Exhibit 10.1
[6/3/03]
CREDIT AGREEMENT
DATED AS OF JUNE 27, 2003
AMONG
MINDSPEED TECHNOLOGIES, INC.,
AS BORROWER,
THE SUBSIDIARY GUARANTORS PARTY HERETO,
AS GUARANTORS,
AND
CONEXANT SYSTEMS, INC.,
AS LENDER
TABLE OF CONTENTS
Page
ARTICLE I DEFINED TERMS; RULES OF CONSTRUCTION............................................... 1
SECTION 1.01. DEFINED TERMS............................................................... 1
SECTION 1.02. RULES OF CONSTRUCTION....................................................... 1
ARTICLE II THE LOANS......................................................................... 1
SECTION 2.01. COMMITMENT.................................................................. 1
SECTION 2.02. LOANS....................................................................... 1
SECTION 2.03. BORROWING PROCEDURE......................................................... 2
SECTION 2.04. REPAYMENT OF LOANS; EVIDENCE OF DEBT........................................ 2
SECTION 2.05. INTEREST ON LOANS........................................................... 3
SECTION 2.06. TERMINATION AND REDUCTION OF COMMITMENT..................................... 4
SECTION 2.07. OPTIONAL AND MANDATORY PREPAYMENTS OF LOANS................................. 4
SECTION 2.08. PAYMENTS GENERALLY.......................................................... 4
SECTION 2.09. TAXES....................................................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES................................................... 7
SECTION 3.01. ORGANIZATION; POWERS........................................................ 7
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY............................................... 7
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS........................................ 7
SECTION 3.04. FINANCIAL STATEMENTS........................................................ 7
SECTION 3.05. PROPERTIES.................................................................. 8
SECTION 3.06. EQUITY INTERESTS AND SUBSIDIARIES; CONSENT.................................. 9
SECTION 3.07. NO EVENT OF DEFAULT......................................................... 9
SECTION 3.08. AGREEMENTS.................................................................. 9
SECTION 3.09. NO MATERIAL MISSTATEMENTS................................................... 10
SECTION 3.10. SOLVENCY.................................................................... 10
SECTION 3.11. SECURITY DOCUMENTS.......................................................... 10
SECTION 3.12. REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL........................ 11
ARTICLE IV CONDITIONS OF LENDING............................................................. 13
SECTION 4.01. ALL LOANS................................................................... 13
SECTION 4.02. CLOSING DATE ITEMS.......................................................... 13
ARTICLE V AFFIRMATIVE COVENANTS.............................................................. 16
SECTION 5.01. FINANCIAL STATEMENTS, REPORTS, ETC.......................................... 17
SECTION 5.02. LITIGATION AND OTHER NOTICES................................................ 18
SECTION 5.03. EXISTENCE; BUSINESSES AND PROPERTIES........................................ 18
SECTION 5.04. INSURANCE................................................................... 19
SECTION 5.05. TAXES....................................................................... 20
SECTION 5.06. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS................... 20
SECTION 5.07. USE OF PROCEEDS............................................................. 20
SECTION 5.08. PAYMENT OF OBLIGATIONS...................................................... 20
SECTION 5.09. COMPLIANCE WITH LAWS........................................................ 21
SECTION 5.10. ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS................................ 21
SECTION 5.11. SECURITY INTERESTS; FURTHER ASSURANCES...................................... 25
SECTION 5.12. POST-CLOSING MATTERS........................................................ 26
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ARTICLE VI NEGATIVE COVENANTS................................................................ 26
SECTION 6.01. INDEBTEDNESS................................................................ 26
SECTION 6.02. LIENS....................................................................... 27
SECTION 6.03. INVESTMENTS, LOANS AND ADVANCES............................................. 29
SECTION 6.04. MERGERS, CONSOLIDATIONS, ASSET SALES AND PURCHASES OF ASSETS................ 30
SECTION 6.05. DIVIDENDS................................................................... 32
SECTION 6.06. TRANSACTIONS WITH AFFILIATES................................................ 32
SECTION 6.07. LIMITATION ON CAPITAL EXPENDITURES.......................................... 32
SECTION 6.08. LIMITATION ON MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS OF CERTIFICATE OF
INCORPORATION, OTHER CONSTITUTIVE DOCUMENTS OR BYLAWS AND CERTAIN OTHER
AGREEMENTS, ETC............................................................. 32
SECTION 6.09. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES.......................... 33
SECTION 6.10. LIMITATION ON ISSUANCE OF CAPITAL STOCK..................................... 33
SECTION 6.11. LIMITATION ON CREATION OF SUBSIDIARIES...................................... 33
SECTION 6.12. SALE AND LEASEBACK TRANSACTIONS............................................. 34
SECTION 6.13. LIMITATION ON LEASE OBLIGATIONS............................................. 34
SECTION 6.14. BUSINESS.................................................................... 34
SECTION 6.15. LIMITATION ON ACCOUNTING CHANGES............................................ 34
SECTION 6.16. RESTRICTED PAYMENTS......................................................... 34
SECTION 6.17. FISCAL YEAR................................................................. 34
SECTION 6.18. FOREIGN SUBSIDIARIES........................................................ 34
ARTICLE VII GUARANTEE........................................................................ 35
SECTION 7.01. THE GUARANTEE............................................................... 35
SECTION 7.02. OBLIGATIONS UNCONDITIONAL................................................... 35
SECTION 7.03. REINSTATEMENT............................................................... 37
SECTION 7.04. SUBROGATION; SUBORDINATION.................................................. 37
SECTION 7.05. REMEDIES.................................................................... 38
SECTION 7.06. INSTRUMENT FOR THE PAYMENT OF MONEY......................................... 38
SECTION 7.07. GENERAL LIMITATION ON GUARANTEE OBLIGATIONS................................. 38
SECTION 7.08. CONTINUING GUARANTEE........................................................ 38
SECTION 7.09. RELEASE OF GUARANTORS....................................................... 38
ARTICLE VIII EVENTS OF DEFAULT............................................................... 39
ARTICLE IX MISCELLANEOUS..................................................................... 42
SECTION 9.01. NOTICES..................................................................... 42
SECTION 9.02. WAIVERS; AMENDMENT.......................................................... 43
SECTION 9.03. EXPENSES; INDEMNITY......................................................... 43
SECTION 9.04. SUCCESSORS AND ASSIGNS...................................................... 44
SECTION 9.05. SURVIVAL OF AGREEMENT....................................................... 45
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS.................................... 45
SECTION 9.07. SEVERABILITY................................................................ 46
SECTION 9.08. RIGHT OF SET-OFF............................................................ 46
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.................. 46
SECTION 9.10. WAIVER OF JURY TRIAL........................................................ 47
SECTION 9.11. CONFIDENTIALITY............................................................. 47
EXHIBIT A DEFINED TERMS; RULES OF CONSTRUCTION........................................ A-1
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ANNEXES
Annex I Limitations on Guarantees and Indemnities Under Applicable Foreign Laws
Annex II Lenders' Notice Information and Commitments
Annex III Foreign Subsidiary Pledge and Guarantee Documentation
SCHEDULES
Schedule 1.01(a) Immaterial Subsidiaries
Schedule 1.01(b) Subsidiary Guarantors
Schedule 1.1(d) Certain Foreign Subsidiary Guarantors
Schedule 3.03 Governmental Approvals; Compliance with Laws
Schedule 3.05(b) Leased Properties
Schedule 3.06(a) Subsidiaries; Non-Guarantor Subsidiaries
Schedule 3.12(a) Material Items of Collateral
Schedule 3.12(b) Location of Certain Collateral
Schedule 3.12(c) Location of Loan Parties
Schedule 3.18 Insurance
Schedule 4.02(n) Landlord Lien Waiver and Access Agreement Properties
Schedule 5.10(b) Section 5.10(b) Listed Subsidiaries
Schedule 5.12 Post-Closing Matters
Schedule 6.01 Existing Liens
Schedule 6.02 Certain Permitted Liens
Schedule 6.03 Existing Investments
Schedule 6.13 Existing Lease Obligations
EXHIBITS
Exhibit A Defined Terms; Rules of Construction
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Monthly Cash Balance Report
Exhibit E-1 Form of Agreement and Estoppel Certificate
Exhibit E-2 Form of Landlord Lien Waiver and Access Agreement
Exhibit F Form of U.S. Security Agreement
Exhibit G Form of Intercompany Note
Exhibit H Form of Joinder Agreement
Exhibit I-1 Form of Perfection Certificate
Exhibit I-2 Form of Perfection Certificate Supplement
Exhibit J Form of Note
Exhibit K Form of Financial Officer's Compliance Certificate
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CREDIT AGREEMENT
AGREEMENT, dated as of June 27, 2003 among MINDSPEED TECHNOLOGIES, INC., a
Delaware corporation ("BORROWER"); and EACH OF THE SUBSIDIARY GUARANTORS LISTED
ON THE SIGNATURE PAGES HERETO OR FROM TIME TO TIME BECOMING A PARTY HERETO BY
EXECUTION OF A JOINDER AGREEMENT (together with each other Subsidiary Guarantor
from time to time executing a Guarantee (defined herein) as required hereunder,
"GUARANTORS"); and CONEXANT SYSTEMS, INC. ("CONEXANT" or "LENDER").
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION
SECTION 1.01. DEFINED TERMS. In this Agreement, terms defined in Exhibit A
shall have the meanings set forth therein, terms defined in the preamble or
other sections of this Agreement shall have the meanings set forth therein,
terms defined in the UCC and not otherwise defined in this Agreement or the
Security Documents shall have the meanings set forth in the UCC, and capitalized
terms used but not otherwise defined in this Agreement which are defined in the
Security Documents shall have the meanings set forth in the Security Documents.
SECTION 1.02. RULES OF CONSTRUCTION. The rules of construction set forth
in Exhibit A shall apply to this Agreement and the other Loan Documents.
ARTICLE II
THE LOANS
SECTION 2.01. COMMITMENT. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, Lender agrees to make
Loans to Borrower, at any time and from time to time during the Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in Lender's Exposure exceeding its Commitment. Within the limits set
forth above and subject to the terms, conditions and limitations set forth
herein, Borrower may borrow, pay or prepay and reborrow Loans.
SECTION 2.02. LOANS.
(a) Each Loan shall be in an aggregate principal amount that is (i)
an integral multiple of $1.0 million and not less than $2.0 million or
(ii) equal to the remaining available balance of the Commitment.
(b) Lender shall make each Loan to be made by it hereunder not later
than 11:00 a.m., Pacific time on the proposed date thereof by wire
transfer of immediately available dollars to such bank deposit account in
the United States as Borrower may designate in the applicable Borrowing
Request.
SECTION 2.03. BORROWING PROCEDURE. To request a Loan, Borrower shall
notify Lender of such request by delivering a duly completed Borrowing Request
not later than 10:30 a.m., Pacific time, three Business Days before the date of
the proposed Loan. Each such Borrowing Request shall specify the following
information in compliance with Section 2.02:
(a) the amount of such Loan;
(b) the date of such Loan, which shall be a Business Day; and
(c) the location and number of Borrower's account to which funds are
to be disbursed, which shall comply with the requirements of Section
2.02(b).
SECTION 2.04. REPAYMENT OF LOANS; EVIDENCE OF DEBT.
(a) Borrower hereby unconditionally promises to pay to Lender the
then unpaid principal amount of each Loan on the Final Maturity Date,
together with all accrued and unpaid interest on such principal amount to
the date of payment.
(b) Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of Borrower to Lender
resulting from each Loan made by Lender from time to time, including the
amounts of principal and interest payable and paid to Lender from time to
time under this Agreement, including:
(i) the amount and the borrowing date of each Loan made
hereunder;
(ii) the amount of any principal or interest due and payable
or to become due and payable from Borrower to Lender hereunder;
(iii) the amount of any principal paid, pre-paid and repaid
and the amount of any interest paid by Borrower to Lender or added
to principal hereunder; and
(iv) the amount of any other sum received by Lender.
(c) The entries made in the accounts maintained pursuant to Section
2.04(b) shall be prima facie evidence of the existence and amounts of the
obligations therein recorded (in the absence of manifest error); provided,
however, that the failure of Lender to maintain such accounts or any error
therein shall not in any manner affect the obligations of Borrower to
repay the Loans in accordance with their terms.
(d) Lender may request that its Loans be evidenced by a Note. In
such event, Borrower shall prepare, execute and deliver to Lender a Note
payable to the order of Lender (or, if requested by Lender, to Lender and
its registered assigns) and substantially in the form of Exhibit J or in a
form otherwise approved by Lender. Thereafter, the Loans evidenced by such
Note and interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more Notes in such form
payable to the order of the payee named therein (or, if such Note is a
registered note, to such payee and its registered assigns).
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SECTION 2.05. INTEREST ON LOANS.
(a) Subject to Section 2.05(b), the principal amount of Loans,
including the amount of any accrued and unpaid interest which is not paid
in cash and added to principal as provided in Section 2.05(d), shall bear
interest at a rate of ten percent (10%) per annum.
(b) Notwithstanding the foregoing, upon the occurrence and during
the continuation of any Event of Default, the outstanding principal amount
of all Loans and, to the extent permitted by applicable law, any interest
thereon and any fees and other amounts payable hereunder, shall thereafter
bear interest (including post-petition interest in any proceeding under
the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 12% per annum. Payment or acceptance of the
increased rates of interest provided for in this Section 2.05(b) is not a
permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or
remedies of Lender.
(c) Accrued interest on each Loan may be paid in arrears on the last
Business Day of each calendar quarter and all accrued and unpaid interest
shall be paid on the Final Maturity Date and upon termination of the
Commitment; provided that, (i) interest accrued pursuant to Section
2.05(b) shall be payable on demand and, (ii) in the event of any repayment
or prepayment of any Loan, accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or prepayment.
(d) Accrued interest not paid in cash on the last Business Day of
each calendar quarter shall be added to the principal amount outstanding
as of the last Business Day of each calendar quarter and thereafter accrue
interest (at the applicable interest rate) until paid in cash. Any such
capitalized interest shall be treated as principal of Loans for all
purposes of the Loan Documents, except that such capitalized interest
shall not be deemed Exposure for purposes of determining the amount of
principal that may be borrowed pursuant to Section 2.01.
(e) All interest hereunder shall be computed on the basis of a year
of 365/366 days, and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(f) Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to any Loan, together with all fees, charges
and other amounts that are treated as interest on such Loan under
applicable law (collectively the "CHARGES"), shall exceed the maximum
lawful rate (the "MAXIMUM RATE") that may be contracted for, charged,
taken, received or reserved by Lender in accordance with applicable law,
the rate of interest payable in respect of such Loan hereunder, together
with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that
would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section 2.05(f) shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by
Lender.
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SECTION 2.06. TERMINATION AND REDUCTION OF COMMITMENT.
(a) The Commitments shall automatically terminate on the Final
Maturity Date.
(b) Borrower may at any time terminate, or from time to time reduce,
the Commitments; provided that, (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1.0 million and not
less than $2.0 million and (ii) the Commitments shall not be terminated or
reduced if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 2.07(b), the Exposure would exceed the
Commitment.
(c) Borrower shall notify Lender of any election to terminate or
reduce its Commitment under Section 2.06(b) at least one Business Day
prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. Each notice delivered by
Borrower pursuant to this Section 2.06(b) shall be irrevocable. Any
termination or reduction of the Commitment shall be permanent.
(d) The Commitment may be terminated at any time an Event of Default
has occurred pursuant to and in accordance with the terms of Article XIII.
SECTION 2.07. OPTIONAL AND MANDATORY PREPAYMENTS OF LOANS.
(a) OPTIONAL PREPAYMENTS. Borrower shall have the right at any time
and from time to time to prepay any Loan, in whole or in part without
premium or penalty, subject to the requirements of this Section 2.07;
provided that, each partial prepayment shall be in an amount that is an
integral multiple of $1.0 million and not less than $2.0 million.
(b) COMMITMENT AMOUNT LOAN PREPAYMENTS. In the event of any
termination of all the Commitments, Borrower shall, on the date of such
termination, repay or prepay all its outstanding Loans. In the event of
any partial reduction of the Commitments, if the Exposure would exceed the
amount of Commitment after giving effect to such reduction, then Borrower
shall, on the date of such reduction, repay or prepay Loans in an amount
sufficient to eliminate such excess.
(c) CASH BALANCE LOAN PREPAYMENT. Borrower must repay Loans
hereunder to the extent its Cash Balance as shown in the most recent
Monthly Cash Balance Report exceeds $25,000,000.
SECTION 2.08. PAYMENTS GENERALLY. Borrower shall make each payment
required to be made by it hereunder or under any other Loan Document (whether of
principal, interest, or of amounts payable under Section 2.09, or otherwise) on
or before the time expressly required hereunder or under such other Loan
Document for such payment (or, if no such time is expressly required, prior to
11:00 a.m., Pacific time), on the date when due, in immediately available
dollars, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of Lender, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made to Comerica Bank, Detroit, Michigan, ABA #
▇▇▇▇▇▇▇▇▇, Account No. 1850967629 or such other account as Lender may designate
from time to time in a written notice given to Borrower not later than two
Business Days prior to the date such payment must be made. If any payment under
any Loan
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Document shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments under each Loan Document shall be made in dollars.
SECTION 2.09. TAXES.
(a) Any and all payments by or on account of any obligation of
Borrower hereunder or under any other Loan Document shall be made without
set-off, counterclaim or other defense and free and clear of and without
deduction or withholding for any and all Indemnified Taxes or Other Taxes;
provided that, if Borrower shall be required by law to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section 2.09) Lender
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) Borrower shall make such
deductions or withholdings and (iii) Borrower shall pay the full amount
deducted or withheld to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Borrower shall indemnify Lender, within ten Business Days after
written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by Lender on or with respect to any payment by or on
account of any Obligation of Borrower hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section 2.09) and any
penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. If in the reasonable opinion of Borrower, any amount has been
paid to, by or on behalf of Lender pursuant to clause (a), (b) or this (c)
of this Section 2.09 with respect to Taxes or Other Taxes which are not
correctly or legally asserted, Lender will cooperate with Borrower in
seeking to obtain a refund for the benefit of Borrower of such amount,
provided that, the rendering of any such cooperation by Lender would not,
in the reasonable opinion of Lender (i) cause Lender to incur any expense
or liability (which is not otherwise paid in full by Borrower prior to or
at the time that such expense or liability is incurred) or (ii) have any
adverse effect on Lender. A certificate as to the amount of such payment
or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. If Lender receives a written notice of Tax assessment from
any Governmental Authority regarding any Tax in respect of which
indemnification may be required pursuant to this Section 2.09(c), Lender
shall notify Borrower within 120 days following the receipt of such notice
that such notice has been received; provided, however, that the failure of
Lender to provide such notice shall not relieve Borrower of its obligation
to make any indemnification payment under this Agreement.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by Borrower to a Governmental Authority, Borrower shall
deliver to Lender the original or a certified copy of a receipt issued by
such Governmental Authority
5
evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to Lender.
