability or standards of conduct concerning public health, safety and environmental protection matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act, the California Hazardous Waste Control Law, the California Solid Waste Management, Resource Recovery and Recycling Act, the California Water Code and the California Health and Safety Code. "Equity Capital" shall mean, as of any date of determination, Consolidated Total Assets minus Consolidated Total Liabilities (exclusive of the cumulative translation adjustment account as reported in the consolidated balance sheet of LSI and its Subsidiaries as of such date). "ERISA" shall mean the Employee Retirement Income Security Act of 1974. "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) which is under common control with LSI within the meaning of Section 4001(a)(14) of ERISA and Sections 414(b), (c) and (m) of the IRC. "ERISA Event" shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by LSI or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan subject to Title IV of ERISA; (d) a failure by LSI or any ERISA Affiliate to make required contributions to a Pension Plan or other Plan subject to Section 412 of the IRC; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon LSI or any ERISA Affiliate; or (g) an application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the IRC with respect to any Pension Plan. "Euro-Dollar Lending Office" shall mean, with respect to any U.S. Lender and any U.S. Borrowing, (a) initially, such Lender's office designated as such in Part B of Schedule I (or, in the case of any U.S. Lender which becomes a U.S. Lender by an assignment pursuant to Subparagraph 8.05(c), its office designated as such in the 7 12 applicable Assignment Agreement) and (b) subsequently, such other office or offices as such Lender may designate to Agent as the office at which such Lender's LIBOR Loans will thereafter be maintained and for the account of which all payments of principal of, and interest on, such Lender's LIBOR Loans will thereafter be made. "Event of Default" shall have the meaning given to that term in Paragraph 6.01. "Federal Funds Rate" shall mean, for any day, the rate per annum set forth in the weekly statistical release designated as H.15 (519), or any successor publication, published by the FRB (including any such successor publication, "H.15 (519)") for such day opposite the caption "Federal Funds (Effective)". If on any relevant day, such rate is not yet published in H.15 (519), the rate for such day shall be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor publication, the "Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds Effective Rate". If on any relevant day, such rate is not yet published in either H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day shall be the arithmetic means, as determined by Agent, of the rates quoted to Agent for such day by three (3) federal funds brokers of recognized standing selected by Agent for overnight federal funds transactions. "Financial Statements" shall mean, with respect to any accounting period for any Person, statements of income, shareholders' equity and cash flows of such Person for such period, and a balance sheet of such Person as of the end of such period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year if such period is less than a full fiscal year or, if such period is a full fiscal year, corresponding figures from the preceding annual audit, all prepared in reasonable detail and in accordance with GAAP. "Foreign Plan" shall mean any employee benefit plan maintained by LSI, LLJS or any of their Subsidiaries which is mandated or governed by any Governmental Rule of any Governmental Authority other than the United States. "FRB" shall mean the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "GAAP" shall mean generally accepted accounting principles set forth from time to time 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 U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" shall mean any domestic or foreign national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, 8 13 without limitation, the Federal Deposit Insurance Corporation, the FRB, the Comptroller of the Currency, any central bank or any comparable authority. "Governmental Charges" shall mean, with respect to any Person, all levies, assessments, fees, claims or other charges imposed by any Governmental Authority upon such Person or any of its property or otherwise payable by such Person. "Governmental Rule" shall mean any law, rule, regulation, ordinance, order, code interpretation, judgment, decree, directive, guidelines, policy or similar form of decision of any Governmental Authority. "Guaranty Obligation" shall mean, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person: (a) With respect to any Indebtedness, lease (other than an operating lease), dividend, or other obligation (the "primary obligations") of another Person (the "primary obligor"), including any obligation of that Person (i) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, or (ii) to advance or provide funds (A) for the payment or discharge of any such primary obligation, or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof; (b) (i) With respect to letters of credit, acceptances, bank guaranties, surety bonds or similar instruments issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, or (ii) as a partner or joint venturer in any partnership or joint venture; (c) With respect to synthetic leases; or (d) Net obligations with respect to Rate Contracts, other than Rate Contracts entered into in connection with a bona fide hedging operation that provides offsetting benefits to such Person. "Hazardous Substances" shall mean any toxic or hazardous substances, materials, wastes, contaminants or pollutants, including asbestos, PCBs, petroleum products and byproducts, and any substances defined or listed as "hazardous substances," "hazardous materials," "hazardous wastes" or "toxic substances" (or similarly identified), regulated under or forming the basis for liability under any applicable Environmental Law. 9 14 "Indebtedness" shall mean, for any Person, without duplication: (a) All indebtedness or other obligations of such Person for borrowed money; (b) All obligations of such Person for the deferred purchase price of property or services (including obligations under credit facilities which secure or finance such purchase price and obligations under "synthetic" leases), other than trade payables incurred by such Person in the ordinary course of its business on ordinary terms; (c) All obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (d) All indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (e) All obligations under Capital Leases; (f) All Guaranty Obligations other than Guaranty Obligations described in clauses (a)(iii) and (a)(iv) of the definition of "Guaranty Obligation" where the primary obligor is a Subsidiary; and (g) All indebtedness of another Person secured by any Lien upon or in property owned by the Person for whom Indebtedness is being determined, whether or not such Person has assumed or become liable for the payment of such indebtedness of such other Person; provided, that if such indebtedness is not assumed and recourse is limited solely to such property, the Indebtedness incurred hereunder shall be valued at the lesser of the principal amount of the obligation so secured or the fair market value of the property subject to such Lien. "Initial Closing Date" shall mean the earlier of the U.S. Closing Date and the Japanese Closing Date. (If the U.S. Closing Date and the Japanese Closing Date are the same date, the Initial Closing Date and the Second Closing Date shall be the same date.) "Interest Period" shall mean: (a) With respect to any LIBOR Loan, the time period selected by LSI pursuant to Subparagraph 2.01(c) or Subparagraph 2.01(e) which commences on the first day of such U.S. Borrowing or the effective date of any conversion and ends on the last day of such time period, and thereafter, each subsequent time period selected by LSI pursuant to Subparagraph 2.01(f) which commences on the last day of the immediately preceding time period and ends on the last day of that time period; and 10 15 (b) With respect to a Japanese Borrowing, the time period selected by LLJS pursuant to Subparagraph 2.02(b) which commences on the first day of such Japanese Borrowing and ends on the last day of such time period, and thereafter, each subsequent time period selected by LLJS pursuant to Subparagraph 2.02(d) which commences on the last day of the immediately preceding time period and ends on the last day of that time period. "IRC" shall mean the Internal Revenue Code of 1986. "IRS" shall mean the Internal Revenue Service, or any successor thereto. "Japanese Borrowing" shall mean a borrowing by LLJS consisting of Japanese Loans made by the Japanese Lenders on the same date pursuant to a single Notice of Japanese Borrowing. Any reference to a Japanese Borrowing shall include the Japanese Loans made pursuant to such Japanese Borrowing. "Japanese Closing Date" shall mean the date, not later than August 31, 1998, designated by LLJS in the initial Notice of Japanese Borrowing as the date on which the initial Japanese Borrowing is to occur. "Japanese Commitment" shall mean, with respect to each Lender, the Yen Equivalent on the day four (4) Business Days prior to the Japanese Closing Date of the Dollar amount set forth under the caption "Japanese Commitment" opposite such Lender's name on Part A of Schedule I, or, if changed, such Yen amount as may be set forth for such Lender in the Register. "Japanese Commitment Fees" shall have the meaning given to that term in Subparagraph 2.04(b). "Japanese Lender" shall mean a Lender having a Japanese Commitment or, if the Japanese Commitments have been terminated, a Lender having a Japanese Loan. "Japanese Lending Office" shall mean, with respect to any Japanese Lender and any Japanese Borrowing, (a) initially, such Lender's office designated as such in Part B of Schedule I (or, in the case of any Japanese Lender which becomes a Japanese Lender by an assignment pursuant to Subparagraph 8.05(c), its office designated as such in the applicable Assignment Agreement) and (b) subsequently, such other office or offices as such Lender may designate to Agent as the office at which such Lender's Japanese Loans will thereafter be maintained and for the account of which all payments of principal of, and interest on, such Lender's Japanese Loans will thereafter be made. "Japanese Loan" shall have the meaning given to that term in Subparagraph 2.02(a). "Lender Rate Contract" shall mean any Rate Contract entered into by either Borrower or any of its Subsidiaries with a Lender or its Affiliates as permitted by this Agreement of which Agent will be given written notice upon the occurrence and during the continuance of an Event of Default. 11 16 "Lenders" shall have the meaning given to that term in clause (3) of the introductory paragraph hereof. "LIBO Rate" shall mean, with respect to any Interest Period for the LIBOR Loans in any U.S. Borrowing, a rate per annum equal to the quotient (rounded upward if necessary to the nearest 1/100 of one percent) of (a) the arithmetic mean (rounded upward if necessary to the nearest 1/16 of one percent) of the rates per annum appearing on Telerate Page 3750 (or any successor publication) on the second Business Day prior to the first day of such Interest Period at or about 11:00 A.M. (London time) (for delivery on the first day of such Interest Period) for a term comparable to such Interest Period, divided by (b) one minus the Reserve Requirement for such LIBOR Loans in effect from time to time. If for any reason rates are not available as provided in clause (a) of the preceding sentence, the rate to be used in clause (a) shall be, at the Agent's discretion, (i) the rate per annum at which Dollar deposits are offered to Agent in the London interbank market or (ii) the rate at which Dollar deposits are offered to Agent in, or by Agent to major banks in, any offshore interbank market selected by Agent, in each case on the second Business Day prior to the commencement of such Interest Period at or about 10:00 A.M. (New York time) (for delivery on the first day of such Interest Period) for a term comparable to such Interest Period and in an amount approximately equal to the amount of the LIBOR Loan to be made or funded by Agent as part of such U.S. Borrowing. The LIBO Rate shall be adjusted automatically as to all LIBOR Loans then outstanding as of the effective date of any change in the Reserve Requirement. "LIBOR Loan" shall mean, at any time, a U.S. Loan which then bears interest at a rate specified in clause (ii) of Subparagraph 2.01(d). "Lien" shall mean any mortgage, deed of trust, pledge, security interest, assignment, deposit arrangement, charge or encumbrance, lien (statutory or other), or other preferential arrangement (including any conditional sale or other title retention agreement, or any financing lease having substantially the same economic effect as any of the foregoing or any agreement to give any security interest, but excluding any operating lease, regardless of whether precautionary filings are made in respect thereof under Section 9408 of the California Uniform Commercial Code). "LLJS" shall have the meaning given to that term in clause (2) of the introductory paragraph hereof. "Loan" shall mean a U.S. Revolving Loan, a U.S. 364 Day Loan or a Japanese Loan. "Loan Account" shall have the meaning given to that term in Subparagraph 2.07(a). "LSI" shall have the meaning given to that term in clause (1) of the introductory paragraph hereof. "LSI Guaranty" shall have the meaning given to that term in Subparagraph 2.13(a). 12 17 "Material Adverse Effect" shall mean (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of either Borrower or either Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of either Borrower to perform its Obligations or to pay any Indebtedness described in Subparagraph 6.01(e); or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Credit Document. "Maturity" shall mean, with respect to any Loan, interest, fee or other amount payable by either 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. "Multiemployer Plan" shall mean a "multiemployer plan" as defined in Sections 3(37) and 4001(a)(3) of ERISA. "Net Proceeds" shall mean, with respect to any sale of any asset (including any sale of assets to be leased back in connection with a "synthetic" lease of such assets) or any sale or issuance of any Indebtedness or equity securities by any Person, the aggregate consideration received by such Person from such sale or issuance less the sum of the actual amount of the reasonable fees and commissions payable to Persons other than such Person or any Affiliate of such Person, the reasonable legal expenses and other costs and expenses directly related to such sale or issuance that are to be paid by such Person. "Note" shall have the meaning given to that term in Subparagraph 2.07(b). "Notice of Borrowing" shall mean a Notice of U.S. Borrowing or a Notice of Japanese Borrowing. "Notice of Interest Period Selection" shall mean a Notice of U.S. Borrowing Interest Period Selection or a Notice of Japanese Borrowing Interest Period Selection. "Notice of Japanese Borrowing" shall have the meaning given to that term in Subparagraph 2.02(b). "Notice of Japanese Borrowing Interest Period Selection" shall have the meaning given to that term in Subparagraph 2.02(d). "Notice of U.S. Borrowing" shall have the meaning given to that term in Subparagraph 2.01(c). "Notice of U.S. Borrowing Conversion" shall have the meaning given to that term in Subparagraph 2.01(e). "Notice of U.S. Borrowing Interest Period Selection" shall have the meaning given to that term in Subparagraph 2.01(f). 13 18 "Obligations" shall mean and include all loans, advances, debts, liabilities, and obligations, howsoever arising, owed by either Borrower individually to Agent or any Lender of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising pursuant to the terms of this Agreement or any of the other Credit Documents, including all interest, fees, charges, expenses, attorneys' fees and accountants' fees chargeable to Borrowers or payable by Borrowers thereunder. "Outstanding Japanese Loan Facility" shall mean the Yen credit facility provided pursuant to the Agreement for yen 25,000,000,000 Floating Rate Guaranteed Credit Facility, dated December 27, 1995, as amended, among LLJS, as borrower, LSI, as guarantor, the banks and financial institutions parties thereto, as lenders, ABN AMRO, as agent for such lenders, and The Industrial Bank of Japan, Limited, as co-agent for such lenders. "Outstanding Japanese Lease Facility" shall mean the Yen "synthetic" lease provided pursuant to the Master Lease Agreement, dated June 16, 1995, as amended, among LLJS, as lessee, and certain financial institutions parties thereto, as lessors, including IBJ Leasing Co., Ltd., as lead lessor. "Outstanding U.S. Loan Facility" shall mean the Dollar credit facility provided pursuant to the Credit Agreement, dated as of December 20, 1996, as amended, among LSI, as borrower, the financial institutions parties thereto, as lenders, and ABN AMRO, as agent for such lenders. "Overnight Rate" shall mean, for any amount payable in Yen on any day, the per annum interest rate at which overnight deposits in Yen in an amount approximately equal to such amount would be offered for such day by ABN AMRO's Japanese Lending Office to major banks in the Tokyo interbank market. "Participant" shall have the meaning given to that term in Subparagraph 8.05(b). "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. "Pension Plan" shall mean any employee pension benefit plan covered by Title IV of ERISA (other than a Multiemployer Plan) that is maintained for employees of LSI or any ERISA Affiliate or with regard to which LSI or an ERISA Affiliate is a contributing sponsor within the meaning of Section 4001(a)(13) or 4069 of ERISA. "Permitted Acquisition" shall mean: (a) The Symbios Acquisition; and (b) Any Acquisition of any other Person by either Borrower or any of its Subsidiaries for which (i) the sole consideration paid by the acquiring Borrower or Subsidiary, as the case may be, consists of capital stock, or (ii) the total cash consideration paid by the acquiring Borrower or Subsidiary, as the case 14 19 may be, does not exceed, in the aggregate with all other Acquisitions and all investments under clause (vi) of Subparagraph 5.02(e), $300,000,000 during the period from the date of this Agreement through the Revolving Termination Date and no Default exists at the time of such Acquisition and no Default or Material Adverse Effect would occur as a result thereof. "Permitted Investments" shall mean any investments selected by LSI in accordance with its Corporate Cash Investment Policy as adopted by LSI on August 16, 1996 (as the same may be amended from time to time with the approval of Agent); provided that any investments not meeting the standards set forth in such Corporate Cash Investment Policy shall nevertheless be deemed to be "Permitted Investments" if they do not exceed at any time, in the aggregate, ten percent (10%) of all Permitted Investments at such time. "Permitted Liens" shall mean: (a) Liens which may at any time be granted in favor of Agent or any Lender to secure the Obligations; (b) Liens in existence as of the date of this Agreement listed on Schedule 5.02(a), and any substitutions or renewals thereof, provided that (i) any substitute or renewal Lien is limited to the property encumbered by the existing Lien, and (ii) the principal amount of the obligations secured thereby is not increased; (c) Liens for current taxes, assessments or other Governmental Charges which are not delinquent or remain payable without any penalty or which are being contested in good faith via appropriate proceedings, with appropriate reserves established therefor in accordance with GAAP; (d) Liens in connection with workers' compensation, unemployment insurance or other social security obligations; (e) Mechanics', workers', materialmen's, landlords', carriers' or other like Liens arising in the ordinary and normal course of business with respect to obligations which are not past due or which are being contested in good faith via appropriate proceedings, with appropriate reserves established therefor in accordance with GAAP; (f) Purchase money security interests (including by way of installment sales and title retention agreements) in personal or real property hereafter acquired when the security interest is granted contemporaneously with such acquisition (or within nine months thereafter), Liens created to secure the cost of construction or improvement of property and Liens created to secure Indebtedness incurred to finance such purchase price or cost (including Liens in favor of the United States or any state thereof, or any department, agency, instrumentality or political subdivision thereof, securing any real property or other assets in connection with the financing of industrial revenue bond facilities or of any 15 20 equipment or other property designed primarily for the purpose of air or water pollution control); provided that (i) any such Lien shall attach only to the property so purchased. constructed or improved, together with attachments and accessions thereto, and rents, proceeds, products, substitutions, replacements and profits thereof and attachments and accessories thereto, and (ii) the amount of Indebtedness secured by any such Lien shall not exceed the purchase or construction price of such property plus transaction costs and financing charges relating to the acquisition or construction thereof; (g) Liens arising from attachments or similar proceedings, pending litigation, judgments or taxes or assessments in any such event whose validity or amount is being contested in good faith by appropriate proceedings and for which adequate reserves have been established and are maintained in accordance with GAAP; (h) Liens arising in the ordinary course of business or by operation of law, not securing Indebtedness, but securing such obligations as (i) judgments or awards, which (A) are covered by applicable insurance or (B) have been outstanding less than thirty (30) consecutive days, (ii) interests of landlords or lessors under leases of real or personal property entered into in the ordinary course of business arising by contract or operation of law, (iii) Liens in favor of customs and revenue authorities which secure payment of customs in connection with the importation of goods, (iv) Liens which constitute rights of set-off of a customary nature or bankers' liens on amounts on deposit, whether arising by contract or by operation of law, in connection with arrangements entered into with depository institutions in the ordinary course of business, (v) such minor defects, irregularities, encumbrances, easements, rights of way, and clouds on title as normally exist with respect to similar properties which do not, individually or in the aggregate, materially impair the property affected thereby or the use thereof and (vi) subleases, licenses, and sublicenses granted to third parties, the granting of which does not result in a Material Adverse Effect; (i) Liens securing reimbursement obligations of either Borrower or any of its Subsidiaries under documentary letters of credit; provided that such Liens shall attach only to documents relating to such letters of credit, goods covered thereby and products and proceeds thereof; (j) Liens on insurance policies or the proceeds of insurance policies incurred solely to secure the financing of premiums owing with respect thereto; (k) Liens existing on property (including the proceeds and accessions thereto) acquired by either Borrower or any of its Subsidiaries (including Liens on assets of any corporation at the time it becomes a Subsidiary), but excluding any Liens created in contemplation of any such acquisition; (l) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry 16 21 and incurred in the ordinary course of business in connection with Rate Contracts or portfolio investments maintained with financial intermediaries; and (m) Liens related to a "synthetic" lease financing of equipment, provided that (i) such Liens cover only the equipment and related property and (ii) the "principal" amount of such financing does not exceed $250,000,000. "Person" shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, an unincorporated association, a limited liability company, a joint venture, a trust or other entity or a Governmental Authority. "Plan" shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which LSI or any ERISA Affiliate sponsors or maintains, or to which LSI or any ERISA Affiliate makes, is making, or is obligated to make contributions, and includes any Pension Plan. "Pricing Grid" shall mean Schedule II. "Pricing Period" shall mean (a) the period commencing on the date of this Agreement and ending on September 30, 1998, and (b) each consecutive calendar quarter thereafter which commences on the day following the last day of the immediately preceding calendar quarter and ends on the last day of that calendar quarter. "Pricing Ratio" shall mean, as of the last day of any fiscal quarter, the ratio of (a) Senior Debt as of such date to (b) annualized Consolidated EBITDA for such fiscal quarter and the immediately preceding fiscal quarter, plus, to the extent deducted in calculating such Consolidated EBITDA, the sum of (i) preproduction engineering charges not exceeding $135,000,000 taken by LSI during 1999 as a result of the Financial Accounting Standards Executive Committee Statement of Position regarding capitalization of preproduction charges, plus (ii) the aggregate amount of asset write-downs not exceeding $100,000,000 taken by LSI during the quarter ending September 30, 1998. "Prime Rate" shall mean the per annum rate publicly announced by ABN AMRO from time to time at its Chicago office. The Prime Rate is determined by ABN AMRO 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 ABN AMRO at any given time for any particular class of customers or credit extensions. Any change in the Base Rate resulting from a change in the Prime Rate shall become effective on the Business Day on which each change in the Prime Rate occurs. "Proportionate Share" shall mean: (a) With respect to any U.S. Lender and its U.S. Revolving Commitment or U.S. Revolving Loans, if any, the ratio (expressed as a percentage rounded to the eighth digit to the right of the decimal point) of (i) such Lender's U.S. Revolving Commitment to the Total U.S. Revolving Commitment at any time on or prior to the Revolving Termination Date or (ii) the aggregate principal amount of such Lender's U.S. Revolving Loans to the aggregate principal amount of the U.S. Revolving Borrowings outstanding at any time after the Revolving Termination Date; (b) With respect to any U.S. Lender and its U.S. 364 Day Commitment or U.S. 364 Day Loans, if any, the ratio (expressed as a percentage rounded to the eighth digit to the right of the decimal point) of (i) such Lender's U.S. 364 Day Commitment to the Total U.S. 364 Day Commitment at any time on 17 22 or prior to the U.S. 364 Day Termination Date or (ii) the aggregate principal amount of such Lender's U.S. 364 Day Loans to the aggregate principal amount of the U.S. 364 Day Borrowings outstanding at any time after the U.S. 364 Day Termination Date; (c) With respect to any Japanese Lender and its Japanese Commitment or Japanese Loans, if any, the ratio (expressed as a percentage rounded to the eighth digit to the right of the decimal point) of (i) such Lender's Japanese Commitment to the Total Japanese Commitment at any time on or prior to the Revolving Termination Date or (ii) the aggregate principal amount of such Lender's Japanese Loans to the aggregate principal amount of the Japanese Borrowings outstanding at any time after the Revolving Termination Date; and (d) With respect to any Lender without reference to a particular type of Commitment or Loan, the ratio (expressed as a percentage rounded to the eighth digit to the right of the decimal point) of (i) the aggregate of such Lender's U.S. Revolving Commitment, U.S. 364 Day Commitment and the Dollar Equivalent of such Lender's Japanese Commitment to the sum of the Total U.S. Revolving Commitment, the Total U.S. 364 Day Commitment and the Dollar Equivalent of the Total Japanese Commitment at any time on or prior to the Initial Closing Date or (ii) the weighted average of the sums determined for such Lender pursuant to clauses (a), (b) and (c) above at any time after the Initial Closing Date. "Rate Contracts" shall mean interest rate swaps, caps, floors and collars, currency swaps, or other similar financial products designed to provide protection against fluctuations in interest, currency or exchange rates. "Register" shall have the meaning given to that term in Subparagraph 8.05(d). "Reportable Event" shall mean any of the events set forth in Section 4043(b) of ERISA or the regulations promulgated thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Lenders" shall mean, at any time, Lenders whose Proportionate Shares equal or exceed fifty-one percent (51%). "Reserve Requirement" shall mean (a) with respect to any day in an Interest Period for a LIBOR Loan, the aggregate of the reserve requirement rates (expressed as a decimal) in effect on such day for eurodollar funding (currently referred to as "Eurocurrency liabilities" in Regulation D of the FRB) maintained by a member bank of the Federal Reserve System or (b) with respect to any day in an Interest Period for a Japanese Loan, the aggregate of the reserve requirement rates, if any (expressed as a decimal), in effect on such day for Yen funding in Tokyo maintained by commercial banks in Tokyo. As used herein, the term "reserve requirement" shall include, without limitation, any basic, supplemental or emergency reserve requirements imposed on any Lender by any Governmental Authority. 18 23 "Responsible Officer" shall mean, with respect to any Person, the chief executive officer, the president, the chief financial officer or the treasurer of such Person, or any other senior officer of such Person having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of any such Person, or any other senior officer of such Person involved principally in the financial administration or controllership function of such Person and having substantially the same authority and responsibility. "Revolving Termination Date" shall mean August 4, 2002, or, with respect to U.S. Revolving Borrowings or Japanese Borrowings, such earlier date as the Total U.S. Revolving Commitment or the Total Japanese Commitment, as the case may be, is cancelled pursuant to Subparagraph 2.03(c). "Scheduled Reduction Date" shall mean the last day of each of December 1999, March, June, September and December 2000, and March, June and September 2001. "SEC" shall mean the Securities and Exchange Commission, or any successor thereto. "Second Closing Date" shall mean the later of the U.S. Closing Date and the Japanese Closing Date. (If the U.S. Closing Date and the Japanese Closing Date are the same date, the Initial Closing Date and the Second Closing Date shall be the same date.) "Security Documents" shall mean and include the LSI Guaranty and any other instruments, agreements, certificates, opinions and documents (including Uniform Commercial Code financing statements and fixture filings and landlord waivers) delivered to Agent or any Lender to secure the Obligations. "Senior Debt" shall mean all Indebtedness, other than Subordinated Debt, of LSI and its Subsidiaries on a consolidated basis. "Significant Subsidiary" shall mean, at any time, any Subsidiary of LSI having at such time total assets, as of the last day of the preceding fiscal quarter, having a net book value in excess of $10,000,000 (exclusive of intercompany assets and liabilities), based upon LSI's most recent annual or quarterly Financial Statements delivered to Agent under Subparagraph 5.01(a). "Solvent" shall mean, with respect to any Person, that as of the date of determination, (a) the then fair saleable value of the property of such Person is (ii) greater than the total amount of liabilities (including reasonably anticipated liabilities with respect to contingent obligations) of such Person and (ii) greater than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person, and (b) such Person has not incurred and does 19 24 not intend to incur, or does not believe that it will incur, debts beyond its ability to pay such debts as they become due. "Subordinated Debt" shall mean any Indebtedness of LSI or any of its Subsidiaries under which principal payments will become due and payable no earlier than the first anniversary of the Revolving Termination Date and which is subordinated on terms and conditions reasonably acceptable to Required Lenders; provided, that any Subordinated Debt having subordination provisions no more favorable to the holder than those contained in LSI's 5 1/2% Convertible Subordinated Notes Due 2001 and the indenture relating thereto shall be deemed to be reasonably acceptable to the Required Lenders for the purposes hereof. "Subsidiary" shall mean any corporation, association, partnership, joint venture or other business entity of which more than fifty percent (50%) of the voting stock or other equity interest is owned directly or indirectly by any Person or one or more of the other Subsidiaries of such Person or a combination thereof. (All references in this Agreement and the other Credit Documents to Subsidiaries of LSI shall, unless otherwise indicated, include LLJS and its Subsidiaries.) "Swap Termination Value" shall mean, in respect of any one or more Rate Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Rate Contracts, (a) for any date on or after the date such Rate Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Rate Contracts, as determined based upon one or more mid- market or other readily available quotations provided by any recognized dealer in such Rate Contracts (which may include any Lender). "Symbios" shall mean Symbios, Inc., a Delaware corporation. "Symbios Acquisition" shall mean the acquisition by LSI of the capital stock of Symbios pursuant to the Symbios Acquisition Documents. "Symbios Acquisition Documents" shall mean the Stock Purchase Agreement, dated as of June 28, 1998, by and among LSI, Hyundai Electronics America, a California corporation, and Hyundai Electronics Industries Ltd., a legal entity under the laws of the Republic of Korea, and all material documents, instruments and agreements delivered to or by LSI in connection with the Symbios Acquisition. "Taxes" shall have the meaning given to such term in Subparagraph 2.11(a). "TIBO Rate" shall mean, with respect to any Interest Period for the Japanese Loans in any Japanese Borrowing, a rate per annum equal to the quotient (rounded upward if necessary to the nearest 1/100 of one percent) of (a) the rate per annum appearing on the Reuter Screen TIBM Page (All Banks Average) (or any successor publication) on the second Business Day prior to the first day of such Interest Period at or about 11:00 A.M. (Tokyo time) (for delivery on the first day of such Interest Period) in 20 25 an amount substantially equal to Agent's Japanese Loan for such Japanese Borrowing and for a term comparable to such Interest Period, divided by (b) one minus the Reserve Requirement for such Japanese Loan in effect from time to time. If for any reason rates are not available as provided in clause (a) of the preceding sentence, the rate to be used in clause (a) shall be, at Agent's discretion, (i) the rate per annum at which Yen deposits are offered to Agent in the Tokyo interbank market or (ii) the rate at which Yen deposits are offered to Agent in, or by Agent to major banks in, any offshore interbank market selected by Agent, in each case on the second Business Day prior to the commencement of such Interest Period at or about 11:00 A.M. (Tokyo time) (for delivery on the first day of such Interest Period) for a term comparable to such Interest Period and in an amount approximately equal to the amount of the Japanese Loan to be made or funded by Agent as part of such Japanese Borrowing. The TIBO Rate shall be adjusted automatically as to all Japanese Loans then outstanding as of the effective date of any change in the Reserve Requirement. "Total Capital" shall mean the sum of Equity Capital, Senior Debt and Subordinated Debt. "Total Japanese Commitment" shall mean an amount not to exceed the Yen Equivalent of Seventy-Five Million Dollars ($75,000,000), such Dollar amount to be specified by LLJS in a written notice received by Agent and the Yen Equivalent of such Dollar amount to be determined by Agent on the day four (4) Business Days prior to the Japanese Closing Date, or such amount as reduced pursuant to Subparagraph 2.03(c). "Total U.S. Revolving Commitment" shall mean Five Hundred Seventy-Five Million Dollars ($575,000,000), minus the amount of the Total Japanese Commitment, or such amount as reduced pursuant to Subparagraph 2.03(b) or Subparagraph 2.03(c). "Total U.S. 364 Day Commitment" shall mean One Hundred Fifty Million Dollars ($150,000,000) , or such amount as reduced pursuant to Subparagraph 2.03(b) or Subparagraph 2.03(c). "Type" shall mean, with respect to any U.S. Loan or U.S. Borrowing at any time, the classification of such Loan or Borrowing by the type of interest rate it then bears, whether an interest rate based upon the Base Rate or the LIBO Rate. "Unfunded Pension Liability" shall mean the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Plan pursuant to Section 412 of the IRC for the applicable plan year. "United States" and "U.S." each shall mean the United States of America. "U.S. Borrowing" shall mean a U.S. Revolving Borrowing or a U.S. 364 Day Borrowing. 21 26 "U.S. Closing Date" shall mean the date, not later than August 31, 1998, designated by LSI in the initial Notice of U.S. Borrowing as the date on which the initial U.S. Borrowing is to occur. "U.S. Lender" shall mean a Lender having a U.S. Revolving Commitment or a U.S. 364 Day Commitment or, after the U.S. 364 Day Termination Date, a Lender having a U.S. Loan or a U.S. Revolving Commitment. "U.S. Loan" shall mean a U.S. Revolving Loan or a U.S. 364 Day Loan. "U.S. Revolving Borrowing" shall mean a borrowing by LSI consisting of U.S. Revolving Loans made by U.S. Lenders on the same date and of the same Type pursuant to a single Notice of U.S. Borrowing. Any reference to a U.S. Revolving Borrowing shall include the U.S. Revolving Loans made pursuant to such U.S. Revolving Borrowing. "U.S. Revolving Commitment" shall mean, with respect to each Lender, the Dollar amount set forth under the caption "U.S. Revolving Commitment" opposite such Lender's name on Part A of Schedule I, or, if changed, such Dollar amount as may be set forth for such Lender in the Register. "U.S. Revolving Commitment Fees" shall have the meaning given to that term in Subparagraph 2.04(b). "U.S. Revolving Loan" has the meaning given to that term in Subparagraph 2.01(a). "U.S. 364 Day Borrowing" shall mean a borrowing by LSI consisting of U.S. 364 Day Loans made by U.S. Lenders on the same date and of the same Type pursuant to a single Notice of U.S. Borrowing. Any reference to a U.S. 364 Day Borrowing shall include the U.S. 364 Day Loans made pursuant to such U.S. 364 Day Borrowing. "U.S. 364 Day Commitment" shall mean, with respect to each Lender, the Dollar amount set forth under the caption "U.S. 364 Day Commitment" opposite such Lender's name on Part A of Schedule I, or, if changed, such Dollar amount as may be set forth for such Lender in the Register. "U.S. 364 Day Commitment Fees" shall have the meaning given to that term in Subparagraph 2.04(b). "U.S. 364 Day Loan" has the meaning given to that term in Subparagraph 2.01(b). "U.S. 364 Day Termination Date" shall mean August 3, 1999, or such earlier date as the Total U.S. 364 Day Commitment is cancelled pursuant to Subparagraph 2.03(c). "Yen" and "(Y)" shall mean the lawful currency of Japan and, in relation to any payment under this Agreement, same day or immediately available funds. 22 27 "Yen Equivalent" shall mean, as to any amount denominated in Dollars as of any date of determination, the equivalent amount in Yen as determined by Agent on the basis of the Telegraphic Transfer Mid Rate quoted by Bank of Tokyo Mitsubishi at or about 10:00 a.m. (Tokyo time) on such date. 1.02. GAAP. Unless otherwise indicated in this Agreement or any other Credit Document, all accounting terms used in this Agreement or any other Credit Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP. If GAAP changes during the term of this Agreement such that any covenants contained herein would then be calculated in a different manner or with different components, Borrowers, Lenders and Agent agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those covenants as criteria for evaluating Borrowers' financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided, however, that, until Borrowers, Lenders and Agent so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change. 1.03. Headings. Headings in this Agreement and each of the other Credit Documents are for convenience of reference only and are not part of the substance hereof or thereof. 1.04. Plural Terms. All terms defined in this Agreement or any other Credit Document in the singular form shall have comparable meanings when used in the plural form and vice versa. 1.05. Governing Law. Unless otherwise expressly provided in any Credit Document, this Agreement and each of the other Credit Documents shall be governed by and construed in accordance with the laws of the State of California without reference to conflicts of law rules. 1.06. English Language. This Agreement and the other Credit Documents are executed and shall be construed in the English language. All instruments, agreements, certificates, opinions and other documents to be furnished or communications to be given or made under this Agreement or any other Credit Document shall be in the English language, except that LLJS may deliver the Japanese language version of (a) any LLJS corporate document initially prepared in the ordinary course of its business in the Japanese language or (b) any certificate or other document prepared by a Japanese Governmental Authority in the Japanese language, provided that, in each such case, the Japanese language version of such document is delivered along with an English language translation thereof which shall be binding upon Borrowers. 1.07. Construction. This Agreement is the result of negotiations among, and has been reviewed by, Borrowers, each Lender, Agent and their respective counsel. Accordingly, this Agreement shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against either Borrower, any Lender or Agent. 1.08. Entire Agreement. This Agreement and each of the other Credit Documents, taken together, constitute and contain the entire agreement of Borrowers, Lenders and Agent and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof 23 28 (excluding the Agent's Fee Letter and the Agent's Syndication Letter but including the commitment letter dated as of July 17, 1998 between LSI and ABN AMRO). 1.09. Calculation of Interest and Fees. All calculations of interest and fees under this Agreement and the other Credit Documents for any period (a) shall include the first day of such period and exclude the last day of such period and (b) shall be calculated on the basis of a year of 360 days for actual days elapsed, except that during any period any Loan bears interest based upon the Prime Rate, such interest shall be calculated on the basis of a year of 365 or 366 days, as appropriate, for actual days elapsed. 1.10. References. (a) References in this Agreement to "Recitals," "Sections," "Paragraphs," "Subparagraphs," "Exhibits" and "Schedules" are to recitals, sections, paragraphs, subparagraphs, exhibits and schedules therein and thereto unless otherwise indicated. (b) References in this Agreement or any other Credit Document to any document, instrument or agreement (i) shall include all exhibits, schedules and other attachments thereto, (ii) shall include all documents, instruments or agreements issued or executed in replacement thereof if such replacement is permitted hereby, and (iii) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time if such amendment, modification or supplement is permitted hereby. (c) References in this Agreement or any other Credit Document to any Governmental Rule (i) shall include any successor Governmental Rule, (ii) shall include all rules and regulations promulgated under such Governmental Rule (or any successor Governmental Rule), and (iii) shall mean such Governmental Rule (or successor Governmental Rule) and such rules and regulations, as amended, modified, codified or reenacted from time to time and in effect at any given time. (d) References in this Agreement or any other Credit Document to any Person in a particular capacity (i) shall include any permitted successors to and assigns of such Person in that capacity and (ii) shall exclude such Person individually or in any other capacity. 1.11. Other Interpretive Provisions. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement or any other Credit Document shall refer to this Agreement or such other Credit Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Credit Document, as the case may be. The words "include" and "including" and words of similar import when used in this Agreement or any other Credit Document shall not be construed to be limiting or exclusive. In the event of any inconsistency between the terms of this Agreement and the terms of any other Credit Document, the terms of this Agreement shall govern. 24 29 SECTION II. CREDIT FACILITIES. 2.01. U.S. Borrowings. (a) U.S. Revolving Borrowing Availability. Subject to the terms and conditions of this Agreement (including the amount limitations set forth in Paragraph 2.03), each U.S. Lender with a U.S. Revolving Commitment severally agrees to advance to LSI from time to time during the period beginning on the U.S. Closing Date and ending on the Revolving Termination Date such loans in Dollars as LSI may request under this Subparagraph 2.01(a) (individually, a "U.S. Revolving Loan"); provided, however, that (i) the aggregate principal amount of all U.S. Revolving Loans made by such Lender at any time outstanding shall not exceed such Lender's U.S. Revolving Commitment at such time; and (ii) the aggregate principal amount of all U.S. Revolving Loans made by all Lenders at any time outstanding shall not exceed the Total U.S. Revolving Commitment at such time. All U.S. Revolving Loans shall be made on a pro rata basis by all U.S. Lenders with U.S. Revolving Commitments in accordance with their respective Proportionate Shares of the Total U.S. Revolving Commitment, with each U.S. Revolving Borrowing to be comprised of a U.S. Revolving Loan by each U.S. Lender with a U.S. Revolving Commitment equal to such Lender's Proportionate Share of such U.S. Revolving Borrowing. Except as otherwise provided herein, LSI may borrow, repay and reborrow U.S. Revolving Loans until the Revolving Termination Date. (b) U.S. 364 Day Borrowing Availability. Subject to the terms and conditions of this Agreement (including the amount limitations set forth in Paragraph 2.03), each U.S. Lender with a U.S. 364 Day Commitment severally agrees to advance to LSI from time to time during the period beginning on the U.S. Closing Date and ending on the U.S. 364 Day Termination Date such loans in Dollars as LSI may request under this Subparagraph 2.01(b) (individually, a "U.S. 364 Day Loan"); provided, however, that (i) the aggregate principal amount of all U.S. 364 Day Loans made by such Lender at any time outstanding shall not exceed such Lender's U.S. 364 Day Commitment at such time; and (ii) the aggregate principal amount of all U.S. 364 Day Loans made by all Lenders at any time outstanding shall not exceed the Total U.S. 364 Day Commitment at such time. All U.S. 364 Day Loans shall be made on a pro rata basis by all U.S. Lenders with U.S. 364 Day Commitments in accordance with their respective Proportionate Shares of the Total U.S. 364 Day Commitment, with each U.S. 364 Day Borrowing to be comprised of a U.S. 364 Day Loan by each U.S. Lender with a U.S. 364 Day Commitment equal to such Lender's Proportionate Share of such U.S. 364 Day Borrowing. Except as otherwise 25 30 provided herein, LSI may borrow, repay and reborrow U.S. 364 Day Loans until the U.S. 364 Day Termination Date. (c) Notice of Borrowing. LSI shall request each U.S. Borrowing by delivering to Agent an irrevocable written notice in the form of Exhibit A, appropriately completed (a "Notice of U.S. Borrowing"), which specifies, among other things: (i) Whether the requested U.S. Borrowing is a U.S. Revolving Borrowing or a U.S. 364 Day Borrowing; (ii) The principal amount of the requested U.S. Borrowing, which shall be in the minimum amount of $15,000,000 or an integral multiple of $5,000,000 in excess thereof; (iii) Whether the requested U.S. Borrowing is to consist of Base Rate Loans or LIBOR Loans; (iv) If the requested U.S. Borrowing is to consist of LIBOR Loans, the initial Interest Period selected by LSI for such LIBOR Loans in accordance with Subparagraph 2.01(f); and (v) The date of the requested U.S. Borrowing, which (A) in the case of a U.S. Revolving Borrowing, shall be a Business Day not later than the Revolving Termination Date, and (B) in the case of a U.S. 364 Day Borrowing, shall be a Business Day not later than the U.S. 364 Day Termination Date; Provided, however, that all U.S. Borrowings made during the period commencing on the date of this Agreement and ending three (3) Business Days thereafter shall consist solely of Base Rate Loans. LSI shall give each Notice of U.S. Borrowing to Agent at least three (3) Business Days before the date of the requested U.S. Borrowing in the case of a U.S. Borrowing consisting of LIBOR Loans and at least one (1) Business Day before the date of the requested U.S. Borrowing in the case of a U.S. Borrowing consisting of Base Rate Loans. Each Notice of U.S. Borrowing shall be delivered by first-class mail or facsimile to Agent at the office or facsimile number and during the hours specified in Paragraph 8.01; provided, however, that LSI shall promptly deliver to Agent the original of any Notice of U.S. Borrowing initially delivered by facsimile. Agent shall promptly notify each U.S. Lender with a U.S. Revolving Commitment of each Notice of U.S. Borrowing requesting a U.S. Revolving Borrowing and of the amount and Type of (and, if applicable, the Interest Period for) each U.S. Revolving Loan to be made by such Lender as part of the requested U.S. Revolving Borrowing, and Agent shall promptly notify each U.S. Lender with a U.S. 364 Day Commitment of each Notice of U.S. Borrowing requesting a U.S. 364 Day Borrowing and of the amount and Type of (and, if applicable, the Interest Period for) each U.S. 364 Day Loan to be made by such Lender as part of the requested U.S. 364 Day Borrowing. (d) Interest Rates. LSI shall pay interest on the unpaid principal amount of each U.S. Loan from the date of such U.S. Loan until the Maturity thereof, at one of the following rates per annum: 26 31 (i) During such periods as such U.S. Loan is a Base Rate Loan, at a rate per annum equal to the Base Rate plus the Applicable Margin therefor, such rate to change from time to time as the Applicable Margin or Base Rate shall change; and (ii) During such periods as such U.S. Loan is a LIBOR Loan, at a rate per annum equal at all times during each Interest Period for such LIBOR Loan to the LIBO Rate for such Interest Period plus the Applicable Margin therefor, such rate to change from time to time as the Applicable Margin shall change. All U.S. Loans in each U.S. Borrowing shall, at any given time prior to Maturity, bear interest at one, and only one, of the above rates. The number of U.S. Borrowings consisting of LIBOR Loans shall not exceed four (4) at any time. (e) Conversion of U.S. Loans. LSI may convert any U.S. Borrowing from one Type of U.S. Borrowing to the other Type; provided, however, that any conversion of a U.S. Borrowing consisting of LIBOR Loans into a U.S. Borrowing consisting of Base Rate Loans shall be made on, and only on, the last day of an Interest Period for such LIBOR Loans. LSI shall request such a conversion by an irrevocable written notice to Agent in the form of Exhibit B, appropriately completed (a "Notice of U.S. Borrowing Conversion"), which specifies, among other things: (i) The U.S. Borrowing which is to be converted; (ii) The Type of U.S. Borrowing into which it is to be converted; (iii) If any U.S. Borrowing is to be converted into a U.S. Borrowing consisting of LIBOR Loans, the initial Interest Period selected by LSI for such LIBOR Loans in accordance with Subparagraph 2.01(f); provided, that no such conversion shall be made if a Default has occurred and is continuing; and (iv) The date of the requested conversion, which shall be a Business Day. LSI shall give each Notice of U.S. Borrowing Conversion to Agent at least three (3) Business Days before the date of the requested conversion. Each Notice of U.S. Borrowing Conversion shall be delivered by first-class mail or facsimile to Agent at the office or to the facsimile number and during the hours specified in Paragraph 8.01; provided, however, that LSI shall promptly deliver to Agent the original of any Notice of U.S. Borrowing Conversion initially delivered by facsimile. Agent shall promptly notify each U.S. Lender with U.S. Revolving Loans of the contents of each Notice of U.S. Borrowing Conversion relating to such U.S. Revolving Loans, and Agent shall promptly notify each U.S. Lender with U.S. 364 Day Loans of the contents of each Notice of U.S. Borrowing Conversion relating to such U.S. 364 Day Loans. 27 32 (f) LIBOR Loan Interest Periods. (i) The initial and each subsequent Interest Period selected by LSI for a U.S. Borrowing consisting of LIBOR Loans shall be one (1), two (2), three (3) or six (6) months; provided, however, that (A) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such next Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (B) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; (C) with respect to any U.S. 364 Day Borrowing, no Interest Period shall end after the U.S. 364 Day Termination Date; and (D) with respect to any U.S. Revolving Borrowing, no Interest Period shall end after a Scheduled Reduction Date unless, after giving effect to such Interest Period, the aggregate principal amount of all U.S. Revolving Borrowings consisting of Base Rate Loans and LIBOR Loans having Interest Periods ending on or prior to such Scheduled Reduction Date equals or exceeds the amount of the Total U.S. Revolving Commitment on such Scheduled Reduction Date, and no Interest Period shall end after the Revolving Termination Date. (ii) LSI shall notify Agent by an irrevocable written notice in the form of Exhibit C, appropriately completed (a "Notice of U.S. Borrowing Interest Period Selection"), at least three (3) Business Days prior to the last day of each Interest Period for a U.S. Borrowing consisting of LIBOR Loans of the Interest Period selected by LSI for the next succeeding Interest Period for such LIBOR Loans. Each Notice of U.S. Borrowing Interest Period Selection shall be given to Agent by first-class mail or facsimile to the office or the facsimile number and during the hours specified in Paragraph 8.01; provided, however, that LSI shall promptly deliver to Agent the original of any Notice of U.S. Borrowing Interest Period Selection initially delivered by facsimile. If LSI fails to notify Agent of the next Interest Period for a U.S. Borrowing consisting of LIBOR Loans in accordance with this Subparagraph 2.01(f), such LIBOR Loans shall automatically convert to Base Rate Loans on the last day of the current Interest Period therefor. (g) Scheduled Payments. Unless earlier repayment is required by Subparagraph 2.05(c), LSI shall repay the principal amount of the U.S. Revolving Loans on the Revolving Termination Date. LSI shall repay the principal amount of the U.S. 364 Day Loans on the U.S. 364 Day Termination Date. LSI shall pay accrued interest on the unpaid principal amount of each U.S. Loan in arrears (i) in the case of a Base Rate Loan, on the last day in each March, June, September and December (commencing with the first such day after the U.S. Closing Date), (ii) in the case of a LIBOR Loan, on the last day of each Interest Period (and if any such Interest Period is equal to or longer than three (3) months, every three (3) months); and (iii) in the case of all U.S. Loans, upon prepayment (to the extent thereof) and at Maturity. 28 33 (h) Purpose. LSI shall use the proceeds of the U.S. Borrowings to consummate the Symbios Acquisition, repay in full all amounts owing under the Outstanding U.S. Loan Facility and for general corporate purposes. 2.02. Japanese Borrowings. (a) Availability. Subject to the terms and conditions of this Agreement (including the amount limitations set forth in Paragraph 2.03), each Japanese Lender severally agrees to advance to LLJS from time to time during the period beginning on the Japanese Closing Date and ending on the Revolving Termination Date such loans in Yen as LLJS may request under this Paragraph 2.02 (individually, a "Japanese Loan"); provided, however, that (i) the aggregate principal amount of all Japanese Loans made by such Lender at any time outstanding shall not exceed such Lender's Japanese Commitment at such time; and (ii) the aggregate principal amount of all Japanese Loans made by all Lenders at any time outstanding shall not exceed the Total Japanese Commitment at such time. All Japanese Loans shall be made on a pro rata basis by all Japanese Lenders in accordance with their respective Proportionate Shares of the Total Japanese Commitment, with each Japanese Borrowing to be comprised of a Japanese Loan by each Japanese Lender equal to such Lender's Proportionate Share of such Japanese Borrowing. Except as otherwise provided herein, LLJS may borrow, repay and reborrow Japanese Loans until the Revolving Termination Date. (b) Notice of Borrowing. LLJS shall request each Japanese Borrowing by delivering to Agent an irrevocable written notice in the form of Exhibit D, appropriately completed (a "Notice of Japanese Borrowing"), which specifies, among other things: (i) The principal amount of the requested Japanese Borrowing, which shall be in the minimum amount of yen 1,000,000,000 or an integral multiple of yen 100,000,000 in excess thereof; (ii) The initial Interest Period selected by LLJS for the requested Japanese Borrowing in accordance with Subparagraph 2.02(d); and (iii) The date of the requested Japanese Borrowing, which shall be a Business Day not later than the Revolving Termination Date. LLJS shall give each Notice of Japanese Borrowing to Agent at least four (4) Business Days before the date of the requested Japanese Borrowing. Each Notice of Japanese Borrowing shall be delivered by first-class mail or facsimile to Agent at the office or facsimile number and during the hours specified in Paragraph 8.01; provided, however, that LLJS shall promptly deliver to Agent the original of any Notice of Japanese Borrowing if initially delivered by facsimile. Agent shall promptly notify each Japanese 29 34 Lender of the amount of and Interest Period for each Japanese Loan to be made by such Lender as part of the requested Japanese Borrowing. (c) Interest Rates. LLJS shall pay interest on the unpaid principal amount of each Japanese Loan from the date of such Japanese Loan until the Maturity thereof, at a rate per annum equal at all times during each Interest Period to the TIBO Rate for such Interest Period plus the Applicable Margin therefor, such rate to change from time to time as the Applicable Margin shall change. The number of Japanese Borrowings shall not exceed four (4) at any time. (d) Japanese Borrowing Interest Periods. (i) The initial and each subsequent Interest Period selected by LLJS for a Japanese Borrowing shall be one (1), two (2), three (3) or six (6) months; provided, however, that (A) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such next Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (B) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; (C) no Interest Period shall end after a Scheduled Reduction Date unless, after giving effect to such Interest Period, the aggregate principal amount of all Japanese Loans having Interest Periods ending on or prior to such Scheduled Reduction Date equals or exceeds the amount of the Total Japanese Commitment on such Scheduled Reduction Date; and (D) no Interest Period shall end after the Revolving Termination Date. (ii) LLJS shall notify Agent by an irrevocable written notice in the form of Exhibit E, appropriately completed (a "Notice of Japanese Borrowing Interest Period Selection"), at least four (4) Business Days prior to the last day of each Interest Period for a Japanese Borrowing of the Interest Period selected by LLJS for the next succeeding Interest Period for such Japanese Borrowing. Each Notice of Japanese Borrowing Interest Period Selection shall be given to Agent by first-class mail or facsimile to the office or the facsimile number and during the hours specified in Paragraph 8.01; provided, however, that LLJS shall promptly deliver to Agent the original of any Notice of Japanese Borrowing Interest Period Selection initially delivered by facsimile. If LLJS fails to notify Agent of the next Interest Period for any Japanese Borrowing in accordance with this Subparagraph 2.02(d), such Japanese Borrowing shall automatically have an Interest Period of one (1) month following the current Interest Period. (e) Scheduled Payments. Unless earlier repayment is required by Subparagraph 2.05(c), LLJS shall repay the principal amount of the Japanese Borrowings on the Revolving Termination Date. LLJS shall pay accrued interest on the unpaid principal amount of each Japanese Loan in arrears on the last day of each Interest Period 30 35 (and if any such Interest Period is equal to or longer than three (3) months, every three (3) months), upon prepayment (to the extent thereof) and at Maturity. (f) Purpose. LLJS shall use the proceeds of the Japanese Borrowings to repay in full the Outstanding Japanese Loan Facility and for its general corporate purposes. 2.03. Amount Limitations, Commitment Reductions, Etc. (a) Total Commitments. The aggregate principal amount of all U.S. Revolving Loans outstanding at any time shall not exceed the Total U.S. Revolving Commitment at such time, the aggregate principal amount of all U.S. 364 Day Loans outstanding at any time shall not exceed the Total U.S. 364 Day Commitment, and the aggregate principal amount of all Japanese Loans outstanding at any time shall not exceed the Total Japanese Commitment at such time. Until the Outstanding Japanese Loan Facility is terminated and repaid in full, the unused amount of the Commitments (including the Yen Equivalent of the U.S. Revolving Commitments and the U.S. 364 Day Commitments) shall not be less than the aggregate amount outstanding under the Outstanding Japanese Loan Facility. (b) Mandatory Reduction of Commitments. The Commitments shall be reduced as follows: (i) On each Scheduled Reduction Date, the Total U.S. Revolving Commitment shall be permanently reduced by an amount equal to Thirty-Four Million Three Hundred Seventy-Five Thousand Dollars ($34,375,000). (ii) If at any time after the Initial Closing Date LSI or any of its Subsidiaries sells assets other than in the ordinary course of business (including any sale of assets to be leased back in connection with a "synthetic" lease of such assets), or sells or issues any Indebtedness for borrowed money (including Indebtedness evidenced by notes, bonds, debentures or other similar instruments), yielding Net Proceeds which exceed $50,000,000 for any single transaction or series of related transactions, immediately after such sale or issuance the Total U.S. 364 Day Commitment shall be permanently reduced by an aggregate amount equal to the Net Proceeds of such sale or issuance and, if such Net Proceeds exceed the Total U.S. 364 Day Commitment, the Total U.S. Revolving Commitment shall be permanently reduced by an aggregate amount equal to such excess Net Proceeds; provided, that with respect to the Net Proceeds from "synthetic" leases or Indebtedness for borrowed money, LSI shall have no obligation under this provision to reduce the Total U.S. Revolving Commitment if, after taking into account any voluntary reduction pursuant to Subparagraph 2.03(c), such reduction would reduce the aggregate of the Total U.S. Revolving Commitment and the Dollar Equivalent of the Total Japanese Commitment below $300,000,000. 31 36 (c) Voluntary Reduction or Cancellation of Commitments. LSI may, upon three (3) Business Days written notice to Agent, permanently reduce or cancel in their entirety either of the Total U.S. Revolving Commitment or the Total 364 Day Commitment and LLJS may, upon four (4) Business Days written notice to Agent, permanently reduce or cancel in its entirety the Total Japanese Commitment; provided, however, that: (i) Any reduction of the Total U.S. Revolving Commitment shall be in the amount of $15,000,000 or an integral multiple of $5,000,000 in excess thereof and LSI shall not reduce or cancel the Total U.S. Revolving Commitment prior to the Revolving Termination Date, if, after giving effect to such reduction, the aggregate principal amount of all U.S. Revolving Loans then outstanding would exceed the Total U.S. Revolving Commitment as so reduced or, after giving effect to such cancellation, any U.S. Revolving Loan would then remain outstanding; (ii) Any reduction of the Total U.S. 364 Day Commitment shall be in the amount of $15,000,000 or an integral multiple of $5,000,000 in excess thereof and LSI shall not reduce or cancel the Total U.S. 364 Day Commitment prior to the U.S. 364 Day Termination Date, if, after giving effect to such reduction, the aggregate principal amount of all U.S. 364 Day Loans then outstanding would exceed the Total U.S. 364 Day Commitment as so reduced or, after giving effect to such cancellation, any U.S. 364 Day Loan would then remain outstanding; and (iii) Any reduction of the Total Japanese Commitment shall be in the amount of yen 1,000,000,000 or an integral multiple of yen 100,000,000 in excess thereof and LLJS shall not reduce or cancel the Total Japanese Commitment prior to the Revolving Termination Date, if, after giving effect to such reduction, the aggregate principal amount of all Japanese Loans then outstanding would exceed the Total Japanese Commitment as so reduced or, after giving effect to such cancellation, any Japanese Loan would then remain outstanding. (d) Effect of Commitment Reductions. From the effective date of any reduction of any of the Commitments, the Commitment Fees payable with respect to such Commitments pursuant to Subparagraph 2.04(b) shall be computed on the basis of the Commitments as so reduced. Once reduced or cancelled, Commitments may not be increased or reinstated without the prior written consent of all Lenders holding Loans of the type covered by such Commitments. Any reduction of the Total U.S. Revolving Commitment or the Total U.S. 364 Day Commitment pursuant to Subparagraph 2.03(b) shall be applied ratably to reduce each Lender's U.S. Revolving Commitment or U.S. 364 Day Commitment, as the case may be, in accordance with clause (i) of Subparagraph 2.09(a). Any reduction of the Total U.S. Revolving Commitment pursuant to clause (ii) of Subparagraph 2.03(b) or Subparagraph 2.03(c) shall be in addition to, and not in substitution for, the reduction of the Total U.S. Revolving Commitment required by clause (i) of Subparagraph 2.03(b). 32 37 2.04. Fees. (a) Agent's Fee. LSI shall pay to Agent, for its own account, agent's fees and other compensation in the amounts and at the times set forth in the Agent's Fee Letter and the Agent's Syndication Letter. (b) Commitment Fees. (i) LSI shall pay to Agent, for the ratable benefit of U.S. Lenders with U.S. Revolving Commitments as provided in clause (iv) of Subparagraph 2.09(a), commitment fees (the "U.S. Revolving Commitment Fees") equal to the per annum percentage which is determined pursuant to the Pricing Grid of the daily average difference between the Total U.S. Revolving Commitment and the aggregate principal amount of all U.S. Revolving Loans outstanding for each day during the period beginning on the date of this Agreement and ending on the Revolving Termination Date. LSI shall pay the U.S. Revolving Commitment Fees in arrears on the last day in each March, June, September and December (commencing with the first such day after the U.S. Closing Date) and the Revolving Termination Date. (ii) LSI shall pay to Agent, for the ratable benefit of U.S. Lenders with U.S. 364 Day Commitments as provided in clause (v) of Subparagraph 2.09(a), commitment fees (the "U.S. 364 Day Commitment Fees") of twenty-two and one-half hundredths of one percent (0.225%) of the daily average difference between the Total U.S. 364 Day Commitment and the aggregate principal amount of all U.S. 364 Day Loans outstanding for each day during the period beginning on the date of this Agreement and ending on the U.S. 364 Day Termination Date. LSI shall pay the U.S. 364 Day Commitment Fees in arrears on the last day in each March, June, September and December (commencing with the first such day after the U.S. Closing Date) and the U.S. 364 Day Termination Date. (iii) LLJS shall pay to Agent, for the ratable benefit of Japanese Lenders as provided in clause (vi) of Subparagraph 2.09(a), commitment fees (the "Japanese Commitment Fees") equal to the per annum percentage which is determined pursuant to the Pricing Grid of the daily average difference between the Total Japanese Commitment and the aggregate principal amount of all Japanese Loans outstanding for each day during the period beginning on the date of this Agreement and ending on the Revolving Termination Date. LLJS shall pay the Japanese Commitment Fees in arrears on the last day in each March, June, September and December (commencing with the first such day after the Japanese Closing Date) and the Revolving Termination Date. 33 38 2.05. Prepayments. (a) Terms of all Prepayments. Upon the prepayment of any Borrowing (whether such prepayment is an optional prepayment under Subparagraph 2.05(b) or a mandatory prepayment required by any provision of this Agreement or the other Credit Documents, including a prepayment upon acceleration), the Borrower making such prepayment shall pay to the applicable Lenders (i) all accrued interest to the date of such prepayment on the amount prepaid and (ii) if such prepayment is the prepayment of LIBOR Loans or the prepayment of Japanese Loans on a day other than the last day of an Interest Period for such Loans, all amounts payable to such Lenders pursuant to Paragraph 2.12. (b) Optional Prepayments. At its option, LSI may, upon one (1) Business Day notice to Agent in the case of Base Rate Loans or three (3) Business Days notice to Agent in the case of LIBOR Loans, prepay any U.S. Borrowing in part, in an aggregate principal amount of $15,000,000 or more, or in whole. At its option, LLJS may, upon four (4) Business Days notice to Agent, prepay any Japanese Borrowing in part, in an aggregate principal amount of yen 1,000,000,000 or more, or in whole. (c) Mandatory Prepayments. Borrowers shall prepay the Loans as follows: (i) If at any time the aggregate principal amount of all U.S. Revolving Loans then outstanding exceeds the Total U.S. Revolving Commitment at such time, LSI shall immediately prepay U.S. Revolving Loans in an aggregate principal amount equal to such excess. (ii) If at any time the aggregate principal amount of all U.S. 364 Day Loans then outstanding exceeds the Total U.S. 364 Day Commitment at such time, LSI shall immediately prepay U.S. 364 Day Loans in an aggregate principal amount equal to such excess. (iii) If at any time the aggregate principal amount of all Japanese Loans then outstanding exceeds the Total Japanese Commitment at such time, LLJS shall immediately prepay Japanese Loans in an aggregate principal amount equal to such excess. (iv) If at any time after the U.S. Closing Date LSI or any of its Subsidiaries sells assets other than in the ordinary course of business (including any sale of assets to be leased back in connection with a "synthetic" lease of such assets), or sells or issues any Indebtedness for borrowed money (including Indebtedness evidenced by notes, bonds, debentures or other similar instruments), yielding Net Proceeds which exceed $50,000,000 for any single transaction or series of related transactions, LSI shall, immediately after such sale or issuance, prepay the U.S. 364 Day Loans in an aggregate amount equal to the Net Proceeds of such sale or issuance and, if such Net Proceeds exceed the total amount payable with respect to the U.S. 364 34 39 Day Loans, LSI shall prepay the U.S. Revolving Loans in an aggregate amount equal to such excess Net Proceeds; provided, that with respect to the Net Proceeds from "synthetic" leases or Indebtedness for borrowed money, LSI shall have no obligation under this provision to prepay such U.S. Loans if, after taking into account any optional prepayment pursuant to Subparagraph 2.05(b), such prepayment would reduce the aggregate of the outstanding principal amount of the U.S. Loans and the Dollar Equivalent of the outstanding principal amount of the Japanese Loans below $300,000,000. (d) Application of Prepayments. All prepayments of the U.S. Borrowings shall, to the extent possible, be first applied to prepay Base Rate Loans, if any, and then if any funds remain, to prepay LIBOR Loans. 