(e) On or before the Closing Date in the case of Lender, or on or
before the effective date of an Assignment and Acceptance pursuant to
which it became a Lender in the case of an assignee, and if otherwise
reasonably requested from time to time by Borrower, within 30 days of such
request, each Lender which is not a U.S. Person within the meaning of
Section 7701(a)(30) of the Tax Code shall provide to Borrower two duly
completed and signed copies of Internal Revenue Service Forms W-8BEN, or
W-8ECI or successor form(s), as the case may be, certifying as to such
Lender's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to Lender under
this Agreement. Until Borrower and Lender have received such forms and
indicating that payments under this Agreement are subject to an exemption
from or reduction of United States withholding tax, Borrower or Lender (if
not withheld by Borrower) shall withhold taxes from such payments at the
applicable statutory rate, without any obligation to "gross-up" or make
Lender whole under clause (a) of this Section. In case Lender is subject
to a reduction of, rather than exemption from, United States withholding
tax, the obligation of Borrower to "gross-up" under clause (a) of this
Section shall not apply in respect of the amount of United States
withholding tax that Lender is subject to at the time they become a party
to this Agreement (provided, however, that in the case of an assignee that
becomes a Lender pursuant to Section 10.04, the obligation of Borrower to
"gross-up" under clause (a) of this Section, or indemnify for Indemnified
Taxes under clause (c) of this Section, shall apply in respect of the
amount of United States withholding tax that is applicable to payments
made on or after the date upon which the assignee first becomes a Lender
to the same extent that Borrower would have been obligated to "gross-up"
under clause (a) of this Section, or indemnify for Indemnified Taxes under
clause (c) of this Section, had Lender not made such assignment to such
assignee).
(f) If (i) Lender receives a cash refund in respect of an
overpayment of Indemnified Taxes or Other Taxes from a Governmental
Authority with respect to, and actually resulting from, an amount of
Indemnified Taxes or Other Taxes actually paid to or on behalf of Lender
by Borrower (a "TAX REFUND") and (ii) Lender determines in its reasonable
opinion that such Tax Refund has been correctly paid by such Governmental
Authority and will not be required to be repaid to such Governmental
Authority, then Lender shall use its reasonable efforts to notify Borrower
of such Tax Refund and to forward the proceeds of such Tax Refund (or
relevant portion thereof) to Borrower as reduced by any expense or
liability incurred by such Lender in connection with obtaining such Tax
Refund.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Loan Parties, as applicable, represents and warrants to
Lender (with references to the Companies being references thereto after giving
effect to the Transactions unless otherwise expressly stated) that:
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SECTION 3.01. ORGANIZATION; POWERS. Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to carry on its business as now conducted, and
(c) is qualified and in good standing (to the extent such concept is applicable
in the applicable jurisdiction) to do business in every jurisdiction where such
qualification is required, except in such jurisdictions where the failure to so
qualify, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to be
entered into by each Loan Party are within such Loan Party's powers and have
been duly authorized by all necessary action. This Agreement has been duly
executed and delivered by each Loan Party and constitutes, and each other Loan
Document to which any Loan Party is to be a party, when executed and delivered
by such Loan Party, will constitute, a legal, valid and binding obligation of
such Loan Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as set forth on
Schedule 3.03, the Transactions:
(a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except
(i) such as have been obtained or made and are in full force and effect,
(ii) filings necessary to perfect Liens created under the Loan Documents,
(iii) consents, approvals, registrations, filings or actions the failure
of which to obtain or perform could not reasonably be expected to result
in a Material Adverse Effect and (iv) registrations and filings
contemplated by the Registration Rights Agreement;
(b) will not violate (i) any applicable law or regulation except for
violations that could not reasonably be expected to result in a Material
Adverse Effect, or (ii) the charter, bylaws or other organizational
documents of any Company or any order of any Governmental Authority;
(c) will not violate, result in a default or require any consent or
approval under any indenture, agreement, lease or other instrument binding
upon any Company or its assets, or give rise to a right thereunder to
require any payment to be made by any Company, except for violations,
defaults or the creation of such rights that could not reasonably be
expected to result in a Material Adverse Effect; and
(d) will not result in the creation or imposition of any Lien on any
asset of any Company, except Liens created under the Loan Documents and
Permitted Liens.
SECTION 3.04. FINANCIAL STATEMENTS.
(a) The historical financial statements and the notes thereto
included in the Form 10 present fairly in all material respects the
consolidated financial position, income statement, cash flows and changes
in stockholder's equity of Borrower and its Subsidiaries at the respective
dates and for the respective periods indicated. All such financial
statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods presented (except as disclosed
therein). The
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unaudited pro forma financial statements and the notes thereto included in
the Form 10 have been prepared on a basis consistent with the historical
financial statements of Borrower and its Subsidiaries and give effect to
assumptions used in the preparation thereof on a reasonable basis and in
good faith and present fairly in all material respects the historical and
proposed transactions contemplated by the Form 10; and such pro forma
financial statements comply as to form in all material respects with the
requirements applicable to pro forma financial statements set forth in
Regulation S-X under the Securities Act. The other financial and
statistical information and data included in the Form 10 (other than
industry and market-related data) are accurately presented in all material
respects and prepared on a basis consistent with the financial statements
and the books and records of Borrower and its Subsidiaries.
(b) Since March 31, 2003, there has been no event, condition or
circumstance that could reasonably be expected to result in a Material
Adverse Effect.
(c) When delivered, each Monthly Cash Balance Report is true and
correct and presents fairly Borrower's Cash Balance as of the date
indicated therein.
SECTION 3.05. PROPERTIES.
(a) As of the Closing Date, no Loan Party owns any Real Property.
Each Loan Party has valid leasehold interests in or other valid rights to
use, all of its Real Property. Each Loan Party has good title, valid
leasehold interests in or licenses to or other valid rights to use all of
its personal property material to its business. The property of the
Companies, taken as a whole, (i) is in good operating order, condition and
repair (ordinary wear and tear excepted) and (ii) constitutes all the
properties that are required for the business and operations of the
Companies as currently conducted.
(b) Schedule 3.05(b) contains a true and complete list of (1) each
parcel of Real Property leased, subleased or otherwise occupied or
utilized by any Loan Party, as lessee or sublessee, as of the Closing Date
(each, a "COMPANY FACILITY LEASE"), including a description of the type of
interest therein held by such Loan Party and the name of the Loan Party
holding such interest; and (2) each lease or license agreement for any
property other than Real Property which is material to the business,
operations, condition (financial or other), assets or prospects of the
Companies, taken as a whole, and in effect as of the Closing Date (each a
"COMPANY PROPERTY LEASE"), including a description of the type of property
subject to such lease or license agreement, the lessors or licensors
parties thereto and the name of the Loan Party that is a party thereto.
Each Company Lease is a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Loan Party that is a party thereto, and,
to the knowledge of Borrower, each of the Lessors or Licensors parties
thereto. There is no, nor has any Loan Party received notice of any,
default under any Company Lease (or to the knowledge of any Loan Party,
any condition or event that, after notice or a lapse of time or both,
would constitute a default thereunder). No Loan Party, and, to the
knowledge of each Loan Party, no third party to any Company Lease, has
assigned any Company Property Lease or sublet any part of the property
covered thereby or exercised any renewal or purchase option thereunder.
None of the Loan Parties has granted any options or rights of first
refusal, or rights of first offer to third parties to purchase or
otherwise acquire an interest in any of the
8
property subject to any Company Property Lease. True and complete copies
of all Company Leases, together with all modifications, extensions,
amendments and assignments thereof have heretofore been made available to
Lender. All improvements required to be made by any Loan Party under any
Company Facility Lease have been completed and fully paid for.
(c) Each Company owns, or is licensed to use, all Intellectual
Property used in the conduct of its business as currently conducted,
except for those the failure to own or license that, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. No claim has been asserted and is pending by any person
challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does
any Company know of any valid basis for any such claim. The use of such
Intellectual Property by each Company does not infringe the rights of any
person, except for such claims and infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.06. EQUITY INTERESTS AND SUBSIDIARIES; CONSENT.
(a) Schedule 3.06(a) sets forth a list, as of the Closing Date, of
(i) all Subsidiaries of Borrower and their jurisdiction of organization;
(ii) the number of shares of each class of its Equity Interests
authorized, and the number outstanding, and the number of shares covered
by all outstanding options, warrants, rights of conversion or purchase and
similar rights of each such Subsidiary; and (iii) a designation as to
whether such Subsidiary constitutes a Non-Guarantor Subsidiary. All Equity
Interests of each Subsidiary of Borrower are duly and validly issued, are
fully paid and non-assessable and, except as disclosed on Schedule
3.06(a), are owned directly or indirectly by Borrower. Each Loan Party is
the record and beneficial owner of, and has good and marketable title to,
the Equity Interests pledged by it under the applicable Security
Agreement, free of any and all Liens, rights or claims of other persons,
except for the security interest created by the Security Agreements.
(b) No consent of any person including any other general or limited
partner, any other member of a limited liability company, any other
shareholder or any trust beneficiary is necessary or desirable in
connection with the creation, perfection or first priority status of the
security interest of Lender in any Equity Interests pledged to Lender
under any Security Agreement or the exercise by Lender of the voting or
other rights provided for in any Security Agreement or the exercise of
remedies in respect thereof.
SECTION 3.07. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
SECTION 3.08. AGREEMENTS.
(a) No Company is a party to any agreement or instrument or subject
to any corporate or other constitutional restriction that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
9
(b) No Company is in default in any manner under any provision of
any indenture or other agreement or instrument evidencing Indebtedness, or
any other agreement, lease or instrument to which it is a party or by
which it or any of its property are or may be bound, where such default
could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.09. NO MATERIAL MISSTATEMENTS. None of any information, report,
financial statement, exhibit or schedule furnished by or on behalf of any
Company to Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto (including the Form 10), taken
together with all related information so furnished, contained, contains or will
contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading
as of the date such information is dated or certified; provided that, to the
extent any such information, report, financial statement, exhibit or schedule
was based upon or constitutes a forecast, projection or pro forma adjustment,
each Company represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule (it being understood that, with respect
to projected financial information, actual results may vary significantly from
such projected results).
SECTION 3.10. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Closing Date, (a) the fair value of the assets of
the Loan Parties, taken as a whole, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Loan Parties, taken as a whole, will be greater than the
amount that will be required to pay the probable liability of their collective
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) the Loan Parties,
taken as a whole, will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) the Loan Parties, taken as a whole, will not have unreasonably
small capital with which to conduct the business in which they are engaged as
such business is now conducted and is proposed to be conducted following the
Closing Date.
SECTION 3.11. SECURITY DOCUMENTS.
(a) The Security Agreements are effective to create in favor of
Lender, a legal, valid and enforceable security interest in and Lien on
the Security Agreement Collateral and, when (i) financing statements and
other filings in appropriate form are filed in the offices specified in
Section III.B of the Perfection Certificate and (ii) the Loan Parties have
complied with Article III of the U.S. Security Agreement, the U.S.
Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the grantors
thereunder in such Collateral (other than (A) the Intellectual Property
(as defined in the U.S. Security Agreement) and (B) such Collateral in
which a security interest cannot be perfected under the Uniform Commercial
Code as in effect at the relevant time in the relevant jurisdiction for
filing), in each case subject to no Liens other than Permitted Liens.
(b) When the U.S. Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the
U.S. Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the grantors
thereunder in the Intellectual Property (as defined in the U.S. Security
Agreement), in each case subject to no Liens other than Permitted
10
Liens (it being understood that subsequent recordings in the United States
Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a Lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the Closing
Date).
(c) Each Security Document delivered pursuant to Section 5.10 will,
upon execution and delivery thereof, be effective to create in favor of
Lender a legal, valid and enforceable Lien on all of the Loan Parties'
right, title and interest in and to the Collateral described therein, and
when such Security Document is filed or recorded in the appropriate
offices as may be required under applicable law, such Security Document
will constitute a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Security Agreement
Collateral, in each case subject to no Liens other than the applicable
Permitted Liens.
SECTION 3.12. REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL.
(a) TYPES OF COLLATERAL. Set forth in Schedule 3.12(a) is a complete
and accurate description of each Material Item of Collateral in which any
Loan Party has any right, title or interest on the Closing Date that is:
(1) Real Property, Fixtures or an interest therein;
(2) Deposit Accounts, Security Accounts or similar accounts
maintained with financial institutions in the United States;
(3) Investment Property (other than Security Accounts),
including Pledged Equity Interests;
(4) Letter-of-Credit Rights held by or on behalf of any Loan
Party in the United States;
(5) Instruments held by or on behalf of any Loan Party in the
United States;
(6) Patents;
(7) registered Trademarks or applications for registration
that have been filed in the United States Patent and Trademark
Office; and
(8) registered Copyrights or applications for registration
that have been filed in the United States Copyright Office.
(b) LOCATION OF CERTAIN COLLATERAL. Set forth in Schedule 3.12(b) is
a complete and accurate description for each Material Item of Collateral
located in the United States in which any Loan Party has any right, title
or interest on the Closing Date, of:
(1) the location of any Real Property or Fixture;
11
(2) the jurisdiction of any bank or other financial
institution at which each Deposit Account or similar account is
maintained, determined in accordance with Section 9-304 of the UCC;
(3) the jurisdiction in which any certificated security is
located, the jurisdiction of the issuer of any uncertificated
security, the jurisdiction of any securities intermediary at which
any security entitlement or securities account is held, and the
jurisdiction of any commodity intermediary at which any commodity
account or commodity contract is held, determined in each case in
accordance with Section 9-305 of the UCC;
(4) the jurisdiction of the issuer or nominated person in
respect of any Letter-of-Credit Rights, determined in accordance
with Section 9-306 of the UCC; and
(5) the jurisdiction where any Instrument is located.
(c) LOCATION OF LOAN PARTIES. Set forth in Schedule 3.12(c) is the
location of each Loan Party, determined in accordance with Section 9-307
of the UCC.
(d) NO LIENS. None of the Collateral is subject to any Lien of any
kind, other than Permitted Liens. As of the Closing Date, there is no
financing statement (or similar statement or instrument under the laws of
any jurisdiction in the United States) covering or purporting to cover any
interest of any kind in the Collateral, other than financing statements
filed pursuant to this Agreement or the other Security Documents or in
respect of (i) Permitted Liens or financing statements for which proper
termination statements have been delivered to Lender for filing or (ii)
other obligations which in the aggregate do not exceed $10,000.
(e) PLEDGED EQUITY INTERESTS. So long as Lender has possession of
the Pledged Equity Interests, it will have a fully perfected, first
priority security interest in the Pledged Equity Interests of the Domestic
Subsidiaries. No filings or recordings are required to perfect (or
maintain the perfection or priority of) the security interests created in
the Pledged Equity Interests of the Domestic Subsidiaries. Lender will
have a fully perfected pledge of the Pledged Equity Interests of the
Foreign Subsidiaries upon compliance by Borrower and such Foreign
Subsidiaries with Section 4.02(h)(ix).
(f) INVESTMENT PROPERTY. Upon execution and delivery of the Control
Agreements by each of the parties thereto, and assuming compliance by each
securities intermediary or commodity intermediary which is a party
thereto, Lender will have (x) "control" within the meaning of Section
9-106 of the UCC of each account referred to in such agreements and all
security entitlements or commodity contracts carried in such accounts and
(y) a fully perfected, first priority security interest in each account
referred to therein and all Investment Property credited to any such
account subject to such Control Agreement.
(g) DEPOSIT ACCOUNTS; BANK ACCOUNTS. Upon execution and delivery of
the Control Agreements by each of the parties thereto, and assuming
compliance by each
12
bank or depositary which is a party thereto, Lender will have (x)
"control" within the meaning of Section 9-104 of the UCC with respect to
each Deposit Account subject to such Control Agreement, (y) exclusive
dominion and control with respect to each bank or depositary account
subject to such Control Agreement which is not a Deposit Account or
Securities Account, and (z) a fully perfected, first priority security
interest in all funds held in each account subject to such Control
Agreement.
ARTICLE IV
CONDITIONS OF LENDING
The obligation of Lender to make Loans hereunder is subject to the
satisfaction of the following conditions:
SECTION 4.01. ALL LOANS. On the date of each Loan:
(a) Lender shall have received a Borrowing Request in accordance
with Section 2.03.
(b) Borrower and each other Loan Party shall be in compliance with
all the terms and provisions set forth herein and in each other Loan
Document on its part to be observed or performed, including its obligation
to deliver Monthly Cash Balance Reports pursuant to Section 5.01(d).
(c) At the time of and immediately after such Loan, no Default or
Event of Default shall have occurred and be continuing.
(d) Each of the representations and warranties set forth in Article
III hereof or in any other Loan Document shall be true and correct in all
material respects (except that any representation and warranty that is
qualified as to "materiality" or "Material Adverse Effect" shall be true
and correct in all respects) on and as of the date of such Loan with the
same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date
(in which case shall have been true and correct in all material respects
(except that those that are qualified as to "materiality" or "Material
Adverse Effect" shall be true and correct in all respects) on and as of
such earlier date).
(e) After giving effect to the Loan, Borrower's Cash Balance shall
not exceed $25,000,000.
Each Loan shall be deemed to constitute a representation and warranty by
Borrower and each other Loan Party on the date of such Loan as to the matters
specified in paragraphs (b) through (e) above.
SECTION 4.02. CLOSING DATE ITEMS. On the Closing Date:
(a) LOAN DOCUMENTS. All legal matters incident to this Agreement,
the Loans hereunder and the other Loan Documents shall be satisfactory to
Lender and there shall have been delivered to Lender an executed
counterpart of each of the Loan
13
Documents, including this Agreement, each Security Agreement, the
Perfection Certificate and each other applicable Loan Document and each of
such agreements shall be in full force and effect.