2.06. Other Payment Terms. (a) Place and Manner. (i) LSI shall make all payments due to each U.S. Lender or Agent related to U.S. Borrowings by payments to Agent at Agent's New York office located at the address specified in Paragraph 8.01, with each such payment due to a U.S. Lender to be for the account of such Lender and such Lender's applicable Domestic Lending Office or Euro-Dollar Lending Office. (ii) LLJS shall make all payments due to each Japanese Lender or Agent related to Japanese Borrowings by payments to Agent at Agent's Tokyo office located at the address specified in Paragraph 8.01, with each such payment due to a Japanese Lender to be for the account of such Lender and such Lender's Japanese Lending Office. (iii) Each Borrower shall, unless otherwise directed by Agent, make all other payments due to each Lender or Agent hereunder by payments to Agent's New York office located at the address specified in Paragraph 8.01, with each such payment due to a Lender to be for the account of such Lender and such Lender's Applicable Lending Office. (iv) Borrowers shall make all payments hereunder in the lawful currency required by Subparagraph 2.06(c) and in same day or immediately available funds and without deduction or offset not later than 11:00 a.m. (New York time, in the case of any payment to be made to Agent's New York office, or Tokyo time, in the case of any payment to be made to Agent's Tokyo office) and on the date due. Agent shall promptly disburse to each Lender each payment received by Agent for the account of such Lender. (b) Date. Whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be, unless such next Business Day falls in another calendar month, in which case such payment shall be due on the immediately preceding Business Day. 35 40 (c) Currency of Payment. (i) LSI shall pay principal of, interest on and all other amounts related to U.S. Borrowings in Dollars, and LLJS shall pay principal of, interest on and all other amounts related to Japanese Borrowings in Yen. Borrowers shall pay all other amounts payable under this Agreement and the other Credit Documents in Dollars. If, for any reason, LLJS is prohibited by any Governmental Rule from making any required Yen payment hereunder in Yen, LLJS shall make such payment in Dollars in the Dollar Equivalent of such Yen amount. (ii) If any amounts required to be paid by either Borrower under this Agreement, any other Credit Document or any order, judgment or award given or rendered in relation hereto or thereto has to be converted from the currency (the "first currency") in which the same is payable hereunder or thereunder into another currency (the "second currency") for the purpose of (A) making or filing a claim or proof against such Borrower with any Governmental Authority, (B) obtaining an order or judgment in any court or other tribunal or (C) enforcing any order or judgment given or made in relation hereto, such Borrower shall, to the fullest extent permitted by law, indemnify and hold harmless each of the Persons to whom such amounts are payable from and against any loss suffered as a result of any discrepancy between (1) the rate of exchange used for such purpose to convert the amounts in question from the first currency into the second currency and (2) the rate or rates of exchange at which such Person may, using reasonable efforts in the ordinary course of business, purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. The foregoing indemnity shall constitute a separate obligation of each Borrower distinct from their other respective obligations hereunder and shall survive the giving or making of any judgment or order in relation to all or any of such obligations. The respective obligations of Borrowers under this Subparagraph 2.06(c) shall survive the payment and performance of their respective Obligations and the termination of this Agreement. (d) Late Payments. If any amount required to be paid by either Borrower under this Agreement or the other Credit Documents (including, without limitation, principal or interest payable on any Loan, any fees or any other amount) remains unpaid after such amount is due and after the expiration of any applicable grace period, such Borrower shall pay interest on the aggregate, outstanding balance of such amount from the date due until such amount is paid in full at a per annum rate equal to (i) in the case any amount payable in Dollars, the Base Rate plus two percent (2.00%), such rate to change from time to time as the Base Rate shall change, and (ii) in the case of any amount payable in Yen, the Overnight Rate for such amount plus three percent (3.00%), such rate to change from time to time as the Overnight Rate shall change. (e) 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 36 41 or the other Credit Documents and finally to reduce the principal amount of outstanding Loans. Upon an Event of Default or if the applicable Borrower does not specify the Borrowing to which any payment relates, a payment in Dollars to be applied to accrued interest or principal shall be applied to all accrued interest or principal then due and payable on all outstanding U.S. Loans and a payment in Yen to be applied to accrued interest or principal shall be applied to all accrued interest or principal then due and payable on all outstanding Japanese Loans. (f) Failure to Pay Agent. Unless Agent shall have received notice from a Borrower at least one (1) Business Day prior to the date on which any payment is due to Lenders hereunder that such Borrower will not make such payment in full, Agent shall be entitled to assume that such Borrower has made or will make such payment in full to Agent on such date and Agent may, in reliance upon such assumption, cause to be paid to the applicable Lenders on such due date an amount equal to the amount then due such Lenders. If and to the extent such Borrower shall not have so made such payment in full to Agent, each such Lender shall repay to Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to Agent, at a per annum rate equal to (i) the Federal Funds Rate for the first three (3) days and the Base Rate thereafter for any amount in Dollars or (ii) the Overnight Rate plus one percent (1%) for any amount in Yen. A certificate of Agent submitted to any Lender with respect to any amount owing by such Lender under this Subparagraph 2.06(f) shall constitute prima facie evidence of such amount. 2.07. Loan Accounts; Notes. (a) Loan Accounts. The obligation of each Borrower to repay the Loans made to it by each Lender and to pay interest thereon at the rates provided herein shall be evidenced by an account or accounts maintained by such Lender on its books (individually, a "Loan Account"), except that any Lender may request that its U.S. Loans be evidenced by a note or notes pursuant to Subparagraph 2.07(b). Each Lender shall record in its Loan Accounts (i) the date and amount of each Loan made by such Lender, (ii) the interest rates applicable to each such Loan and the effective dates of all changes thereto, (iii) the Interest Period for each LIBOR Loan and each Japanese Loan, (iv) the date and amount of each principal and interest payment on each Loan and (v) such other information as such Lender may determine is necessary for the computation of principal and interest payable to it by each Borrower hereunder; provided, however, that any failure by a Lender to make, or any error by any Lender in making, any such notation shall not affect Borrowers' Obligations hereunder. The Loan Accounts shall constitute prima facie evidence of the matters noted therein. (b) Notes. If any Lender so requests, such Lender's U.S. Loans shall be evidenced by one or more promissory notes in the form of Exhibit F (individually, a "Note"), each of which shall be (i) payable to the order of such Lender, (ii) in the amount of such Lender's U.S. Revolving Commitment or U.S. 364 Day Commitment, as the case may be, (iii) dated the U.S. Closing Date, and (iv) otherwise appropriately completed. 37 42 2.08. Loan Funding. (a) Lender Funding and Disbursements to Borrowers. (i) Each U.S. Lender shall, before 11:00 a.m. (New York time) on the date of each U.S. Borrowing, make available to Agent at Agent's New York office specified in Paragraph 8.01, in immediately available funds, such Lender's Proportionate Share of such U.S. Borrowing. After Agent's receipt of such funds and upon satisfaction of the applicable conditions set forth in Section III, Agent shall promptly disburse such funds to LSI no later than 1:00 p.m. (New York time) in immediately available funds. Agent shall disburse the proceeds of such U.S. Borrowing to the account or accounts specified by LSI in the applicable Notice of U.S. Borrowing. (ii) Each Japanese Lender shall, before 10:00 a.m. (Tokyo time) on the date of each Japanese Borrowing, make available to Agent at Agent's Tokyo office specified in Paragraph 8.01, in immediately available funds, such Lender's Proportionate Share of such Japanese Borrowing. After Agent's receipt of such funds and upon satisfaction of the applicable conditions set forth in Section III, Agent shall promptly disburse such funds to LLJS no later than 1:00 p.m. (Tokyo time) in immediately available funds. Agent shall disburse the proceeds of such Japanese Borrowing to the account or accounts specified by LLJS in the applicable Notice of Japanese Borrowing. (b) Lender Failure to Fund. Unless Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to Agent such Lender's Proportionate Share of such Borrowing, Agent shall be entitled to assume that such Lender has made or will make such portion available to Agent on the date of such Borrowing in accordance with Subparagraph 2.08(a), and Agent may on such date, in reliance upon such assumption, disburse or otherwise credit to the applicable Borrower a corresponding amount. If any Lender does not make the amount of its Proportionate Share of such Borrowing available to Agent on or prior to the date of such Borrowing, such Lender shall pay to Agent, on demand, interest which shall accrue on such amount from the date of such Borrowing until such amount is paid to Agent at rates equal to (i) the Federal Funds Rate for the first three (3) days and the Base Rate thereafter for any amount in Dollars or (ii) the Overnight Rate plus one percent (1%) for any amount in Yen. A certificate of Agent submitted to any Lender with respect to any amount owing by such Lender under this Subparagraph 2.08(b) shall constitute prima facie evidence of such amount. If the amount of any Lender's Proportionate Share of any Borrowing is not paid to Agent by such Lender within three (3) Business Days after the date of such Borrowing, the applicable Borrower shall repay such amount to Agent, on demand, together with interest thereon, for each day from the date such amount was disbursed to such Borrower until the date such amount is repaid to Agent, at the interest rate applicable at the time to the Loans comprising such Borrowing. (c) Lenders' Obligations Several. The failure of any Lender to make a Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its 38 43 obligation hereunder to make its Loan as part of such Borrowing, but no Lender shall be obligated in any way to make any Loan which another Lender has failed or refused to make or otherwise be in any way responsible for the failure or refusal of any other Lender to make any Loan required to be made by such other Lender. 2.09. Pro Rata Treatment. (a) Borrowings, Commitment Reductions, Etc. Except as otherwise provided herein: (i) Each U.S. Revolving Borrowing and reduction in the Total U.S. Revolving Commitment shall be made or shared by U.S. Lenders with U.S. Revolving Commitments pro rata according to their applicable respective U.S. Revolving Commitments, each U.S. 364 Day Borrowing and reduction in the Total U.S. 364 Day Commitment shall be made or shared by U.S. Lenders with U.S. 364 Day Commitments pro rata according to their applicable respective U.S. 364 Day Commitments, and each Japanese Borrowing and reduction in the Total Japanese Commitment shall be made or shared by Japanese Lenders pro rata according to their applicable respective Japanese Commitments; (ii) Each payment of principal on Loans in any Borrowing shall be shared among Lenders which made or funded the Loans in such Borrowing pro rata according to the respective unpaid principal amounts of such Loans then owed to such Lenders; (iii) Each payment of interest on Loans in any Borrowing shall be shared among Lenders which made or funded the Loans in such Borrowing pro rata according to (A) the respective unpaid principal amounts of such Loans so made or funded by such Lenders and (B) the dates on which such Lenders so made or funded such Loans; (iv) Each payment of U.S. Revolving Commitment Fees shall be shared among U.S. Lenders with U.S. Revolving Commitments (except for Defaulting Lenders) pro rata according to (A) their respective Proportionate Shares of the Total U.S. Revolving Commitment and (B) in the case of each U.S. Lender which becomes a U.S. Lender with a U.S. Revolving Commitment hereunder after the date hereof and before the Revolving Termination Date, the date upon which such U.S. Lender so became a U.S. Lender with a U.S. Revolving Commitment; (v) Each payment of U.S. 364 Day Commitment Fees shall be shared among U.S. Lenders with U.S. 364 Day Commitments (except for Defaulting Lenders) pro rata according to (A) their respective Proportionate Shares of the Total U.S. 364 Day Commitment and (B) in the case of each U.S. Lender which becomes a U.S. Lender with a U.S. 364 Day Commitment hereunder after the date hereof and before the U.S. 364 Day Termination Date, the date upon which such U.S. Lender so became a U.S. Lender with a U.S. 364 Day Commitment; 39 44 (vi) Each payment of Japanese Commitment Fees shall be shared among Japanese Lenders (except for Defaulting Lenders) pro rata according to (A) their respective Proportionate Shares of the Total Japanese Commitment and (B) in the case of each Japanese Lender which becomes a Japanese Lender hereunder after the date hereof and before the Revolving Termination Date, the date upon which such Japanese Lender so became a Japanese Lender; (vii) Each payment of interest (other than interest on Loans) shall be shared among Lenders and Agent owed the amount upon which such interest accrues pro rata according to (A) the respective amounts so owed such Lenders and Agent and (B) the dates on which such amounts became owing to such Lenders and Agent; and (viii) All other payments under this Agreement and the other Credit Documents shall be for the benefit of the Person or Persons specified. (b) Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of Loans owed to it as part of any Borrowing in excess of its ratable share of payments on account of all Loans in such Borrowing obtained by all applicable Lenders entitled to such payments, such Lender shall forthwith purchase from such other Lenders such participations in their Loans as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase shall be rescinded and each other applicable Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such other Lender's ratable share (according to the proportion of (i) the amount of such other Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Each Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Subparagraph 2.09(b) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of such participation. 2.10. Change of Circumstances. (a) Inability to Determine Rates. If, on or before the first day of any Interest Period for any LIBOR Loan or any Japanese Loan, (i) any U.S. Lender or Japanese Lender, as the case may be, shall advise Agent that the LIBO Rate or TIBO Rate, as the case may be, for such Interest Period cannot be adequately and reasonably determined due to the unavailability of funds in or other circumstances affecting the London interbank market or the Tokyo interbank market, as the case may be, or (ii) any U.S. Lender or Japanese Lender, as the case may be, shall advise Agent that the rate of interest for such Loan does not adequately and fairly reflect the cost to such Lender of making or maintaining such Loan, Agent shall immediately give notice of such condition to the 40 45 applicable Borrower and the other U.S. Lenders or Japanese Lenders, as the case may be. After the giving of any such notice and until Agent shall otherwise notify the applicable Borrower that the circumstances giving rise to such condition no longer exist, such Borrower's right to obtain, continue or convert to LIBOR Loans or Japanese Loans, as the case may be, shall be suspended. Any LIBOR Loans outstanding at the commencement of any such suspension affecting the LIBO Rate shall be converted at the end of the then current Interest Period for such LIBOR Loans into Base Rate Loans unless such suspension has then ended. All Japanese Loans outstanding at the commencement of any such suspension affecting the TIBO Rate shall after the end of the then current Interest Period for such Japanese Loans bear interest at the Overnight Rate plus one percent (1.0%), such rate to change from time to time as the Overnight Rate shall change, until such suspension has ended. (b) Illegality. If, after the date of this Agreement, the adoption of any Governmental Rule, any change in any Governmental Rule or the application or requirements thereof (whether such change occurs in accordance with the terms of such Governmental Rule as enacted, as a result of amendment or otherwise), any change in the interpretation or administration of any Governmental Rule by any Governmental Authority, or compliance by any Lender with any request or directive (whether or not having the force of law) of any Governmental Authority (a "Change of Law") shall make it unlawful or impossible for any U.S. Lender to make or maintain any LIBOR Loans or any Japanese Lender to make or maintain any Japanese Loans, such Lender shall immediately notify Agent and the applicable Borrower of such Change of Law. Upon receipt of such notice, (i) such Borrower's right to obtain, continue or convert to LIBOR Loans or Japanese Loans, as the case may be, shall be suspended until such time as Agent shall notify such Borrower and the applicable Lenders that the circumstances giving rise to such suspension no longer exist, and (ii) such Borrower shall, if so requested by such Lender, immediately repay such Loans if such Lender shall notify such Borrower that such Lender may not lawfully continue to fund and maintain such Loans. Any conversion or prepayment of LIBOR Loans or Japanese Loans made pursuant to the preceding sentence prior to the last day of an Interest Period for such Loans shall be deemed a prepayment thereof for purposes of Paragraph 2.12. After any Lender notifies Agent and the applicable Borrower of such a Change in Law and until such Lender notifies Agent and such Borrower that it is no longer unlawful or impossible for such Lender to make or maintain a LIBOR Loan, all U.S. Loans of such Lender shall be Base Rate Loans. (c) Increased Costs. If, after the date of this Agreement, any Change of Law: (i) Shall subject any U.S. Lender or Japanese Lender to any tax, duty or other charge with respect to any LIBOR Loan or Japanese Loan, as the case may be, or shall change the basis of taxation of payments by either Borrower to any such Lender on or in respect to such LIBOR Loan or Japanese Loan, as the case may be, under this Agreement (except for changes in the rate of taxation on the overall net income of such Lender imposed by its jurisdiction of incorporation or the jurisdiction of its Applicable Lending Office); or 41 46 (ii) Shall impose, modify or hold applicable any reserve (excluding any Reserve Requirement or other reserve to the extent included in the calculation of the LIBO Rate or TIBO Rate for any Loans), special deposit or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances or loans by, or any other acquisition of funds by any Lender for any LIBOR Loans or Japanese Loans, as the case may be; or (iii) Shall impose on any Lender any other condition related to any LIBOR Loans or Japanese Loans or such Lender's Commitments; And the effect of any of the foregoing is to increase the cost to such Lender of making, continuing or maintaining any such LIBOR Loans, Japanese Loans or its Commitments or to reduce any amount receivable by such Lender hereunder; then the applicable Borrower shall from time to time, within twenty (20) days after written demand by such Lender, pay to such Lender additional amounts sufficient to reimburse such Lender for such increased costs or to compensate such Lender for such reduced amounts; provided, however, that such Borrower shall have no obligation to make any payment to any demanding party under this Subparagraph 2.10(c) on account of any such increased costs or reduced amounts unless such Borrower receives notice of such increased costs or reduced amounts from the demanding party within six (6) months after they are incurred or realized. A certificate setting forth in reasonable detail the amount of such increased costs or reduced amounts, submitted by such Lender to such Borrower, shall constitute prima facie evidence of such costs or amounts. The obligations of Borrowers under this Subparagraph 2.10(c) shall survive the payment and performance of the Obligations and the termination of this Agreement. (d) Capital Requirements. If, after the date of this Agreement, any Lender determines that (i) any Change of Law affects the amount of capital required or expected to be maintained by such Lender or any Person controlling such Lender (a "Capital Adequacy Requirement") and (ii) the amount of capital maintained by such Lender or such Person which is attributable to or based upon the Loans, the Commitments or this Agreement must be increased as a result of such Capital Adequacy Requirement (taking into account such Lender's or such Person's policies with respect to capital adequacy), the applicable Borrower shall pay to such Lender or such Person, within twenty (20) days after written demand of such Lender, such amounts as such Lender or such Person shall determine are necessary to compensate such Lender or such Person for the increased costs to such Lender or such Person of such increased capital; provided, however, that such Borrower shall have no obligation to make any payment to any demanding party under this Subparagraph 2.10(d) on account of any such increased costs unless such Borrower receives notice of such increased costs from the demanding party within twelve (12) months after they are incurred or realized. A certificate setting forth in reasonable detail the amount of such increased costs, submitted by any Lender to such Borrower, shall constitute prima facie evidence of such costs. The obligations of Borrowers under this Subparagraph 2.10(d) shall survive the payment and performance of the Obligations and the termination of this Agreement. 42 47 (e) Mitigation. Any Lender which becomes aware of (i) any Change of Law which will make it unlawful or impossible for such Lender to make or maintain any LIBOR Loan or Japanese Loan or (ii) any Change of Law or other event or condition which will obligate either Borrower to pay any amount pursuant to Subparagraph 2.10(c) or Subparagraph 2.10(d) shall notify such Borrower and Agent thereof as promptly as practical. If any Lender has given notice of any such Change of Law or other event or condition and thereafter becomes aware that such Change of Law or other event or condition has ceased to exist, such Lender shall notify such Borrower and Agent thereof as promptly as practical. Each Lender affected by any Change of Law which makes it unlawful or impossible for such Lender to make or maintain any LIBOR Loan or Japanese Loan or to which either Borrower is obligated to pay any amount pursuant to Subparagraph 2.10(c) or Subparagraph 2.10(d) shall use reasonable commercial efforts (including changing the jurisdiction of its Applicable Lending Offices) to avoid the effect of such Change of Law or to avoid or materially reduce any amounts which either Borrower is obligated to pay pursuant to Subparagraph 2.10(c) or Subparagraph 2.10(d) if, in the reasonable opinion of such Lender, such efforts would not be disadvantageous to such Lender or contrary to such Lender's normal banking practices. 2.11. Taxes on Payments. (a) Payments Free of Taxes. All payments made by Borrowers under this Agreement and the other Credit Documents shall be made free and clear of, and without deduction or withholding for or on account of, all present and future income, stamp, documentary and other taxes and duties, and all other levies, imposts, charges, fees, deductions and withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (except net income taxes and franchise taxes in lieu of net income taxes imposed on Agent or any Lender by its jurisdiction of incorporation or the jurisdiction in which its Applicable Lending Office is located) (all such non-excluded taxes, duties, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to Agent or any Lender hereunder or under the other Credit Documents, the amounts so payable to Agent or such Lender shall be increased to the extent necessary to yield to Agent or such Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the other Credit Documents. Whenever any Taxes are payable by either Borrower, as promptly as possible thereafter, such Borrower shall send to Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by such Borrower showing payment thereof. If either Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to Agent the required receipts or other required documentary evidence, such Borrower shall indemnify Agent and Lenders for any Taxes (including interest or penalties) that may become payable by Agent or any Lender as a result of any such failure. The obligations of Borrowers under this Subparagraph 2.11(a) shall survive the payment and performance of the Obligations and the termination of this Agreement. (b) Withholding Exemption Certificates. On or prior to the applicable Closing Date, each U.S. Lender which is not organized under the laws of the United 43 48 States of America or a state thereof and each Japanese Lender which is not organized under the laws of Japan shall deliver to LSI or LLJS, respectively, and Agent such certificates and other evidence as such Borrower or Agent may reasonably request to establish that such Lender is entitled to receive payments under this Agreement on account of any U.S. Borrowing or Japanese Borrowing, as the case may be, without deduction or withholding of any United States federal income taxes or Japanese income taxes, respectively. Each such Lender further agrees (i) promptly to notify the applicable Borrower and Agent of any change of circumstances (including any change in any treaty, law or regulation) which would prevent such Lender from receiving payments hereunder without any deduction or withholding of such taxes and (ii) on or before the date that any certificate or other form delivered by such Lender under this Subparagraph 2.11(b) expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent such certificate or form previously delivered by such Lender, to deliver to the applicable Borrower and Agent a new certificate or form, certifying that such Lender is entitled to receive payments under this Agreement without deduction or withholding of such taxes. If any Lender fails to provide to Borrowers or Agent pursuant to this Subparagraph 2.11(b) (or, in the case of an Assignee Lender, Subparagraph 8.05(c)) any certificates or other evidence required by such provision to establish that such Lender is, at the time it becomes a Lender hereunder, entitled to receive payments under this Agreement on account of any U.S. Borrowing or Japanese Borrowing, as the case may be, without deduction or withholding of any United States federal income taxes or Japanese income taxes, respectively, such Lender shall not be entitled to any indemnification under Subparagraph 2.11(a) for any Taxes imposed on such Lender primarily as a result of such failure. (c) Mitigation. If Agent or any Lender claims any additional amounts to be payable to it pursuant to this Paragraph 2.11, such Person shall use reasonable commercial efforts to file any certificate or document requested in writing by the applicable Borrower reflecting a reduced rate of withholding or to change the jurisdiction of its Applicable Lending Office if the making of such a filing or such change in the jurisdiction of its Applicable Lending Office would avoid the need for or materially reduce the amount of any such additional amounts which may thereafter accrue and if, in the reasonable opinion of such Person, in the case of a change in the jurisdiction of its Applicable Lending Office, such change would not be disadvantageous to such Person or contrary to such Person's normal banking practices. (d) Tax Returns. Nothing contained in this Paragraph 2.11 shall require Agent or any Lender to make available any of its tax returns (or any other information relating to its taxes which it deems to be confidential). (e) Lender Rate Contracts. Nothing contained in this Paragraph 2.11 shall override or supercede any term or provision of any Lender Rate Contract regarding withholding taxes relating to Rate Contracts. 2.12. Funding Loss Indemnification. If either Borrower shall (a) repay or prepay any LIBOR Loan or Japanese Loan, or convert any LIBOR Loan, on any day other than the last day of an Interest Period therefor (whether a scheduled payment, an optional prepayment or 44 49 conversion, a mandatory prepayment or conversion, a payment upon acceleration or otherwise), (b) fail to borrow any LIBOR Loan or Japanese Loan after delivering the applicable Notice of Borrowing therefor to Agent (whether as a result of the failure to satisfy any applicable conditions or otherwise) or (c) fail to convert any U.S. Borrowing into LIBOR Loans in accordance with a Notice of U.S. Borrowing Conversion delivered to Agent (whether as a result of the failure to satisfy any applicable conditions or otherwise), such Borrower shall, within twenty (20) days after written demand of such Lender, reimburse such Lender for and hold such Lender harmless from all reasonable costs and losses incurred by such Lender as a result of such repayment, prepayment, conversion or failure; provided, however, that such Borrower shall have no obligation to make any payment to any demanding party under this Paragraph 2.12 on account of any such costs or losses unless such Borrower receives notice of such costs or losses from the demanding party within six (6) months after they are incurred or realized. Borrowers understand that such costs and losses may include, without limitation, losses incurred by a Lender as a result of funding and other contracts entered into by such Lender to fund a LIBOR Loan or Japanese Loan. Each Lender demanding payment under this Paragraph 2.12 shall deliver to the applicable Borrower, with a copy to Agent, a certificate setting forth the amount of costs and losses for which demand is made, which certificate shall set forth in reasonable detail the calculation of the amount demanded. Such a certificate so delivered to such Borrower shall constitute prima facie evidence of such costs and losses. The obligations of Borrowers under this Paragraph 2.12 shall survive the payment and performance of the Obligations and the termination of this Agreement. 2.13. Security. (a) The Obligations of LLJS shall be secured by a guaranty duly executed by LSI in the form of Exhibit G (the "LSI Guaranty"). (b) Further Assurances. Each Borrower shall deliver to Agent such other instruments, agreements, certificates, opinions and documents (including Uniform Commercial Code financing statements) as Agent may reasonably request to implement the provisions of Subparagraph 2.13(a) and otherwise to establish, maintain, protect and evidence the rights provided to Agent, for the benefit of Agents and Lenders, pursuant to the Security Documents. Each Borrower shall fully cooperate with Agent and Lenders and perform all additional acts reasonably requested by Agent or any Lender to effect the purposes of this Paragraph 2.13. 2.14. Replacement of Lenders. If any Lender shall (a) become a Defaulting Lender more than one (1) time in a period of twelve (12) consecutive months, (b) continue as a Defaulting Lender for more than five (5) Business Days at any time, (c) suspend its obligation to make or maintain LIBOR Loans or Japanese Loans pursuant to Subparagraph 2.10(b) for a reason which is not applicable to any other Lender or (d) demand any payment under Subparagraph 2.10(c), 2.10(d) or 2.11(a) for a reason which is not applicable to any other Lender, then Agent may (or upon the written request of Borrowers, shall) replace such Lender (the "affected Lender"), or cause such affected Lender to be replaced, with another lender (the "replacement Lender") satisfying the requirements of an Assignee Lender under Subparagraph 8.05(c), by having the affected Lender sell and assign all of its rights and obligations under this Agreement and the other Credit Documents to the replacement Lender pursuant to Subparagraph 8.05(c); provided, however, that if Borrowers seek to exercise such right, they must do so within 45 50 sixty (60) days after either Borrower first knows or should have known of the occurrence of the event or events giving rise to such right, and neither Agent nor any Lender shall have any obligation to identify or locate a replacement Lender for Borrowers. Upon receipt by any affected Lender of a written notice from Agent stating that Agent is exercising the replacement right set forth in this Paragraph 2.14, such affected Lender shall sell and assign all of its rights and obligations under this Agreement and the other Credit Documents to the replacement Lender pursuant to an Assignment Agreement and Subparagraph 8.05(c) for a purchase price equal to the sum of the principal amount of the affected Lender's Loans so sold and assigned, all accrued and unpaid interest thereon and its ratable share of all fees to which it is entitled. SECTION III. CONDITIONS. 