(b) CORPORATE DOCUMENTS. Lender shall have received:
(i) a certificate of the Secretary or Assistant Secretary of
each Loan Party dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the certificate or
articles of incorporation or other constitutive documents, including
all amendments thereto certified as of a recent date by the
Secretary of State (or like official) of the jurisdiction of its
organization (if such document is of a type that may be so
certified), (B) that attached thereto is a true and complete copy of
the bylaws or other organizational documents of each Loan Party as
in effect on the Closing Date and at all times since a date prior to
the date of the resolutions described in clause (C) below, (C) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors or other governing body of such
person authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party and, in the case of
Borrower, the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and
effect, and (D) as to the incumbency and specimen signature of each
officer executing any Loan Document or any other document delivered
in connection herewith on behalf of such person (together with a
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate in this clause (i));
(ii) a long form certificate as to the good standing of each
Loan Party as of a recent date, from the Secretary of State (or like
official) of the jurisdiction of its organization, to the extent
such certificates or their equivalent are issued by such
jurisdiction; and
(iii) such other documents as Lender may reasonably request.
(c) OFFICER'S CERTIFICATE. Lender shall have received a certificate,
dated the Closing Date and signed by a Financial Officer or the Chief
Executive Officer of Borrower, confirming compliance with the conditions
precedent set forth in paragraphs (b), (c) and (d) of Section 4.01.
(d) INDEBTEDNESS. After giving effect to the Transactions and the
other transactions contemplated hereby, no Company shall have outstanding
any Indebtedness, preferred stock or minority interests other than (i) the
Loans hereunder and (ii) the minority interests described on Schedule
3.06(a) attached hereto.
(e) REQUIREMENTS OF LAW. Lender shall be satisfied that the
Transactions shall be in full compliance with all material Requirements of
Law.
(f) CONSENTS. Lender shall be satisfied that all material consents
and approvals required from Governmental Authorities and third parties in
connection with the Transactions have been obtained and remain in effect,
and there shall be no
14
governmental or judicial action (or any adverse development therein),
actual or threatened, that Lender shall reasonably determine has or could
have, singly or in the aggregate, a material adverse effect on the
Transactions.
(g) LITIGATION. There shall be no litigation, public or private, or
administrative proceedings, governmental investigation or other legal or
regulatory developments that, singly or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect, or could materially
and adversely affect the ability of any Company to fully and timely
perform its respective obligations under the Transaction Documents, or the
ability of the parties to consummate the financings contemplated hereby or
the other Transactions.
(h) PERSONAL PROPERTY REQUIREMENTS. Lender shall have received from
each Loan Party (other than any Non-Guarantor Subsidiary):
(i) all certificates, agreements or instruments representing
or evidencing the Pledged Equity Interests and the Pledged
Intercompany Debt accompanied by instruments of transfer and stock
powers endorsed in blank shall have been delivered to Lender;
(ii) all other certificates, agreements, including Control
Agreements, or instruments necessary to perfect security interests
in all Chattel Paper, all Instruments, all Deposit Accounts and all
Investment Property of each Loan Party (as each such term is defined
in the U.S. Security Agreement and to the extent required by the
terms of the U.S. Security Agreement);
(iii) UCC financing statements in appropriate form for filing
under the UCC and such other documents under applicable Requirements
of Law in each jurisdiction as may be necessary or appropriate to
perfect the Liens created, or purported to be created, by the
Security Documents;
(iv) certified copies of Requests for Information (Form
UCC-11), tax lien, judgment lien, bankruptcy and pending lawsuit
searches or equivalent reports or lien search reports, each of a
recent date listing all effective financing statements, lien notices
or comparable documents that name (A) any domestic Loan Party as
debtor and that are filed in those state and county jurisdictions in
which any of the property of such domestic Loan Party is located and
the state and county jurisdictions in which such domestic Loan
Party's principal place of business is located, and (B) any foreign
Loan Party, to the extent obtainable from the District of Columbia,
none of which encumber the Collateral covered or intended to be
covered by the Security Documents (other than those relating to
Liens acceptable to Lender);
(v) evidence of the completion of all recordings and filings
of, or with respect to, each Security Agreement, including filings
with the United States Patent, Trademark and Copyright Offices, and
the execution and/or delivery of such other security and other
documents, and the taking of all actions as may be necessary or, in
the reasonable opinion of Lender, desirable, to perfect the Liens
created, or purported to
15
be created, by the Security Agreements, except for any of the
foregoing to be provided after the Closing Date pursuant to Section
5.12 hereof;
(vi) any documents required to be submitted to Lender by the
Loan Parties as may be necessary or desirable to perfect the
security interest of Lender pursuant to each Foreign Security
Agreement, except for any of the foregoing to be provided after the
Closing Date pursuant to Section 5.12 hereof;
(vii) with respect to each Real Property located in the United
States in which a Loan Party holds the tenant's interest thereunder
set forth on Schedule 4.02(n) where the Loan Parties maintain
Collateral having a value in excess of $1.0 million (other than the
MacArthur Sublease) or which Real Property is operationally
significant to such Loan Party's business, as reasonably determined
by Lender, a Landlord Lien Waiver and Access Agreement and a
Collateral Assignment of Lease, except for any of the foregoing to
be provided after the Closing Date pursuant to Section 5.12 hereof;
(viii) evidence acceptable to Lender of payment by the Loan
Parties of all applicable recording taxes, fees, charges, costs and
expenses required for the recording of the Security Documents,
except for any of the foregoing to be provided after the Closing
Date pursuant to Section 5.12 hereof; and
(ix) with respect to Pledged Equity Interests issued by
Foreign Subsidiaries, the documentation specified in Annex III.
(i) INSURANCE. Lender shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by
Section 5.04 and the applicable provisions of the Security Documents, each
of which (other than directors' and officers' liability insurance
policies) shall be endorsed or otherwise amended to include a "standard"
or "New York" lender's loss payable endorsement and to name Lender as
additional insured, in form and substance satisfactory to Lender.
(j) SUBSIDIARY GUARANTORS. Each Subsidiary Guarantor listed on
Schedule 1.01(d) that is a Foreign Subsidiary and is not a signatory to
this Agreement shall have executed and delivered a Guarantee in form and
substance satisfactory to Lender.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees with Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan and all other expenses or amounts
payable under any Loan Document shall have been paid in full, unless Lender
shall otherwise consent in writing, each Loan Party will, and will cause each of
its Subsidiaries to:
16
SECTION 5.01. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of Borrower,
furnish to Lender:
(a) ANNUAL REPORTS. Within 90 days after the end of each fiscal
year, or such other period in which the Borrower must file its Form 10-K
with the Securities and Exchange Commission, the consolidated balance
sheet of Borrower as of the end of such fiscal year and related
consolidated statements of income, cash flows and stockholders' equity for
such fiscal year, and notes thereto, all prepared in accordance with
Regulation S-X under the Securities Act and in a manner acceptable to the
Securities and Exchange Commission and accompanied by an opinion of
Deloitte & Touche or other independent public accountants of recognized
national standing satisfactory to Lender (which opinion shall not be
qualified as to scope or contain any going concern or other
qualification), stating that such financial statements fairly present, in
all material respects, the consolidated financial condition, results of
operations, cash flows and changes in stockholders' equity of the
Consolidated Companies as of the end of and for such fiscal year in
accordance with GAAP;
(b) QUARTERLY REPORTS. Commencing with the filing of Borrower's Form
10-Q for the fiscal quarter ending June 30, 2003, within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, or
such other period in which the Borrower must file its Form 10-Q with the
Securities and Exchange Commission, the consolidated balance sheet of
Borrower as of the end of such fiscal quarter and related consolidated
statements of income and cash flows for such fiscal quarter and for the
then elapsed portion of the fiscal year, in comparative form with the
consolidated statements of income and cash flows for the comparable
periods in the previous fiscal year, and notes thereto, all prepared in
accordance with Regulation S-X under the Securities Act and in a manner
acceptable to the Securities and Exchange Commission and accompanied by a
certificate of a Financial Officer stating that such financial statements
fairly present, in all material respects, the consolidated financial
condition, results of operations and cash flows of the Consolidated
Companies as of the date and for the periods specified in accordance with
GAAP and on a basis consistent with the audited financial statements
referred to in Section 5.01(a), subject to normal year-end audit
adjustments and the absence of footnotes;
(c) FINANCIAL OFFICER'S COMPLIANCE CERTIFICATE. (i) Concurrently
with any delivery of financial statements under Sections 5.01(a) and (b),
a certificate of a Financial Officer, substantially in the form of Exhibit
K attached hereto, certifying that no Default has occurred or, if such a
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto;
(d) MONTHLY CASH BALANCE REPORT. Within ten (10) Business Days of
the end of each fiscal month, a report signed by a Financial Officer of
Borrower setting forth Borrower's Cash Balance as of the last Business Day
of such month substantially in the form of Exhibit D hereto, appropriately
completed and signed by a Financial Officer of the Borrower (the "MONTHLY
CASH BALANCE REPORT");
(e) PERFECTION CERTIFICATE SUPPLEMENT. Concurrently with any
delivery of financial statements under Sections 5.01(a) and (b), a
Perfection Certificate Supplement;
17
(f) PUBLIC REPORTS. Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and
other materials filed by any Company with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor), as the case may be;
(g) MANAGEMENT LETTERS. Promptly after the receipt thereof by any
Company, a copy of any "management letter" received by any such person
from its certified public accountants and management's responses thereto;
and
(h) OTHER INFORMATION. Promptly, from time to time, such other
information regarding the operations, property, business affairs and
financial condition of any Company, or any Collateral, or compliance with
the terms of any Loan Document, as Lender may reasonably request.
SECTION 5.02. LITIGATION AND OTHER NOTICES. Furnish to Lender prompt
written notice upon any Responsible Officer of a Loan Party becoming aware of
the following:
(a) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity by or before any Governmental
Authority (i) against any Company (or any Affiliate thereof) that could
reasonably be expected to result in a Material Adverse Effect or (ii) with
respect to any Loan Document;
(b) any Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect
thereto;
(c) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect;
(d) the occurrence of a Casualty Event in excess of $500,000; and
(e) the incurrence of any Lien (other than Permitted Liens) on, or
claim asserted against, any Material Item of Collateral.
SECTION 5.03. EXISTENCE; BUSINESSES AND PROPERTIES.
(a) Do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence, except as otherwise
expressly permitted under Section 6.05 or, in the case of any Subsidiary,
where the failure to perform such obligations, individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and
trade names material to the conduct of its business;
18
(c) Maintain and operate its business in substantially the manner in
which it is presently conducted and operated;
(d) Pay and perform its obligations under all Company Leases; and
(e) Maintain and preserve all property material to the conduct of
such business and keep such property in good repair, working order and
condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith
may be properly conducted at all times;
provided, however, that nothing in this Section 5.03 shall prevent (i)
sales of assets, consolidations or mergers by or involving any Company in
accordance with Section 6.04; (ii) the withdrawal by any Company of its
qualification as a foreign corporation, partnership or company in any
jurisdiction where such withdrawal, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect;
or (iii) the abandonment by any Company of any property, rights,
franchises, licenses, trademarks, tradenames, copyrights or patents that
such person reasonably determines are not useful to its business.
SECTION 5.04. INSURANCE.
(a) Keep its insurable property adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance,
to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in
the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with
the use of any property owned, occupied or controlled by it, to the extent
obtainable on commercially reasonable terms; and maintain such other
insurance as may be required by law; and, with respect to any Mortgaged
Real Property, otherwise maintain all insurance coverage required under
the applicable Mortgage, such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to Lender;
provided, that, unless a Default has occurred and is continuing, any
proceeds of insurance policies (x) insuring the Collateral may be applied
by the Borrower to promptly replace, rebuild or restore such Collateral
and (y) insuring liabilities to third parties may be applied by the
Borrower to promptly pay, discharge or bond such liabilities, in each case
on commercially reasonable terms.
(b) Assure that all such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by Lender
of written notice thereof; (ii) name Lender as insured party or loss
payee; (iii) if reasonably requested by Lender, include a
breach-of-warranty clause; and (iv) be reasonably satisfactory in all
other respects to Lender.
(c) Notify Lender immediately whenever any separate insurance
concurrent in form or contributing in the event of loss with that required
to be maintained under this Section 5.04 is taken out by any Company; and
promptly deliver to Lender a
19
duplicate original copy of, or a certificate as to coverage under, such
policy or policies.
(d) Deliver to Lender a report of a reputable insurance broker
annually with respect to such insurance and such supplemental reports with
respect thereto as Lender may from time to time reasonably request.
SECTION 5.05. TAXES. File or cause to be filed all federal Tax Returns and
all material state, local and foreign Tax Returns or materials required to have
been filed by it and pay and discharge promptly when due all Taxes before the
same shall become delinquent or in default; provided, however, that such payment
and discharge shall not be required with respect to any such Taxes so long as
the validity or amount thereof shall be contested in good faith by appropriate
proceedings and the applicable Company shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP and such
proceedings (or orders entered in connection with such proceedings) operate to
prevent the forfeiture or sale of the property or assets subject to any such
Lien and suspend collection of the contested Tax and enforcement of a Lien and,
in the case of Collateral, the applicable Company shall have otherwise complied
with the provisions of the applicable Security Document in connection with such
nonpayment.
SECTION 5.06. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Keep proper books of record and account (i) in which full, true and correct
entries are made in conformity with GAAP and all Requirements of Law, and (ii)
in which all material dealings and transactions in relation to its business and
activities are recorded. Each Company will permit any representatives designated
by Lender to visit and inspect the financial records and the property of such
Company at reasonable times during normal business hours and upon reasonable
advance notice and to make extracts from and copies of such financial records,
and permit any representatives designated by Lender to discuss the affairs,
finances and condition of any Company with and be advised as to the same by the
officers thereof and the independent accountants therefor.
SECTION 5.07. USE OF PROCEEDS. Use the proceeds of the Loans only to
maintain Cash Balances, subject to the limitations on the amount of such Cash
Balances set forth in this Agreement. No part of the proceeds of any Loan will
be used in any manner, whether directly or indirectly, for any purpose that
violates, or that is inconsistent with, the provisions of Regulation T, U or X.
SECTION 5.08. PAYMENT OF OBLIGATIONS. Pay and discharge at or before
maturity, all its respective material obligations and liabilities (including,
without limitation, claims of materialmen, warehousemen and the like or for
labor, materials or supplies or other obligations which if unpaid would
reasonably be expected to give rise to a Lien), except where the same may be
contested in good faith by appropriate proceedings (including administrative
proceedings), and appropriate reserves are maintained for the accrual of any of
the same.
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SECTION 5.09. COMPLIANCE WITH LAWS. Comply with all applicable
Requirements of Law and decrees and orders of Governmental Authorities, now or
hereafter in effect, except where the failure to so comply, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
SECTION 5.10. ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS.
(a) Subject to this Section 5.10 and except to the extent Lender, in
its sole discretion, otherwise determines, with respect to any assets
acquired after the Closing Date by Borrower or any other Loan Party that
are intended to be subject to the Lien created by any of the Security
Documents but that are not so subject, and with respect to any assets held
by Borrower or any other Loan Party on the Closing Date not made subject
to a Lien created by any of the Security Documents but of a type intended
to be subject to the Lien created by the applicable Security Documents,
promptly (and in any event within 30 days after the acquisition thereof or
upon Lender's request): (i) execute and deliver to Lender such amendments
or supplements to the relevant Security Documents or such other documents
(including, without limitation, a Mortgage or Collateral Assignment of
Lease) as Lender shall deem necessary or advisable to grant to Lender, for
its benefit, a Lien on such properties or assets (including using its
reasonable efforts to deliver a Landlord Lien Waiver and Access Agreement
with respect to each Real Property located in the United States in which a
Loan Party holds the tenant's interest thereunder and where the Loan
Parties maintain Collateral having a value in excess of $1.0 million
(other than with respect to the MacArthur Sublease) or which Real Property
is operationally significant to such Loan Party's business as reasonably
determined by Lender), subject to no Liens other than Permitted Liens, and
(ii) take all actions necessary to cause such Lien to be duly perfected to
the extent required by such Security Document in accordance with all
applicable Requirements of Law, including the filing of a Mortgage or
Collateral Assignment of Lease and financing statements in such
jurisdictions as may be reasonably requested by Lender. Borrower shall
otherwise take such actions and execute and/or deliver to Lender such
documents as Lender shall require to confirm the validity, perfection and
priority of the Lien of Security Documents against such after-acquired
properties or assets, and such assets held on the Closing Date not made
subject to a Lien created by any of the Security Documents. For purposes
of this Section 5.10(a), Lender and Borrower agree that the Lien referred
to in this Section 5.10(a) is intended to cover all assets and properties
of Borrower and all other Loan Parties whether now owned or hereafter
acquired, except for such properties or assets which are expressly
excluded pursuant to the terms of this Agreement.
(b) For any person that is a Wholly Owned Subsidiary of Parent or
any of its Subsidiaries that are listed on Schedule 5.10(b) (a "SECTION
5.10(b) LISTED SUBSIDIARY"), and any person that becomes a Wholly Owned
Subsidiary of Borrower or any of its Subsidiaries after the Closing Date
(a "NEW WHOLLY OWNED SUBSIDIARY"), promptly (and in any event (x) in the
case of a New Wholly Owned Subsidiary, no later than 30 days after each
such person becomes a New Wholly Owned Subsidiary, and (y) in the case of
each Section 5.10(b) Listed Subsidiary or a New Wholly Owned Subsidiary
that is required to become a Guarantor, or the stock or assets of which
are required to be pledged, pursuant to clauses (i) and (ii) immediately
below, no later than 30 days following the Closing Date), cause such
Subsidiary (i) to become a Guarantor and deliver to Lender the
certificates representing the Equity Interests of such Subsidiary
(provided that, in no event shall
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the stock of any such Subsidiary be required to be pledged if such pledge
is illegal under applicable law and no reasonable alternative structure
can be devised having substantially the same effect as such pledge that
would not be illegal under applicable law), together with undated stock
powers executed and delivered in blank by a duly authorized officer of
such Subsidiary's parent, as the case may be, and all Intercompany Notes
owing from such Subsidiary to any Loan Party; and (ii) (A) to execute a
Joinder Agreement or such comparable documentation, in form and substance
reasonably satisfactory to Lender, and (B) to take all actions reasonably
necessary or advisable to cause the Lien created by each Security
Agreement to be duly perfected to the extent required by such agreement in
accordance with all applicable Requirements of Law, including the filing
of financing statements in such jurisdictions as may be reasonably
requested by Lender (provided that any such Subsidiary shall not be
required to comply with clause (ii)(A) and (B) above if satisfying such
requirements is illegal under applicable law and no reasonable alternative
structure can be devised having substantially the same effect as such
pledge that would not be illegal under applicable law).
(c) Notwithstanding anything to the contrary contained herein:
(i) in the case of any (x) Section 5.10(b) Listed Subsidiary
and New Wholly Owned Subsidiary that has not previously become a
Guarantor and (y) other Non-Guarantor Subsidiary, 65% of the Equity
Interests of any such Subsidiary (and 100% of the Equity Interests
of any Domesticated Foreign Subsidiary) shall be subject to a Lien
or be required to be pledged under the applicable Loan Document
except to the extent Lender, in its sole discretion, otherwise
determines; and
(ii) notwithstanding clause (c)(i) immediately above and as of
the end of any fiscal quarter of Borrower:
(1) if the aggregate consolidated revenues of the
Non-Guarantor Subsidiaries exceeds 10.0% of Borrower's
consolidated revenues, then within 60 days of such date
Borrower shall cause a sufficient number of the Non-Guarantor
Subsidiaries to become Guarantors hereunder so that, after
giving pro forma effect to such action, the aggregate
consolidated revenues of the Subsidiaries remaining as
Non-Guarantor Subsidiaries is less than 10.0% of Borrower's
consolidated revenues; or
(2) if the aggregate consolidated sum of the
Non-Guarantor Subsidiaries' fixed assets, receivables and
inventories exceeds 10.0% of the aggregate consolidated sum of
Borrower's fixed assets, receivables and inventories (which
fixed assets, receivables and inventories shall be computed
after eliminating intercompany profit), then within 60 days of
such date Borrower shall cause a sufficient number of the
Non-Guarantor Subsidiaries to become Guarantors hereunder so
that, after giving pro forma effect to such action, the
aggregate consolidated sum of fixed assets, receivables and
inventories of the Subsidiaries remaining as Non-Guarantor
Subsidiaries is less
22
than 10.0% of the aggregate consolidated sum of Borrower's
fixed assets, receivables and inventories.
If the condition set forth in clause (ii)(1) or (ii)(2) above is
established, Borrower shall, or shall cause the applicable Foreign Subsidiaries
to, take all such further action and execute and deliver all such further
agreements or documents as Lender deems necessary or advisable to receive the
full benefits of the Guarantees and Security Documents to be entered into by
such Foreign Subsidiaries to the extent necessary to preclude the 10.0%
thresholds set forth in the immediately preceding clauses (ii)(1) and (ii)(2)
from being exceeded, except to the extent such actions, executions, or,
deliveries are illegal under applicable law, and no reasonable alternative
structure can be devised having substantially the same effect as such actions,
executions, or deliveries that would not be illegal under applicable law.
(d) Upon the written request of Lender, each Loan Party will
promptly grant to Lender, within 30 days of such request, security
interests and Mortgages in such owned or leased Real Property of such Loan
Party located in the United States as is acquired or leased by such Loan
Party after the Closing Date by Borrower or such Subsidiary and has a
value as determined in good faith by Lender in excess of $1.0 million or
is otherwise material to the business operations of Borrower or such
Subsidiary, as additional security for the Secured Obligations (unless (i)
the subject property is already mortgaged to a third party to the extent
permitted by Section 6.02 or (ii) if the encumbrancing of such leased Real
Property requires the consent of any applicable lessor, where Borrower and
its Subsidiaries have attempted in good faith, but are unable, to obtain
such lessor's consent). Such Mortgages shall be granted pursuant to
documentation reasonably satisfactory in form and substance to Lender and
shall constitute valid and enforceable perfected Liens subject only to
Permitted Liens and such other Liens reasonably acceptable to Lender. The
Mortgages or instruments related thereto shall be duly recorded or filed
in such manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens in favor of Lender required to be
granted pursuant to the Mortgages and all taxes, fees and other charges
payable in connection therewith shall be paid in full by such Loan Party.
Such Loan Party shall otherwise take such actions and execute and/or
deliver to Lender such documents as Lender shall require to confirm the
validity, perfection and priority of the Lien of any existing Mortgage or
new Mortgage against such after-acquired Real Property within 30 days of
the written request of Lender, including the following:
(i) Mortgages encumbering each Mortgaged Real Property in
favor of Lender, duly executed and acknowledged by the Loan Party
that is the owner of or holder of an interest in such Mortgaged Real
Property, and otherwise in form for recording in the recording
office of each political subdivision where each such Mortgaged Real
Property is situated, and such certificates, affidavits,
questionnaires or returns as shall be required in connection with
the recording or filing thereof to create a Lien under applicable
law, and such UCC financing statements and fixture filings, all of
which shall be in form and substance reasonably satisfactory to
Lender, and any other instruments necessary to grant a mortgage lien
under the laws of any applicable jurisdiction;
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(ii) with respect to each Mortgaged Real Property for which a
Mortgage is obtained in accordance with clause (i) above, an
Agreement and Estoppel Certificate executed by the applicable Loan
Party and fee interest holder, and such other consents, approvals,
amendments, supplements, memoranda of lease estoppels, tenant
non-disturbance or subordination agreements or other instruments as
shall reasonably be deemed necessary by Lender in order for the
owner or holder of the fee or leasehold interest constituting such
Mortgaged Real Property to grant the Lien contemplated by the
Mortgage with respect to such Mortgaged Real Property;
(iii) with respect to each Mortgage, a policy of title
insurance insuring the Lien of such Mortgage as a valid first
mortgage Lien on the Real Property and fixtures described therein in
an amount equal to 115% of the fair market value of the fee or
leasehold interest, as applicable, of such Real Property which
policies (each, a "TITLE POLICY") shall (A) be issued by the Title
Company, (B) to the extent necessary, include such reinsurance
arrangements (with provisions for direct access, if necessary) as
shall be reasonably acceptable to Lender, (C) contain a "tie-in" or
"cluster" endorsement (if available under applicable law) (i.e.,
policies that insure against losses regardless of location or
allocated value of the insured property up to a stated maximum
coverage amount), (D) have been supplemented by such endorsements
(or where such endorsements are not available, opinions of special
counsel, architects or other professionals reasonably acceptable to
Lender to the extent that such opinions can be obtained at a cost
that is reasonable with respect to the value of the Real Property
subject to such Mortgage) as shall be requested by Lender, to the
extent such endorsements are available in the applicable
jurisdiction (including endorsements on matters relating to usury,
first loss, last dollar, zoning, contiguity, revolving credit, doing
business, non-imputation, public road access, survey, variable rate,
environmental lien and so-called comprehensive coverage over
covenants and restrictions), and (E) contain no exceptions to title
other than exceptions for the Permitted Liens applicable to such
Mortgaged Real Property and otherwise acceptable to Lender;
(iv) with respect to each Mortgaged Real Property for which a
Mortgage is obtained in accordance with clause (i) above, such
affidavits, certificates, information (including financial data) and
instruments of indemnification (including a so-called "gap,"
"mechanics lien," and "owner's" indemnifications and affidavits) as
shall be required to induce the Title Company to issue the Title
Policy/ies and endorsements contemplated in clause (iii) above;
(v) evidence reasonably acceptable to Lender of payment by
Borrower of all Title Policy premiums, escrow, search and
examination charges, and related charges, mortgage recording taxes,
fees, charges, costs and expenses required for the recording of the
Mortgages and issuance of the Title Policies referred to in clause
(iii) above;
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(vi) with respect to each Real Property or Mortgaged Real
Property, copies of all Leases in which Borrower or any Subsidiary
holds the lessor's interest or other agreements relating to
possessory interests, if any. To the extent any of the foregoing
affect any Mortgaged Real Property for which a Mortgage is obtained
in accordance with clause (i) above, such agreement shall be
subordinate to the Lien of the Mortgage to be recorded against such
Mortgaged Real Property, either expressly by its terms or pursuant
to a subordination, non-disturbance and attornment agreement, and
shall otherwise be acceptable to Lender;
(vii) with respect to each Mortgaged Real Property for which a
Mortgage is obtained in accordance with clause (i) above, Borrower
and each Subsidiary shall have made all notification, registrations
and filings, to the extent required by, and in accordance with, all
Requirements of Law; and
(viii)with respect to each Mortgaged Real Property for which a
Mortgage is obtained in accordance with clause (i) above, an
Officers' Certificate or other evidence reasonably satisfactory to
Lender that as of the date thereof (A) there is no outstanding
citation, violation or similar notice indicating that the Mortgaged
Real Property contains conditions that are not in compliance in any
material respect with local codes or ordinances relating to building
or fire safety or structural soundness, (B) there has not occurred
any taking or destruction of any Mortgaged Real Property and (C)
there are no material disputes regarding boundary lines, location,
encroachment or possession of such Mortgaged Real Property, and to
the best knowledge of Borrower or any Subsidiary that is the owner
of or holder of an interest in such Mortgaged Real Property, no
state of facts exist that could give rise to any such claim.
SECTION 5.11. SECURITY INTERESTS; FURTHER ASSURANCES. Each Loan Party
shall, at its own cost and expense, take any and all actions necessary to defend
title to the Collateral against all persons and to defend the security interest
of Lender in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02. Promptly, upon the reasonable
request of Lender, at Borrower's expense, execute, acknowledge and deliver, or
cause the execution, acknowledgment and delivery of, and thereafter register,
file or record, or cause to be registered, filed or recorded, in an appropriate
governmental office, any document or instrument supplemental to or confirmatory
of the Security Documents or otherwise deemed by Lender reasonably necessary or
desirable for the continued validity, perfection and priority of the Liens on
the Collateral covered thereby superior and prior to the rights of all third
persons other than the holders of Permitted Liens and subject to no other Liens
except as permitted by the Security Documents, or obtain any consents, including
landlord or similar Lien waivers and consents, as may be necessary or
appropriate in connection therewith, to the extent contemplated hereby. Each
Loan Party shall, at its own cost and expense, deliver or cause to be delivered
to Lender from time to time such other documentation, consents, authorizations,
approvals and orders in form and substance reasonably satisfactory to Lender as
Lender shall deem necessary to perfect or maintain the Liens on the Collateral
pursuant to the Security Documents. Upon the exercise by Lender of any power,
right, privilege or remedy pursuant to any Loan Document that requires any
consent, approval, registration, qualification or authorization of any
Governmental Authority or any other person, execute and deliver and/or obtain
all applications, certifications, instruments and other documents and papers
that Lender may be so required to obtain.
25
Notwithstanding anything to the contrary contained herein, if an Event of
Default has occurred and is continuing, Lender shall have the right to require
any Loan Party to execute and deliver documentation, consents, authorizations,
approvals and orders in form and substance reasonably satisfactory to Lender as
Lender shall deem necessary to grant to Lender, for its benefit, a valid and
perfected Lien subject to no Liens other than Permitted Liens on such assets and
properties not otherwise required hereunder, except to the extent such
requirements are illegal under applicable law, and no reasonable alternative
structure can be devised having substantially the same effect as such actions
that would not be illegal under applicable law. If Lender determines that it is
required by law or regulation to have appraisals prepared in respect of the Real
Property of any Loan Party constituting Collateral, Borrower shall provide to
Lender appraisals that satisfy the applicable requirements of the Real Estate
Appraisal Reform Amendments of the Federal Institutions Reform, Recovery and
Enforcement Act of 1989 and are in form and substance satisfactory to Lender.
SECTION 5.12. POST-CLOSING MATTERS. Execute and deliver the documents and
complete the tasks set forth on Schedule 5.12, in each case within the time
limits specified on such schedule.
ARTICLE VI
NEGATIVE COVENANTS
Each Loan Party covenants and agrees with Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan and all other expenses or amounts
payable under any Loan Document have been paid in full, unless Lender shall
otherwise consent in writing, no Loan Party will, nor will any Loan Party cause
or permit any of its Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist,
directly or indirectly, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(b) Indebtedness under Hedging Agreements entered into from time to
time by any Company in accordance with Section 6.03(c);
(c) intercompany Indebtedness of the Companies outstanding to the
extent permitted by Sections 6.03(d), (g) and (k) and Section 6.18;
(d) Indebtedness in respect of workers' compensation claims,
self-insurance obligations, performance bonds, surety, appeal or similar
bonds and completion guarantees provided by a Company in the ordinary
course of its business consistent with past practices;
(e) (i) Indebtedness actually outstanding on the Closing Date and
listed on Schedule 6.01, provided that, any such scheduled Indebtedness
that constitutes intercompany Indebtedness (A) must be subordinated to the
Obligations of the Loan Parties in accordance with a subordination
agreement in form and substance
26
reasonably satisfactory to Lender, and (B) except for any intercompany
Indebtedness of the Companies permitted by Section 6.01(c), shall not be
repaid, prepaid, refinanced or renewed unless the repayment, prepayment,
refinancing or renewal thereof is treated as an Investment and permitted
under Section 6.03; and (ii) refinancings or renewals thereof, provided
that, (A) any such refinancing Indebtedness is in an aggregate principal
amount not greater than the aggregate principal amount of the Indebtedness
being renewed or refinanced, plus the amount of any premiums required to
be paid thereon and fees and expenses associated therewith, (B) such
refinancing Indebtedness has a later or equal final maturity and longer or
equal weighted average life than the Indebtedness being renewed or
refinanced and (C) the covenants, events of default, subordination and
other provisions thereof (including any guarantees thereof) shall be, in
the aggregate, no less favorable to the Loan Parties than those contained
in the Indebtedness being renewed or refinanced; and
(f) other Indebtedness, including Purchase Money Obligations and
Capital Lease Obligations, of Borrower and its Subsidiaries not to exceed
$10 million in aggregate principal amount at any time outstanding.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist, directly or
indirectly, any Lien on any property now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except (each of the
following being the "PERMITTED LIENS"):
(a) inchoate Liens for Taxes not yet due and payable or delinquent
and Liens for Taxes that (i) are being contested in good faith by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP, which proceedings (or orders entered in
connection with such proceedings) have the effect of preventing the
forfeiture or sale of the property or assets subject to any such Lien, or
(ii) in the case of any such charge or claim that has or may become a Lien
against any of the Collateral, such Lien and the contest thereof shall
satisfy the Contested Collateral Lien Conditions;
(b) Liens imposed by law that were incurred in the ordinary course
of business consistent with past practices of the Companies and do not
secure Indebtedness for borrowed money, such as carriers', warehousemen's,
materialmen's, landlords', workmen's, suppliers', repairmen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business consistent with past practices of the Companies (i) for amounts
not yet overdue or (ii) for amounts that are overdue and that are being
contested in good faith by appropriate proceedings, so long as (A)
adequate reserves have been established in accordance with GAAP, and (B)
in the case of any such Lien that has or may become a Lien against any of
the Collateral, such Lien and the contest thereof shall satisfy the
Contested Collateral Lien Conditions;
(c) easements, rights-of-way, restrictions (including zoning
restrictions), covenants, encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies on or with respect
to any Real Property, in each case whether now or hereafter in existence,
not (i) securing Indebtedness and (ii) individually or in the aggregate
materially interfering with the conduct of the business of the Companies
at such Real Property;
27
(d) Liens arising out of judgments or awards not resulting in an
Event of Default and in respect of which such Company shall in good faith
be prosecuting an appeal or proceedings for review in respect of which
there shall be secured a subsisting stay of execution pending such appeal
or proceedings;
(e) Liens (other than any Lien imposed by ERISA or Section
401(a)(29) or 412(n) or the Tax Code) (i) imposed by law or deposits made
in connection therewith in the ordinary course of business consistent with
past practices in connection with workers' compensation, unemployment
insurance and other types of social security; (ii) incurred in the
ordinary course of business consistent with past practices to secure the
performance of tenders, statutory obligations (other than excise taxes),
surety, stay, customs and appeal bonds, statutory bonds, bids, leases,
government contracts, trade contracts, performance and return of money
bonds and other similar obligations (including obligations imposed by the
applicable laws of foreign jurisdictions and exclusive of obligations for
the payment of borrowed money); or (iii) arising by virtue of deposits
made in the ordinary course of business consistent with past practices to
secure liability for premiums to insurance carriers; provided that, (x)
with respect to clauses (i), (ii) and (iii) above such Liens are set
amounts not yet due and payable or delinquent or, to the extent such
amounts are so due and payable, such amounts are being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, which proceedings for orders entered
in connection with such proceedings have the effect of preventing the
forfeiture or sale of the property or assets subject to any such Lien, (y)
to the extent such Liens are not imposed by Law, such Liens shall in no
event encumber any property other than cash and cash equivalents, and (z)
in the case of any such Lien against any of the Collateral, such Lien and
the contest thereof shall satisfy the Contested Collateral Lien
Conditions;
(f) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
any of the Companies in the ordinary course of business in accordance with
the past practices of the Companies;
(g) Liens arising pursuant to Purchase Money Obligations or Capital
Lease Obligations incurred pursuant to Section 6.01(f); provided that, (i)
the Indebtedness secured by any such Lien (including refinancings thereof)
does not exceed 100% of the cost (including financing cost) of the
property being acquired or leased at the time of the incurrence of such
Indebtedness and (ii) any such Liens attach only to the property being
financed pursuant to such Purchase Money Obligations or Capital Lease
Obligations and directly related assets, such as proceeds (including
insurance proceeds), products, accessions and substitutions, and do not
encumber any other property of any Company;
(h) bankers' Liens, rights of set-off and other similar Liens
existing solely with respect to cash and cash equivalents on deposit in
one or more accounts maintained by any of the Companies, in each case
granted in the ordinary course of business consistent with past practices
in favor of the bank or banks with which such accounts are maintained,
securing amounts owing to such bank with respect to cash management and
operating account arrangements, including those involving pooled accounts
and netting arrangements; provided that, in no case shall any such Liens
secure (either directly or indirectly) the repayment of any Indebtedness;
28
(i) Liens on assets of a person existing at the time such person is
acquired or merged with or into or consolidated with Borrower or any of
its Subsidiaries (and not created in anticipation or contemplation
thereof); provided that, such Liens do not extend to assets not subject to
such Liens at the time of acquisition (other than improvements thereon)
and are no more favorable to the lienholders than the existing Lien;
(j) Liens pursuant to the Security Documents;
(k) Liens in existence on the Closing Date and set forth on Schedule
6.02; provided that, (i) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase; and (ii)
such Liens do not encumber any property other than the property subject
thereto on the Closing Date;
(l) Licenses of Intellectual Property granted by any of the
Companies in the ordinary course of business and not interfering in any
material respect with the ordinary conduct of the business consistent with
past practices of the Companies; and
(m) restrictions on transfers of securities imposed by applicable
securities laws;
provided, however, that no Liens shall be permitted to exist, directly or
indirectly, on any Securities Collateral (as defined in the U.S. Security
Agreement) except to the extent permitted under Section 6.02(m) above).