3.01. Initial Closing Date Conditions. The obligations of the applicable Lenders to make the Loans to be made on the Initial Closing Date are subject to (a) receipt by Agent, on or prior to the Initial Closing Date, of each item listed in Part I of Schedule 3.01, each in form and substance satisfactory to Agent and each Lender, and with sufficient copies for, Agent and each Lender, (b) the termination of the Outstanding U.S. Loan Facility and payment by LSI in full of all amounts payable thereunder, (c) either confirmation in form and substance satisfactory to Agent and each Lender that the transactions contemplated by this Agreement do not contravene the provisions of the Outstanding Japanese Loan Facility, if the Initial Closing Date is the U.S. Closing Date, or the termination of the Outstanding Japanese Loan Facility and payment by LLJS in full of all amounts payable thereunder, if the Initial Closing Date is the Japanese Closing Date, and (d) confirmation in form and substance satisfactory to Agent and each Lender that the transactions contemplated by this Agreement do not contravene the provisions of the Outstanding Japanese Lease Facility. The obligations of the applicable Lenders to maintain the Loans made on the Initial Closing Date are subject to receipt by Agent within ten (10) Business Days after the Initial Closing Date of each item listed in Part II of Schedule 3.01, each in form and substance satisfactory to Agent and each Lender, and with sufficient copies for, Agent and each Lender. 3.02. Second Closing Date Conditions Precedent. The obligations of the applicable Lenders to make the Loans to be made on the Second Closing Date are subject to (a) the satisfaction of the conditions set forth in Paragraph 3.01, (b) if such Loans are U.S. Loans, the receipt by Agent, on or prior to the Second Closing Date, of each Note requested by a U.S. Lender, each duly executed by LSI, and (c) if such Loans are Japanese Loans, the receipt by Agent of written notice from LLJS specifying the Total Japanese Commitment on the day four (4) Business Days prior to the Second Closing Date and the receipt by Agent of the LSI Guaranty duly executed by LSI and the termination of the Outstanding Japanese Loan Facility and payment by LLJS in full of all amounts payable thereunder on or prior to the Second Closing Date. 3.03. Conditions Precedent to Each Credit Event. The occurrence of each Credit Event (including the initial Borrowing) is subject to the further conditions that: 46 51 (a) Borrowers shall have delivered to Agent the Notice of Borrowing, Notice of U.S. Borrowing Conversion or Notice of Interest Period Selection, as the case may be, for such Credit Event in accordance with this Agreement; and (b) On the date such Credit Event is to occur and after giving effect to such Credit Event, the following shall be true and correct: (i) The representations and warranties of Borrowers and their Subsidiaries set forth in Paragraph 4.01 and in the other Credit Documents are true and correct in all material respects as if made on such date (except for representations and warranties expressly made as of a specified date, which shall be true as of such date); (ii) No Default has occurred and is continuing or will result from such Credit Event; and (iii) All of the Credit Documents are in full force and effect. The submission by either Borrower to Agent of each Notice of Borrowing, each Notice of U.S. Borrowing Conversion (other than a notice for a conversion to Base Rate Loans) and each Notice of Interest Period Selection (other than a notice selecting an Interest Period of one (1) month for any Japanese Borrowing) shall be deemed to be a representation and warranty by such Borrower that each of the statements set forth above in this Subparagraph 3.03(b) is true and correct as of the date of such notice. 3.04. Covenant to Deliver. Borrowers agree (not as a condition but as a covenant) to deliver to Agent each item required to be delivered to Agent as a condition to the occurrence of any Credit Event if such Credit Event occurs. Borrowers expressly agree that the occurrence of any such Credit Event prior to the receipt by Agent of any such item shall not constitute a waiver by Agent or any Lender of Borrowers' obligation to deliver such item. SECTION IV. REPRESENTATIONS AND WARRANTIES. 4.01. Borrowers' Representations and Warranties. In order to induce Agent and Lenders to enter into this Agreement, Borrowers hereby represent and warrant to Agent and Lenders as follows: (a) Organization and Powers. Each of Borrowers and the Significant Subsidiaries is a corporation or partnership duly organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, is qualified to do business and is in good standing in each jurisdiction in which the failure so to qualify or be in good standing would result in a Material Adverse Effect and has all requisite power and authority to own its assets and carry on its business and, with respect to each Borrower, to execute, deliver and perform its obligations under the Credit Documents and the Symbios Acquisition Documents to which it is a party. 47 52 (b) Authorization; No Conflict. The execution, delivery and performance by each Borrower of the Credit Documents and the Symbios Acquisition Documents to which it is a party have been duly authorized by all necessary corporate action of each Borrower and do not and will not (i) contravene the terms of the certificate or articles, as the case may be, of incorporation and the bylaws of either Borrower or result in a breach of or constitute a default under any material Contractual Obligation to which either Borrower is a party or by which it or its properties may be bound or affected; or (ii) violate any provision of Governmental Rule binding on or affecting either Borrower. (c) Binding Obligation. The Credit Documents and the Symbios Acquisition Documents constitute, or when delivered will constitute, legal, valid and binding obligations of each Borrower which is a party thereto, enforceable against such Borrower in accordance with their respective terms, except to the extent the enforceability thereof would be subject to bankruptcy, insolvency, receivership or similar laws providing relief from creditors, or principles of equity generally. (d) Governmental Consents. No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Authority, or approval or consent of any other Person, is required for the due execution, delivery or performance by either Borrower of any of the Credit Documents or the Symbios Acquisition Documents except those set forth on Schedule 4.01(d) which have been obtained or made and are in full force and effect. (e) No Defaults. None of Borrowers and their Significant Subsidiaries is in default under any material Contractual Obligation or Governmental Rule to which it is a party or by which it or its properties may be bound which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect. (f) Title to Properties. Each Borrower and each Significant Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as could not, individually or in the aggregate, have a Material Adverse Effect. The property of Borrowers and their Significant Subsidiaries is subject to no Liens, other than Liens permitted under Subparagraph 5.02(a). (g) Litigation. Except as set forth in Schedule 4.01(g), there are no actions, suits or proceedings pending or, to the best of either Borrower's knowledge, threatened against or affecting such Borrower or any of its Significant Subsidiaries or the properties of such Borrower or any of its Significant Subsidiaries before any Governmental Authority or arbitrator which if determined adversely to such Borrower or any such Significant Subsidiary would be reasonably likely to result in a Material Adverse Effect. (h) Compliance with Consents and Licenses. Every consent required by either Borrower or any of its Significant Subsidiaries (including those required under or pursuant to any Environmental Law) in connection with the conduct of its business and the ownership, use, exploitation or occupation of its property and assets has been obtained and is in full force and effect and there has not been any default in the 48 53 observance of the conditions and restrictions (if any) imposed in, or in connection with, any of the same, except where the failure to obtain any of the foregoing would not reasonably be expected to have a Material Adverse Effect. (i) Compliance with Environmental Law. Except as set forth in Schedule 4.01(i), to the best of each Borrower's knowledge after due investigation, (i) the properties of each Borrower and its Subsidiaries do not contain and have not previously contained (at, under, or about any such property) any Hazardous Substances or other contamination (A) in amounts or concentrations that constitute or constituted a violation of, or could give rise to liability under, any Environmental Laws, in either case where such violation or liability could reasonably be expected to result in a Material Adverse Effect, (B) which could interfere with the continued operation of such property, or (C) which could materially impair the fair market value thereof; and (ii) there has been no transportation or disposal of Hazardous Substances from, nor any release or threatened release of Hazardous Substances at or from, any property of either Borrower or any of its Subsidiaries in violation of or in any manner which could give rise to liability under any Environmental Laws, where such violation or liability, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. (j) Governmental Regulation. None of Borrowers and their Significant Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce Act, any state public utilities code or any other Governmental Rule limiting its ability to incur Indebtedness. (k) Employment Benefit Plans. (i) Except as specifically disclosed to Agent and Lenders in writing prior to the date of this Agreement: (A) each Plan is in compliance in all material respects with the applicable provisions of ERISA, the IRC and other Governmental Rules; (B) there are no pending, or to the best knowledge of either Borrower, threatened, claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect; (C) there has been no prohibited transaction or other violation of the fiduciary responsibility rule with respect to any Plan which could reasonably result in a Material Adverse Effect; (D) no ERISA Event has occurred or is reasonably expected to occur with respect to any Pension Plan; (E) no Pension Plan has any Unfunded Pension Liability; (F) neither Borrower has incurred, nor does it reasonably expect to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (G) no trade or business (whether or not incorporated under common control with either Borrower within the meaning of Section 414(b), (c), (m) or (a) of the IRC) maintains or contributes to any Pension Plan or other Plan subject to Section 412 of the IRC; and (H) none of Borrowers and any entity under common control with either Borrower in the preceding sentence has ever contributed to any Multiemployer Plan. 49 54 (ii) All employer and employee contributions required by any applicable Governmental Rule in connection with all Foreign Plans have been made, or, if applicable, accrued, in accordance with the country-specific accounting practices. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the date hereof, with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Plan, which actuarial assumptions are commercially reasonable. Each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable Governmental Authorities. Each Foreign Plan reasonably complies in all material respects with all applicable Governmental Rules. (l) Significant Subsidiaries. The name and ownership of each Significant Subsidiary on the date of this Agreement is as set forth in Schedule 4.01(l). All of the outstanding capital stock of, or any other interest in, each such Significant Subsidiary has been validly issued, and is fully paid and nonassessable. (m) Margin Regulations. Neither Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying "margin stock" (within the meaning of Regulation U of the FRB). No part of the proceeds of the Loans 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 compliance with said Regulation U. (n) Taxes. Borrowers and their Significant Subsidiaries have filed all federal and other material tax returns and reports required to be filed, and have paid all federal and other material taxes, assessments, fees and other Governmental Charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against either Borrower or any of its Significant Subsidiaries that would, if made, have a Material Adverse Effect. (o) Patents and Other Rights. Each Borrower and each Significant Subsidiary possesses all permits, franchises, licenses, patents, trademarks, trade names, service marks, copyrights and all rights with respect thereto, free from maintenance and operation of its business, except where the failure to obtain any of the foregoing would not reasonably be expected to have a Material Adverse Effect. (p) Insurance. The properties of each Borrower and its Significant Subsidiaries are insured against losses and damages of the kinds and in amounts which are deemed prudent by such Borrower in its reasonable business judgment and within the general parameters customary among similarly situated businesses in the industry, and such insurance is maintained with financially sound and reputable insurance companies 50 55 or pursuant to a plan or plans of self-insurance to such extent as is usual for companies of similar size engaged in the same or similar businesses and owning similar properties. (q) Financial Statements. The audited Financial Statements of LSI and its Subsidiaries for the fiscal year ended December 31, 1997 and the unaudited Financial Statements of LSI and its Subsidiaries for the fiscal quarter ended March 31, 1998 are complete and correct and fairly present the financial condition of LSI and its Subsidiaries as at such dates and the results of operations of LSI and its Subsidiaries for the periods covered by such statements, in each case in accordance with GAAP consistently applied, subject, in the case of the March 31, 1998 Financial Statements, to normal year-end adjustments and the absence of notes. Since December 31, 1997, there has been no Material Adverse Effect. (r) Liabilities. None of Borrowers and their Significant Subsidiaries has any material liabilities, fixed or contingent, that are not reflected in the Financial Statements referred to in Subparagraph 4.01(q), in the notes thereto or otherwise disclosed in writing to the Agent and Lenders, other than liabilities arising in the ordinary course of business since March 31, 1998. (s) Labor Disputes. Etc. There are no strikes, lockouts or other labor disputes against either Borrower or any of its Significant Subsidiaries, or, to the best of either Borrower's knowledge, threatened against or affecting either Borrower or any of its Significant Subsidiaries, which may result in a Material Adverse Effect. (t) Solvency. Each Borrower and its Subsidiaries on a consolidated basis are Solvent. (u) Year 2000 Compatibility. Borrowers and their Significant Subsidiaries have reviewed the areas within their business and operations which could be adversely affected by, and have developed or are developing a program to address on a timely basis, the "Year 2000 Problem" (that is, the risk that computer applications used by Borrowers and their Significant Subsidiaries may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date on or after December 31, 1999), and have made related appropriate inquiry of material suppliers and vendors. Based on such review and program, each Borrower reasonably believes that the "Year 2000 Problem" will not have a Material Adverse Effect. (v) Disclosure. None of the representations or warranties made by either Borrower in the Credit Documents as of the date of such representations and warranties, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of either Borrower or any of its Significant Subsidiaries to Agent or any Lender in connection with the Credit Documents, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect as of the time when made or delivered. 51 56 4.02. Reaffirmation. Each Borrower shall be deemed to have reaffirmed, for the benefit of Lenders and Agent, each representation and warranty contained in Paragraph 4.01 on and as of the date of each Credit Event (except for representations and warranties expressly made as of a specified date, which shall be true as of such date). SECTION V. COVENANTS. 5.01. Affirmative Covenants. Until the termination of this Agreement and the satisfaction in full by each Borrower of all of their respective Obligations, each Borrower will comply, and will cause compliance, with the following affirmative covenants, unless Required Lenders shall otherwise consent in writing: (a) Financial Statements and Other Reports. LSI, on behalf of Borrowers, will furnish to Agent in sufficient copies for distribution to Lenders: (i) As soon as available and in any event within fifty (50) days after the end of each of the first three fiscal quarters of each fiscal year, the consolidated Financial Statements of LSI and its Subsidiaries for such fiscal quarter, prepared in accordance with GAAP consistently applied, all in reasonable detail; (ii) As soon as available and in any event within one hundred (100) days after the end of each fiscal year, the consolidated Financial Statements of LSI and its Subsidiaries for such fiscal year, prepared in accordance with GAAP consistently applied, all in reasonable detail, and accompanied by a report thereon of Ernst & Young LLP or another firm of independent certified public accountants of recognized national standing, which report shall be unqualified as to scope of audit or the status of LSI and its Subsidiaries as a going concern; (iii) Together with the Financial Statements required pursuant to clauses (i) and (ii) of this Subparagraph 5.01(a), a compliance certificate of a Responsible Officer of LSI (a "Compliance Certificate") which (A) states that such Financial Statements fairly present the financial condition of LSI and its Subsidiaries as at the last day of the fiscal quarter or fiscal year covered by such Financial Statements and the results of operations of LSI and its Subsidiaries for such quarter or year and have been prepared in accordance with GAAP consistently applied, subject to normal, year-end audit adjustments in the case of the Financial Statements for any fiscal quarter; (B) states that no Default has occurred and is continuing, or, if any such Default has occurred and is continuing, a statement as to the nature thereof and what action LSI or LLJS proposes to take with respect thereto; (C) sets forth, for the fiscal quarter or fiscal year covered by such Financial Statements or as of the last day of such quarter or year, the calculation of the financial ratios and tests provided in Paragraph 5.03; and (D) states that the Year 2000 remediation efforts of Borrowers and their Subsidiaries are proceeding as scheduled; 52 57 (iv) As soon as available and in any event within fifty (50) days after the end of each fiscal quarter, a certificate of a Responsible Officer of LSI which sets forth the calculation of the Pricing Ratio as of the last day of such quarter; (v) Promptly after the giving, sending or filing thereof, copies of all reports, if any, which each Borrower or any of its Subsidiaries sends generally to any class of holders of its respective capital stock or other securities and of all reports or filings, if any, by each Borrower or any of its Subsidiaries with the SEC or any national securities exchange; (vi) Promptly after either Borrower has knowledge or becomes aware thereof, notice of the occurrence or existence of any Default; (vii) Prompt written notice of any action, event or occurrence that could reasonably be expected to result in a Material Adverse Effect due to environmental liability under Environmental Laws; (viii) Prompt written notice of all actions, suits and proceedings before any Governmental Authority or arbitrator pending, or to the best of either Borrower's knowledge, threatened against or affecting either Borrower or any of its Subsidiaries which (A) if adversely determined would involve an aggregate liability of $25,000,000 or more in excess of amounts covered by third-party insurance, or (B) otherwise may have a Material Adverse Effect; (ix) Promptly after either Borrower has knowledge or becomes aware thereof, (A) notice of the occurrence of any ERISA Event, together with a copy of any notice of such ERISA Event to the PBGC, and (B) the details concerning any action taken or proposed to be taken by the IRS, PBGC, Department of Labor or other Person with respect thereto; (x) Promptly upon the commencement or increase of contributions to, the adoption of, or an amendment to, a Plan by LSI or an ERISA Affiliate, if such commencement or increase of contributions, adoption, or amendment could reasonably be expected to result in a net increase in unfunded liability to LSI or an ERISA Affiliate in excess of $10,000,000, a calculation of the net increase in unfunded liability; (xi) Promptly after filing or receipt thereof by LSI or any ERISA Affiliate, copies of the following: (A) Any notice received from the PBGC of intent to terminate or have a trustee appointed to administer any Pension Plan; (B) Any notice received from the sponsor of a Multiemployer Plan concerning the imposition, delinquent payment, or amount of withdrawal liability; 53 58 (C) Any demand by the PBGC under Subtitle D of Title IV of ERISA; and (D) Any notice received from the IRS regarding the disqualification of a Plan intended to qualify under Section 401(a) of the IRC; (xii) Within forty-five (45) days of the date thereof, or, if earlier, on the date of delivery of any Financial Statements pursuant to clause (i) or (ii) of this Subparagraph 5.01(a), notice of any change in accounting policies or financial reporting practices by either Borrower or any of the Significant Subsidiaries that is expected to affect (or has affected) materially under U.S. GAAP the consolidated financial condition of LSI and its Subsidiaries; (xiii) Promptly after the occurrence thereof, notice of any labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other material labor disruption against or involving either Borrower or any of its Subsidiaries which could result in a Material Adverse Effect; (xiv) Upon the request from time to time of Agent or any Lender (through Agent), the Swap Termination Values, together with a description of the method by which such values were determined, relating to any then-outstanding Rate Contracts to which either Borrower or any of its Subsidiaries is party; (xv) Prompt written notice of any change in either Borrower's fiscal year; (xvi) Prompt written notice of any Person or Subsidiary not identified on Schedule 4.01(l) that becomes a Significant Subsidiary after the date of this Agreement; (xvii) Prompt written notice of any other condition or event which has resulted, or that could reasonably be expected to result, in a Material Adverse Effect; (xviii) Prior written notice of any sale of assets other than in the ordinary course of business (including any sale of assets to be leased back in connection with a "synthetic" lease of such assets) or any sale or issuance of Indebtedness for borrowed money (including Indebtedness evidenced by notes, bonds, debentures or other similar instruments) for Net Proceeds which exceed $50,000,000 for any single transaction or series of related transactions; and (xix) Such other information respecting the operations, properties, business or condition (financial or otherwise) of either Borrower or the Significant Subsidiaries as Agent or any Lender (through Agent) may from time to time reasonably request. 54 59 Each notice pursuant to clauses (vi) - (xix) of this Subparagraph 5.01(a) shall be accompanied by a written statement by a Responsible Officer of LSI setting forth details of the occurrence referred to therein, and stating what action LSI or LLJS proposes to take with respect thereto. (b) Preservation of Corporate Existence. Etc. Each Borrower shall and shall cause each of its Significant Subsidiaries to: (i) Preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation or formation, except in connection with transactions permitted by Paragraph 5.02 and (B) in the case of any Significant Subsidiary (other than LLJS) to the extent that failure to obtain or maintain the foregoing would not reasonably be expected to have a Material Adverse Effect; (ii) Preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that the failure to obtain or maintain the foregoing would not reasonably be expected to have a Material Adverse Effect; (iii) Use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill, except in the case of any Significant Subsidiary (other than LLJS) to the extent that the failure to obtain or maintain the foregoing would not reasonably be expected to have a Material Adverse Effect; and (iv) Preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. (c) Payment of Taxes. Etc. Each Borrower will, and will cause each of its Significant Subsidiaries to, pay and discharge all taxes, fees, assessments, levies and other Governmental Charges imposed upon it or upon its properties or assets prior to the date on which penalties attach thereto, and all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien upon any properties or assets of such Borrower or any of its Significant Subsidiaries, except to the extent such taxes, fees, assessments, levies or other Governmental Charges, or such claims, are being contested in good faith by appropriate proceedings and are adequately reserved against in accordance with GAAP. (d) Licenses. Each Borrower will, and will cause each of its Significant Subsidiaries to, obtain and maintain all licenses, authorizations, consents, filings, exemptions, registrations and other governmental approvals necessary in connection with the execution, delivery and performance of the Credit Documents, the consummation of the transactions therein contemplated or the operation and conduct of its business and 55 60 ownership of its properties, except to the extent that the failure to obtain or maintain the foregoing would not reasonably be expected to have a Material Adverse Effect. (e) Maintenance of Property. Except as otherwise permitted under Subparagraph 5.02(c) or Subparagraph 5.02(d), each Borrower shall, and shall cause each of its Subsidiaries to, maintain and preserve all its property which is used in its business in good working order and condition, ordinary wear and tear excepted. (f) Insurance. Each Borrower shall maintain, and shall cause each of its Significant Subsidiaries to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against losses and damages of the kinds and in amounts which are deemed prudent by such Borrower in its reasonable business judgment and within the general parameters customary among similarly situated businesses in the industry. (g) Payment of Indebtedness. Each Borrower shall, and shall cause each of its Significant Subsidiaries to, pay and discharge as the same shall become due and payable, all Indebtedness as and when due and payable or within any grace periods applicable thereto, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. (h) Compliance with Laws. Each Borrower shall comply, and shall cause each of its Significant Subsidiaries to comply, in all material respects with the requirements of all Environmental Laws and all other Governmental Rules applicable to it or its business. (i) Employment Benefit Plans. (i) LSI shall, and shall cause each of its ERISA Affiliates to: (A) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the IRC and other federal or state law; (B) cause each Plan which is qualified under Section 401(a) of the IRC to maintain such qualification; and (C) make all required contributions to any Plan subject to Section 412 of the IRC. (ii) None of Borrowers and their Significant Subsidiaries shall (A) engage in any transaction prohibited by any Governmental Rule applicable to any Foreign Plan, (B) fail to make full payment when due of all amounts due as contributions to any Foreign Plan or (C) otherwise fail to comply with the requirements of any Governmental Rule applicable to any Foreign Plan, where singly or cumulatively, the above would be reasonably likely to have a Material Adverse Effect. (j) Inspection of Property and Books and Records. Each Borrower shall maintain and shall cause each of its Significant Subsidiaries to maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Borrower or such Significant Subsidiary. Each Borrower 56 61 shall permit, and shall cause each of its Significant Subsidiaries to permit, representatives and independent contractors of Agent or any Lender to visit and inspect any of their respective properties, to examine its respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its respective affairs, finances and accounts with its respective directors, officers, and independent public accountants, all at the expense of such Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to such Borrower; provided, however, that (i) unless an Event of Default shall have occurred and be continuing, (A) Borrowers shall be responsible under this Subparagraph 5.01(j) for the reasonable costs and expenses of Agent only, (B) all inspections, visits, examinations and other actions permitted or authorized hereunder shall be coordinated only through Borrowers, and (C) physical inspections of either Borrower's or any such Significant Subsidiary's facilities in Japan shall be made on two weeks' prior notice and shall occur no more frequently than semiannually in the case of inspections by Agent and no more frequently than annually otherwise, and (ii) when an Event of Default exists Agent or any Lender may make any visit, inspection or examination or take any other action authorized hereunder at the expense of Borrowers at any time during normal business hours, without advance notice and without being subject to any of the other restrictions described in clause (i). (k) Use of Proceeds. Except as otherwise expressly provided in Subparagraph 2.01(h) or Subparagraph 2.02(f), each Borrower will use the proceeds of the Loans solely for general corporate purposes, including for working capital, capital expenditures, Permitted Investments and Permitted Acquisitions. If either Borrower uses the proceeds of the Loans to purchase or carry "margin stock" (within the meaning of Regulation U of the FRB) or extend credit to others for the purpose of purchasing or carrying margin stock, such Borrower will do so only in compliance with said Regulation U and only if not more than twenty percent (20%) of the value of the assets of such Borrower and its Subsidiaries on a consolidated basis consists of margin stock. (l) Further Assurances and Additional Acts. Each Borrower will execute, acknowledge, deliver, file, notarize and register at its own expense all such further agreements, instruments, certificates, documents and assurances and perform such acts as Agent or Required Lenders shall deem necessary or appropriate to effectuate the purposes of the Credit Documents, and promptly provide Agent with evidence of the foregoing satisfactory in form and substance to Agent or Required Lenders. (m) Year 2000 Compatibility. Each of Borrower and its Significant Subsidiaries shall take all acts reasonably necessary to ensure that all software, hardware, firmware, equipment, goods and systems utilized by or material to its business operations or financial condition will properly perform date sensitive functions before, during and after the year 2000. At the request of Agent, each Borrower shall provide to Agent such reasonable certifications or other evidence of compliance with this Subparagraph 5.01(m) as Agent may from time to time reasonably require. 5.02. Negative Covenants. Until the termination of this Agreement and the satisfaction in full by each Borrower of all of their respective Obligations, each Borrower will comply, and 57 62 will cause compliance, with the following negative covenants, unless Required Lenders shall otherwise consent in writing: (a) Liens. Neither Borrowers nor any of its Significant Subsidiaries will create, incur, assume or suffer to exist any Lien upon or with respect to any of their properties, revenues or assets, whether now owned or hereafter acquired, other than (i) Permitted Liens and (ii) other Liens that, in the aggregate at any time, secure obligations in an amount not in excess of ten percent (10%) of Consolidated Total Assets determined as of the last day of the immediately preceding fiscal quarter (or fiscal year, as the case may be). (b) Change in Nature of Business. None of Borrowers and their Significant Subsidiaries will engage in any material line of business other than the electronics business and other businesses incidental or reasonably related thereto. (c) Restrictions on Fundamental Changes. None of Borrowers and their Significant Subsidiaries will merge with or consolidate into, or acquire all or substantially all of the assets of, any Person, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets, except that: (i) Any of LSI's Significant Subsidiaries may merge with, consolidate into or transfer all or substantially all of its assets to another of LSI's Significant Subsidiaries or to LSI and in connection therewith such Significant Subsidiary (other than LSI) may be liquidated or dissolved, provided that (A) if the transaction involves either Borrower, such Borrower shall be the surviving Person, and (B) if any transaction shall be between a non-wholly owned Significant Subsidiary and a wholly owned Significant Subsidiary, the wholly owned Significant Subsidiary shall be the continuing or surviving Person, and provided further that no Material Adverse Effect or Default shall result therefrom; (ii) Either Borrower or any of its Significant Subsidiaries may sell or dispose of assets in accordance with the provisions of Subparagraph 5.02(d); (iii) Either Borrower or any of its Significant Subsidiaries may make any investment permitted by Subparagraph 5.02(e); and (iv) Either Borrower may merge with or consolidate into any other Person pursuant to an Acquisition permitted by Subparagraph 5.02(e), provided that (A) such Borrower is the surviving Person, (B) no such merger or consolidation shall be made while there exists a Default or if a Default or Material Adverse Effect would occur as a result thereof, and (C) such Borrower shall have complied with the notice and other requirements of Subparagraph 5.02(e) with respect to any Acquisition. (d) Sales of Assets. None of Borrowers and their Significant Subsidiaries will convey, sell, lease, transfer, or otherwise dispose of, or part with control of (whether in 58 63 one transaction or a series of transactions) any assets (including any shares of stock in any Subsidiary or other Person), except: (i) Sales or other dispositions of inventory in the ordinary course of business; (ii) Sales or other dispositions of assets in the ordinary course of business which have become worn out or obsolete or which are promptly being replaced; (iii) Sales of accounts receivable to financial institutions not affiliated with either Borrower; provided that (A) the discount rate shall not at any time exceed ten percent (10%), (B) the amount of all accounts receivable permitted to be sold in any fiscal quarter shall not exceed twenty percent (20%) of the consolidated accounts receivable of LSI and its Subsidiaries, determined as of the last day of the immediately preceding fiscal quarter (or fiscal year, as the case may be), and (C) the sole consideration received for such sales shall be cash; (iv) Sales of equipment to be leased back to LSI in conjunction with a "synthetic" lease financing of such equipment, provided that the "principal" amount of such financing does not exceed $250,000,000; (v) Sales or other dispositions of assets outside the ordinary course of business which do not constitute Substantial Assets (as defined below); (vi) Sales of assets which yield Net Proceeds which are applied to prepay the U.S. Loans pursuant to clause (iv) of Subparagraph 2.05(c); and (vii) Sales or other dispositions of Permitted Investments. For purposes of clause (v) above, a sale, lease, transfer or other disposition of assets shall be deemed to be of "Substantial Assets" if such assets, when added to all other assets conveyed, sold, leased, transferred or otherwise disposed of by LSI and its Subsidiaries in any period of four consecutive fiscal quarters (other than assets sold in the ordinary course of business or pursuant to clause (iii) above), shall exceed ten percent (10%) of Consolidated Total Assets as determined as of the last day of the fiscal quarter of LSI immediately preceding the date of determination. (e) Loans and Investments. None of Borrowers and their Significant Subsidiaries will enter into any Acquisition or otherwise extend any credit to, guarantee the obligations of or make any additional investments in or acquire any interest in, any Person, other than in connection with: (i) Extensions of credit in the nature of accounts receivable or notes receivable arising from the sales of goods or services in the ordinary course of business; (ii) Permitted Investments; 59 64 (iii) Additional purchases of or investments in the stock of, or guarantees of the obligations of, Subsidiaries; (iv) Permitted Acquisitions; (v) Employee loans and guarantees in accordance with LSI's usual and customary practices with respect thereto; or (vi) Additional investments not exceeding, in the aggregate with all such investments and all Acquisitions, $300,000,000 during the period from the date of this Agreement through the Revolving Termination Date; Provided that in the case of an Acquisition or an investment referred to in clause (vi) above, (A) no such Acquisition or investment shall be made while there exists a Default or if a Default or Material Adverse Effect would occur as a result thereof, and (B) the acquired or other Person in which any such Acquisition or investment is made shall be in the electronics business or other business incidental or reasonably related thereto. (f) Distributions. Neither Borrower will declare or pay any dividends in respect of its capital stock, or purchase, redeem, retire or otherwise acquire for value any of its capital stock now or hereafter outstanding, return any capital to its shareholders as such, or make any distribution of assets to its shareholders as such, or permit any of its Subsidiaries to purchase, redeem, retire, or otherwise acquire for value any stock of either Borrower, except that LLJS may declare and pay dividends and distributions to LSI and either Borrower may: (i) Declare and deliver dividends and distributions payable only in common stock of such Borrower; (ii) Purchase shares of its capital stock from time to time in connection with the issuance of shares under such Borrower's employee stock option plans; (iii) Purchase, redeem, retire, or otherwise acquire shares of its capital stock with the proceeds received from a substantially concurrent issue of new shares of its capital stock; and (iv) In addition to the dividends, purchases, redemptions, retirements and other acquisitions permitted by the foregoing clauses (i) through (iii) above, declare and deliver dividends and distributions, and purchase, redeem, retire, or otherwise acquire shares of its capital stock, in an aggregate amount not exceeding $100,000,000 in any period of four consecutive fiscal quarters. (g) Transactions with Related Parties. None of Borrowers and their Significant Subsidiaries will enter into any transaction, including the purchase, sale or exchange of property or the rendering of any services, with any Affiliate, any officer or director thereof or any Person which beneficially owns or holds twenty percent (20%) or more of the equity securities, or twenty percent (20%) or more of the equity interest, thereof (a "Related Party"), or enter into, assume or suffer to exist, or permit any such 60 65 Significant Subsidiary to enter into, assume or suffer to exist, any employment or consulting contract with any Related Party, except (i) a transaction or contract which is in the ordinary course of such Borrower's or Significant Subsidiary's business, including a transaction in the ordinary course of business between or among such Borrower and one or more of its Subsidiaries, and (ii) any other transaction which is upon fair and reasonable terms not less favorable to such Borrower or Significant Subsidiary than it would obtain in a comparable arm's length transaction with a Person not a Related Party. For purposes of this Subparagraph 5.02(g), the sale, transfer or disposition of more than thirty percent (30%) of its assets (in any transaction or a series of related transactions) by a Borrower or any of its Significant Subsidiaries shall be deemed to be outside the ordinary course of business. (h) Accounting Changes. None of Borrowers and their Significant Subsidiaries will make any significant change in accounting treatment or reporting practices, except as required or permitted by GAAP (or, in the case of any such Significant Subsidiary domiciled in a jurisdiction other than the United States, in accordance with generally accepted accounting principles and practices in such jurisdiction). 5.03. Financial Covenants. Until the termination of this Agreement and the satisfaction in full by each Borrower of all of their respective Obligations, LSI will comply, and will cause compliance, with the following financial covenants, unless Required Lenders shall otherwise consent in writing: (a) Senior Debt to Total Capital. LSI will maintain a ratio of Senior Debt to Total Capital as of each date set forth below that is not more than the ratio set forth opposite such date: September 30, 1998 0.40 to 1.00; December 31, 1998 0.40 to 1.00; March 31, 1999 0.40 to 1.00; June 30, 1999 0.40 to 1.00; The last day of each quarter thereafter 0.35 to 1.00. (b) Quick Ratio. Commencing with the fiscal quarter ending December 31, 1998, LSI will maintain a ratio of Consolidated Quick Assets to Consolidated Current Liabilities as of each date set forth below that is not less than the ratio set forth opposite such date: 61 66 December 31, 1998 0.70 to 1.00; March 31, 1999 0.75 to 1.00; June 30, 1999 0.80 to 1.00; September 30, 1999 0.85 to 1.00; December 31, 1999 0.90 to 1.00; The last day of each quarter thereafter 1.00 to 1.00; Provided, however, that, if LSI sells assets other than in the ordinary course of business for Net Proceeds which exceed $125,000,000 on or prior to June 30, 1999, LSI will maintain a ratio of Consolidated Quick Assets to Consolidated Current Liabilities that is not less than 1.00 to 1.00 on the last day of the fiscal quarter in which such sale occurs and on the last day of each fiscal quarter thereafter. (c) Minimum Consolidated Tangible Net Worth. LSI will maintain a Consolidated Tangible Net Worth (exclusive of the cumulative translation adjustment account as reported in the consolidated balance sheet of LSI and its Subsidiaries as of such date) as of the end of each fiscal quarter of not less than (i) $1,050,000,000 plus (ii) one hundred percent (100%) of the Net Proceeds received by LSI or any of its Subsidiaries from the sale or issuance of equity securities (including equity securities issued upon the conversion of Subordinated Debt) to any Person other than LSI or any of its Subsidiaries after June 30, 1998, plus (iii) eighty percent (80%) of the sum of Consolidated Net Income plus the charges described below in clauses (iv) and (vi) to the extent deducted in determining Consolidated Net Income, if such sum is positive, for each fiscal quarter elapsed after June 30, 1998, minus (iv) one hundred percent (100%) of preproduction engineering charges not exceeding $135,000,000 taken by LSI during 1999 as a result of the Financial Accounting Standards Executive Committee Statement of Position regarding capitalization of preproduction charges, minus (v) the net value of LSI stock not exceeding $250,000,000 in aggregate amount repurchased by LSI pursuant to employee stock ownership and purchase plans (provided that LSI shall not so repurchase stock in an aggregate amount which exceeds five percent (5%) of its stock outstanding as of the last day of such fiscal quarter), minus (vi) the aggregate amount of asset write-downs not exceeding $100,000,000 taken by LSI during the quarter ending September 30, 1998. (d) Debt Service Coverage Ratio. LSI will maintain a ratio of: (i) Consolidated EBITDA, plus, to the extent deducted in calculating such Consolidated EBITDA, the sum of (A) preproduction engineering charges not exceeding $135,000,000 taken by LSI during 1999 as a result of the Financial Accounting Standards Executive Committee Statement of Position regarding capitalization of preproduction 62 67 charges, plus (B) the aggregate amount of asset write-downs not exceeding $100,000,000 taken by LSI during the quarter ending September 30, 1998; to (ii) The sum of Consolidated CMLTD, plus Consolidated Interest Expense, plus Capitalized Interest; for each period of four consecutive fiscal quarters ending as of the date set forth below, calculated as of the end of such period, that is not less than the ratio set forth opposite such date: September 30, 1998 1.50 to 1.00; December 31, 1998 1.50 to 1.00; March 31, 1999 1.50 to 1.00; June 30, 1999 1.50 to 1.00; The last day of each quarter thereafter 2.00 to 1.00. (e) Subordinated Debt. LSI will not permit Subordinated Debt of LSI and its consolidated Subsidiaries to exceed $750,000,000 at any time; and LSI will not, and will not permit any of its Subsidiaries to, make any voluntary or optional payment or repayment on, redemption, exchange or acquisition for value of, or any sinking fund or similar payment with respect to, any Subordinated Debt if a Default shall then exist or would occur as a result thereof. SECTION VI. DEFAULT. 6.01. Events of Default. The occurrence or existence of any one or more of the following shall constitute an "Event of Default" hereunder: (a) Non-Payment. Either Borrower shall (i) fail to pay when due any principal of any Loan or fail to make any payment or transfer when due under any Lender Rate Contract or (ii) fail to pay within five (5) Business Days after the same becomes due any interest, fee or other payment required under the terms of this Agreement or any of the other Credit Documents; or (b) Specific Defaults. Either Borrower or any of its Significant Subsidiaries shall fail to observe or perform any covenant, obligation, condition or agreement set forth in Paragraph 5.02 or Paragraph 5.03; or (c) Other Defaults. Either Borrower or any of its Significant Subsidiaries shall fail to observe or perform any other covenant, obligation, condition or agreement contained in this Agreement or the other Credit Documents and such failure shall continue for thirty (30) days after the earlier of (i) either Borrower's written acknowledgement of such failure and (ii) Agent's or any Lender's written notice to Borrowers of such failure; or (d) Representations and Warranties. Any representation, warranty, certificate, information or other statement (financial or otherwise) made or furnished by or on behalf of either Borrower to Agent or any Lender in or in connection with this Agreement or any of the other Credit Documents, or as an inducement to Agent or any Lender to enter into this Agreement, shall be false, incorrect, incomplete or misleading in any material respect when made (or deemed made) or furnished; or 63 68 (e) Cross-Default. (i) Either Borrower or any of its Significant Subsidiaries shall fail to make any payment on account of any Indebtedness of such Person (other than the Obligations) when due (whether at scheduled maturity, by required prepayment, upon acceleration or otherwise) and such failure shall continue beyond any period of grace provided with respect thereto, if the aggregate amount of such Indebtedness exceeds $10,000,000 or the effect of such failure is to cause, or permit the holder or holders thereof to cause, Indebtedness of either Borrower or any of its Significant Subsidiaries (other than the Obligations) in an aggregate amount exceeding $10,000,000 to become due (whether at scheduled maturity, by required prepayment, upon acceleration or otherwise) or (ii) either Borrower or any of its Significant Subsidiaries shall otherwise fail to observe or perform any agreement, term or condition contained in any agreement or instrument relating to any Indebtedness of such Person (other than the Obligations), or any other event shall occur or condition shall exist, and such failure, event or condition shall continue beyond any period of grace provided with respect thereto, if the effect of such failure, event or condition is to cause, or permit the holder or holders thereof to cause, Indebtedness of either Borrower or any of its Significant Subsidiaries (other than the Obligations) in an aggregate amount exceeding $10,000,000 to become due (and/or to be secured by cash collateral); or (f) Insolvency, Voluntary Proceedings. Either Borrower or any of its Significant Subsidiaries shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v) become insolvent (as such term may be defined or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing; or (g) Involuntary Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of either Borrower or any of its Significant Subsidiaries or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to either Borrower or any of its Significant Subsidiaries or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within sixty (60) days of commencement; or (h) Judgments. (i) A final nonappealable judgment or order for the payment of money against either Borrower or any of its Significant Subsidiaries in an amount of $25,000,000 or more in excess of amounts covered by third-party insurance shall remain unpaid for ninety (90) days following the due date for such payment; or (ii) any non-monetary judgment or order shall be rendered against either Borrower or any of its Significant Subsidiaries which has or would reasonably be expected to have a Material 64 69 Adverse Effect; or (i) Process Issued. A warrant of attachment, execution, distraint, or similar process against any substantial part of the assets of either Borrower or any of its Significant Subsidiaries is issued which remains undismissed or undischarged for a period of thirty (30) days, if as a result thereof there is reasonably expected to occur a Material Adverse Effect; or (j) Seizure. All or a material part of the undertaking, assets, rights or revenues of either Borrower or any of its Significant Subsidiaries are seized, nationalized, expropriated or compulsorily acquired by or under the authority of any Governmental Authority; or (k) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan which has resulted or could reasonably be expected to result in liability of either Borrower or any of its Subsidiaries under Title IV of ERISA to the Pension Plan or PBGC in an aggregate amount in excess of $10,000,000; (ii) the commencement or increase of contributions to, or the adoption of or the amendment of a Pension Plan by either Borrower or any of its Subsidiaries which has resulted or could reasonably be expected to result in an increase in Unfunded Pension Liability among all Pension Plans in an aggregate amount in excess of $10,000,000; or (iii) any of the representations and warranties contained in Subparagraph 4.01(k) shall cease to be true and correct which, individually or in combination, has resulted or could reasonably be expected to result in a Material Adverse Effect; or (l) Credit Documents. Any Credit Document or any material term thereof shall cease to be, or be asserted by either Borrower or any of its Significant Subsidiaries not to be, a legal, valid and binding obligation of such Borrower or such Significant Subsidiary enforceable in accordance with its terms; or (m) Dissolution. Etc. Either Borrower or any of its Significant Subsidiaries shall (i) liquidate, wind up or dissolve (or suffer any liquidation, wind-up or dissolution), except to the extent expressly permitted by clause (i) of Subparagraph 5.02(c), (ii) suspend its operations other than in the ordinary course of business, or (iii) take any corporate action to authorize any of the actions or events set forth above in this Subparagraph; or (n) Change of Control. Any Change of Control shall occur; or (o) Material Adverse Effect. Any event(s) or condition(s) which is (are) reasonably likely to have a Material Adverse Effect shall occur or exist. 6.02. Remedies. At any time after the occurrence and during the continuance of any Event of Default (other than an Event of Default referred to in Subparagraph 6.01(f) or 6.01(g) or any Event of Default which has been cured by LSI under the LSI Guaranty), Agent may, with the consent of the Required Lenders, or shall, upon instructions from the Required Lenders, by written notice to Borrowers, (a) terminate the Commitments and the obligations of Lenders to make Loans and/or (b) declare all outstanding Obligations payable by Borrowers to be 65 70 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 Lenders to make Loans shall automatically terminate and (2) all outstanding Obligations payable by Borrowers 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, Agent may exercise any other right, power or remedy available to it under any of the Credit Documents or otherwise by law, either by suit in equity or by action at law, or both. 6.03. Lender Rate Contract Remedies. Notwithstanding any other provision of this Section VI, each Lender or its Affiliate which has entered into a Lender Rate Contract shall have the right, with prior notice to Agent, but without the approval or consent of Agent or any other Lender, (a) to declare an event of default, termination event or other similar event thereunder which will result in the early termination of such Lender Rate Contract, (b) to determine Swap Termination Values in accordance with the terms of such Lender Rate Contract and to set-off amounts between Lender Rate Contracts of such Lender, and (c) to prosecute any legal action against either Borrower or its Subsidiaries to enforce Swap Termination Values owing to such Lender or its Affiliate under such Lender Rate Contracts. 66 71 SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS. 7.01. Appointment, Powers and Immunities. Each Lender hereby appoints and authorizes Agent to act as its agent hereunder and under the other Credit Documents with such powers as are expressly delegated to Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement or in any other Credit Document, be a trustee for any Lender or have any fiduciary duty to any Lender. Notwithstanding anything to the contrary contained herein Agent shall not be required to take any action which is contrary to this Agreement or any other Credit Document or any applicable Governmental Rule. Neither Agent nor any Lender shall be responsible to any other Lender for any recitals, statements, representations or warranties made by either Borrower or any of its Subsidiaries contained in this Agreement or in any other Credit Document, for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document or for any failure by either Borrower or any of its Subsidiaries to perform its respective obligations hereunder or thereunder. Agent may employ agents and attorneys-in-fact and shall not be responsible to any Lender for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. Neither Agent nor any of its directors, officers, employees, agents or advisors shall be responsible to any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Credit Document or in connection herewith or therewith, except for its or their own gross negligence or willful misconduct. Except as otherwise provided under this Agreement, Agent shall take such action with respect to the Credit Documents as shall be directed by the Required Lenders. 7.02. Reliance by Agent. Agent shall be entitled to rely upon any certificate, notice or other document (including any cable, telegram, facsimile or telex) believed by it in good faith to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by Agent with reasonable care. As to any other matters not expressly provided for by this Agreement, Agent shall not be required to take any action or exercise any discretion, but shall be required to act or to refrain from acting upon instructions of the Required Lenders and shall in all cases be fully protected by Lenders in acting, or in refraining from acting, hereunder or under any other Credit Document in accordance with the instructions of the Required Lenders, and such instructions of the Required Lenders and any action taken or failure to act pursuant thereto shall be binding on all of Lenders. 7.03. Defaults. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default unless Agent has received a written notice from a Lender or either Borrower, referring to this Agreement, describing such Default and stating that such notice is a "Notice of Default". If Agent receives such a notice of the occurrence of a Default, Agent shall give prompt notice thereof to Lenders. Agent shall take such action with respect to such Default as shall be reasonably directed by the Required Lenders; provided, however, that until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of Lenders. 67 72 7.04. Indemnification. Without limiting the Obligations of Borrowers hereunder, each Lender agrees to indemnify Agent, ratably in accordance with their Proportionate Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against Agent in any way relating to or arising out of this Agreement or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof; provided, however, that no Lender shall be liable for any of the foregoing to the extent they arise from Agent's gross negligence or willful misconduct. Agent shall be fully justified in refusing to take or in continuing to take any action hereunder unless it shall first be indemnified to its satisfaction by Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The obligations of each Lender under this Paragraph 7.04 shall survive the payment and performance of the Obligations, the termination of this Agreement and any Lender ceasing to be a party to this Agreement (with respect to events which occurred prior to the time such Lender ceased to be a Lender hereunder). 7.05. Non-Reliance. Each Lender represents that it has, independently and without reliance on Agent, or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of the business, prospects, management, financial condition and affairs of Borrowers and their Subsidiaries and its own decision to enter into this Agreement and agrees that it will, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own appraisals and decisions in taking or not taking action under this Agreement. Neither Agent nor any of its affiliates nor any of their respective directors, officers, employees, agents or advisors shall (a) be required to keep any Lender informed as to the performance or observance by either Borrower or any of its Subsidiaries of the obligations under this Agreement or any other document referred to or provided for herein or to make inquiry of, or to inspect the properties or books of either Borrower or any of its Subsidiaries; (b) have any duty or responsibility to provide any Lender with any credit or other information concerning either Borrower or any of its Subsidiaries which may come into the possession of Agent, except for notices, reports and other documents and information expressly required to be furnished to Lenders by Agent hereunder; or (c) be responsible to any Lender for (i) any recital, statement, representation or warranty made by either Borrower or any officer, employee or agent of either Borrower in this Agreement or in any of the other Credit Documents, (ii) the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any Credit Document, (iii) the value or sufficiency of any collateral or the validity or perfection of any of the liens or security interests intended to be created by the Credit Documents, or (iv) any failure by either Borrower to perform its obligations under this Agreement or any other Credit Document. 7.06. Resignation or Removal of Agent. Agent may resign at any time by giving thirty (30) days prior written notice thereof to Borrowers and Lenders, and Agent may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent, which Agent, if not a Lender, shall be reasonably acceptable to Borrowers; provided, however, that Borrowers shall have no right to approve a successor Agent if a Default has occurred and is continuing. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent 68 73 shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from the duties and obligations thereafter arising hereunder. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section VII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. 7.07. Agent in its Individual Capacity. Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of banking or other business with Borrowers and their Subsidiaries and affiliates as though Agent were not Agent hereunder. With respect to Loans, if any, made by Agent in its capacity as a Lender, Agent in its capacity as a Lender shall have the same rights and powers under this Agreement and the other Credit Documents as any other Lender and may exercise the same as though it were not Agent, and the terms "Lender" or "Lenders" shall include Agent in its capacity as a Lender. SECTION VIII. MISCELLANEOUS. 8.01. Notices. Except as otherwise provided herein, all notices, requests, demands, consents, instructions or other communications to or upon either Borrower, any Lender or Agent under this Agreement or the other Credit Documents shall be in writing and faxed, mailed or delivered, if to either Borrower or Agent, at its respective facsimile number or address set forth below or, if to any Lender, at the address or facsimile number specified for such Lender in Part B of Schedule I (or to such other facsimile number or address for any party as indicated in any notice given by that party to the other parties). All such notices and communications shall be effective (a) when sent by an overnight courier service of recognized standing, on the second Business Day following the deposit with such service; (b) when mailed, first class postage prepaid and addressed as aforesaid through the United States Postal Service or registered mail through the Japanese Post Office, upon receipt; (c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation of receipt; provided, however, that any notice delivered to Agent under Section II shall not be effective until received by Agent. Agent: For notices related to any Japanese Borrowing: ABN AMRO Bank N.V. Tokyo Branch 13F, Shiroyama JT Mori Building 4-3-1, Toranomon, Minato-ku Tokyo 105 Japan Attn: Kiyoharu Michiwaki or Takamasa Marito Tel. No: 81-3-5405-6575 or 6565 Fax No: 81-3-5405-6902 or 6903 69 74 For notices related to any U.S. Borrowing, all other notices and copies of notices related to the Japanese Borrowing: ABN AMRO Bank N.V. Syndications Group 1325 Avenue of the Americas, 9th Floor New York, NY 10019 U.S.A. Attn: Linda Boardman Tel. No: (212) 314-1724 Fax. No: (212) 314-1712 With a copy in each case to: ABN AMRO Bank N.V. 101 California Street, Suite 4550 San Francisco, CA 94111-5812 Attn: Thomas R. Wagner Tel: (415) 984-3734 Fax: (415) 362-3524 LSI: LSI Logic Corporation 1551 McCarthy Boulevard Milpitas, CA 95035 Attn: Mark R. Kent, Treasurer Mail Stop D106 Tel: (408) 433-7189 Fax: (408) 433-6896 LLJS: LSI Logic Japan Semiconductor, Inc. 10, Kitahara Tsukuba-shi Ibaraki, Japan Attn: Makoto Kaneda Tel: (81) ###-##-#### Fax: (81) ###-##-#### with a copy to LSI as provided above. Each Notice of U.S. Borrowing, Notice of U.S. Borrowing Conversion and Notice of U.S. Borrowing Interest Period Selection shall be given by LSI to Agent's New York office located at the address referred to above during such office's normal business hours; provided, however, that any such notice received by Agent after 11:00 a.m. (New York time) on any Business Day shall be deemed received by Agent on the next Business Day. Each Notice of Japanese Borrowing and Notice of Japanese Borrowing Interest Period Selection shall be given by LLJS to Agent's Tokyo office at the address referred to above during such office's normal business hours; 70 75 provided, however, that any such notice received by Agent after 10:00 a.m. (Tokyo time) on any Business Day shall be deemed received by Agent on the next Business Day. In any case where this Agreement authorizes notices, requests, demands or other communications by Borrowers to Agent or any Lender to be made by telephone or facsimile, Agent or any Lender may conclusively presume that anyone purporting to be a Person designated in any incumbency certificate or other similar document received by Agent or a Lender is such a Person. 8.02. Expenses. LSI agrees to pay promptly upon receipt of an invoice therefor, whether or not any Loan is made hereunder, (a) all reasonable fees and expenses, including reasonable attorneys' fees and expenses, incurred by Agent in connection with the syndication of the credit facilities provided hereunder, the preparation, negotiation, execution and delivery of, and the exercise of its duties under, this Agreement and the other Credit Documents, and the preparation, negotiation, execution and delivery of amendments and waivers hereunder and thereunder and (b) all reasonable fees and expenses, including reasonable attorneys' fees and expenses, incurred by Agent and Lenders in the enforcement or attempted enforcement of any of the Obligations or in preserving any of Agent's or Lenders' rights and remedies (including, without limitation, all such fees and expenses incurred in connection with any "workout" or restructuring affecting the Credit Documents or the Obligations or any bankruptcy or similar proceeding involving either Borrower or any of its Subsidiaries). As used herein, the term "reasonable attorneys' fees and expenses" shall include, without limitation, allocable costs and expenses of Agent's and Lenders' in-house legal counsel and staff. The obligations of LSI under this Paragraph 8.02 shall survive the payment and performance of the Obligations and the termination of this Agreement. 8.03. Indemnification. To the fullest extent permitted by law, LSI agrees to protect, indemnify, defend and hold harmless Agent, Lenders and their Affiliates and their respective directors, officers, employees, agents and advisors ("Indemnitees") from and against any and all liabilities, losses, damages or expenses of any kind or nature and from any suits, claims or demands (including in respect of or for reasonable attorney's fees and other expenses) arising on account of or in connection with any matter or thing or action or failure to act by Indemnitees, or any of them, arising out of or relating to the Credit Documents or any transaction contemplated thereby, including without limitation any use by either Borrower of any proceeds of the Loans, except to the extent such liability arises from the willful misconduct or gross negligence of such Indemnitee. Upon receiving knowledge of any suit, claim or demand asserted by a third party that Agent or any Lender believes is covered by this indemnity, Agent or such Lender shall give LSI notice of the matter and an opportunity to defend it, at LSI's sole cost and expense, with legal counsel satisfactory to Agent or such Lender, as the case may be. Agent or such Lender may also require LSI to defend the matter. Any failure or delay of Agent or any Lender to notify LSI of any such suit, claim or demand shall not relieve LSI of its obligations under this Paragraph 8.03 but shall reduce such obligations to the extent of any increase in those obligations caused solely by any such failure or delay which is unreasonable. The obligations of LSI under this Paragraph 8.03 shall survive the payment and performance of the Obligations and the termination of this Agreement. 8.04. Waivers; Amendments. Any term, covenant, agreement or condition of this Agreement or any other Credit Document may be amended or waived, and any consent under this Agreement or any other Credit Document may be given, if such amendment, waiver or 71 76 consent is in writing and is signed by Borrowers and the Required Lenders (or Agent on behalf of the Required Lenders with the written approval of the Required Lenders); provided, however that: (a) Any amendment, waiver or consent which would (i) reduce any fees or other amounts payable for the account of all Lenders hereunder or extend the scheduled date for payment of any such fees or amounts, (ii) amend this Paragraph 8.04, (iii) amend the definition of Required Lenders or (iv) release the LSI Guaranty or any substantial part of any other guaranty or collateral which may be granted under the Security Documents, must be in writing and signed or approved in writing by all Lenders; (b) Any amendment, waiver or consent which would (i) extend the Revolving Termination Date with respect to the U.S. Revolving Borrowings, (ii) increase the Total U.S. Revolving Commitment or (iii) reduce the principal of or interest on the U.S. Revolving Loans or the U.S. Revolving Commitment Fees or any other fees or amounts payable for the account of all U.S. Lenders with U.S. Revolving Commitments or extend the scheduled date for payment of any such principal, interest, fees or amounts, must be in writing and signed or approved in writing by all U.S. Lenders with U.S. Revolving Commitments or U.S. Revolving Loans; (c) Any amendment, waiver or consent which would (i) extend the U.S. 364 Day Termination Date, (ii) increase the Total U.S. 364 Day Commitment or (iii) reduce the principal of or interest on the U.S. 364 Day Loans or the U.S. 364 Day Commitment Fees or any other fees or amounts payable for the account of all U.S. Lenders with U.S. 364 Day Commitments or extend the scheduled date for payment of any such principal, interest, fees or amounts, must be in writing and signed or approved in writing by all U.S. Lenders with U.S. 364 Day Commitments or U.S. 364 Day Loans; (d) Any amendment, waiver or consent which would (i) extend the Revolving Termination Date with respect to the Japanese Borrowings, (ii) increase the Total Japanese Commitment or (iii) reduce the principal of or interest on the Japanese Loans or the Japanese Commitment Fees or any other fees or amounts payable for the account of all Japanese Lenders hereunder or extend the scheduled date for payment of any such principal, interest, fees or amounts, must be in writing and signed or approved in writing by all Japanese Lenders; (e) Any amendment, waiver or consent which would increase or decrease the Commitment of any Lender (except for a pro rata decrease in the Commitments of all Lenders with the same type of Commitment) must be in writing and signed by such Lender; and (f) Any amendment, waiver or consent which affects the rights or obligations of Agent must be in writing and signed by Agent. No failure or delay by Agent or any Lender in exercising any right under this Agreement or any other Credit Document shall operate as a waiver thereof or of any other right hereunder or thereunder nor shall any single or partial exercise of any such right preclude any other further 72 77 exercise thereof or of any other right hereunder or thereunder. Unless otherwise specified in such waiver or consent, a waiver or consent given hereunder shall be effective only in the specific instance and for the specific purpose for which given. 