SECTION 6.03. INVESTMENTS, LOANS AND ADVANCES. Directly or indirectly,
lend money or credit or make advances to any person, or purchase or acquire
(using money, securities, obligations or property of any kind) any stock,
obligations or securities of, or any Equity Interests or other interest in, or
make any capital contribution to, any other person, or purchase or own a futures
or forward contract or otherwise become liable for the purchase or sale of
commodities at a future date in the nature of a futures or forward contract (all
of the foregoing, collectively, "INVESTMENTS"), except that the following shall
be permitted:
(a) the Companies may consummate the Transactions in accordance with
the provisions of the Transaction Documents;
(b) any Company may (i) acquire and hold accounts receivables owing
to any of them if created or acquired in the ordinary course of business
consistent with past practices and payable or dischargeable in accordance
with customary terms, (ii) acquire and hold cash and cash equivalents,
(iii) endorse negotiable instruments for collection in the ordinary course
of business consistent with past practices, or (iv) make lease, utility
and other similar deposits in the ordinary course of business consistent
with past practices;
(c) any Company may enter into and perform its obligations under
Hedging Agreements entered into in the ordinary course of business
consistent with past practices and so long as any such Hedging Agreement
is not speculative in nature and is (i) related to income related to
foreign currency exposure of any Company or otherwise related to purchases
permitted hereunder from foreign suppliers or (ii) entered into to protect
such Companies against fluctuations in the prices of raw materials used in
their businesses or changes in interest rates on Indebtedness that
29
(x) is permitted under Section 6.01 and (y) bears interest at a
fluctuating rate per annum;
(d) any Company may make intercompany loans and advances to any Loan
Party and any Loan Party may make intercompany loans and advances to any
other Loan Party, and any Subsidiary that is not a Loan Party may make
intercompany loans and advances to any other Subsidiary that is not a Loan
Party; provided that, (i) no Loan Party may make loans to any Foreign
Subsidiary or Non-Guarantor Subsidiary pursuant to this Section 6.03(d)
unless otherwise permitted under this Section 6.03 or Section 6.18, and
(ii) any loan or loans made by any Foreign Subsidiary or Non-Guarantor
Subsidiary to any Loan Party pursuant to this Section 6.03(d) shall be
subordinated to the obligations of the Loan Parties pursuant to an
Intercompany Note if any such loan or loans, individually or in the
aggregate to any one Loan Party, has an outstanding principal amount in
excess of $1.0 million;
(e) any Company may make Investments in the form of advances to
employees for travel, relocation and like expenses, in each case, in the
ordinary course of business and consistent with such Company's past
practices;
(f) any Company may sell or transfer amounts to the extent permitted
by Section 6.04;
(g) Investments (other than as described in Section 6.03(d)) (i) by
Borrower in any existing Subsidiary Guarantor, (ii) by any Company in
Borrower or any existing Subsidiary Guarantor, and (iii) by a Subsidiary
Guarantor in another existing Subsidiary Guarantor (in each case only for
so long as a Subsidiary Guarantor remains a Guarantor);
(h) Investments in securities of trade creditors or customers in the
ordinary course of business and consistent with such Company's past
practices that are received in the settlement of bona fide disputes or
pursuant to any plan of reorganization or liquidation or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers;
(i) Investments made by any Company as a result of consideration
received in connection with an Asset Sale or other transaction effected in
compliance with Section 6.04;
(j) Investments outstanding on the Closing Date and identified on
Schedule 6.03;
(k) any Company may make loans, advances or capital contributions to
any Wholly Owned Foreign Subsidiary in accordance with Section 6.18;
(l) any Company may make Permitted Acquisitions.
SECTION 6.04. MERGERS, CONSOLIDATIONS, ASSET SALES AND PURCHASES OF
ASSETS. Wind up, liquidate or dissolve its affairs or enter into any transaction
of merger or consolidation, or make any Asset Sale or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, equipment or
other assets used or useful in the Companies' business, but not
30
(x) Investments or (y) all or any material part of a person's assets) of any
person (or agree to do any of the foregoing at any future time), except that:
(a) Capital Expenditures by any Company shall be permitted to the
extent permitted by Section 6.07;
(b) (i) Asset Sales of used, worn out, obsolete or surplus property
by any Company in the ordinary course of business consistent with past
practices and the abandonment or other Asset Sale of Intellectual Property
that is, in the reasonable judgment of Borrower, no longer economically
practicable to maintain or useful in the conduct of the business of the
Companies taken as a whole shall be permitted; and (ii) any other Asset
Sale shall be permitted if (1) the aggregate consideration received or
value of property disposed of (based on the value thereof shown on the
Borrower's balance sheet prepared in accordance with GAAP) in respect of
all Asset Sales pursuant to this clause (ii) does not exceed $5.0 million
in any four consecutive fiscal quarters of Borrower (excluding for
purposes of this amount, any property sold by a Non-Guarantor Subsidiary
the proceeds of which are promptly distributed to the Borrower or another
Loan Party), (2) such property is sold for cash or cash equivalents, (3)
such property is sold for at least eighty percent (80%) of its Fair Market
Value, and (4) such property is not a Business Unit;
(c) Investments shall be permitted to the extent permitted by
Section 6.03;
(d) any Company may sell cash equivalents in the ordinary course of
business consistent with past practices;
(e) any Company may lease (as lessee or lessor) real or personal
property to the extent permitted by Section 6.12 and Section 6.13;
(f) the Transactions shall be permitted;
(g) any Subsidiary may be merged into Borrower (as long as Borrower
is the surviving corporation of such merger) or any other Wholly Owned
Subsidiary Guarantor; provided, however, that the Lien on and security
interest in such property granted in favor of Lender under the Security
Documents shall be maintained in accordance with the provisions of Section
5.10;
(h) any Subsidiary may convey, sell, transfer, assign or otherwise
dispose of assets to Borrower or any other Loan Party;
(i) Permitted Acquisitions shall be permitted;
(j) Permitted Business Dispositions shall be permitted;
(k) any Company may settle or release tort or other litigation
claims in the ordinary course of business consistent with past practices;
and
(l) any Immaterial Subsidiary may voluntarily dissolve, liquidate or
wind up.
31
To the extent Lender waives the provisions of this Section 6.04 with respect to
the sale of any Collateral, or any Collateral is sold as permitted by this
Section 6.04, such Collateral (unless sold to a Company) shall be sold free and
clear of the Liens created by the Security Documents, and Lender shall take all
actions deemed appropriate to release such Liens.
SECTION 6.05. DIVIDENDS. Authorize, declare or pay, directly or
indirectly, any Dividends with respect to any Company, except that any
Subsidiary of Borrower may pay cash Dividends to Borrower or any Wholly Owned
Subsidiary of Borrower.
SECTION 6.06. TRANSACTIONS WITH AFFILIATES. Enter into, directly or
indirectly, any transaction or series of related transactions with any Affiliate
of any Company, other than in the ordinary course of business consistent with
past practices and on terms and conditions substantially as favorable to such
Company as would reasonably be obtained by such Company at that time in a
comparable arm's-length transaction with a person other than an Affiliate,
except that:
(a) Dividends may be paid to the extent provided in Section 6.05;
(b) loans may be made and other transactions may be entered into
between and among any Company and its Affiliates to the extent permitted
by Sections 6.01, 6.03 and 6.18;
(c) customary fees may be paid to non-officer directors of the Loan
Parties, and customary indemnities may be provided to all directors of the
Loan Parties;
(d) the Transactions may be effected; and
(e) payments may be made between Loan Parties pursuant to the Tax
Sharing Agreement.
SECTION 6.07. LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make
any Capital Expenditures, other than Capital Expenditures made or committed to
be made by Borrower and its Consolidated Subsidiaries which in the aggregate do
not exceed during any fiscal year of the Borrower $25 million multiplied by the
Pro Rata Percentage for such fiscal year, reduced dollar for dollar by the
Purchase Price for any Permitted Acquisitions made during such period.
Notwithstanding anything to the contrary contained in the prior sentence, to the
extent that the Capital Expenditures made by Borrower and its Consolidated
Subsidiaries in any fiscal year are less than the amount permitted to be made in
such period (without giving effect to any additional amount available as a
result of this sentence), the amount of such difference may be carried forward
and used to make Capital Expenditures in the next succeeding fiscal year of
Borrower.
SECTION 6.08. LIMITATION ON MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS
OF CERTIFICATE OF INCORPORATION, OTHER CONSTITUTIVE DOCUMENTS OR BYLAWS AND
CERTAIN OTHER AGREEMENTS, ETC. (i) Amend or modify, or permit the amendment or
modification of, any provision of any existing Indebtedness, any Transaction
Document, or of Borrower's corporate policy on cash management and short-term
investments (as in effect on the Closing Date), other than any amendments or
modifications to any Indebtedness, any Transaction Document, or such corporate
policy that do not in any way adversely affect the interests of Lender; (ii)
amend, modify or change its articles of incorporation or other constitutive
documents (including by the filing or modification of any certificate of
designation) or bylaws, or any agreement entered into
32
by it, with respect to its capital stock (including any shareholders'
agreement), or enter into any new agreement with respect to its capital stock,
other than any amendments, modifications, agreements or changes pursuant to this
clause (ii) or any such new agreements pursuant to this clause (ii) that do not
in any way adversely affect the interests of Lender; or (iii) amend or terminate
any Company Lease relating to any Mortgaged Property other than any amendments
or terminations that do not in any way adversely affect the interests of Lender
or take any action or fail to take any action that, with or without either
notice or lapse of time, would constitute a default under any Company Lease
relating to any Mortgaged Real Property.
SECTION 6.09. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to:
(a) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits owned by
Borrower or any Subsidiary of Borrower, or pay any Indebtedness owed to
Borrower or a Subsidiary of Borrower;
(b) make loans or advances to Borrower or any of Borrower's
Subsidiaries; or
(c) transfer any of its properties to Borrower or any of Borrower's
Subsidiaries, except for such encumbrances or restrictions existing under
or by reason of (i) applicable law, (ii) this Agreement and the other Loan
Documents, (iii) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of Borrower or a Subsidiary of
Borrower, or (iv) customary provisions with respect to the disposition or
distribution of assets in joint venture agreements and other similar
agreements (to the extent otherwise permitted by this Agreement) relating
solely to the assets subject to such agreement.
SECTION 6.10. LIMITATION ON ISSUANCE OF CAPITAL STOCK. Borrower will not
permit any of its Subsidiaries to issue any Equity Interest (including by way of
sales of treasury stock) or any options or warrants to purchase, or securities
convertible into, Equity Interests, except (i) for stock splits, stock dividends
and additional Equity Interest issuances that do not decrease the percentage
ownership of Borrower or any Subsidiary in any class of the Equity Interest of
such Subsidiary; (ii) Borrower Common Stock may be issued, at then Fair Market
Value, to pay (in whole or in part) the purchase price for any Permitted
Acquisition; (iii) Subsidiaries of Borrower formed after the Closing Date
pursuant to Section 6.11 may issue Equity Interests to Borrower or the
Subsidiary of Borrower that is to own such stock; and (iv) only to the extent
required in accordance with applicable law, any Foreign Subsidiary may issue
directors' qualifying shares. All Equity Interests issued in accordance with
this Section 6.10 shall, to the extent required by Section 5.10 or the
applicable Security Agreement, be delivered to Lender for pledge pursuant to the
applicable Security Agreement.
SECTION 6.11. LIMITATION ON CREATION OF SUBSIDIARIES. Establish, create or
acquire any additional Subsidiaries without the prior written consent of Lender,
except that (i) Borrower may acquire one or more Wholly Owned Subsidiaries in
any Permitted Acquisition and (ii) Borrower may establish or create one or more
Wholly Owned Subsidiaries of Borrower or one of its Wholly Owned Subsidiaries
without such consent so long as (except to the extent any of the following is
expressly exempted or otherwise limited pursuant to Section 5.10(b), but
subject, in any event, to the requirements of Section 5.10(c)): (a) 100% of the
Equity Interest of any new Subsidiary is upon the acquisition, creation or
establishment of any such new Subsidiary
33
pledged and delivered to Lender for its benefit under the applicable Security
Agreement; and (b) upon the acquisition, creation or establishment of any such
new Subsidiary, such Subsidiary becomes a party to the applicable Security
Documents and shall become a Subsidiary Guarantor hereunder and execute a
Joinder Agreement and other applicable Loan Documents all in accordance with
Section 5.10(b); and (c) any Investment made in any such Subsidiary is permitted
under Section 6.03.
SECTION 6.12. SALE AND LEASEBACK TRANSACTIONS. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property being sold or transferred, except such transactions among Loan Parties,
unless (i) the sale of such property is permitted by Section 6.04 and (ii) any
Liens arising in connection with its use of such property are permitted by
Section 6.02.
SECTION 6.13. LIMITATION ON LEASE OBLIGATIONS. Incur, create, assume or
permit to exist, directly or indirectly, any obligation as a lessee in an amount
exceeding, during any fiscal year of Borrower, $2 million multiplied by the Pro
Rata Percentage for such fiscal year in respect of any lease obligation other
than (i) a Capital Lease Obligation, (ii) obligations under the MacArthur
Sublease, and (iii) lease obligations under leases in effect on the Closing Date
and set forth on Schedule 6.13.
SECTION 6.14. BUSINESS. Unless otherwise expressly provided herein, engage
(directly or indirectly) in any business other than those businesses in which
Borrower and its Subsidiaries are engaged on the Closing Date (or that are
complementary or substantially related thereto or are reasonable extensions
thereof).
SECTION 6.15. LIMITATION ON ACCOUNTING CHANGES. Make or permit any change
in accounting policies or reporting practices without the consent of Lender
except changes that are required by GAAP.
SECTION 6.16. RESTRICTED PAYMENTS. Redeem, retire, purchase or otherwise
acquire, directly or indirectly, for any consideration, any shares of any class
of its capital stock or interest of any of its shareholders, in each case now or
hereafter outstanding (or any options or warrants issued by Borrower or any of
its Subsidiaries with respect to Borrower or any of its Subsidiaries' capital
stock); except that Borrower and its Subsidiaries may redeem, retire, purchase
or otherwise acquire any of Borrower's Subsidiaries' capital stock.
SECTION 6.17. FISCAL YEAR
Change its fiscal year-end from that in effect on the Closing Date.
SECTION 6.18. FOREIGN SUBSIDIARIES
Sell, lease, contribute, loan, advance, assign or otherwise transfer any
property that is Collateral to any Foreign Subsidiary, except that:
(a) Borrower or any of its Subsidiaries may make loans, capital
contributions or advances to any Wholly Owned Foreign Subsidiary, in the
ordinary course of business consistent with past practice, to fund working
capital, operating expenses and, to the extent permitted by this
Agreement, Capital Expenditures, of any such Wholly Owned Foreign
Subsidiary, required in the ordinary course of
34
business consistent with past practice, in no event to exceed $8 million
in the aggregate for any fiscal quarter (excluding any amounts invested in
any Wholly Owned Foreign Subsidiary that is as of the Closing Date or
subsequently becomes a Guarantor (effective only upon such person being or
becoming a Guarantor and only for so long as such person remains a
Guarantor)); and provided further that, any such investment in excess of
$1.0 million must be in the form of an intercompany loan to such Wholly
Owned Foreign Subsidiary and shall be evidenced by an Intercompany Note
pledged (and delivered) by the Loan Party that is the lender of such
intercompany loan as Collateral pursuant to the applicable Security
Agreement.
(b) Borrower or any of its Subsidiaries may sell for cash (but not
otherwise transfer) any property that is Collateral to any Foreign
Subsidiary to the extent that any such sale would be a sale of assets
permitted by Section 6.04(b)(ii).
ARTICLE VII
GUARANTEE
SECTION 7.01. THE GUARANTEE. The Guarantors hereby irrevocably and
unconditionally, jointly and severally guarantee as primary obligors and not as
sureties to Lender and its successors and assigns the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
principal of and interest on (including any interest, fees, costs or charges
that would accrue but for the provisions of Title 11 of the United States Code
after any bankruptcy or insolvency petition under Title 11 of the United States
Code) the Loans made by Lender to, and the Notes held by Lender of, Borrower,
and all other Obligations from time to time owing to Lender by any Loan Party
under any Loan Document strictly in accordance with the terms thereof (such
obligations being herein collectively called the "GUARANTEED OBLIGATIONS"). The
Guarantors hereby irrevocably and unconditionally, jointly and severally agree
that if Borrower or other Guarantor(s) shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantors will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
SECTION 7.02. OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors
under Section 7.01 shall constitute a guaranty of payment (and not of
collection) and are absolute, irrevocable and unconditional, joint and several
(except to the extent otherwise limited in accordance with applicable
Requirements of Law as described in Annex I attached hereto or in any other
Guarantee required by applicable Requirements of Law), irrespective of the
value, genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of Borrower under this Agreement, the Notes, if any, or any other
agreement or instrument referred to herein or therein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Guaranteed Obligations and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or Guarantor
(except for payment in full). Without limiting the generality of the foregoing,
it is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Guarantors hereunder, which shall remain
absolute, irrevocable and unconditional under any and all circumstances as
described above:
35
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any
of the Guaranteed Obligations shall be extended, or such performance
or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or the Notes, if any, or any other agreement or
instrument referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be
amended in any respect, or any right under the Loan Documents or any
other agreement or instrument referred to herein or therein shall be
amended or waived in any respect or any other guarantee of any of
the Guaranteed Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien or security interest granted to, or in favor of,
Lender as security for any of the Guaranteed Obligations shall fail
to be perfected; or
(v) the release of any other Guarantor.