8.05. Successors and Assigns. (a) Binding Effect. This Agreement and the other Credit Documents shall be binding upon and inure to the benefit of Borrowers, Lenders, Agent, all future holders of the Notes and their respective successors and permitted assigns, except that neither Borrower may assign or transfer any of its rights or obligations under any Credit Document without the prior written consent of Agent and each Lender. (b) Participations. Any Lender may at any time sell to one or more banks or other financial institutions ("Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under this Agreement and the other Credit Documents. In the event of any such sale by a Lender of participating interests, such Lender's obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of its Notes for all purposes under this Agreement and Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement pursuant to which any such sale is effected may require the selling Lender to obtain the consent of the Participant in order for such Lender to agree in writing to any amendment, waiver or consent of a type specified in clause (a)(iv), (b)(i), (b)(iii), (c)(i), (c)(iii), (d)(i), (d)(iii) or Subparagraph (e) of Paragraph 8.04 but may not otherwise require the selling Lender to obtain the consent of such Participant to any other amendment, waiver or consent hereunder. Borrowers also agree that any Lender which has transferred any participating interest in its Commitments or Loans shall, notwithstanding any such transfer, be entitled to the full benefits accorded such Lender under Paragraph 2.10, Paragraph 2.11, and Paragraph 2.12, as if such Lender had not made such transfer. (c) Assignments. Any Lender may, at any time, sell and assign to any other Lender or any Eligible Assignee (individually, an "Assignee Lender") all or a portion of its rights and obligations under this Agreement and the other Credit Documents (such a sale and assignment to be referred to herein as an "Assignment") pursuant to an assignment agreement in the form of Exhibit H (an "Assignment Agreement"), executed by each Assignee Lender and such assignor Lender (an "Assignor Lender") and delivered to Agent for its acceptance and recording in the Register; provided, however, that: (i) Without the written consent of Agent and, if no Default has occurred and is continuing, LSI (which consent of Agent and LSI shall not be unreasonably withheld), no U.S. Lender may make any Assignment of its U.S. Revolving Commitment, U.S. 364 Day Commitment or U.S. Loans to any Assignee Lender which is not, immediately prior to such Assignment, a U.S. Lender hereunder or an Affiliate thereof acting through an office or branch located in the United States; 73 78 (ii) Without the written consent of Agent and, if no Default has occurred and is continuing, LLJS (which consent of Agent and LLJS shall not be unreasonably withheld), no Japanese Lender may make any Assignment of its Japanese Commitment or Japanese Loans to any Assignee Lender which is not, immediately prior to such Assignment, a Japanese Lender hereunder or an Affiliate thereof acting through an office or branch located in Japan; (iii) Without the written consent of Agent and, if no Default has occurred and is continuing, LSI (which consent of Agent and LSI shall not be unreasonably withheld), no U.S. Lender may make any Assignment of its U.S. Revolving Commitment, U.S. 364 Day Commitment or U.S. Loans to any Assignee Lender if, after giving effect to such Assignment, the U.S. Revolving Commitment, the U.S. 364 Day Commitment or the U.S. Loans of such Lender or such Assignee Lender would in the aggregate be less than Ten Million Dollars ($10,000,000) (except that a U.S. Lender may make an Assignment which reduces its U.S. Revolving Commitment, U.S. 364 Day Commitment and U.S. Loans to zero without the written consent of LSI and Agent); (iv) Without the written consent of Agent and, if no Default has occurred and is continuing, LLJS (which consent of Agent and LLJS shall not be unreasonably withheld), no Japanese Lender may make any Assignment of its Japanese Commitment or Japanese Loans to any Assignee Lender if, after giving effect to such Assignment, the Japanese Commitment or Japanese Loans of such Lender or such Assignee Lender would in the aggregate be less than One Billion Yen (Yen 1,000,000,000) (except that a Japanese Lender may make an Assignment which reduces its Japanese Commitment and Japanese Loans to zero without the written consent of LSI and Agent); (v) Without the written consent of Agent and, if no Default has occurred and is continuing, LSI (which consent of Agent and LSI shall not be unreasonably withheld), no U.S. Lender with a U.S. Revolving Commitment may make any Assignment of its U.S. Revolving Commitment or U.S. Revolving Loans which does not assign and delegate an equal pro rata interest in all rights, duties and obligations of such Lender under this Agreement and the other Credit Documents (except for its rights and duties, if any, relating to its U.S. 364 Day Commitment or U.S. 364 Day Loans or its Japanese Commitment or Japanese Loans); (vi) Without the written consent of Agent and, if no Default has occurred and is continuing, LSI (which consent of Agent and LSI shall not be unreasonably withheld), no U.S. Lender with a U.S. 364 Day Commitment may make any Assignment of its U.S. 364 Day Commitment or U.S. 364 Day Loans which does not assign and delegate an equal pro rata interest in all rights, duties and obligations of such Lender under this Agreement and the other Credit Documents (except for its rights and duties, if any, relating to its U.S. Revolving Commitment or U.S. Revolving Loans or its Japanese Commitment or Japanese Loans); 74 79 (vii) Without the written consent of Agent and, if no Default has occurred and is continuing, LLJS (which consent of Agent and LLJS shall not be unreasonably withheld), no Japanese Lender may make any Assignment of its Japanese Commitment or Japanese Loan which does not assign and delegate an equal pro rata interest in all rights, duties and obligations of such Lender under this Agreement and the other Credit Documents (except for its rights and duties, if any, relating to its U.S. Revolving Commitment or U.S. Revolving Loans or its U.S. 364 Day Commitment or U.S. 364 Day Loans); and (viii) Any Assignor Lender which is, or which has an Affiliate which is, a party to a Lender Rate Contract may not make an Assignment of all of its Commitment or all of its Loans to an Assignee Lender unless such Assignee Lender or its Affiliate shall also assume all obligations of such Assignor Lender or its Affiliate with respect to such Lender Rate Contract. Upon such execution, delivery, acceptance and recording of each Assignment Agreement, from and after the Assignment Effective Date determined pursuant to such Assignment Agreement, (A) each Assignee Lender thereunder shall be a Lender hereunder with Commitments or Loans as set forth on Attachment 1 to such Assignment Agreement (under the caption "Commitments or Loans After Assignment") and shall have the rights, duties and obligations of such a Lender under this Agreement and the other Credit Documents, and (B) the Assignor Lender thereunder shall be a Lender with Commitments or Loans as set forth on Attachment 1 to such Assignment Agreement (under the caption "Commitments or Loans After Assignment"), or, if the Commitments or Loans of the Assignor Lender have been reduced to zero, the Assignor Lender shall cease to be a Lender and to have any obligation to make any Loan; provided, however, that any such Assignor Lender which ceases to be a Lender shall continue to be entitled to the benefits of any provision of this Agreement which by its terms survives the termination of this Agreement. Each Assignment Agreement shall be deemed to amend Schedule I to the extent, and only to the extent, necessary to reflect the addition of each Assignee Lender, the deletion of each Assignor Lender which reduces its Commitments or Loans to zero, and the resulting adjustment of Commitments or Loans arising from the purchase by each Assignee Lender of all or a portion of the rights and obligations of an Assignor Lender under this Agreement and the other Credit Documents. On or prior to the Assignment Effective Date determined pursuant to each Assignment Agreement, LSI, at its own expense, shall, if requested by Assignee Lenders, execute and deliver to Agent, in exchange for the surrendered Notes, if any, of the Assignor Lender thereunder, new Notes to the order of each Assignee Lender thereunder and, if the Assignor Lender is continuing as a Lender hereunder, new Notes to the order of the Assignor Lender. The Notes surrendered by the Assignor Lender shall be returned by Agent to LSI marked "Replaced". Each Assignee Lender which becomes a U.S. Lender and was not previously a U.S. Lender hereunder and which is not incorporated under the laws of the United States of America or a state thereof shall, within three (3) Business Days of becoming a U.S. Lender, deliver to LSI and Agent such certificates and other evidence as LSI or Agent may reasonably request to establish that such Lender is entitled to receive payments under this Agreement on account of its U.S. Loans without deduction or withholding of any United States federal income taxes. Each Assignee Lender which 75 80 becomes a Japanese Lender and was not previously a Japanese Lender hereunder and which is not incorporated under the laws of Japan shall, within three (3) Business Days of becoming a Japanese Lender, deliver to LLJS and Agent such certificates and other evidence as LLJS or Agent may reasonably request to establish that such Lender is entitled to receive payments under this Agreement on account of its Japanese Loans without deduction or withholding of any Japanese income taxes. (d) Register. Agent shall maintain at its address referred to in Paragraph 8.01 a copy of each Assignment Agreement delivered to it and a register (the "Register") for the recordation of the names and addresses of Lenders and the Commitments or Loans of each Lender from time to time. The entries in the Register shall be conclusive in the absence of manifest error, and Borrowers, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Commitments or Loans recorded therein for all purposes of this Agreement. The Register shall be available for inspection by either Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Registration. Upon its receipt of an Assignment Agreement executed by an Assignor Lender and an Assignee Lender (and, to the extent required by Subparagraph 8.05(c), by Borrowers and Agent) together with payment to Agent by Assignor Lender of a registration and processing fee of $3,000, Agent shall (i) promptly accept such Assignment Agreement and (ii) on the Assignment Effective Date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to Lenders and Borrowers. Agent may, from time to time at its election, prepare and deliver to Lenders and Borrowers a revised Schedule I reflecting the names, addresses and respective Commitments or Loans of all Lenders then parties hereto. (f) Confidentiality. Subject to Paragraph 8.12, Agent and Lenders may disclose the Credit Documents and any financial or other information relating to Borrowers or any of their Subsidiaries to each other or to any potential Participant or Assignee Lender. (g) Pledges to Federal Reserve Banks. Notwithstanding any other provision of this Agreement, any Lender may at any time assign all or a portion of its rights under this Agreement and the other Credit Documents to a Federal Reserve Bank. No such assignment shall relieve the assigning Lender from its obligations under this Agreement and the other Credit Documents. 76 81 8.06. Setoff; Security Interest. (a) Setoff. In addition to any rights and remedies of Lenders provided by law, each Lender shall have the right, with the prior consent of Agent but without prior notice to or consent of Borrowers, any such notice and consent being expressly waived by Borrowers to the extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, to set-off and apply against the Obligations of either Borrower any amount owing from such Lender to such Borrower. The aforesaid right of set-off may be exercised by such Lender against a Borrower or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or execution, judgment or attachment creditor of such Borrower or against anyone else claiming through or against such Borrower or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off may not have been exercised by such Lender at any prior time. Each Lender agrees promptly to notify the applicable Borrower after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. (b) Security Interest. As security for the Obligations, each Borrower hereby grants to Agent and each Lender, for the benefit of all Lenders, a continuing security interest in any and all deposit accounts or moneys of such Borrower now or hereafter maintained with such Lender. Each Lender shall have all of the rights of a secured party with respect to such security interest. 8.07. No Third Party Rights. Nothing expressed in or to be implied from this Agreement is intended to give, or shall be construed to give, any Person, other than the parties hereto and their permitted successors and assigns hereunder, any benefit or legal or equitable right, remedy or claim under or by virtue of this Agreement or under or by virtue of any provision herein. 8.08. Partial Invalidity. If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law or any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this Agreement nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. 8.09. Jury Trial. EACH OF BORROWERS, LENDERS AND AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT. 8.10. Counterparts. This Agreement may be executed in any number of identical counterparts, any set of which signed by all the parties hereto shall be deemed to constitute a complete, executed original for all purposes. 77 82 8.11. Borrowers' Liabilities. LSI is individually liable for the payment of the U.S. Revolving Commitment Fees, the U.S. 364 Day Commitment Fees and the principal of, interest on and all other amounts related to the U.S. Loans and all expenses and indemnification payable under Paragraphs 8.02 and 8.03, and LLJS is individually liable for the payment of the Japanese Commitment Fees and the principal of, interest on and all other amounts related to the Japanese Loans. LSI also is liable for the payment and performance of all Obligations of LLJS under this Agreement and the other Credit Documents as provided in the LSI Guaranty. 8.12. Confidentiality. Neither any Lender nor Agent shall disclose to any Person any information with respect to Borrowers or any of their Subsidiaries which is furnished pursuant to this Agreement or under the other Credit Documents, except that any Lender or Agent may disclose any such information (a) to its own directors, officers, employees, auditors, counsel and other advisors and to its Affiliates to the extent reasonably determined by such Lender or Agent to be necessary for the administration or enforcement of the Credit Documents; (b) to any other Lender or Agent; (c) which is otherwise available to the public; (d) if required or appropriate in any report, statement or testimony submitted to any Governmental Authority having or claiming to have jurisdiction over such Lender or Agent; (e) if required in response to any summons or subpoena; (f) in connection with any enforcement by Lenders and Agent of their rights under this Agreement or the other Credit Documents or any litigation among the parties relating to the Credit Documents or the transactions contemplated thereby; (g) to comply with any requirement of law applicable to such Lender or Agent; (h) to any Assignee Lender or Participant or any prospective Assignee Lender or Participant, provided that such Assignee Lender or Participant or prospective Assignee Lender or Participant agrees to be bound by this Paragraph 8.12; or (i) otherwise with the prior consent of Borrowers; provided, however, that (i) any Lender or Agent served with any summons or subpoena demanding the disclosure of any such information shall use reasonable efforts to notify Borrowers promptly of such summons or subpoena if not prohibited by any requirement of law and, if requested by Borrowers and not disadvantageous to such Lender or Agent, to cooperate with Borrowers in obtaining a protective order restricting such disclosure, and (ii) any disclosure made in violation of this Agreement shall not affect the obligations of Borrowers and their Subsidiaries under this Agreement and the other Credit Documents. 8.13. Consent to Jurisdiction. Each Borrower irrevocably submits to the non-exclusive jurisdiction of the courts of the State of California and the courts of the United States of America located in the Northern District of California and agrees that any legal action, suit or proceeding arising out of or relating to this Agreement or any of the other Credit Documents may be brought against such party in any such courts. Final judgment against either Borrower in any such action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any other manner provided by law. Nothing in this Paragraph 8.13 shall affect the right of Agent or any Lender to commence legal proceedings or otherwise sue either Borrower in any other appropriate jurisdiction, or concurrently in more than one jurisdiction, or to serve process, pleadings and other papers upon either Borrower in any manner authorized by the laws of any such jurisdiction. Each Borrower agrees that process served either personally or by registered mail shall, to the extent permitted by law, constitute adequate service of process in any such suit. Without limiting the foregoing, each Borrower hereby appoints, in the case of any such action or proceeding brought in the courts of or in the State of California, CT Corporation, 78 83 with offices on the date hereof at 818 West Seventh Street, Los Angeles, California 90017, to receive for it and on its behalf, service of process in the State of California with respect thereto, provided Guarantor may appoint any other Person, reasonably acceptable to Agent, with offices in the State of California to replace such agent for service of process upon delivery to Agent of a reasonably acceptable agreement of such new agent agreeing so to act. Guarantor irrevocably waives to the fullest extent permitted by applicable law (a) any objection which it may have now or in the future to the laying of the venue of any such action, suit or proceeding in any court referred to in the first sentence above; (b) any claim that any such action, suit or proceeding has been brought in an inconvenient forum; (c) its right of removal of any matter commenced by any other party in the courts of the State of California to any court of the United States of America; (d) any immunity which it or its assets may have in respect of its obligations under this Agreement or any other Credit Document from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process; and (e) any right it may have to require the moving party in any suit, action or proceeding brought in any of the courts referred to above arising out of or in connection with this Agreement or any other Credit Document to post security for the costs of Guarantor or to post a bond or to take similar action. [The first signature page follows] 79 84 IN WITNESS WHEREOF, Borrowers, Lenders and Agent have caused this Agreement to be executed as of the day and year first above written. BORROWERS: LSI LOGIC CORPORATION By: /s/ MARK R. KENT ------------------------------------ Name: Mark R. Kent ------------------------------ Title: Treasurer ----------------------------- LSI LOGIC JAPAN SEMICONDUCTOR, INC. By: /s/ R. D. NORBY ------------------------------------ Name: R. Douglas Norby ------------------------------ Title: Representative Director ----------------------------- AGENT: ABN AMRO BANK N.V. By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- LENDERS: ABN AMRO BANK N.V. By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- S-1 85 IN WITNESS WHEREOF, Borrowers, Lenders and Agent have caused this Agreement to be executed as of the day and year first above written. BORROWERS: LSI LOGIC CORPORATION By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- LSI LOGIC JAPAN SEMICONDUCTOR, INC. By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- AGENT: ABN AMRO BANK N.V. By: /s/ THOMAS R. WAGNER ------------------------------------ Name: Thomas R. Wagner ------------------------------ Title: Group Vice President ----------------------------- By: /s/ ROBERT N. HARTINGER ------------------------------------ Name: Robert N. Hartinger ------------------------------ Title: Senior Vice President ----------------------------- LENDERS: ABN AMRO BANK N.V. By: /s/ THOMAS R. WAGNER ------------------------------------ Name: Thomas R. Wagner ------------------------------ Title: Group Vice President ----------------------------- By: /s/ ROBERT N. HARTINGER ------------------------------------ Name: Robert N. Hartinger ------------------------------ Title: Senior Vice President ----------------------------- S-1 86 SCHEDULE I LENDERS PART A - COMMITMENTS
U.S. JAPANESE LENDER REVOLVING U.S 364 DAY COMMITMENT COMMITMENT COMMITMENT (DOLLAR EQUIVALENT) - ---------------------- ---------------------------------------------------------------- ABN AMRO Bank N.V. $575,000,000, less $150,000,000 Total Japanese amount of Total Commitment not to Japanese Commitment exceed $100,000,000
I-1 87 PART B - ADDRESSES FOR NOTICES, ETC. ABN AMRO BANK N.V. Domestic Lending Office and Euro-Dollar Lending Office: ABN AMRO Bank N.V. 135 South LaSalle Street Chicago, IL 60603 Japanese Lending Office: ABN AMRO Bank N.V. Tokyo Branch 13F, Shiroyama JT Mori Building 4-3-1, Toranomon, Minato-ku Tokyo 105 Japan Address for Notices related to U.S. Borrowings: ABN AMRO Bank N.V. San Francisco International Branch 101 California Street, Suite 4550 San Francisco, CA 94111 Attn: Thomas R. Wagner Tel. No: (415) 984-3734 Fax No: (415) 362-3524 Address for Notices related to Japanese Borrowings: ABN AMRO Bank N.V. Tokyo Branch 13F, Shiroyama JT Mori Building 4-3-1, Toranomon, Minato-ku Tokyo 105 Japan Attn: Kiyoharu Michiwaki or Takamasa Marito Tel. No: 81-3-5405-6575 or 6565 Fax No: 81-3-5405-6902 or 6903 I-2 88 With a copy of all notices to: ABN AMRO North America, Inc. Syndications Group 1325 Avenue of the Americas, 9th Floor New York, NY 10019 Attn: Linda Boardman Tel. No: (212) 314-1724 Fax No: (212) 314-1712 Wiring Instructions for U.S. Borrowings: ABN AMRO Bank N.V. New York, New York RT/ABA No.: 026009580 Account Name: ABN AMRO Bank N.V. - Chicago CPU Account No.: 650-001-1789-41 Reference: LSI Logic Corporation Wiring Instructions for Japanese Borrowings: Paying Bank: Sakura Bank, Tokyo Eigyo-bu Beneficiary: Oranda Ginko Tokyo Shiten (Japanese Account Name for ABN AMRO Bank Tokyo Branch) Type of Account: Current Account No.: 1008000 Reference: LSI Logic Japan 1998 Credit Facility -or- BOJ Net (Bank of Japan Financial Network System) Tohzo Yokin Furikae Account No.: 0422-001 Settlement: Kokan Jiri I-3 89 SCHEDULE II PRICING GRID
APPLICABLE APPLICABLE APPLICABLE U.S. REVOLVING MARGIN MARGIN MARGIN PRICING COMMITMENT FEES AND FOR FOR FOR PRICING PERIOD JAPANESE COMMITMENT BASE RATE LIBOR JAPANESE RATIO LEVEL FEES LOANS LOANS LOANS ------- ------- ------------------- --------- ---------- ---------- *0.75 1 0.250% 0% 0.750% 0.750% >0.75, *1.50 2 0.300% 0% 1.000% 1.000% >1.50 3 0.325% 0% 1.250% 1.250%
EXPLANATION 1. The U.S. Revolving Commitment Fees and the Japanese Commitment Fees and the Applicable Margin For Base Rate Loans, LIBOR Loans and Japanese Loans will be set for each Pricing Period and will vary depending upon whether such period is a Level 1 Period, a Level 2 Period or a Level 3 Period. 2. The first Pricing Period, which commences on the date of this Agreement and ends on September 30, 1998, will be a Level 2 Period. 3. Each Pricing Period thereafter will be a Level 1 Period, a Level 2 Period, or a Level 3 Period depending upon the Senior Debt to Pricing Ratio calculated on an annualized basis for the most recent consecutive two-quarter period ending on the last day of the quarter that ended prior to the first day of such Pricing Period. 4. If on the date any interest is payable with respect to any Loans the Applicable Margin for such Loans has not yet been determined for such Pricing Period, the applicable Borrower shall pay an estimated amount of interest with respect to such Loans calculated on the basis of the Applicable Margin for the applicable category of Loans during the prior Pricing Period. When the Applicable Margin and the final amount of interest payable with respect to such Loans are determined, the applicable Borrower shall pay to Agent any positive difference between such final amount and the estimated amount of interest paid by such Borrower with respect to such Loans and any negative difference between such amounts shall be applied by Agent against any amounts then or thereafter owing by such Borrower to Lenders holding the Loans on which such excess interest was paid. 5. Examples: (a) Pricing Ratio is 1.55 on an annualized basis for the consecutive two-quarter period ending on September 30, 1998. The Pricing Period of October 1, 1998 through December 31, 1998 will be a Level 1 Period. (b) Pricing Ratio is 1.10 on an annualized basis for the consecutive two-quarter period ending on December 31, 1998. The Pricing Period of January 1, 1999 through March 31, 1999 will be a Level 2 Period. * less than or equal to. II-1 90 SCHEDULE 3.01 I. INITIAL CLOSING DATE CONDITIONS PRECEDENT A. PRINCIPAL CREDIT DOCUMENTS. (1) The Credit Agreement, duly executed by each Borrower, each Lender and Agent; (2) Agent's Syndication Letter, duly executed by each Borrower; (3) If the Initial Closing Date is the U.S. Closing Date, a Note payable to each applicable U.S. Lender requesting such a Note for its U.S. Revolving Loans or U.S. 364 Day Loans, each duly executed by LSI; and (4) If the Initial Closing Date is the Japanese Closing Date, the LSI Guaranty, duly executed by LSI. B. LSI CORPORATE DOCUMENTS. (1) The Certificate of Incorporation of LSI, certified as of a recent date prior to the Initial Closing Date by the Secretary of State of Delaware; (2) A Certificate of Good Standing (or comparable certificate) for LSI, certified as of a recent date prior to the Initial Closing Date by the Secretary of State of Delaware; (3) A certificate of the Secretary or an Assistant Secretary of LSI, dated the Initial Closing Date, certifying (a) that attached thereto is a true and correct copy of the Bylaws of LSI as in effect on the Initial Closing Date; (b) that attached thereto are true and correct copies of resolutions duly adopted by the Board of Directors of LSI and continuing in effect, which (i) authorize the execution, delivery and performance by LSI of this Agreement and the other Credit Documents executed or to be executed by LSI and the consummation of the transactions contemplated hereby and thereby and (ii) designate the officers authorized so to execute, deliver and perform on behalf of LSI; and (c) that there are no proceedings for the dissolution or liquidation of LSI; (4) A certificate of the Secretary or an Assistant Secretary of LSI, dated the Initial Closing Date, certifying the incumbency, signatures and authority of the officers of LSI authorized to execute, deliver and perform this Agreement, the other Credit Documents and all other documents, instruments or agreements related thereto executed or to be executed by LSI; (5) Certificates of Good Standing (or comparable certificates) for LSI, certified as of a recent date prior to the Initial Closing Date by the Secretaries of State (or comparable official) of California and each other jurisdiction in which LSI is qualified to do business and has assets with a net book value in excess of $10,000,000 (exclusive of intercompany assets and liabilities); and 3.01-1 91 (6) Acceptance of appointment as agent for service of process on LSI relating to the Credit Documents, executed by CT Corporation prior to the Initial Closing Date. C. LLJS CORPORATE DOCUMENTS. (1) The Articles of Association (Teikan) of LLJS, certified as of a recent date prior to the Initial Closing Date by a Representative Director of LLJS; (2) A copy of the commercial registry (Syougyou Tookibotoohon) for LLJS, issued as of a recent date prior to the Initial Closing Date by the registrar of the Tokyo Legal Affairs Bureau of the Ministry of Justice; (3) A certificate of a Representative Director of LLJS, dated the Initial Closing Date, certifying (a) that attached thereto are true and correct copies of resolutions duly adopted by the Board of Directors of LLJS and continuing in effect, which (i) authorize the execution, delivery and performance by LLJS of this Agreement and the other Credit Documents executed or to be executed by LLJS and the consummation of the transactions contemplated hereby and (ii) designate the officers, directors and attorneys authorized so to execute, deliver and perform on behalf of LLJS; and (b) that there are no proceedings for the dissolution or liquidation of LLJS, together with an English translation thereof (if appropriate); (4) A certificate of a Representative Director of LLJS, dated the Initial Closing Date, certifying the incumbency, signatures and authority of the officers, directors or attorneys of LLJS authorized to execute, deliver and perform this Agreement, the other Credit Documents and all other documents, instruments or agreements related thereto executed or to be executed by LLJS, together with an English translation thereof (if appropriate); and (5) Acceptance of appointment as agent for service of process on LLJS relating to the Credit Documents, executed by CT Corporation prior to the Initial Closing Date. D. FINANCIAL STATEMENTS, FINANCIAL CONDITION, ETC. (1) A copy of the unaudited Financial Statements of LSI and its Subsidiaries for the fiscal quarter ended March 31, 1998, and for the fiscal year to such date (prepared on a consolidated and consolidating basis), certified by the Chief Financial Officer or Treasurer of LSI to present fairly the financial condition, results of operations and other information reflected therein and to have been prepared in accordance with GAAP (subject to normal year-end audit adjustments); (2) A copy of the audited consolidated Financial Statements of LSI for the fiscal year ended December 31, 1997, prepared by Ernst & Young LLP, together with a copy of the unqualified opinion and management letter delivered by such accountants in connection with such Financial Statements; 3.01-2 92 (3) A copy of the 10-Q report filed by LSI with the SEC for the quarter ended March 31, 1998; (4) A copy of the 10-K report filed by LSI with the SEC for the fiscal year ended December 31, 1997; (5) A final sources and uses statement for the Symbios Acquisition (including transaction costs); (6) A pro forma balance sheet of LSI prepared as of June 30, 1998, but incorporating all preclosing adjustments and reflecting the consummation of the Symbios Acquisition, the Loans to be made in connection therewith and the other transactions contemplated by the Symbios Acquisition Documents, certified by the Chief Financial Officer or Treasurer of LSI as having been prepared based upon reasonable assumptions and in good faith; and (7) Such other financial, business and other information regarding Borrowers or any of their Subsidiaries as Agent or any Lender may reasonably request, including information as to the Symbios Acquisition and possible contingent liabilities, tax matters, environmental matters and obligations for employee benefits and compensation. E. OPINIONS. A favorable written opinion from Wilson, Sonsini, Goodrich & Rosati, counsel for Borrowers and LSI as guarantor under the LSI Guaranty, in the form of Exhibit I, dated the Initial Closing Date, addressed to Agent for the benefit of Agent and Lenders, covering such legal matters as Agent may reasonably request and otherwise in form and substance satisfactory to Agent: F. OTHER ITEMS. (1) A duly completed and timely delivered Notice of Borrowing for the applicable Borrowing and, if the Initial Closing Date is the Japanese Closing Date, the receipt by Agent of written notice from LLJS specifying the Total Japanese Commitment on the day four (4) Business Days prior to the Initial Closing Date; (2) Copies of the principal Symbios Acquisition Documents; (3) Copies of all filings made by LSI with the SEC in connection with the Symbios Acquisition, together with all exhibits and all amendments thereto through the Initial Closing Date; (4) A certificate from each of the Chief Financial Officer or Treasurer of LSI and a Representative Director of LLJS, respectively, addressed to Agent and dated the Initial Closing Date, certifying that: (a) The representations and warranties set forth in Paragraph 4.01 and in the other Credit Documents are true and correct in all material respects as of 3.01-3 93 such date (except for such representations and warranties made as of a specified date, which shall be true as of such date); and (b) No Default has occurred and is continuing as of such date. (5) All fees and expenses payable to Agent and Lenders on or prior to the Initial Closing Date (including all fees payable to Agent pursuant to the Agent's Fee Letter); (6) All fees and expenses of Agent's counsels through the Initial Closing Date; (7) Such other evidence as Agent or any Lender may reasonably request to establish the accuracy and completeness of the representations and warranties and the compliance with the terms and conditions contained in this Agreement and the other Credit Documents; (8) Copies of the irrevocable notices delivered by LLJS pursuant to the Outstanding Japanese Loan Facility of its intention to cancel all commitments and prepay all amounts outstanding thereunder by no later than August 31, 1998; (9) Copies of the form of LSI's 5 1/2% Subordinated Notes due 2001 and the indenture relating thereto; (10) Such documentation as ABN AMRO may require in order for LLJS to open an account with its Tokyo branch, including, without limitation, an Agreement on Bank Transactions and an Agreement on Overdraft in Current Account. II. POST-CLOSING CONDITIONS SUBSEQUENT A. English translations of the Articles of Association (Teikan) and commercial registry (Syougyou Tookibotoohon) for LLJS delivered pursuant to Items C(1) and C(2) of Part I of this Schedule 3.01. B. A favorable written opinion from Nagashima & Ohno, , Japanese counsel for LLJS, in the form of Exhibit J, addressed to Agent for the benefit of Agent and Lenders, covering such legal matters as Agent may reasonably request and otherwise in form and substance satisfactory to Agent: 3.01-4 94 SCHEDULE 4.01(d) GOVERNMENTAL CONSENTS (1) Pursuant to the Hart, Scott, Rodino Act, LSI Logic Corporation was granted early termination from the Federal Trade Commission (FTC) on July 21, 1998 with respect to its proposed acquisition of Symbios, Inc. 95 DISCLOSURE SCHEDULE SECTION 4.01(g) Ethel Taylor v. LSI Logic Corporation. Case #13915 in Court of Chancery of the State of Delaware in and for New Castle County. The matter is described in the Form 10-K of LSI Logic Corporation at Item 3, Legal Proceedings therein. Plaintiff's appeal of the court of Chancery's dismissal upon LSI Logic's motion is still pending. In the Matter of LSI Logic Corporation of Canada and its Shareholders. Action #9501-15628 in the Court of Queen's Bench of Alberta, Judicial District of Calgary. This matter is described in the form 10-K of LSI Logic Corporation at Item 3, Legal Proceedings therein. 96 SCHEDULE 4.01(i) None 97 SCHEDULE 4.01(1) SIGNIFICANT SUBSIDIARIES - -------------------------------------------------------------------------------- % NAME OF SUBSIDIARY SHAREHOLDER(S) OWNERSHIP - ------------------ ---------------------- --------- - -------------------------------------------------------------------------------- LSI Logic Corporation of LSI Logic Corporation 100% Canada, Inc. - -------------------------------------------------------------------------------- Mint Technology, Inc. LSI Logic Corporation 100% - -------------------------------------------------------------------------------- LSI Logic Netherlands B.V. LSI Logic Corporation 100% - -------------------------------------------------------------------------------- LSI Logic Europe LTD LSI Logic Netherlands B.V. 100% - -------------------------------------------------------------------------------- LSI Logic Hong Kong LSI Logic Netherlands B.V. 100% - -------------------------------------------------------------------------------- LSI Logic HK Holdings LSI Logic Netherlands 100% Antilles B.V. - -------------------------------------------------------------------------------- LSI Logic KK LSI Logic Netherlands B.V. 91% - -------------------------------------------------------------------------------- LSI Logic Japan LSI Logic Netherlands B.V. 100% Semiconductor, Inc. - --------------------------------------------------------------------------------