The Guarantors hereby expressly waive diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that any Loan
Party exhaust any right, power or remedy or proceed against Borrower under this
Agreement or the Notes, if any, or any other agreement or instrument referred to
herein or therein, or against any other person under any other guarantee of, or
security for, any of the Guaranteed Obligations. The Guarantors waive any and
all notice of the creation, renewal, extension, waiver, termination or accrual
of any of the Guaranteed Obligations and notice of or proof of reliance by
Lender upon this Guarantee or acceptance of this Guarantee, and the Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guarantee, and all dealings between
Borrower and Lender shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. This Guarantee shall be construed
as a continuing, absolute, irrevocable and unconditional guarantee of payment
without regard to any right of offset with respect to the Guaranteed Obligations
at any time or from time to time held by Lender, and the obligations and
liabilities of the Guarantors hereunder shall not be conditioned or contingent
upon the pursuit by Lender or any other person at any time of any right or
remedy against Borrower or against any other person that may be or become liable
in respect of all or any part of the Guaranteed Obligations or against any
collateral or guarantee therefor or right of offset with respect thereto. This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Guarantors and the successors and
assigns thereof, and shall inure to the benefit of Lender, and its successors
and assigns, notwithstanding that from time to time during the term of this
Agreement there may be no Guaranteed Obligations outstanding.
For purposes of this paragraph only, references to the "principal" include
each Loan Party and references to the "creditor" includes Lender and its
successors and permitted assigns. In accordance with Section 2856 of the
California Civil Code, each Guarantor waives all rights and defenses (i)
available to such Guarantor by reason of Sections 2787 through 2855, 2899, and
3433 of the California Civil Code, including all rights or defenses such
Guarantor may have by
36
reason of protection afforded to the principal with respect to any of the
Guaranteed Obligations, or to any other guarantor of any of the Guaranteed
Obligations with respect to any of such guarantor's obligations under its
guarantee, in either case in accordance with the antideficiency or other laws of
the State of California limiting or discharging the principal's Indebtedness or
such other guarantor's obligations, including Sections 580a, 580b, 580d and 726
of the California Code of Civil Procedure; and (ii) arising out of an election
of remedies by the creditor, even though such election, such as a nonjudicial
foreclosure with respect to security for any Guaranteed Obligation (or any
obligation of any other guarantor of any of the Guaranteed Obligations), has
destroyed such Guarantor's right of subrogation and reimbursement against the
principal (or such other guarantor) by the operation of Section 580d of the
California Code of Civil Procedure or otherwise. No other provision of this
Guarantee shall be construed as limiting the generality of any of the covenants
and waivers set forth in this paragraph. As provided below, this Agreement shall
be governed by, and shall be construed and enforced in accordance with the laws
of the State of New York. This paragraph is included solely out of an abundance
of caution, and shall not be construed to mean that any of the above-referenced
provisions of California law are in any way applicable to this Agreement or to
any of the Guaranteed Obligations.
SECTION 7.03. REINSTATEMENT. The obligations of the Guarantors under this
Article VII shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of Borrower or any other Loan Party in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise. The Guarantors jointly
and severally (except to the extent otherwise limited in accordance with
applicable Requirements of Law as described in Annex I attached hereto or in any
other Guarantee required by applicable Requirements of Law) agree that they will
indemnify Lender on demand for all reasonable costs and expenses (including
reasonable fees of counsel) incurred by Lender in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law, other than any costs or expenses resulting from the gross
negligence, bad faith or willful misconduct of Lender.
SECTION 7.04. SUBROGATION; SUBORDINATION. Each Guarantor hereby agrees
that until the indefeasible payment and satisfaction in full in cash of all
Guaranteed Obligations and the expiration and termination of the Commitment of
Lender under this Agreement it shall not exercise any right or remedy arising by
reason of any performance by it of its guarantee in Section 7.01, whether by
subrogation or otherwise, against Borrower or any other Guarantor of any of the
Guaranteed Obligations or any security for any of the Guaranteed Obligations.
The payment of any amounts due with respect to any Indebtedness of Borrower or
any other Guarantor now or hereafter owing to any Guarantor or Borrower by
reason of any payment by such Guarantor under the Guarantee in this Article VII
is hereby subordinated to the prior indefeasible payment in full in cash of the
Guaranteed Obligations. In addition, any Indebtedness of the Borrower or any
Subsidiary now or hereafter held by any Guarantor is hereby subordinated in
right of payment in full in cash to the Guaranteed Obligations. Each Guarantor
agrees that it will not demand, ▇▇▇ for or otherwise attempt to collect any such
indebtedness of Borrower or any Subsidiary to such Guarantor until the
Obligations shall have been indefeasibly paid in full in cash. If,
notwithstanding the preceding sentence, any Guarantor shall, prior to the
indefeasible payment in full in cash of the Guaranteed Obligations, collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by such Guarantor as trustee for
Lender and be paid over to Lender on account of the Guaranteed Obligations
without affecting in any manner the liability of such Guarantor under the other
37
provisions of the guaranty contained herein. Each Subsidiary of Borrower which
(x) is not a Guarantor and (y) holds outstanding Indebtedness of another
Subsidiary of Borrower shall execute an agreement, in form and substance
reasonably satisfactory to Lender, subordinating such indebtedness to the prior
indefeasible payment in full in cash of the Guaranteed Obligations. Solely for
the purposes of this Section 7.04, the term "Indebtedness" shall not include
intercompany advances and amounts for goods or services sold or rendered in the
ordinary course of business, consistent with past practices, owed by any
Subsidiary to any Guarantor.
SECTION 7.05. REMEDIES. The Guarantors jointly and severally (except to
the extent otherwise limited in accordance with applicable Requirements of Law
as described in Annex I attached hereto) agree that, as between the Guarantors
and the Lenders, the obligations of Borrower under this Agreement and the Notes,
if any, may be declared to be forthwith due and payable as provided in Article
VIII (and shall be deemed to have become automatically due and payable in the
circumstances provided in said Article VIII) for purposes of Section 7.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against Borrower and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable), such obligations
(whether or not due and payable by Borrower) shall forthwith become due and
payable by the Guarantors for purposes of Section 7.01.
SECTION 7.06. INSTRUMENT FOR THE PAYMENT OF MONEY. Each Guarantor hereby
acknowledges that the guarantee in this Article VII constitutes an instrument
for the payment of money, and consents and agrees that Lender, at its sole
option, in the event of a dispute by such Guarantor in the payment of any moneys
due hereunder, shall have the right to bring a motion-action under New York CPLR
Section 3213 to the extent permitted thereunder.
SECTION 7.07. GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action
or proceeding involving any state corporate law, or any state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of any Guarantor under Section 7.01
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Section 7.01, then, notwithstanding any
other provision to the contrary, the amount of such liability shall, without any
further action by such Guarantor, any Loan Party or any other person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.
SECTION 7.08. CONTINUING GUARANTEE. The Guarantees in this Article VII are
continuing guarantees of payment, and shall apply to all Guaranteed Obligations
whenever arising.
SECTION 7.09. RELEASE OF GUARANTORS. If at any time after the Closing Date
and in connection with the Guarantee of any Loan Party in this Article VII (i)
subject to the requirements of Section 5.10(c), in the case of a Foreign
Subsidiary, Lender (after consultation with Borrower) determines that in the
case of any existing Guarantor, it would not be commercially reasonable for such
Guarantor to remain a Guarantor (taking into account the expense (including
taxes), the ability of Borrower or such Guarantor to obtain any necessary
approvals or consents required to be obtained under applicable law (but have not
been previously obtained) in connection therewith, and the effectiveness and
enforceability thereof under applicable law) or (ii) such Guarantee becomes
illegal under applicable law and such Loan Party delivers to Lender a legal
opinion from its counsel to such effect, and no reasonable alternative
38
structure can be devised having substantially the same effect as the issuance of
a Guarantee that would not be illegal under applicable law, then, in case of
each of the immediately preceding clauses (i) and (ii), Lender shall (at the
expense of Borrower) take all action necessary to release its security interest
in that portion of the Security Agreement Collateral owned by such Guarantor
(provided, however, that 65% of the Equity Interests of such Guarantor (and 100%
of the Equity Interests of any Domesticated Foreign Subsidiary) shall not be
released from the Security Agreement Collateral)), and such Guarantor shall be
released from its obligations in respect of the Guarantees in this Article VII
(such Guarantor being hereinafter referred to as a "RELEASED GUARANTOR," so long
as it continues to be a Non-Guarantor Subsidiary), which release from such
Guarantees, in the case of an event described in the immediately preceding
clause (i), shall become effective as of the closing of the last day of the
taxable year that immediately precedes the date that Lender makes a
determination described in such clause (i).
ARTICLE VIII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether
at the due date thereof or by acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on
any Loan (other than any amount added to principal of Loans pursuant
to Section 2.05(d)) or any other amount (other than an amount
referred to in paragraph (a) above) due under any Loan Document,
when and as the same shall become due and payable, and such default
shall continue unremedied for a period of five Business Days;
(c) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings hereunder, or
any representation, warranty, statement or information contained in
any report, certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan Document, shall
prove to have been false or misleading in any material respect when
so made, deemed made or furnished;
(d) default shall be made in the due observance or performance
by any Company of any covenant, condition or agreement contained in
Section 5.01, 5.03 or 5.07 or in Article VI;
(e) default shall be made in the due observance or performance
by any Company of any covenant, condition or agreement contained in
any Loan Document (other than those specified in paragraph (a), (b)
or (d) above), and such default shall continue unremedied or shall
not be waived for a period of 30 days after the earlier of (i) an
officer of such Company becoming aware of such default or (ii)
receipt by Borrower and such Company of notice from Lender of such
default;
(f) any Company (other than any Immaterial Subsidiary) shall
(i) fail to pay any principal or interest, regardless of amount, due
in respect of any Indebtedness
39
(other than the Obligations) when and as the same shall become due
and payable (after all applicable grace periods have expired); or
(ii) fail to observe or perform any other term, covenant, condition
or agreement contained in any agreement or instrument evidencing or
governing any such Indebtedness if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder
or holders of such Indebtedness or a trustee on its or their behalf
(with or without the giving of notice, the lapse of time or both) to
cause, such Indebtedness to become due prior to its stated maturity;
provided that, it shall not constitute an Event of Default pursuant
to this paragraph (f) unless the aggregate amount of all such
Indebtedness referred to in clauses (i) and (ii) exceeds $1.0
million at any one time;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of any Company (other
than any Immaterial Subsidiary), or of a substantial part of the
property or assets of any Company (other than any Immaterial
Subsidiary), under the Bankruptcy Code, or any other federal, state
or foreign bankruptcy, insolvency, receivership or similar law; (ii)
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Company (other than any
Immaterial Subsidiary) or for a substantial part of the property or
assets of any Company; or (iii) the winding-up or liquidation of any
Company (other than any Immaterial Subsidiary); and such proceeding
or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(h) any Company (other than any Immaterial Subsidiary) shall
(i) voluntarily commence any proceeding or file any petition seeking
relief under the Bankruptcy Code, or any other federal, state or
foreign bankruptcy, insolvency, receivership or similar law; (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition
described in paragraph (g) above; (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Company (other than any
Immaterial Subsidiary) or for a substantial part of the property or
assets of any Company (other than any Immaterial Subsidiary); (iv)
file an answer admitting the material allegations of a petition
filed against it in any such proceeding; (v) make a general
assignment for the benefit of creditors; (vi) become unable, admit
in writing its inability or fail generally to pay its debts as they
become due; (vii) take any action for the purpose of effecting any
of the foregoing; or (viii) wind up or liquidate;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $1.0 million shall be rendered against
any Company or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or
properties of any Company to enforce any such judgment;
(j) an ERISA Event occurs, an event of noncompliance with
respect to any Foreign Plan occurs or, if the present value of the
accrued benefit liabilities (whether or not vested) under any
Foreign Plan that is funded, determined as of the end of the most
recently ended fiscal year of the respective Loan Party on the basis
of actuarial assumptions proper under applicable foreign law,
exceeds the current value of the assets of such Foreign Plan by more
than $1.0 million, that in the opinion of Lender,
40
when taken together with all other such ERISA Events, noncompliance
and underfunding, could reasonably be expected to result in
liability to any Company or its ERISA Affiliates in an aggregate
amount exceeding $1.0 million;
(k) any security interest and Lien purported to be created by
any Security Document shall cease to be in full force and effect, or
shall cease to give Lender, for its benefit, the Liens, rights,
powers and privileges purported to be created and granted under such
Security Documents (including a perfected first priority security
interest in and Lien on all of the Collateral thereunder (except as
otherwise expressly provided in such Security Documents)) in favor
of Lender, or shall be asserted by Borrower or any other Loan Party
not to be a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document)
security interest in or Lien on the Collateral covered thereby;
(l) the Guarantees or any Security Document shall cease to be
in full force and effect, except to the extent expressly permitted
to be released hereunder in accordance with Section 7.09;
(m) any Loan Document or any material provisions thereof shall
at any time and for any reason be declared by a court of competent
jurisdiction to be null and void, or a proceeding shall be commenced
by any Loan Party or any other person, or by any Governmental
Authority, seeking to establish the invalidity or unenforceability
thereof (exclusive of questions of interpretation of any provision
thereof), or any Loan Party shall repudiate or deny that it has any
liability or obligation for the payment of principal or interest or
other obligations purported to be created under any Loan Document;
(n) there shall have occurred a Change of Control; or
(o) the Distribution shall not have occurred on the Closing
Date in accordance with the terms and conditions of the Distribution
Agreement;
then, and in every such event (other than an event described in paragraph (g) or
(h) above), and at any time thereafter during the continuance of such event,
Lender may by notice to Borrower, take either or both of the following actions,
at the same or different times: (i) terminate forthwith the Commitment in whole
or in part; and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all other
liabilities of Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by
Borrower and the Guarantors, anything contained herein or in any other Loan
Document to the contrary notwithstanding. In any event described in paragraph
(g) or (h) above, the Commitment shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
other liabilities of Borrower accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by Borrower and the Guarantors, anything contained herein or in
any other Loan Document to the contrary notwithstanding.
41
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to any Loan Party, to Borrower at:
Mindspeed Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇;
With a courtesy copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Conexant, to it at:
Conexant Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.,
Senior Vice President,
General Counsel and Secretary
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇;
With a courtesy copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to a Lender other than Conexant, to it at its address (or
telecopy number) set forth in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
42
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or by certified or registered mail, in each case delivered, sent or
mailed (properly addressed) to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01, and failure to deliver courtesy copies of
notices and other communications shall in no event affect the validity or
effectiveness of such notices and other communications.
SECTION 9.02. WAIVERS; AMENDMENT.
(a) No failure or delay by Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power. The
rights and remedies of Lender hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision
of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be
permitted by Section 9.02(b), and then such waiver or consent shall
be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the
making of a Loan shall not be construed as a waiver of any Default,
regardless of whether Lender may have had notice or knowledge of
such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified
except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by Borrower and Lender or, in the
case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by Lender and the Loan Party or
Loan Parties that are parties thereto.
SECTION 9.03. EXPENSES; INDEMNITY.
(a) Borrower agrees to pay all reasonable out-of-pocket
expenses (including reasonable legal fees and expenses of counsel,
expenses incurred in connection with due diligence and travel,
courier, reproduction, printing and delivery expenses) incurred by
Lender in connection with the preparation, execution and delivery,
administration of this Agreement and the other Loan Documents or in
connection with any amendments, modifications, enforcement costs or
waivers of the provisions hereof or thereof (whether or not the
transactions hereby or thereby contemplated shall be consummated),
or incurred by Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement and the
other Loan Documents or in connection with the Loans made hereunder,
including the reasonable fees, charges and disbursements of
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for Lender (and one local
counsel in each foreign jurisdiction where Lender deems such local
counsel advisable and any additional counsel to Lender required in
the event of a conflict of interest), and, in connection with any
such enforcement or protection, the fees, charges and disbursements
of any consultants and advisors in connection with any out-of-court
workout or in any bankruptcy case.
43
(b) Except to the extent otherwise limited in accordance with
applicable Requirements of Law as described in Annex I attached
hereto, the Loan Parties agree, jointly and severally, to indemnify
Lender, each Affiliate of Lender, and each of their respective
directors, officers, trustees, employees and agents (each such
person being called an "INDEMNITEE") against, and to hold each
Indemnitee harmless from, all reasonable out-of-pocket costs and any
and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) any actual or proposed
use of the proceeds of the Loans; or (ii) any claim, litigation,
investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; or (iii) any
Transaction Document; provided that, such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court
of competent jurisdiction by final and nonappealable judgment to
have resulted from the bad faith, gross negligence or willful
misconduct of such Indemnitee.
(c) The provisions of this Section 9.03 shall remain operative
and in full force and effect regardless of the expiration of the
term of this Agreement, the consummation of the Transactions
contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitment, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document,
or any investigation made by or on behalf of Lender. All amounts due
under this Section 9.03 shall be payable on written demand therefor
accompanied by reasonable documentation with respect to any
reimbursement, indemnification or other amount requested.
SECTION 9.04. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Loan Party
may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of Lender (and any
attempted assignment or transfer by any Loan Party without such
consent shall be null and void). Nothing in this Agreement, express
or implied, shall be construed to confer upon any person (other than
the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby,
the Indemnitees) any legal or equitable right, remedy or claim under
or by reason of this Agreement.
(b) Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the
time owing to it); provided that, (i) except in the case of an
assignment to an Affiliate of a Lender, Borrower must give its prior
written consent to such assignment (which consent shall not be
unreasonably withheld or delayed); (ii) except in the case of an
assignment of the entire remaining amount of the assigning Lender's
Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such
assignment is delivered to the Borrower) shall be in a principal
amount that is an integral multiple of $500,000 and not less than
$1.0 million, unless Borrower otherwise consents; (iii) each partial
assignment shall be made as an assignment of a proportionate part of
all the assigning
44
Lender's rights and obligations under this Agreement; (iv) the
parties to each assignment shall execute and deliver to Borrower an
Assignment and Acceptance; provided further that, any consent of
Borrower otherwise required under this Section 9.04(b) shall not be
required if a Default or an Event of Default under Article VIII has
occurred and is continuing. Subject to acceptance, from and after
the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the
rights and obligations of Lender under this Agreement (provided
that, any liability of Borrower to such assignee under Section 2.09
shall be limited to the amount, if any, that would have been payable
thereunder by Borrower in the absence of such assignment), and the
assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment
and Acceptance covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.09 and 9.03).
(c) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the
assignee's completed Administrative Questionnaire, and any written
consent to such assignment required by Section 9.04(b), such
Assignment and Acceptance shall become effective for all purposes.