98 DISCLOSURE SCHEDULE SECTION 5.02(a) LIENS OF LSI LOGIC CORPORATION See Attached Schedule "Lease Base Report", 07/98. LIENS OF SUBSIDIARIES 1. Nippon Life Insurance Company: The outstanding balance as of July 31, 1998 is Y150,000,000. The security for the loans is the land, building and equipment of the Borrower which constitute a Kojo-Zeiden-Teito (factory mortgage) (located at 10-banchi, Kitahara, Tsukuba-shi). 2. Kawasaki Leasing Co. Miscellaneous lease agreements involving automobiles, office computer, testing instruments and so on. Those leased items are owned by Kawasaki Leasing Co. 3. The Industrial Bank of Japan Leasing Master Lease Agreement and Master Purchase Agreement dated June 16, 1995 and leasing transactions thereunder in connection with Y15 billion synthetic lease. The net present value of the remaining lease payments, including the equipment purchase option, is approximately Y8,279,048,000 as of July 31, 1998. 99 LEASE BASE REPORT 07/98 - ------------------------------------------------------------------------------------------------------- Original Equity Purchase Lease Schedule 1 Description Price Maturity - ------------------------------------------------------------------------------------------------------- ??????: CE 18-00 5IIN SS1D M5I WFIGB CLD SN 034F200] 16,987 09/30/ 98 CE 18-00 SUN 4/20 3,214 09/30/ 98 CE 18-00 NS 5000 NETWORK SERVER AND UPGRADE 331,707 09/30/ 98 CE 18-00 19" COLOR MONITOR OLD SN 524F2484 1,797 09/30/ 98 CE 18-00 SUN 4/20 3,214 09/30/ 98 CE 18-00 SUN 5S90 M51 WF1GB OLD SN 034F2052 16,967 09/30/ 98 CE 18-00 SUN 5S90 M51 WF1GB OLD SN 046F1778 16,967 09/30/ 98 CE 18-00 SUN 4/20 3,214 09/30/ 98 CE 18-00 SUN SPARC SS 10/30 10,097 09/30/ 98 CE 18-00 SUN 4/20 3,214 09/30/ 98 CE 18-00 SUN 5S10 M51 WF1GB OLD SN038F109] 16,967 09/30/ 98 CE 18-00 SUN SPARC SS10/30 16,097 09/30/ 98 CE 18-00 SUN 4M70 SPARCSTATION 55,341 09/30/ 98 CE 18-00 SUN SPARC SS 10/30 16,097 09/30/ 98 CE 18-00 SUN SS10 M51 WF1GB OLD SN034F2043 16,987 09/30/ 98 CE 21-01 SUNSPARC 10-40 WF1GB 13,298 03/31/ 99 CE 21-01 SUN OMB 19" COLOR WORKSTATION 8,343 03/31/ 99 CE 21-01 SUN IPX S10-40 WF1GB 10,813 03/31/ 99 CE 21-01 SUN OMB 10" COLOR-GX WORKSTATION 9,875 03/31/ 99 CE 21-01 SUN SPARCSTATION LPG TO 4/75 4,197 03/31/ 99 CE 21-01 SUN SS10 M41 WF1GB, ??NTE ???AL SCSI DISK 8,745 03/31/ 99 CE 21-01 SUN SPARC 10-40 WF1GB 13,295 03/31/ 99 CE 21-01 SUN SPARCPRINTER LASERPRINTER 1,730 03/31/ 99 CE 21-01 SUN IPX S10-40 WF1GB 10,113 03/31/ 99 CE 21-01 3/200 UQ TO 4/300 W321/8 11,133 03/31/ 99 CE 21-01 SUNSPARC 10GX-40 WF1GB 13,797 03/31/ 99 CE 21-01 64MB SIMM 2,640 03/31/ 99 CE 21-01 SUN SPARC 10-40 WF1GB 12,300 03/31/ 99 CE 21-01 SUN 8MB 19" COLOR WORKSTATION 8,343 03/31/ 99 CE 21-01 SUN IPX S10-40 WF1GB 10,113 03/31/ 99 CE 21-01 64MB SIMM 2,640 03/31/ 99 CE 21-01 64MB SIMM 2,640 03/31/ 99 CE 24-00 SEAGATE 1.2GB IPI DISK, U/G #99282 6,365 12/31/ 99 CE 24-00 UG TO 4/75, OLD SN D18F0239 4,491 12/31/ 99 CE 24-00 128MB MEM SD, UG TO A99095 ICE-87) 28,890 12/31/ 99 CE 24-00 SEAGATE 1.2GB IPI DISK, U/G #97282 8,366 12/31/ 99 CE 24-00 SUN1PZ S10-40 WF1GB 19,170 12/31/ 99 CE 24-00 2 EA 32MB MEM 80, UG TO #90015 16,692 12/31/ 99 CE 24-00 2 EA 32MB MEM 80, UG TO #90035 16,692 12/31/ 99 CE 24-00 ADD GX TO U/G COLR SYS 1,620 12/31/ 99 CE 24-00 2 EA 32MB MEM 80, U/G TO 399033 16,892 12/31/ 99 CE 24-00 170MB MEM 8D, U/G TO #99032 (CE-15) 28,890 12/31/ 99 CE 24-00 128MB MEM 8D, U/G TO #99013 (CE-12) 28,890 12/31/ 99 CE 24-00 2 EA 32MB MEM 8D, U/G TO #90016 (CE-12) 16,892 12/31/ 99 CE 24-00 SUN NFS PRESTOSERVER ACCL FOR 4/430 4,810 12/31/ 99 CE EQ-01 MICROSCAN SVGL OUV EXPOSURE SYSTEM 4,150,571 09/27/ 99 CE EQ 07 Tokyo Electron limited Ocean Track Mark 8 1,478,420 05/12/ 00
- ------------------------------------------------------------------------------------------------------- Original Equity Purchase Lease Schedule 1 Description Price Maturity - ------------------------------------------------------------------------------------------------------- AT&T 002 CREDENCE LT1101 TEST SYSTEM 2,645,748 10/31/ 98 AT&T 003 CREDENCE LT1101 TEST SYSTEM 2,190,347 10/31/ 98 Capital Lease DANA THERMCO OXIDATION SERIES 7300 VTR 1,664,244 05/01/ 00 Capital Lse GE 22 IDS 3000 PROBE STATION 205,811 01/01/ 99 CIT 9-002 CREDENCE SYS 6266 VLSITEST SYSTEM 599,960 07/01/ 98 GE CITIZENS LEASING C-1 L?? Rainbow 4520 Oxide Etching System w/pum 1,006,408 04/01/ 02 GE CITIZENS LEASING C-2 NOVELLUS HDP 1,146,320 04/01/ 02 GE CITIZENS LEASING C-3 NOVELLUS HDP 1,146,320 04/01/ 02 GE CITIZENS LEASING C-4 NOVELLUS CONCEPT ONE 1,260,220 04/01/ 02 GE E-02 CANON FPA 2500 STEPPER 2,250,000 10/01/ 99 GE E-03 KLA WAFER INSPECTOR 1,746,000 10/01/ 99 GE E-04 CREDENCE SC212 TESTER W/UNIVERSAL LD 741,865 12/01/ 99 GE E-04 CREDENCE SC212 TESTER 212,773 12/01/ 99 GE E-05 ONTRACT FS/OS WAFER CLEANER 219,048 12/01/ 99 GE E-43 WESTECH CMP POLISHER 282,038 12/31/ 99 GE E-43 WESTECH CMP POLISHER 282,038 12/31/ 99 GE E-07 F????? Monitoring System for AMT 6500 210,090 12/31/ 99 GE E-07 Applied Material 6500 E???? System 3,280,324 12/31/ 99 GE E-08 Eston High Energy Ion Implanter 3,891,849 01/02/ 02 GE E-09 LAM 9600 METAL ETCHER 1,509,133 01/02/ 02 GE E-10 Mitachi S-882 CD/SEM for Jelda Wafer 1,383,305 01/02/ 02 GE E-11 ONS SPINCOAT DEVELOPER 1,041,239 01/02/ 02 GE KEYCORP K-1 ONS ANNEALING SYSTEM FOR ATP 821,100 04/01/ 02 GE PNC LEASING IP-1 (2) ONS TRACKS 1,522,007 01/02/ 02 GE PNC LEASING IP-2 LAN 5408 1,146,320 01/02/ 02 PITNEY BOWES 001 NIKON STEPPER 3,784,280 12/30/ 02 USL CAP. 022012 LAM #4500 RAINBOW OXIDE ETCHSYSTEM 738,102 12/10/ 98 USL CAP. 123845 Lam Research 9600 Metal Etcher w/pump 1,601,472 12/01/ 98 CIT 01 LAM 4528 OXIDE ETCH SYSTEM 828,203 07/01/ 98
100 EXHIBIT A NOTICE OF U.S. BORROWING [Date] ABN AMRO Bank N.V., as Agent Syndications Group 1325 Avenue of the Americas, 9th Floor New York, NY 10019 U.S.A. Attn: Linda Boardman 1. Reference is made to that certain Credit Agreement, dated as of August 5, 1998 (the "Credit Agreement"), among LSI Logic Corporation ("LSI"), LSI Logic Japan Semiconductor, Inc., the financial institutions listed in Schedule I to the Credit Agreement (the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein. 2. Pursuant to Subparagraph 2.01(c) of the Credit Agreement, LSI hereby irrevocably requests a U.S. Borrowing upon the following terms: (a) The requested U.S. Borrowing is to be a [U.S. Revolving Borrowing][U.S. 364 Day Borrowing]; (b) The principal amount of the requested U.S. Borrowing is to be $__________; (c) The requested U.S. Borrowing is to consist of [Base Rate][LIBOR] Loans; (d) If the requested U.S. Borrowing is to consist of LIBOR Loans, the initial Interest Period for such Loans will be month[s]; and (e) The date of the requested U.S. Borrowing is to be __________, ____. 3. LSI hereby certifies to Lenders and Agent that, on the date of this Notice of U.S. Borrowing and after giving effect to the requested U.S. Borrowing: (a) The representations and warranties of Borrowers and their 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 as of such date); A-1 101 (b) No Default has occurred and is continuing; and (c) All of the Credit Documents are in full force and effect. 4. Please disburse the proceeds of the requested U.S. Borrowing to ________________________________________________________________________________ IN WITNESS WHEREOF, LSI has executed this Notice of U.S. Borrowing on the date set forth above. LSI LOGIC CORPORATION By: ___________________________________ Name: _____________________________ Title: ____________________________ A-2 102 EXHIBIT B NOTICE OF U.S. BORROWING CONVERSION [Date] ABN AMRO Bank N.V., as Agent Syndications Group 1325 Avenue of the Americas, 9th Floor New York, NY 10019 U.S.A. Attn: Linda Boardman 1. Reference is made to that certain Credit Agreement, dated as of August 5, 1998 (the "Credit Agreement"), among LSI Logic Corporation ("LSI"), LSI Logic Japan Semiconductor, Inc., the financial institutions listed in Schedule I to the Credit Agreement (the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein. 2. Pursuant to Subparagraph 2.01(e) of the Credit Agreement, LSI hereby irrevocably requests to convert a U.S. Borrowing as follows: (a) The U.S. Borrowing to be converted consists of ["Base Rate" or "LIBOR"] Loans in the aggregate principal amount of $__________ which were initially advanced to LSI on , , as a [U.S. Revolving Borrowing or U.S. 364 Day Borrowing][, and have a current Interest Period of ____ month[s] expiring on _________________, ____]; (b) The U.S. Loans in such U.S. Borrowing are to be converted into ["Base Rate" or "LIBOR"] Loans; (c) If such U.S. Loans are to be converted into LIBOR Loans, the initial Interest Period for such U.S. Loans commencing upon conversion will be month[s]; and (d) The date of the requested conversion is to be __________, ____. B-1 103 3. LSI hereby certifies to Lenders and Agent that, on the date of this Notice of U.S. Borrowing Conversion, and after giving effect to the requested conversion: (a) The representations and warranties of Borrowers and their 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 as of such date); (b) No Default has occurred and is continuing; and (c) All of the Credit Documents are in full force and effect. IN WITNESS WHEREOF, LSI has executed this Notice of U.S. Borrowing Conversion on the date set forth above. LSI LOGIC CORPORATION By: ___________________________________ Name: _____________________________ Title: ____________________________ B-2 104 EXHIBIT C NOTICE OF U.S. BORROWING INTEREST PERIOD SELECTION [Date] ABN AMRO Bank N.V., as Agent Syndications Group 1325 Avenue of the Americas, 9th Floor New York, NY 10019 U.S.A. Attn: Linda Boardman 1. Reference is made to that certain Credit Agreement, dated as of August 5, 1998 (the "Credit Agreement"), among LSI Logic Corporation ("LSI"), LSI Logic Japan Semiconductor, Inc., the financial institutions listed in Schedule I to the Credit Agreement (the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein. 2. Pursuant to Subparagraph 2.01(f) of the Credit Agreement, LSI hereby irrevocably selects a new Interest Period for a U.S. Borrowing as follows: (a) The U.S. Borrowing for which a new Interest Period is to be selected consists of LIBOR Loans in the aggregate principal amount of $__________ which were initially advanced to LSI on , , as a [U.S. Revolving Borrowing or U.S. 364 Day Borrowing]; (b) The last day of the current Interest Period for such LIBOR Loans is ___________, ____; and (c) The next Interest Period for such LIBOR Loans commencing upon the last day of the current Interest Period is to be _________ month[s]. 3. LSI hereby certifies to Lenders and Agent that, on the date of this Notice of U.S. Borrowing Interest Period Selection, and after giving effect to the requested selection: (a) The representations and warranties of Borrowers and their 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 as of such date); (b) No Default has occurred and is continuing; and C-1 105 (c) All of the Credit Documents are in full force and effect. IN WITNESS WHEREOF, LSI has executed this Notice of U.S. Borrowing Interest Period Selection on the date set forth above. LSI LOGIC CORPORATION By: ___________________________________ Name: _____________________________ Title: ____________________________ C-2 106 EXHIBIT D NOTICE OF JAPANESE BORROWING [Date] ABN AMRO Bank N.V., as Agent 13F, Shiroyama JT Mori Building 4-3-1, Toranomon, Minato-ku Tokyo 105, Japan Attn: Kiyoharu Michiwaki 1. Reference is made to that certain Credit Agreement, dated as of August 5, 1998 (the "Credit Agreement"), among LSI Logic Corporation, LSI Logic Japan Semiconductor, Inc. ("LLJS"), the financial institutions listed in Schedule I to the Credit Agreement (the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein. 2. Pursuant to Subparagraph 2.02(b) of the Credit Agreement, LLJS hereby irrevocably requests a Japanese Borrowing upon the following terms: (a) The principal amount of the requested Japanese Borrowing is to be yen__________; (b) The initial Interest Period of the requested Japanese Borrowing will be month[s]; and (c) The date of the requested Japanese Borrowing is to be __________, ____. 3. LLJS hereby certifies to Lenders and Agent that, on the date of this Notice of Japanese Borrowing and after giving effect to the requested Japanese Borrowing: (a) The representations and warranties of Borrowers and their 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 as of such date); (b) No Default has occurred and is continuing; and (c) All of the Credit Documents are in full force and effect. D-1 107 4. Please disburse the proceeds of the requested Japanese Borrowing to ________________________________________________________________________________ IN WITNESS WHEREOF, LLJS has executed this Notice of Japanese Borrowing on the date set forth above. LSI LOGIC JAPAN SEMICONDUCTOR, INC. By: ___________________________________ Name: _____________________________ Title: ____________________________ D-2 108 EXHIBIT E NOTICE OF JAPANESE BORROWING INTEREST PERIOD SELECTION [Date] ABN AMRO Bank N.V., as Agent 13F, Shiroyama JT Mori Building 4-3-1, Toranomon, Minato-ku Tokyo 105, Japan Attn: Kiyoharu Michiwaki 1. Reference is made to that certain Credit Agreement, dated as of August 5, 1998 (the "Credit Agreement"), among LSI Logic Corporation, LSI Logic Japan Semiconductor, Inc. ("LLJS"), the financial institutions listed in Schedule I to the Credit Agreement (the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein. 2. Pursuant to Subparagraph 2.02(d) of the Credit Agreement, LLJS hereby irrevocably selects a new Interest Period for a Japanese Borrowing as follows: (a) The Japanese Borrowing for which a new Interest Period is to be selected is in the aggregate principal amount of yen _________ which was initially advanced to LLJS on _________, _____; (b) The last day of the current Interest Period for such Japanese Borrowing is ___________, ____; and (c) The next Interest Period for such Japanese Borrowing commencing upon the last day of the current Interest Period is to be _________ month[s]. 3. LLJS hereby certifies to Lenders and Agent that, on the date of this Notice of Japanese Borrowing Interest Period Selection, and after giving effect to the requested selection: (a) The representations and warranties of Borrowers and their 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 as of such date); (b) No Default has occurred and is continuing; and (c) All of the Credit Documents are in full force and effect. E-1 109 IN WITNESS WHEREOF, LLJS has executed this Notice of Japanese Borrowing Interest Period Selection on the date set forth above. LSI LOGIC JAPAN SEMICONDUCTOR, INC. By: ___________________________________ Name: _____________________________ Title: ____________________________ E-2 110 EXHIBIT F NOTE $______________ ____________________, __________ ________________, ____ FOR VALUE RECEIVED, LSI LOGIC CORPORATION, a Delaware corporation ("Borrower"), hereby promises to pay to the order of ____________________, a ____________________ ("Lender"), the principal sum of ______________________________ DOLLARS ($__________), or such lesser amount as shall equal the aggregate outstanding principal balance of the [U.S. Revolving Loans][U.S. 364 Day Loans] made by Lender to Borrower pursuant to the Credit Agreement referred to below (as amended from time to time, the "Credit Agreement"), on or before the [Revolving Termination Date][U.S. 364 Day Termination Date] specified in the Credit Agreement; and to pay interest on the outstanding amount of said sum, or such lesser amount, at the rates and on the dates provided in the Credit Agreement. Borrower shall make all payments hereunder, for the account of Lender's Applicable Lending Office, to Agent as indicated in the Credit Agreement, in lawful money of the United States and in same day or immediately available funds. Borrower hereby authorizes Lender to record on the schedule(s) annexed to this note the date and amount of each [U.S. Revolving Loan][U.S. 364 Day Loan] and of each payment or prepayment of principal made by Borrower and agrees that all such notations shall constitute prima facie evidence of the matters noted; provided, however, that the failure of Lender to make any such notation shall not affect Borrower's obligations hereunder. This note is one of the Notes referred to in the Credit Agreement, dated as of August 5, 1998, among Borrower, LSI Logic Japan Semiconductor, Inc., Lender and the other financial institutions from time to time parties thereto (collectively, the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders. This note is subject to the terms of the Credit Agreement, including the rights of prepayment and the rights of acceleration of Maturity set forth therein. Terms used herein have the meanings assigned to those terms in the Credit Agreement, unless otherwise defined herein. The transfer, sale or assignment of any rights under or interest in this note is subject to certain restrictions contained in the Credit Agreement, including Paragraph 8.05 thereof. F-1 111 Borrower shall pay all reasonable fees and expenses, including reasonable attorneys' fees, incurred by Lender in the enforcement or attempt to enforce any of Borrower's obligations hereunder not performed when due. Borrower hereby waives notice of presentment, demand, protest or notice of any other kind. This note shall be governed by and construed in accordance with the laws of the State of California. LSI LOGIC CORPORATION By: ___________________________________ Name: _____________________________ Title: ____________________________ F-2 112 LOANS AND PAYMENTS OF PRINCIPAL
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F-3 113 EXHIBIT G LSI GUARANTY THIS GUARANTY, dated as of [ ], 1998, is executed by LSI LOGIC CORPORATION, a Delaware corporation ("Guarantor"), in favor of ABN AMRO BANK N.V., acting as agent (in such capacity, and each successor thereto in such capacity, "Agent") for the financial institutions which are from time to time parties to the Credit Agreement referred to in Recital A below (collectively, "Lenders"). RECITALS A. Pursuant to a Credit Agreement dated as of August 5, 1998 (as amended from time to time, the "Credit Agreement"), among LSI Logic Japan Semiconductor, Inc. ("Borrower"), Guarantor, Lenders and Agent, Lenders have agreed to extend certain credit facilities to Borrower and Guarantor upon the terms and subject to the conditions set forth therein. Borrower is a wholly-owned Subsidiary of Guarantor. B. Lenders' obligations to extend the credit facilities to Borrower and Guarantor under the Credit Agreement are subject, among other conditions, to receipt by Agent of this Guaranty, duly executed by Guarantor. 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, Guarantor hereby agrees with Agent, for the ratable benefit of Lenders and Agent, as follows: 1. DEFINITIONS AND INTERPRETATION. (a) Definitions. When used in this Guaranty, the following terms shall have the following respective meanings: "Agent" shall have the meaning given to that term in the introductory paragraph hereof. "Borrower" shall have the meaning given to that term in the Recital A hereof. "Credit Agreement" shall have the meaning given to that term in the Recital A hereof. "Debtor Relief Proceeding" shall mean any suit, action, case or other proceeding commenced by, against or for Borrower or Guarantor or its property G-1 114 seeking the dissolution, liquidation, reorganization, rearrangement or other relief of Borrower or Guarantor or its debts under any applicable bankruptcy, insolvency or debtor relief law or other similar Governmental Rule now or hereafter in effect or seeking the appointment of a receiver, trustee, liquidator, custodian or other similar official for Borrower or Guarantor or any substantial part of its property or any general assignment by Borrower or Guarantor for the benefit of its creditors, whether or not any such suit, action, case or other proceeding is voluntary or involuntary. "Disallowed Post-Commencement Interest and Expenses" shall mean interest computed at the rate provided in the Credit Agreement and claims for reimbursement, costs, expenses or indemnities under the terms of any of the Credit Documents accruing or claimed at any time after the commencement of any Debtor Relief Proceeding, if the claim for such interest, reimbursement, costs, expenses or indemnities is not allowable, allowed or enforceable against Borrower in such Debtor Relief Proceeding. "Guaranteed Obligations" shall mean and include all loans, advances, debts, liabilities, and obligations, howsoever arising, owed by Borrower to Agent or any Lender of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising pursuant to the terms of the Credit Documents, including all interest, fees, charges, expenses, attorneys' fees and accountants' fees chargeable to Borrower or payable by Borrower thereunder. "Guarantor" shall have the meaning given to that term in the introductory paragraph hereof. "Lenders" shall have the meaning given to that term in the introductory paragraph hereof. "Subordinated Obligations" shall have the meaning given to that term in Paragraph 4 hereof. "Taxes" shall have the meaning given to such term in Subparagraph 5(h). Unless otherwise defined herein, all other capitalized terms used herein and defined in the Credit Agreement shall have the respective meanings given to those terms in the Credit Agreement. (b) Other Interpretive Provisions. The rules of construction set forth in Section I of the Credit Agreement shall, to the extent not inconsistent with the terms of this Guaranty, apply to this Guaranty and are hereby incorporated by reference. G-2 115 2. GUARANTY. (a) Payment Guaranty. Guarantor unconditionally guarantees and promises to pay and perform as and when due, whether at stated maturity, upon acceleration or otherwise, any and all of the Guaranteed Obligations. If any Debtor Relief Proceeding relating to Borrower is commenced, Guarantor further unconditionally guarantees and promises to pay and perform, upon the demand of Agent, any and all of the Guaranteed Obligations (including any and all Disallowed Post-Commencement Interest and Expenses) in accordance with the terms of the Credit Documents, whether or not such obligations are then due and payable by Borrower and whether or not such obligations are modified, reduced or discharged in such Debtor Relief Proceeding. This Guaranty is a guaranty of payment and not of collection. (b) Continuing Guaranty. This Guaranty is an irrevocable continuing guaranty of the Guaranteed Obligations which shall continue in effect until all obligations of Lenders to extend credit to Borrower have terminated and all of the Guaranteed Obligations have been fully paid. If any payment on any Guaranteed Obligation is set aside, avoided or rescinded or otherwise recovered from Agent or any Lender, such recovered payment shall constitute a Guaranteed Obligation hereunder and, if this Guaranty was previously released or terminated, it automatically shall be fully reinstated, as if such payment was never made. (c) Independent Obligation. The liability of Guarantor hereunder is independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against Guarantor irrespective of whether action is brought against Borrower or any other guarantor of the Guaranteed Obligations or whether Borrower or any other guarantor of the Guaranteed Obligations is joined in any such action or actions. (d) Fraudulent Transfer Limitation. If, in any action to enforce this Guaranty, any court of competent jurisdiction determines that enforcement against Guarantor for the full amount of the Guaranteed Obligations is not lawful under or would be subject to avoidance under Section 548 of the Bankruptcy Code or any applicable provision of any comparable law of any state or other jurisdiction, the liability of Guarantor under this Guaranty shall be limited to the maximum amount lawful and not subject to such avoidance. (e) Termination. Notwithstanding any termination of this Guaranty in accordance with Paragraph 3 hereof, this Guaranty shall continue to be in full force and effect and applicable to any Guaranteed Obligations arising thereafter which arise because prior payments of Guaranteed Obligations are rescinded or otherwise required to be surrendered by Agent or any Lender after receipt. G-3 116 3. AUTHORIZATIONS, WAIVERS, ETC. (a) Authorizations. Guarantor authorizes Agent and Lenders, in their discretion, without notice to Guarantor, irrespective of any change in the financial condition of Borrower, Guarantor or any other guarantor of the Guaranteed Obligations since the date hereof, and without affecting or impairing in any way the liability of Guarantor hereunder, from time to time to: (i) Create new Guaranteed Obligations and renew, compromise, extend, accelerate or otherwise change the time for payment or performance of, or otherwise amend or modify the Credit Documents or change the terms of the Guaranteed Obligations or any part thereof, including increase or decrease of the rate of interest thereon; (ii) Take and hold security for the payment or performance of the Guaranteed Obligations and exchange, enforce, waive or release any such security; apply such security and direct the order or manner of sale thereof; and purchase such security at public or private sale; (iii) Otherwise exercise any right or remedy they may have against Borrower, Guarantor, any other guarantor of the Guaranteed Obligations or any security, including, without limitation, the right to foreclose upon any such security by judicial or nonjudicial sale; (iv) Settle, compromise with, release or substitute any one or more makers, endorsers or guarantors of the Guaranteed Obligations; and (v) Assign the Guaranteed Obligations, this Guaranty or the other Credit Documents in whole or in part to the extent provided in the Credit Agreement and the other Credit Documents. (b) Waivers. Guarantor hereby waives: (i) Any right to require Agent or any Lender to (A) proceed against Borrower or any other guarantor of the Guaranteed Obligations, (B) proceed against or exhaust any security received from Borrower, Guarantor or any other guarantor of the Guaranteed Obligations or otherwise marshall the assets of Borrower, Guarantor or any other guarantor of the Guaranteed Obligations or (C) pursue any other remedy in Agent's or any Lender's power whatsoever; (ii) Any defense arising by reason of the application by Borrower of the proceeds of any borrowing; (iii) Any defense resulting from the absence, impairment or loss of any right of reimbursement, subrogation, contribution or other right or remedy of Guarantor against Borrower, any other guarantor of the Guaranteed Obligations or any security, whether resulting from an election by Agent or any Lender to foreclose upon security by nonjudicial sale, or otherwise; G-4 117 (iv) Any setoff or counterclaim of Borrower or any defense which results from any disability or other defense of Borrower or the cessation or stay of enforcement from any cause whatsoever of the liability of Borrower (including, without limitation, the lack of validity or enforceability of any of the Credit Documents); (v) Any defense based upon any law, rule or regulation which provides that the obligation of a surety must not be greater or more burdensome than the obligation of the principal; (vi) Until all obligations of Agent or any Lender to extend credit to Borrower have terminated and all of the Guaranteed Obligations have been fully paid, any right of subrogation, reimbursement, indemnification or contribution and other similar right to enforce any remedy which Agent, Lenders or any other Person now has or may hereafter have against Borrower on account of the Guaranteed Obligations, and any benefit of, and any right to participate in, any security now or hereafter received by Agent, any Lender or any other Person on account of the Guaranteed Obligations; (vii) All presentments, demands for performance, notices of non-performance, notices delivered under the Credit Documents, protests, notice of dishonor, and notices of acceptance of this Guaranty and of the existence, creation or incurring of new or additional Guaranteed Obligations and notices of any public or private foreclosure sale; (viii) The benefit of any statute of limitations to the extent permitted by law; (ix) Any appraisement, valuation, stay, extension, moratorium redemption or similar law or similar rights for marshalling; (x) Any right to be informed by Agent or any Lender of the financial condition of Borrower or any other guarantor of the Guaranteed Obligations or any change therein or any other circumstances bearing upon the risk of nonpayment or nonperformance of the Guaranteed Obligations; (xi) Until all obligations of Agent or any Lender to extend credit to Borrower have terminated and all of the Guaranteed Obligations have been fully paid, any right to revoke this Guaranty; (xii) Any defense arising from an election for the application of Section 1111(b)(2) of the Bankruptcy Code which applies to the Guaranteed Obligations; (xiii) Any defense based upon any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code; and G-5 118 (xiv) Any right it may have to a fair value hearing to determine the size of a deficiency judgment following any foreclosure on any security for the Guaranteed Obligations. Without limiting the scope of any of the foregoing provisions of this Paragraph 3, Guarantor hereby further waives (A) all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a Guaranteed Obligation, has destroyed Guarantor's rights of subrogation and reimbursement against Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise, (B) all rights and defenses Guarantor may have by reason of protection afforded to Borrower with respect to the Guaranteed Obligations pursuant to the antideficiency or other laws of California limiting or discharging the Guaranteed Obligations, including, without limitation, Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure, and (C) all other rights and defenses available to Guarantor by reason of Sections 2787 to 2855, inclusive, Section 2899 or Section 3433 of the California Civil Code or Section 3605 of the California Commercial Code. (c) Financial Condition of Borrower, Etc. Guarantor is fully aware of the financial condition and affairs of Borrower. Guarantor has executed this Guaranty without reliance upon any representation, warranty, statement or information concerning Borrower furnished to Guarantor by Agent or any Lender and has, independently and without reliance on Agent or any Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of the financial condition and affairs of Borrower and of other circumstances affecting the risk of nonpayment or nonperformance of the Guaranteed Obligations. Guarantor is in a position to obtain, and assumes full responsibility for obtaining, any additional information about the financial condition and affairs of Borrower and of other circumstances affecting the risk of nonpayment or nonperformance of the Guaranteed Obligations and will, independently and without reliance upon Agent or any Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own appraisals and decisions in taking or not taking action in connection with this Guaranty. 4. SUBORDINATION. Guarantor hereby subordinates any and all debts, liabilities and obligations owed to Guarantor by Borrower (the "Subordinated Obligations") to the Guaranteed Obligations as provided in this Paragraph 4. (a) Prohibited Payments, Etc. Except during the continuance of a Default (including the commencement and continuation of any Debtor Relief Proceeding relating to Borrower), Guarantor may receive regularly scheduled payments from Borrower on account of Subordinated Obligations. After the occurrence and during the continuance of any Default (including the commencement and continuation of any Debtor Relief Proceeding relating to Borrower), however, unless Agent otherwise agrees, Guarantor shall not demand, accept or take any action to collect any payment on account of the Subordinated Obligations. G-6 119 (b) Prior Payment of Guaranteed Obligations. In any Debtor Relief Proceeding relating to Borrower, Guarantor agrees that Agent and Lenders shall be entitled to receive payment of all Guaranteed Obligations (including any and all Disallowed Post-Commencement Interest and Expenses) before Guarantor receives payment of any Subordinated Obligations. (c) Turn-Over. After the occurrence and during the continuance of any Default (including the commencement and continuation of any Debtor Relief Proceeding relating to Borrower), Guarantor shall, if Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for Agent and Lenders and deliver such payments to Agent on account of the Guaranteed Obligations (including any and all Disallowed Post-Commencement Interest and Expenses), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty. (d) Agent Authorization. After the occurrence and during the continuance of any Default (including the commencement and continuation of any Debtor Relief Proceeding relating to Borrower), Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of Guarantor to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Disallowed Post-Commencement Interest and Expenses), and (ii) to require Guarantor (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to Agent for application to the Guaranteed Obligations (including any and all Disallowed Post-Commencement Interest and Expenses). 5. MISCELLANEOUS. (a) Notices. Except as otherwise specified herein, all notices, requests, demands, consents, instructions or other communications to or upon Guarantor or Agent under this Agreement shall be given as provided in Paragraph 8.01 of the Credit Agreement. (b) Payments. (i) Guarantor shall make all payments of the Guaranteed Obligations to Agent, or its order, at the office of Agent and at the times specified in the Credit Documents for the payment of such Guaranteed Obligations. Guarantor shall make all other payments hereunder at such office as Agent may designate. Each payment shall be made in same day or immediately available funds not later than 11:00 a.m.(local time of the office of Agent at which such payment is to be made) on the date due. (ii) Guarantor shall make all payments of the Guaranteed Obligations hereunder in the currency in which such Guaranteed Obligations are required to G-7 120 be paid by Borrower pursuant to the Credit Documents and shall make all other payments hereunder in Dollars; provided, however, that, if Agent shall request Guarantor to pay any amount hereunder which would otherwise be payable in another currency in the lawful currency of the United States, Guarantor shall pay to Agent the Dollar Equivalent of such amount. (iii) If any sum due from Guarantor under this Guaranty or any other Credit Document to which Guarantor is a party or any order, judgment or award given or rendered in relation hereto or thereto has to be converted from the currency (the "first currency") in which the same is payable hereunder or thereunder into another currency (the "second currency") for the purpose of (A) making or filing a claim or proof against Guarantor with any Governmental Authority, (B) obtaining an order or judgment in any court or other tribunal or (C) enforcing any order or judgment given or made in relation hereto, Guarantor shall, to the fullest extent permitted by law, indemnify and hold harmless each of the Persons to whom such sum is due from and against any loss suffered as a result of any discrepancy between (1) the rate of exchange used for such purpose to convert the amounts in question from the first currency into the second currency and (2) the rate or rates of exchange at which such Person may, using reasonable efforts in the ordinary course of business, purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. The foregoing indemnity shall constitute a separate obligation of Guarantor distinct from its other obligations hereunder and shall survive the giving or making of any judgment or order in relation to all or any of such obligations. (iv) If any amounts required to be paid by Guarantor under this Guaranty or any order, judgment or award given or rendered in relation hereto remain unpaid after such amounts are due, Guarantor shall pay interest on the aggregate, outstanding balance of such amounts from the date due until those amounts are paid in full at a per annum rate equal to: (A) In the case of amounts payable in Dollars, the Base Rate plus two percent (2.00%), such rate to change from time to time as the Base Rate shall change. (B) In the case of amounts payable in Yen, the Overnight Rate plus three percent (3.00%), such rate to change from time to time as the Overnight Rate shall change. (c) Expenses. Guarantor shall pay promptly upon receipt of an invoice therefor, (i) all reasonable fees and expenses, including reasonable attorneys' fees and expenses, incurred by Agent in connection with the preparation, execution and delivery of, and the exercise of its duties under, this Guaranty and the preparation, execution and delivery of amendments and waivers hereunder and (ii) all reasonable fees and expenses, including reasonable attorneys' fees and expenses, incurred by Agent and Lenders in connection with the enforcement or attempted enforcement of this Guaranty or any of the G-8 121 Guaranteed Obligations or in preserving any of Agent's or Lenders' rights and remedies (including, without limitation, all such fees and expenses incurred in connection with any "workout" or restructuring affecting the Credit Documents or the Guaranteed Obligations or any bankruptcy or similar proceeding involving Guarantor, Borrower or any of their affiliates). (d) Waivers; Amendments. This Guaranty may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by Guarantor and Agent. Each waiver or consent under any provision hereof shall be effective only in the specific instances for the purpose for which given. No failure or delay on Agent's or any Lender's part 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. (e) Successors and Assigns. This Guaranty shall be binding upon and inure to the benefit of Agent, Lenders, Guarantor and their respective successors and assigns; provided, however, that Guarantor may not assign or transfer any of its rights and obligations under this Guaranty without the prior written consent of Agent and Lenders, and, provided, further, that Agent or any Lender may sell, assign and delegate their respective rights and obligations hereunder only as permitted by the Credit Agreement. All references in this Guaranty to any Person shall be deemed to include all permitted successors and assigns of such Person. (f) Cumulative Rights, etc. The rights, powers and remedies of Agent and Lenders under this Guaranty shall be in addition to all rights, powers and remedies given to Agent and Lenders by virtue of any applicable law, rule or regulation of any Governmental Authority, the Credit Agreement, any other Credit Document or any other agreement, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing Agent's or any Lender's rights hereunder. Guarantor waives any right to require Agent or any Lender to proceed against any Person or to exhaust any collateral or to pursue any remedy in Agent's or such Lender's power. (g) Setoff; Security Interest. (i) In addition to any rights and remedies of Lenders provided by law, each Lender shall have the right, with the prior consent of Agent but without prior notice to or consent of Guarantor, any such notice and consent being expressly waived by Guarantor to the extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, to set-off and apply against the obligations of Guarantor any amount owing from such Lender to Guarantor. The aforesaid right of set-off may be exercised by such Lender against Guarantor or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or execution, judgment or attachment creditor of Guarantor or against anyone else claiming through or against Guarantor or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, G-9 122 notwithstanding the fact that such right of set-off may not have been exercised by such Lender at any prior time. Each Lender agrees promptly to notify Guarantor after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. (ii) As security for the obligations of Guarantor hereunder, Guarantor hereby grants to Agent and each Lender, for the benefit of all Lenders, a continuing security interest in any and all deposit accounts or moneys of Guarantor now or hereafter maintained with such Lender. Each Lender shall have all of the rights of a secured party with respect to such security interest. (h) Payments Free of Taxes. All payments made by Guarantor under this Guaranty shall be made free and clear of, and without deduction or withholding for or on account of, all present and future income, stamp, documentary and other taxes and duties, and all other levies, imposts, charges, fees, deductions and withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (except net income taxes and franchise taxes in lieu of net income taxes imposed on Agent or any Lender by its jurisdiction of incorporation or the jurisdiction in which its Applicable Lending Office is located) (all such non-excluded taxes, duties, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to Agent or any Lender hereunder, the amounts so payable to Agent or such Lender shall be increased to the extent necessary to yield to Agent or such Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Guaranty or the other Credit Documents, as applicable. Whenever any Taxes are payable by Guarantor, as promptly as possible thereafter, Guarantor shall send to Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by Guarantor showing payment thereof. If Guarantor fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to Agent the required receipts or other required documentary evidence, Guarantor shall indemnify Agent and Lenders for any taxes (including interest or penalties) that may become payable by Agent or any Lender as a result of any such failure. The obligations of Guarantor under this Subparagraph 5(h) shall survive the payment and performance of the Guaranteed Obligations and the termination of this Guaranty. Nothing contained in this Subparagraph 5(h) shall require Agent or any Lender to make available any of its tax returns (or any other information relating to its taxes which it deems to be confidential). (i) Partial Invalidity. If at any time any provision of this Guaranty is or becomes illegal, invalid or unenforceable in any respect under the law or any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this Guaranty nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. (j) Jury Trial. EACH OF GUARANTOR, LENDERS AND AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE G-10 123 RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY. (k) Governing Law, Consent to Jurisdiction, Etc. (i) This Guaranty shall be governed by and construed in accordance with the laws of the State of California without reference to conflicts of law rules. (ii) Guarantor irrevocably submits to the non-exclusive jurisdiction of the courts of the State of California and the courts of the United States of America located in the Northern District of California and agrees that any legal action, suit or proceeding arising out of or relating to this Guaranty or any of the other Credit Documents may be brought against Guarantor in any such courts. Final judgment against Guarantor in any such action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any other manner provided by law. Nothing in this Subparagraph 5(k) shall affect the right of Agent or any Lender to commence legal proceedings or otherwise sue Guarantor in any other appropriate jurisdiction, or concurrently in more than one jurisdiction, or to serve process, pleadings and other papers upon Guarantor in any manner authorized by the laws of any such jurisdiction. Guarantor agrees that process served either personally or by registered mail shall, to the extent permitted by law, constitute adequate service of process in any such suit. Without limiting the foregoing, Guarantor hereby appoints, in the case of any such action or proceeding brought in the courts of or in the State of California, CT Corporation, with offices on the date hereof at 818 West Seventh Street, Los Angeles, California 90017, to receive for it and on its behalf, service of process in the State of California with respect thereto, provided Guarantor may appoint any other Person, reasonably acceptable to Agent, with offices in the State of California to replace such agent for service of process upon delivery to Agent of a reasonably acceptable agreement of such new agent agreeing so to act. Guarantor irrevocably waives to the fullest extent permitted by applicable law (A) any objection which it may have now or in the future to the laying of the venue of any such action, suit or proceeding in any court referred to in the first sentence above; (B) any claim that any such action, suit or proceeding has been brought in an inconvenient forum; (C) its right of removal of any matter commenced by any other party in the courts of the State of California to any court of the United States of America; (D) any immunity which it or its assets may have in respect of its obligations under this Agreement or any other Credit Document from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process; and (E) any right it may have to require the moving party in any suit, action or proceeding brought in any of the courts referred to above arising out of or in connection with this Agreement or any other Credit Document to post security for the costs of Guarantor or to post a bond or to take similar action. G-11 124 IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed as of the day and year first above written. LSI LOGIC CORPORATION By: ____________________________________ Name: ______________________________ Title: _____________________________ G-12 125 EXHIBIT H ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT, dated as of the Assignment Effective Date set forth in Attachment 1 hereto, by and among: (1) The bank designated in Attachment 1 hereto as the Assignor Lender ("Assignor Lender"); and (2) Each bank designated in Attachment 1 hereto as an Assignee Lender (individually, an "Assignee Lender"). RECITALS A. Assignor Lender is one of the Lenders which is a party to the Credit Agreement dated as of August 5, 1998, by and among LSI Logic Corporation ("LSI"), LSI Logic Japan Semiconductor, Inc. ("LLJS"), Assignor Lender and the other financial institutions parties thereto (collectively, the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). (Such credit agreement, as amended, supplemented or otherwise modified in accordance with its terms from time to time to be referred to herein as the "Credit Agreement"). B. Assignor Lender wishes to sell, and each Assignee Lender wishes to purchase, all or a portion of Assignor Lender's rights under the Credit Agreement pursuant to Subparagraph 8.05(c) of the Credit Agreement. AGREEMENT Now, therefore, the parties hereto hereby agree as follows: 1. Definitions. Except as otherwise defined in this Assignment Agreement, all capitalized terms used herein and defined in the Credit Agreement have the respective meanings given to those terms in the Credit Agreement. 2. Sale and Assignment. Subject to the terms and conditions of this Assignment Agreement, Assignor Lender hereby agrees to sell, assign and delegate to each Assignee Lender and each Assignee Lender hereby agrees to purchase, accept and assume the rights, obligations and duties of a Lender under the Credit Agreement and the other Credit Documents with Commitments or Loans equal to the respective amounts set forth under the caption "Commitments or Loans Assigned" opposite such Assignee Lender's name on Attachment 1 hereto. Such sale, assignment and delegation shall become effective on the date designated in Attachment 1 hereto (the "Assignment Effective Date"), which date shall be, unless Agent shall otherwise consent, at least five (5) Business Days after the date following the date counterparts of this Assignment Agreement are delivered to Agent in accordance with Paragraph 3 hereof. H-1 126 3. Assignment Effective Notice. Upon (a) receipt by Agent of five (5) counterparts of this Assignment Agreement (to each of which is attached a fully completed Attachment 1), each of which has been executed by Assignor Lender and each Assignee Lender (and, to the extent required by Subparagraph 8.05(c) of the Credit Agreement, by Borrowers and Agent) and (b) payment to Agent of the registration and processing fee specified in Subparagraph 8.05(e) of the Credit Agreement by Assignor Lender, Agent will transmit to Borrowers, Assignor Lender and each Assignee Lender an Assignment Effective Notice substantially in the form of Attachment 2 hereto, fully completed (an "Assignment Effective Notice"). 4. Assignment Effective Date. At or before 12:00 noon (New York time for a U.S. Loan and Tokyo time for a Japanese Loan) on the Assignment Effective Date, each Assignee Lender shall pay to Assignor Lender, in immediately available or same day funds, an amount equal to the purchase price, as agreed between Assignor Lender and such Assignee Lender (the "Purchase Price"), for each portion of a Commitment or Loan purchased by such Assignee Lender hereunder. Effective upon receipt by Assignor Lender of each Purchase Price payable by each Assignee Lender, the sale, assignment and delegation to such Assignee Lender of such Commitments or Loans as described in Paragraph 2 hereof shall become effective. 5. Payments After the Assignment Effective Date. Assignor Lender and each Assignee Lender hereby agree that Agent shall, and hereby authorize and direct Agent to, allocate amounts payable under the Credit Agreement and the other Credit Documents as follows: (a) All principal payments made after the Assignment Effective Date with respect to each portion of a Loan assigned to an Assignee Lender pursuant to this Assignment Agreement shall be payable to such Assignee Lender. (b) All interest, fees and other amounts accrued after the Assignment Effective Date with respect to each portion of a Loan assigned to an Assignee Lender pursuant to this Assignment Agreement shall be payable to such Assignee Lender. Assignor Lender and each Assignee Lender shall make any separate arrangements between themselves which they deem appropriate with respect to payments between them of amounts paid under the Credit Documents on account of the Commitments or Loans assigned to such Assignee Lender, and neither Agent nor Borrowers shall have any responsibility to effect or carry out such separate arrangements. 6. Delivery of Notes. On or prior to the Assignment Effective Date, Assignor Lender will deliver to Agent any Notes payable to Assignor Lender with respect to its U.S. Loans. On or prior to the Assignment Effective Date, LSI will deliver to Agent new Notes for each Assignee Lender and Assignor Lender, in each case in principal amounts reflecting, in accordance with the Credit Agreement, their respective U.S. Revolving Commitments or U.S. 364 Day Commitments, as the case may be (as adjusted pursuant to this Assignment Agreement). Promptly after the Assignment Effective Date, Agent will send to each of Assignor Lender and the Assignee Lenders its new Notes and will send to LSI the superseded Note payable to Assignor Lender, marked "Replaced." H-2 127 7. Delivery of Copies of Credit Documents. Concurrently with the execution and delivery hereof, Assignor Lender will provide to each Assignee Lender (if it is not already a Lender party to the Credit Agreement) conformed copies of all documents delivered to Assignor Lender on or prior to the Closing Date in satisfaction of the conditions precedent set forth in the Credit Agreement. 8. Further Assurances. Each of the parties to this Assignment Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment Agreement. 9. Further Representations, Warranties and Covenants. Assignor Lender and each Assignee Lender further represent and warrant to and covenant with each other, Agent and Lenders as follows: (a) Other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, Assignor Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the other Credit Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or the other Credit Documents furnished or any collateral or any security interest therein. (b) Assignor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or any of their obligations under the Credit Agreement or any other Credit Documents. (c) Each Assignee Lender confirms that it has received a copy of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement. (d) Each Assignee Lender will, independently and without reliance upon Agent, Assignor Lender or any other Lender and based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and the other Credit Documents. (e) Each Assignee Lender appoints and authorizes Agent to take such action as Agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as Agent is authorized to exercise by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section VII of the Credit Agreement. (f) Each Assignee Lender agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement and the other Credit Documents are required to be performed by it as a Lender. H-3 128 (g) Attachment 1 hereto sets forth administrative information with respect to each Assignee Lender. 10. Effect of this Assignment Agreement. On and after the Assignment Effective Date, (a) each Assignee Lender shall be a Lender with Commitments or Loans as set forth under the caption "Commitments or Loans After Assignment" opposite such Assignee Lender's name on Attachment 1 hereto and shall have the rights, duties and obligations of such a Lender under the Credit Agreement and the other Credit Documents and (b) Assignor Lender shall be a Lender with Commitments or Loans as set forth under the caption "Commitments or Loans After Assignment" opposite Assignor Lender's name on Attachment 1 hereto and shall have the rights, duties and obligations of such a Lender under the Credit Agreement and the other Credit Documents, or, if the Commitments and Loans of Assignor Lender have been reduced to $0, Assignor Lender shall cease to be a Lender and shall have no further obligation to make any Loans. 11. Miscellaneous. This Assignment Agreement shall be governed by, and construed in accordance with, the laws of the State of California. Paragraph headings in this Assignment Agreement are for convenience of reference only and are not part of the substance hereof. H-4 129 IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by their respective duly authorized officers as of the date set forth in Attachment 1 hereto. ____________________________________, as Assignor Lender By: ____________________________________ Name: ______________________________ Title: _____________________________ _________________________________, as an Assignor Lender By: ____________________________________ Name: ______________________________ Title: _____________________________ _________________________________, as an Assignor Lender By: ____________________________________ Name: ______________________________ Title: _____________________________ _________________________________, as an Assignor Lender By: ____________________________________ Name: ______________________________ Title: _____________________________ H-5 130 CONSENTED TO AND ACKNOWLEDGED BY: ______________________________________ By: __________________________________ Name: ____________________________ Title: ___________________________ ABN AMRO BANK N.V., as Agent By: __________________________________ Name: ____________________________ Title: ___________________________ ACCEPTED FOR RECORDATION IN REGISTER: ABN AMRO BANK N.V., as Agent By: __________________________________ Name: ____________________________ Title: ___________________________ H-6 131 ATTACHMENT 1 TO ASSIGNMENT AGREEMENT PART A
Commitments or Loans Commitments or Loans Assigned After Assignment ------------------------------------------------ --------------------------------------------------------- U.S. U.S. Revolving 364 Day Japanese U.S. Revolving U.S. 364 Day Japanese Commitment/ Commitment/ Commitment/ Commitment/ Commitment/ Commitment/ Loan Loan Loan Loan Loan Loan --------------- ---------------- --------------- ----------------- ----------------- --------------------- Assignor Lender: -------------- $---------- $---------- (Y)---------- $------------ $----------- (Y)------------ Assignee Lenders: -------------- $---------- $---------- (Y)---------- $------------ $----------- (Y)------------ -------------- $---------- $---------- (Y)---------- $------------ $----------- (Y)------------ -------------- $---------- $---------- (Y)---------- $------------ $----------- (Y)------------ -------------- $---------- $---------- (Y)---------- $------------ $----------- (Y)------------
H(1)-1 132 PART B [ASSIGNEE PARTICIPANT] Domestic Lending Office: Euro-Dollar Lending Office: Japanese Lending Office: Address for Notices related to U.S. Borrowings: Address for Notices related to Japanese Borrowings: Wiring Instructions for U.S. Borrowings: Wiring Instructions for Japanese Borrowings: H(1)-2 133 PART C ASSIGNMENT EFFECTIVE DATE ________, ____ H(1)-3 134 ATTACHMENT 2 TO ASSIGNMENT AGREEMENT FORM OF ASSIGNMENT EFFECTIVE NOTICE Reference is made to the Credit Agreement, dated as of August 5, 1998, among LSI Logic Corporation ("LSI"), LSI Logic Japan Semiconductor, Inc., the financial institutions parties thereto (the "Lenders") and ABN AMRO Bank N.V., as agent for Lenders (in such capacity, "Agent"). Agent hereby acknowledges receipt of five executed counterparts of a completed Assignment Agreement, a copy of which is attached hereto. [Note: Attach copy of Assignment Agreement.] Terms defined in such Assignment Agreement (whether directly or indirectly by reference) are used herein as therein defined. 1. Pursuant to such Assignment Agreement, you are advised that the Assignment Effective Date will be __________. [2. Pursuant to such Assignment Agreement, Assignor Lender is required to deliver to Agent on or before the Assignment Effective Date the Notes payable to Assignor Lender.] [3. Pursuant to such Assignment Agreement, LSI is required to deliver to Agent on or before the Assignment Effective Date the following Notes, each dated _________________ [Insert appropriate date]: [Describe each new Note for Assignor Lender and each Assignee Lender as to principal amount.]] 4. Pursuant to such Assignment Agreement, each Assignee Lender is required to pay its Purchase Price to Assignor Lender at or before 12:00 Noon [( time)] on the Assignment Effective Date in immediately available funds. Very truly yours, ABN AMRO BANK N.V., as Agent By: ____________________________________ Name: ______________________________ Title: _____________________________ H(2)-1 135 EXHIBIT I FORM OF OPINION OF WILSON, SONSINI, GOODRICH & ROSATI (a) LSI is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business and is in good standing in the State of California and has all requisite power and authority to execute, deliver and perform its obligations under the Credit Documents and the Symbios Acquisition Documents to which it is a party. (b) The execution, delivery and performance by LSI of the Credit Documents and the Symbios Acquisition Documents to which it is a party have been duly authorized by all necessary corporate action of LSI and will not contravene the terms of the certificate of incorporation and the bylaws of LSI. (c) The execution, delivery and performance by each Borrower of the Credit Documents and the Symbios Acquisition Documents to which it is a party will not (i) to our knowledge, result in a breach of or constitute a default under any material Contractual Obligation to which either Borrower is a party or by which it or its properties may be bound or affected or (ii) violate any provision of Governmental Rule binding on or affecting either Borrower. (d) The Credit Documents and the Symbios Acquisition Documents constitute legal, valid and binding obligations of each Borrower which is a party thereto, enforceable against such Borrower in accordance with their respective terms, except to the extent the enforceability thereof would be subject to bankruptcy, insolvency, receivership or similar laws providing relief from creditors, or principles of equity generally. (e) No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Authority, or, to our knowledge, approval or consent of any other Person, is required for the due execution, delivery or performance by either Borrower of any of the Credit Documents or the Symbios Acquisition Documents except those set forth on Schedule 4.01(d) which have been obtained or made and are in full force and effect. (f) To our knowledge, except as set forth in Schedule 4.01(g), there are no actions, suits or proceedings pending or threatened against or affecting either Borrower or any of its Significant Subsidiaries or the properties of such Borrower or any of its Significant Subsidiaries before any Governmental Authority or arbitrator which if determined adversely to such Borrower or any such Significant Subsidiary would be reasonably likely to result in a Material Adverse Effect. (g) None of Borrowers and their Significant Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce Act, any state public utilities code or any other Governmental Rule limiting its ability to incur Indebtedness. I-1 136 (h) The use of proceeds from the U.S. Borrowings to consummate the Symbios Acquisition as provided in Subparagraph 2.01(h) of the Credit Agreement will not violate Regulation U of the FRB. I-2 137 EXHIBIT J FORM OF OPINION OF JAPANESE COUNSEL (a) LLJS is a corporation duly organized, validly existing and in good standing under the laws of Japan and has all requisite power and authority to execute, deliver and perform its obligations under the Credit Documents to which it is a party. (b) The execution, delivery and performance by LLJS of the Credit Documents to which it is a party have been duly authorized by all necessary corporate action of LLJS and will not contravene the terms of the articles of association of LLJS. (c) The execution, delivery and performance by LLJS of the Credit Documents to which it is a party will not (i) to our knowledge, result in a breach of or constitute a default under any material Contractual Obligation to which LLJS is a party or by which it or its properties may be bound or affected or (ii) violate any provision of Governmental Rule binding on or affecting LLJS. (d) The Credit Documents to which LLJS is a party constitute legal, valid and binding obligations of LLJS, enforceable against LLJS in accordance with their respective terms, except to the extent the enforceability thereof would be subject to bankruptcy, insolvency, receivership or similar laws providing relief from creditors, or principles of equity generally. (e) No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Authority, or, to our knowledge, approval or consent of any other Person, is required for the due execution, delivery or performance by LLJS of any of the Credit Documents to which LLJS is a party. (f) To our knowledge, except as set forth in Schedule 4.01(g), there are no actions, suits or proceedings pending or threatened against or affecting LLJS or any of its Significant Subsidiaries or the properties of LLJS or any of its Significant Subsidiaries before any Governmental Authority or arbitrator which if determined adversely to LLJS or any such Significant Subsidiary would be reasonably likely to result in a Material Adverse Effect. (g) The execution and delivery by LLJS of the Credit Documents to which it is a party are not subject to any stamp duty or other tax, and no deduction or withholding on account of any taxes of any nature whatsoever is required to be made from any payment by LLJS under the Credit Documents to which it is a party. (h) The obligations of LLJS under the Credit Documents to which it is a party rank at least pari passu in order of priority with all its other unsecured obligations. (i) Neither LLJS nor any of its property has any right of immunity from jurisdiction, attachment (before or after judgment) or judgment in the courts of Japan in respect of any action or proceeding relating to the Credit Documents to which LLJS is a party. J-1 138 (j) The courts of Japan will (i) give effect to the choice of the law of the State of California as the governing law of the Credit Agreement and to LLJS's submission to jurisdiction and the manner of service of process as provided in the Credit Agreement and (ii) recognize and enforce any judgment on or in respect of the Credit Agreement in Japan. J-2 EX-99.1 5 PRESS RELEASE 1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE Media Contact: Kevin Brett 408-433-7150 Investor Contact: Diana Matley August 7, 1998 408-433-4365 CC98-41 LSI LOGIC COMPLETES $760 MILLION SYMBIOS ACQUISITION MILPITAS, CA - LSI Logic Corporation (NYSE:LSI) and Hyundai Electronics America (HEA) today announced the completion of LSI Logic's $760 million purchase of Symbios, Inc. The strategic acquisition follows the necessary regulatory review by the Federal Trade Commission. "Now that the purchase has been completed, we can focus our undivided attention on increasing the competitive profile of both companies in the global system-on-a-chip market," said Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. "LSI Logic will immediately benefit from Symbios' strength in global storage markets and its impressive intellectual property offerings, particularly in SCSI technology," added Corrigan. "Symbios, in turn, will have access to LSI Logic's leading edge process technology, our global manufacturing facilities, and our engineering expertise in designing complex single-chip systems for high volume customers around the world." During the coming weeks and months, LSI Logic and Symbios management and employees will work together to develop strategies to - 6 - 2 ensure the smooth integration of the combined strengths of the two companies. The $760 million acquisition of all the outstanding capital stock of Symbios, including assumed liabilities, payable in cash, is expected to be accretive to LSI Logic's earnings per share in 1999. LSI Logic will take an acquisition charge in the third quarter. The company will report its third quarter results on Thursday, October 22. Symbios, a private corporation, designs, manufactures, and markets client/server integrated circuits, cell-based application specific circuits (ASICs), host adapter boards (HABs), and storage subsystems. Symbios, which had 1997 revenues of $620 million and operating income of $70 million before non-recurring charges, is a leader in the small computer system interface (SCSI) chip and the global disk and tape drive electronics markets. SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: The statements in this news release relating to future earnings per share, in-process technology writeoffs, and future benefits of the acquisition, involve known and unknown risks and uncertainties, which may cause LSI Logic's actual results in future periods to be materially different from any performance suggested in this release. Such factors may include, but may not necessarily be limited to fluctuations in customer demand, both in timing and volumes, and in currency exchange rates. Also, the company's ability to have available amount of production capacity in a timely manner can significantly impact the company's financial performance. The timing of new technology and product introductions and risk of early obsolescence are also important factors. Further, the company operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond the company's control. In the context of forward-looking information provided in this news release, reference is made to the discussion of risk factors detailed in the company's filings with the Securities and Exchange Commission during the past 12 months. 3 LSI Logic Corporation (NYSE:LSI), The System on a Chip Company(R), is a leading supplier of custom high-performance semiconductors with operations worldwide. The company enables customers to build complete systems on a single chip with its CoreWare(R) design program, thereby increasing performance, lowering system costs and accelerating time to market. LSI Logic develops application-optimized products in partnership with trendsetting customers and operates leading edge, high-volume manufacturing facilities to promote submicron chips. The company maintains a high level of quality, as demonstrated by its ISO 9000 certifications. LSI Logic is headquartered at 1551 McCarthy Blvd., Milpitas, California 95035, 408-433-8000, www.lsilogic.com. Hyundai Electronics America, headquartered in San Jose, California, is a U.S. subsidiary of Hyundai Electronics Industries Co., Ltd. based in Seoul, Korea. Symbios, Inc., headquartered in Fort Collins, Colorado, creates solutions for moving and storing information. Symbios focuses on developing partnerships with its customers, including original equipment manufacturers and resellers in the storage, server, peripherals, and communications markets. -----END PRIVACY-ENHANCED MESSAGE-----