(d) Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to
secure its obligations, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and the other provisions of
this Section 9.04 shall not apply to any such pledge or assignment
of a security interest; provided that, no such pledge or assignment
of a security interest shall release Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for
Lender as a party hereto.
SECTION 9.05. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that Lender may have had notice or knowledge of any Default
or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.09 and 9.03 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
45
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Article IV, this Agreement shall become effective when it shall
have been executed by the parties hereto, and thereafter shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. RIGHT OF SET-OFF. If an Event of Default shall have occurred
and be continuing, Lender and each of its Affiliates are hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final (other than deposits in trust accounts)) at any time held
and other obligations at any time owing by Lender or Affiliate to or for the
credit or the account of any Loan Party against any of and all the obligations
of any Loan Party now or hereafter existing under this Agreement held by Lender,
irrespective of whether or not Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of Lender
under this Section 9.08 are in addition to other rights and remedies (including
other rights of set-off) that Lender may have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK).
(b) Each Loan Party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to
any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that any Lender may otherwise have
to bring any action or proceeding relating to this Agreement or any
other Loan Document against any Loan Party or its properties in the
courts of any jurisdiction.
(c) Each Loan Party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so,
any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating
to this Agreement or any other Loan Document in any court referred
to in
46
Section 9.09(b). Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section
9.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in
any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11. CONFIDENTIALITY. Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates' directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential pursuant to the terms hereof); (b) to the extent
requested by any regulatory authority; (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process; (d) to any
other party to this Agreement; (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder;
(f) subject to an agreement containing provisions substantially the same as
those of this Section 9.11, to any assignee of, or any prospective assignee of,
any of its rights or obligations under this Agreement; (g) with the consent of
Borrower; or (h) to the extent such Information (i) is publicly available at the
time of disclosure or becomes publicly available other than as a result of a
breach of this Section 9.11, or (ii) becomes available to Lender on a
nonconfidential basis from a source other than Borrower or any Subsidiary. For
the purposes of this Section 9.11, "INFORMATION" shall mean all information
received from Borrower or any Subsidiary on a confidential basis relating to
Borrower or any Subsidiary or its business, other than any such information that
is available to any Lender on a nonconfidential basis prior to disclosure by
Borrower or any Subsidiary. Any person required to maintain the confidentiality
of Information as provided in this Section 9.11 shall be considered to have
complied with its obligation to do so if such person has exercised the same
degree of care to maintain the confidentiality of such Information as such
person would accord to its own confidential information.
[signature pages follow]
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MINDSPEED TECHNOLOGIES, INC., a
Delaware corporation, as Borrower
By:
------------------------------
Name:
Title:
III-1
CONEXANT SYSTEMS, INC., as Lender
By:
------------------------------
Name:
Title:
III-2
EXHIBIT A
DEFINED TERMS
RULES OF CONSTRUCTION
1.01. DEFINED TERMS.
"AFFILIATE" means, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with the person specified;
provided, however, that, for purposes of Section 6.06, the term "AFFILIATE"
shall also include any person, other than Conexant, that directly or indirectly
owns more than 10% of any class of Equity Interests of the person specified or
that is an officer or director of the person specified.
"AGREEMENT" means this Agreement, as amended, restated, supplemented or
otherwise modified from time to time.
"AGREEMENT AND ESTOPPEL CERTIFICATE" means any Agreement and Estoppel
Certificate between a Loan Party, as tenant, and the applicable holder of the
fee interest, as landlord, substantially in the form of Exhibit E-1.
"ASSET SALE" means (a) any conveyance, sale, lease, sublease,
assignment, transfer, license or other disposition (including by way of merger
or consolidation and including any sale and leaseback transaction) of any
property (including stock of any Subsidiary by the holder thereof) by Borrower
or any of its Subsidiaries to any person other than a Loan Party (other than
sales and other dispositions of inventory, and licensing of Intellectual
Property in the ordinary course of business consistent with past practices) and
(b) any issuance or sale by any Subsidiary of its Equity Interests to any person
other than a Loan Party.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by Lender and its assignee, in the form of Exhibit B, or such other form as
shall be approved by Borrower.
"ATTRIBUTABLE INDEBTEDNESS" means, when used with respect to any sale
and leaseback transaction, as at the time of determination, the present value
(discounted at a rate equivalent to Borrower's then-current weighted-average
cost of funds for borrowed money as at the time of determination, compounded on
a semi-annual basis) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in any such sale and leaseback
transaction.
"AVAILABILITY PERIOD" means the period from and including the Closing
Date to the first to occur of (x) the Final Maturity Date, and (y) any
termination of the Commitment pursuant to Section 2.06 or Article VIII hereof.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWER" has the meaning assigned to such term in the preamble
hereto.
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"BORROWER COMMON STOCK" means the common stock $0.01 par value per
share of Borrower, together with the associated preferred share purchase rights.
"BORROWING REQUEST" means a request for a Loan by Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C, or such other form as shall be approved by Lender, appropriately
completed in conformity with this Agreement and signed by the Chief Executive
Officer or Chief Financial Officer of Borrower.
"BUSINESS DAY" means any day other than a Saturday, Sunday or day on
which banks in California or Michigan are authorized or required by law to
close.
"BUSINESS UNIT" means, with respect to Borrower or any Subsidiary, (i)
any "segment," as defined by GAAP, reflected in Borrower's financial statements
included in filings made under the Exchange Act and (ii) any business unit,
product line or product, or any combination thereof, that, consistent with past
practice under Borrower's internal controls and procedures for accounting
matters, separately reports Revenue for purposes of preparing Borrower's
financial statements under GAAP.
"CAPITAL EXPENDITURES" means, with respect to any person, for any
period, the aggregate of all expenditures of such person and its Consolidated
Subsidiaries for the acquisition of fixed or capital assets which should be
capitalized under GAAP on a consolidated balance sheet of such person and its
Consolidated Subsidiaries.
"CAPITAL LEASE OBLIGATIONS" of any person means the obligations of such
person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CASH BALANCE" means the sum, as of the last Business Day of a fiscal
month, of all cash and all Permitted Investments, as shown on the Borrower's
balance sheet for such fiscal month, and for this purpose, all amounts of cash
and Permitted Investments held by Borrower and its Subsidiaries shall be
included in the Cash Balance, without regard to any characterization or
treatment of such amounts (whether as cash and cash equivalents, short-term
investments, or other assets) on Borrower's balance sheet or under GAAP.
"CASUALTY EVENT" means, with respect to any property (including Real
Property) of any person, any loss of title with respect to such property or any
loss of or damage to or destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, such property for which such
person or any of its subsidiaries receives insurance proceeds or proceeds of a
condemnation award or other compensation. "CASUALTY EVENT" includes any taking
of all or any part of any Real Property of any person or any part thereof, in or
by condemnation or other eminent domain proceedings pursuant to any law, or by
reason of the temporary requisition of the use or occupancy of all or any part
of any Real Property of any person or any part thereof by any Governmental
Authority, civil or military.
"CHANGE OF CONTROL" shall have the meaning assigned to such term in the
By-Laws of the Borrower as in effect on the Closing Date, without giving effect
to any amendment thereof after the Closing Date.
"CHARGES" has the meaning assigned to such term in Section 2.05(f).
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"CLOSING DATE" means June 27, 2003.
"COLLATERAL" means all of the Security Agreement Collateral, any
Mortgaged Real Property and all other property of whatever kind and nature
pledged as collateral under any Security Document.
"COLLATERAL ASSIGNMENT OF LEASE" means a Collateral Assignment of Lease
in form and substance reasonably satisfactory to Lender.
"COMMITMENT" means Lender's commitment to make Loans hereunder in the
amount set forth on Annex II, or in the Assignment and Acceptance pursuant to
which such Lender assumed its Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.06 and (b) reduced or increased
from time to time pursuant to assignments pursuant to Section 9.04. The initial
aggregate amount of Lender's Commitment is $50.0 million.
"COMPANIES" means Borrower and its Subsidiaries; and "COMPANY" means
any one of them.
"COMPANY FACILITY LEASE" has the meaning assigned to such term in
Section 3.05(b).
"COMPANY LEASE" means any Company Facility Lease and any Company
Property Lease, individually and collectively.
"COMPANY PROPERTY LEASE" has the meaning assigned to such term in
Section 3.05(b).
"CONSOLIDATED COMPANIES" means Borrower and its Consolidated
Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any time:
(a) the total assets of Borrower and its Subsidiaries
which would be shown as assets on a consolidated balance sheet
of Borrower and its Subsidiaries as of such time prepared in
accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and
surplus of Subsidiaries, minus
(b) the total liabilities of Borrower and its
Subsidiaries which would be shown as liabilities on a
consolidated balance sheet of Borrower and its Subsidiaries as
of such time prepared in accordance with GAAP, minus
(c) the net book value of all assets, after deducting
any reserves applicable thereto, which would be treated as
intangible under GAAP, including, without limitation, good
will, trademarks, trade names, service marks, brand names,
copyrights, patents and unamortized debt discount and expense,
organizational expenses and the excess of the equity in any
Subsidiary over the cost of the investment in such Subsidiary.
"CONSOLIDATED SUBSIDIARIES" means, as to any person, all subsidiaries
of such person that are consolidated with such person for financial reporting
purposes in accordance with GAAP.
"CONTESTED COLLATERAL LIEN CONDITIONS" means, with respect to any
Permitted Lien of the type described in Sections 6.02(a), (b) and (e), the
following conditions:
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(a) any proceeding instituted contesting such Lien
shall conclusively operate to stay the sale or forfeiture of
any portion of the Collateral on account of such Lien;
(b) at the option and upon request of Lender, the
appropriate Loan Party shall maintain cash reserves in an
amount sufficient to pay and discharge such Lien and Lender's
reasonable estimate of all interest and penalties related
thereto; and
(c) such Lien shall in all respects be subject and
subordinate in priority to the Lien and security interest
created and evidenced by the Security Documents, except if and
to the extent that the law or regulation creating, permitting
or authorizing such Lien provides that such Lien is or must be
superior to the Lien and security interest created and
evidenced by the Security Documents.
"CONTINGENT OBLIGATION" means, as to any person, any obligation of such
person guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations ("PRIMARY OBLIGATIONS") of any other person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including any
obligation of such person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor; (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor; (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation; or (d)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term "CONTINGENT
OBLIGATION" shall not include (w) endorsements of instruments for deposit or
collection in the ordinary course of business consistent with past practices,
(x) any product warranties issued on products by Borrower or any of its
Subsidiaries in the ordinary course of business consistent with past practices,
(y) any obligation to buy back products in the ordinary course of business
consistent with past practices made pursuant to the buyback policy of Borrower
and its Subsidiaries or pursuant to applicable Requirements of Law, and (z) any
operating lease guarantees (other than in respect of Synthetic Lease
Obligations) executed by Borrower in the ordinary course of business consistent
with past practices. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made (or, if less,
the maximum amount of such primary obligation for which such person may be
liable pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such person is required to
perform thereunder) as determined by such person in good faith.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"CONTROL AGREEMENT" has the meaning assigned to such term in the U.S.
Security Agreement.
"DEFAULT" means any event or condition that is, or upon notice or lapse
of time or both would constitute, an Event of Default.
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"DISCONTINUED REVENUE" means, with respect to any Business Unit sold or
proposed to be sold in a Permitted Business Disposition, the Revenue of such
Business Unit for the twelve consecutive fiscal month period preceding the date
a binding commitment is made for the sale of such Business Unit.
"DISTRIBUTION" means the distribution by Conexant to its shareholders
of shares of Borrower Common Stock as provided in the Form 10.
"DISTRIBUTION AGREEMENT" means the distribution agreement between
Conexant and Borrower, dated June 27, 2003.
"DISTRIBUTION DATE" means the date of the Distribution.
"DIVIDEND" with respect to any person means that such person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
consideration any shares of any class of its capital stock outstanding on or
after the Closing Date (or any options or warrants issued by such person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of such person outstanding on or after the Closing Date (or any options or
warrants issued by such person with respect to its capital stock). Without
limiting the foregoing, "DIVIDEND" with respect to any person also includes all
payments made or required to be made by such person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any similar
plans or setting aside of any funds for the foregoing purposes.
"DOLLARS" or "$" means the lawful money of the United States of
America.
"DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws of
the United States of America, any state thereof or the District of Columbia.
"DOMESTICATED FOREIGN SUBSIDIARY" means a Foreign Subsidiary which has
become domesticated into the United States of America.
"EQUITY INTEREST" means, with respect to any person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of capital of such
person, including, if such person is a partnership, partnership interests
(whether general or limited) and any other interest (other than an interest
constituting Indebtedness) or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of assets of,
such partnership, whether outstanding on or issued after the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with Borrower, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Tax Code.
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"ERISA EVENT" means (a) any "reportable event," as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan
(other than an event for which the 30-day notice period is waived by
regulation); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Tax Code or Section 302 of
ERISA), whether or not waived, the failure to make by its due date a required
installment under Section 412(m) of the Tax Code with respect to any Plan or the
failure to make any required contribution to a Multiemployer Plan; (c) the
filing pursuant to Section 412(d) of the Tax Code or Section 303(d) of ERISA of
an application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a
plan administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan, or the occurrence of
any event or condition that could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (f) the incurrence by any Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal from any Plan or
Multiemployer Plan; (g) the receipt by any Company or its ERISA Affiliates of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the making of any
amendment to any Plan that could result in the imposition of a lien or the
posting of a bond or other security; (i) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Tax Code or
Section 406 of ERISA) that could result in a Material Adverse Effect; (j) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Tax Code or
pursuant to ERISA with respect to any Plan; and (k) the assertion of a material
claim (other than routine claims for benefits) against any Plan or the assets
thereof, or against any Company or any ERISA Affiliates in connection with any
Plan.
"EVENT OF DEFAULT" has the meaning assigned to such term in Article
VIII.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED TAXES" means, with respect to any payment to Lender made by
or on account of any obligation of Borrower hereunder, federal, state or local
income or franchise taxes imposed on (or measured by) Lender's net income by the
United States of America or by any other jurisdiction in which Lender is
organized.
"EXPOSURE" means, with respect to Lender at any time, the aggregate
principal amount at such time of all outstanding Loans of Lender excluding from
principal, for purposes of this definition, any amount of interest which has
been capitalized and become principal as provided in Section 2.05(d).
"FAIR MARKET VALUE" means on the day of valuation, for (a) any Equity
Interest, with respect to each share, interest, participation or other
equivalent (i) the last reported sale price regular way or, in case no such sale
takes place on such day, the average of the closing bid and asked prices regular
way, in either case as reported on the principal national securities exchange on
which the share, interest, participation or other equivalent is listed or
admitted for trading or (ii) if the share, interest, participation or other
equivalent is not listed or admitted for trading on any national securities
exchange, the last reported sale price or, in case no such sale takes place on
such day, the average of the highest reported bid and the lowest reported asked
quotation for the share, interest, participation or other equivalent, in either
case as quoted on the NASDAQ National Market System or the NASDAQ Small Cap
Market or (iii) if the share, interest,
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participation or other equivalent is not listed or admitted for trading on any
national securities exchange or quoted on the NASDAQ National Market System or
the NASDAQ Small Cap Market, the last reported sale price or, in case no such
sale takes place on such day, the average of the highest reported bid and the
lowest reported asked quotation for the share, interest, participation or other
equivalent , in either case as reported on NASDAQ or a similar service if NASDAQ
is no longer reporting such information; and (b) any asset other than an Equity
Interest and any Equity Interest for which prices can not be obtained in
accordance with clause (a) above, the fair market value thereof as determined in
good faith by an independent auditor mutually agreed to by the Borrower and
Lender.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.
"FINAL MATURITY DATE" means June 29, 2007.
"FINANCIAL OFFICER" of any person means the chief financial officer,
principal accounting officer, treasurer or controller of such person.
"FOREIGN PLAN" means any employee benefit plan, program, policy,
arrangement or agreement that would be an "employee pension benefit plan" under
Section 3(2) of ERISA if such plan, program, policy, arrangement or agreement
was not maintained outside the United States primarily for the benefit of
persons substantially all of whom are nonresident aliens with respect to which
any Company could incur liability.
"FOREIGN SECURITY AGREEMENTS" means each security, pledge or similar
agreement necessary or desirable to evidence the grant of a security interest or
pledge of assets of any Subsidiary Guarantor that is a Foreign Subsidiary and
that is required hereunder, in each case in form and substance satisfactory to
Lender and as such agreement may thereafter be amended, supplemented or
otherwise modified from time to time.
"FOREIGN SUBSIDIARY" means a Subsidiary that is organized under the
laws of a jurisdiction other than the United States or any state thereof or the
District of Columbia.
"FORM 10" means the registration statement on Form 10 filed by Borrower
with the Securities and Exchange Commission as effective June , 2003,as amended.
"GAAP" means generally accepted accounting principles in the United
States.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"GUARANTEED OBLIGATIONS" has the meaning assigned to such term in
Section 7.01.
"GUARANTEES" means the guarantees issued pursuant to Article VII (or
pursuant to any other form of guarantee required by applicable Requirements of
Law and in form and substance reasonably satisfactory to Lender) by Borrower and
the Subsidiary Guarantors.
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"GUARANTORS" has the meaning assigned to such term in the preamble
hereof.
"HEDGING AGREEMENT" means any interest rate derivative contract,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"IMMATERIAL SUBSIDIARY" means a Subsidiary that has less than $1.0
million in assets (based on the amounts thereof reflected on such Subsidiary's
most recent balance sheet prepared in accordance with GAAP) and generates less
than $1.0 million of net revenues during any fiscal year (based on the amount
thereof reflected on such Subsidiary's most recent income statement prepared in
accordance with GAAP) or, in the case of a Subsidiary without prior operating
history, is reasonably projected by Borrower to generate less than $1.0 million
of net revenues during its first full year of operation. All Immaterial
Subsidiaries in existence on the Closing Date are identified on Schedule
1.01(a).
"INDEBTEDNESS" of any person means, without duplication, (a) all
obligations of such person for borrowed money; (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such person upon which interest charges are customarily paid or
accrued; (d) all obligations of such person under conditional sale or other
title retention agreements relating to property purchased by such person; (e)
all obligations of such person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable incurred in the
ordinary course of business on normal trade terms and not overdue by more than
90 days or, if overdue for more than 90 days, as to which a dispute exists and
adequate reserves in conformity with GAAP have been established); (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed; (g) all Capital Lease Obligations, Purchase
Money Obligations and Synthetic Lease Obligations of such person; (h) all
obligations of such person in respect of Hedging Agreements; provided that, the
amount of Indebtedness of the type referred to in this clause (h) of any person
shall be zero unless and until such Indebtedness shall be terminated, in which
case the amount of such Indebtedness shall be the then termination payment due
thereunder by such person; (i) all obligations of such person as an account
party in respect of letters of credit, letters of guaranty and bankers'
acceptances; (j) all Attributable Indebtedness of such person; and (k) all
Contingent Obligations of such person in respect of Indebtedness or obligations
of others of the kinds referred to in clauses (a) through (j) above. The
Indebtedness of any person shall include the Indebtedness of any other entity
(including any partnership in which such person is a general partner) to the
extent such person is liable therefor as a result of such person's ownership
interest in or other relationship with such entity, except to the extent that
the terms of such Indebtedness provide that such person is not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITEE" has the meaning assigned to such term in Section 9.03(b).
"INFORMATION" has the meaning assigned to such term in Section 9.11.
"INTELLECTUAL PROPERTY" has the meaning assigned to such term in the
U.S. Security Agreement.
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"INTERCOMPANY NOTE" means a promissory note, substantially in the form
of Exhibit G, evidencing Indebtedness payable by a payor Company to a payee Loan
Party.
"INTEREST PAYMENT DATE" means with respect to any Loan, the last
Business Day of each March, June, September and December to occur during the
period that such Loan is outstanding and the Final Maturity Date.
"INVESTMENTS" has the meaning assigned to such term in Section 6.03.
"JOINDER AGREEMENT" means a joinder agreement substantially in the form
of Exhibit H.
"LANDLORD LIEN WAIVER AND ACCESS AGREEMENT" means the Landlord Lien
Waiver and Access Agreement, substantially in the form of Exhibit E-2 or
otherwise in form and substance reasonably satisfactory to Lender.
"LEASES" means any and all leases, subleases, tenancies, options,
concession agreements, rental agreements, occupancy agreements, franchise
agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real
Property.
"LENDER" means Lender and any other person that has become a party
hereto pursuant to an Assignment and Acceptance.
"LIEN" means, with respect to any property, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind, any other type of preferential
arrangement in respect of such property or any filing of any financing statement
under the UCC or any other similar notice of Lien under any similar notice or
recording statute of any Governmental Authority, including any easement,
right-of-way or other encumbrance on title to Real Property, in each of the
foregoing cases whether voluntary or imposed by law, and any agreement to give
any of the foregoing; (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such property; and (c) in the case of securities, any
transfer restriction (other than restrictions on transfer arising solely by
virtue of registration, qualification or similar requirements under the
securities laws of any jurisdiction), purchase option, call or similar right of
a third party with respect to such securities.
"LOAN" means a Loan made by Lender to Borrower pursuant to Section
2.01.
"LOAN DOCUMENTS" means this Agreement, each Guarantee, the Notes (if
any), the Warrant, the Registration Rights Agreement and the Security Documents.
"LOAN PARTIES" means Borrower and the Subsidiary Guarantors.
"MACARTHUR SUBLEASE" means the sublease between Lender and Borrower of
the Real Property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
business, property, results of operations, prospects or condition (financial or
otherwise), of Borrower and its Subsidiaries, taken as a whole; (b) material
impairment of the ability of the Loan Parties to
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perform any of their obligations under any Loan Document; (c) material
impairment of the rights of or benefits or remedies available to the Lender
under any Loan Document; or (d) a material adverse effect on the Collateral or
the Liens in favor of Lender on the Collateral or the priority of such Liens.
"MATERIAL ITEM" shall mean any property that is Collateral except for
any particular property that (x) is not material to the business, operations or
condition (financial or other) of any Loan Party and (y) has a book value of
less than $100,000, as shown on the most recent balance sheet of any Loan Party
prepared in accordance with GAAP.
"MAXIMUM RATE" has the meaning assigned to such term in Section
2.05(f).
"MONTHLY CASH BALANCE REPORT" has the meaning assigned to such term in
Section 5.01(d).
"MORTGAGE" means an agreement, including a mortgage, deed of trust or
any other document, creating and evidencing a Lien on a Real Property, which
shall be in form and substance reasonably satisfactory to Lender, with such
schedules and including such provisions as shall be necessary to conform such
document to applicable or local law or as shall be customary under local law, as
the same may at any time be amended in accordance with the terms thereof and
hereof.
"MORTGAGED REAL PROPERTY" means any Real Property that shall be subject
to a Mortgage delivered after the Closing Date pursuant to Section 5.10(d).
"MULTIEMPLOYER PLAN" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (a) to which any Company or any ERISA Affiliate is
then making or accruing an obligation to make contributions, (b) to which any
Company or any ERISA Affiliate has within the preceding five plan years made
contributions, or (c) with respect to which any Company or any ERISA Affiliate
could incur liability.
"NASDAQ" shall mean the Automatic Quotation System of the National
Association of Securities Dealers, Inc.
"NEW WHOLLY OWNED SUBSIDIARY" has the meaning assigned to such term in
Section 5.10(b).
"NON-GUARANTOR SUBSIDIARY" means (a) all of the Companies listed on
Schedule 3.06(a) (as in effect on the Closing Date), (b) each Subsidiary that
has been and remains released from its Guarantee in accordance with Section 7.09
hereof, and (c) each New Wholly Owned Subsidiary that is not required to become
a Guarantor hereunder in accordance with Section 5.10.
"NOTES" means any notes evidencing the Loans issued pursuant to this
Agreement, if any, substantially in the form of Exhibit J.
"OBLIGATIONS" means (a) obligations of each Loan Party from time to
time arising under or in respect of the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, and (ii) all other monetary
obligations, including
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fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
each Loan Party under this Agreement and the other Loan Documents; and (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of each Loan Party under or pursuant to this Agreement and the other
Loan Documents.
"OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit I-1
or any other form approved by Lender, as the same shall be supplemented from
time to time by a Perfection Certificate Supplement.
"PERFECTION CERTIFICATE SUPPLEMENT" means a certificate supplement in
the form of Exhibit I-2 or any other form approved by Lender.
"PERMITTED ACQUISITION" means any Investment, merger, consolidation, or
purchase of property, in one or a series of transactions, that satisfies all of
the following conditions:
(a) results in a Loan Party owning either (x) all of
the outstanding Equity Interests of another person that was
not a Subsidiary of Borrower prior to such transaction or (y)
all or substantially all of the business, operations and
assets of another person that was not a Subsidiary of Borrower
prior to such transaction (the "ACQUIRED BUSINESS");
(b) does not result in any Loan Party, incurring,
creating, assuming, guaranteeing, permitting to exist or
otherwise having any liability for, directly or indirectly,
any Indebtedness or any Liens (other than Permitted Liens);
(c) does not result in any Default or Event of
Default;
(d) The Purchase Price (as defined below) for:
(i) any Acquired Business does not exceed
[120%] of the Fair Market Value of the Acquired Business;
(ii) all Acquired Businesses acquired in any
fiscal year of the Borrower does not exceed, for any fiscal
year, $25,000,000 multiplied by the Pro Rata Percentage for
such fiscal year, reduced dollar for dollar by the amount of
any Capital Expenditures made or committed to be made by
Borrower or any other Loan Party in such fiscal year accounted
for in accordance with GAAP, and for purposes of this
definition, the Purchase Price for any Acquired Business shall
be allocated to the fiscal year in which a binding commitment
is made to acquire the Acquired Business, without regard to
when (1) the acquisition of the Acquired Business is
consummated
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or (2) the Purchase Price is actually paid, and without regard
to when or how such Purchase Price may be accounted for in
accordance with GAAP;
For purposes of this definition, PURCHASE PRICE shall mean the
Fair Market Value of the property (whether cash, cash
equivalents, Equity Interests, or other property) used,
directly or indirectly, to pay (1) the purchase price, merger
consideration, tender offer or exchange offer consideration,
license or cross-license fees or other consideration
(including any (x) contingent consideration, valued for this
purpose assuming the maximum amount of contingent
consideration will be paid, and (y) any compensation, bonus or
other payment made to any shareholder, director, officer or
employee of the Acquired Business other than ordinary course
of business compensation for services to be performed
following the acquisition of the Acquired Business) for the
acquisition of the Acquired Business, and (2) all
out-of-pocket costs and expenses incurred in connection with
the acquisition of the Acquired Business (including any
investment banker, finder or broker fee or commission and any
accounting, legal or other professional expenses), without
regard to whether such costs and expenses would be accounted
for as purchase price in accordance with GAAP. Notwithstanding
anything to the contrary contained in clause (d)(ii) of this
definition, to the extent that the Permitted Acquisitions made
by Borrower and its Consolidated Subsidiaries in any fiscal
year are less than the amount permitted to be made in such
period (without giving effect to any additional amount
available as a result of this sentence), the amount of such
difference may be carried forward and used to make Permitted
Acquisitions in the next succeeding fiscal year of Borrower.
(e) does not have a Material Adverse Effect;
(f) upon the consummation of any acquisition that
results in a person becoming a Subsidiary of a Loan Party,
immediately following such acquisition:
(i) 100% of the Equity Interest of any such
new Subsidiary is pledged and delivered to Lender for its
benefit under the applicable Security Agreement; and
(ii) such Subsidiary becomes a party to the
applicable Security Documents and becomes a Subsidiary
Guarantor hereunder and executes a Joinder Agreement and other
applicable Loan Documents all in accordance with Section
5.10(b);
(g) upon the consummation of any acquisition that
results in any Loan Party acquiring any assets that are not
then subject to a perfected first priority security interest
or Lien of the Lender under the Security Documents,
immediately following such acquisition, the Loan Parties shall
execute and deliver to Lender such agreements and other
instruments, record such Mortgages and financing statements or
other documents and take such other actions as may be required
so that Lender has a perfected, first priority security
interest in or Lien on all such acquired assets, subject to no
Liens other than Permitted Liens.
"PERMITTED BUSINESS DISPOSITION" means any Asset Sale that satisfies
all of the following conditions:
(a) the Equity Interest or other property sold is a
Business Unit;
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(b) the Business Unit is sold for cash or cash
equivalents;
(c) the Asset Sale increases Borrower's Consolidated
Tangible Net Worth;
(d) the Asset Sale does not result in any Default or
Event of Default; and
(e) the aggregate amount of Discontinued Revenue for
such Business Unit and for all other Business Units for which
binding commitments for Asset Sales have been made after the
Closing Date, is less than 25% of Borrower's consolidated
Revenue for the 12 consecutive fiscal months immediately
preceding the month in which any binding commitment is or may
be made for such Asset Sale.
"PERMITTED INVESTMENT" means any investment that Borrower is permitted
to make for the investment of surplus cash under Borrower's [Investment Policy
Statement for [Merganser] Capital Management] as in effect on the Closing Date.
"PERMITTED LIENS" has the meaning assigned to such term in Section
6.02.
"PERSON" means any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Tax Code or Section 307 of ERISA, and in respect of which any Company
or its ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA
or with respect to which any Company could incur liability.
"PLEDGED EQUITY INTERESTS" has the meaning set forth in the Security
Agreements.
"PLEDGED FOREIGN STOCK" shall mean the shares of capital stock of each
direct or indirect Foreign Subsidiary of Borrower owned by Borrower or any
Subsidiary of Borrower other than the Excluded Subsidiaries, including any and
all certificates and other instruments now or hereafter evidencing any such
capital stock.
"PLEDGED INTERCOMPANY DEBT" has the meaning set forth in the Security
Agreements.
"PRO RATA PERCENTAGE" shall mean for (i) each of the fiscal years
ending in 2004, 2005 and 2006, 1.0, (ii) for the fiscal year ending in 2003,
0.25 and (iii) for the fiscal year ending in 2007, 0.75.
"PROPERTY" means any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests of any person and whether now in existence or owned or hereafter
entered into or acquired.
"PURCHASE MONEY OBLIGATION" means, for any person, the obligations of
such person in respect of Indebtedness incurred for the purpose of financing all
or any part of the purchase price of any property (including Equity Interests of
any person) or the cost of installation, construction or improvement of any
property or assets and any refinancing thereof; provided, however, that
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such Indebtedness is incurred within 90 days after such acquisition of such
property by such person.
"REAL PROPERTY" means, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned, leased or operated by any person, whether by lease,
license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other property and rights incidental to the ownership, lease or operation
thereof.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated June 27, 2003, entered into between Lender and Borrower in
connection with the issuance of the Warrant.
"REGULATION T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RELEASED GUARANTOR" has the meaning assigned to such term in Section
7.09.
"REQUIREMENTS OF LAW" means, collectively, any and all requirements of
any Governmental Authority including any and all laws, ordinances, rules,
regulations or similar statutes or case law and all final orders, judgments,
decrees, injunctions, rulings or awards of any court of competent jurisdiction.
"RESPONSIBLE OFFICER" of any corporation means any executive officer or
Financial Officer of such corporation and any other officer or similar official
thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"REVENUE" means, for any person in respect of any period, the revenue
of such person for such period determined in accordance with GAAP as applied by
Borrower.
"SECTION 5.10(b) LISTED SUBSIDIARIES" has the meaning assigned to such
term in Section 5.10(b).
"SECURED PARTIES" has the meaning assigned to such term in the Security
Documents.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENTS" means, collectively, the U.S. Security Agreement
and each Foreign Security Agreement.
"SECURITY AGREEMENT COLLATERAL" has the meaning set forth in any
Security Agreement delivered on the Closing Date or thereafter pursuant to the
terms of this Agreement.
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"SECURITY DOCUMENTS" means the Security Agreements, the Mortgages, the
Control Agreements, the Perfection Certificate, the Collateral Assignments of
Lease and each other security document or pledge agreement required by
applicable local law to grant a valid, perfected security interest in any
property acquired or developed, and all UCC or other financing statements or
instruments of perfection required by this Agreement, any Security Agreement,
Mortgage or Collateral Assignment of Lease to be filed with respect to the
security interests in property and fixtures created pursuant to any Security
Agreement, Mortgage or Collateral Assignment of Lease and any other document or
instrument utilized to pledge as collateral for the Obligations any property of
whatever kind or nature.
"SUBSIDIARY" means, with respect to any person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more Subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"SUBSIDIARY GUARANTOR" means each Subsidiary listed on Schedule
1.01(b), each other Subsidiary that is or becomes a party to this Agreement
pursuant to Section 5.10 (but excluding any Released Guarantor that remains
released from its Guarantee in accordance with Section 7.09 hereof and including
each Foreign Subsidiary that enters into any other Guarantee required by
applicable Requirements of Law).
"SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such person but which, upon the insolvency
or bankruptcy of such person, would be characterized as the indebtedness of such
person (without regard to accounting treatment).
"TAX CODE" means the Internal Revenue Code of 1986, as amended.
"TAXES" mean any and all present or future taxes, duties, levies, fees,
assessments, imposts, deductions, charges or withholdings, whether computed on a
separate, consolidated, unitary, combined or other basis and any and all
liabilities (including interest, fines, penalties or additions to tax) with
respect to the foregoing.
"TAX REFUND" has the meaning assigned to such term in Section 2.09(f).
"TAX RETURN" means all returns, statements, filings, attachments and
other documents or certifications required to be filed in respect of Taxes or
any amendments thereof or thereto.
"TAX SHARING AGREEMENT" means the tax sharing agreement dated as of
June 27, 2003, among the Borrower and its Subsidiaries, as in effect on the
Closing Date and without giving effect to any subsequent amendment, waiver or
supplement thereof.
"TITLE COMPANY" means any title insurance company as shall be retained
by Borrower and reasonably acceptable to Lender.
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"TITLE POLICY" has the meaning assigned to such term in Section
5.10(d).
"TRANSACTION DOCUMENTS" means any and all documents entered into or
delivered in connection with the Transactions, including the Distribution
Agreement, the Tax Sharing Agreement and the Loan Documents.
"TRANSACTIONS" means, collectively, the transactions to occur pursuant
to the Transaction Documents, including (a) the consummation of the
Distribution; (b) the execution and delivery of the Loan Documents; (c) any
borrowings pursuant to this Agreement; (d) the guarantees and grant of security
interests provided in the Loan Documents; (e) the issue of the Warrant; and (f)
the payment of all fees and expenses to be paid on or prior to the Closing Date
and owing in connection with the foregoing.
"UCC" has the meaning set forth in the U.S. Security Agreement.
"U.S. SECURITY AGREEMENT" means a Security Agreement substantially in
the form of Exhibit F among the Loan Parties for the benefit of the Secured
Parties, as the same may be amended in accordance with the terms thereof and
hereof, or such other agreements reasonably acceptable to Lender as shall be
necessary to comply with applicable Requirements of Law and effective to grant
to Lender a perfected, first-priority security interest in the Security
Agreement Collateral covered thereby.
"VOTING STOCK" means any class or classes of capital stock of Borrower
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors of
Borrower.
"WARRANT" means the warrant to acquire up to 8,333,334 shares of
Borrower's Common Stock to be issued to Lender.
"WHOLLY OWNED SUBSIDIARY" means, as to any person, (a) any corporation
100% of whose capital stock (other than directors' qualifying shares) is at the
time owned by such person and/or one or more Wholly Owned Subsidiaries of such
person and (b) any partnership, association, joint venture, limited liability
company or other entity in which such person and/or one or more Wholly Owned
Subsidiaries of such person have a 100% equity interest at such time.
"WHOLLY OWNED FOREIGN SUBSIDIARY" means any Wholly Owned Subsidiary
that is a Foreign Subsidiary.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.02. TERMS GENERALLY. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be modified by the phrase "without limitation." The word "will" shall be
construed to have the same meaning and effect as the word "shall." Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument of other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified in accordance with the provisions hereof and
thereof; (b) any reference herein to any person shall be
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construed to include such person's successors and permitted assigns; (c) the
words "herein," "hereof" and "hereunder," and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision of this Agreement; (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to articles and sections of,
and exhibits and schedules to, this Agreement; and (e) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. All references to the knowledge of any
Company or to facts known by any Company shall mean actual knowledge of any
Responsible Officer of any Loan Party or any of its Subsidiaries.
1.03. ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP, as in effect from time to time. Financial
statements and other information required to be delivered by Borrower to Lenders
pursuant to Sections 5.01(a), (b) and (c) shall be prepared in accordance with
GAAP as in effect at the time of such preparation.
1.04. HEADINGS. Article and section headings and the table of contents used
herein are for convenience of reference only, are not part of this Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.
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