Exhibit 99.2
------------
Execution Copy
CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT (the "Agreement") is dated as of
November 29, 2005, by and between CONEXANT USA, LLC, a Delaware limited
liability company ("Purchaser"), and WACHOVIA BANK, NATIONAL ASSOCIATION, as
lender (the "Lender").
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND RELATED TERMS
SECTION 1.01. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Account Debtor" means, with respect to an Account Receivable, the Person
who is obligated to the Obligee of such Account Receivable.
"Account Receivable" means an Obligee's right to the payment of money from
an Account Debtor arising out of goods sold or to be sold, property leased or to
be leased, and services rendered or to be rendered, whether secured or
unsecured, whether now existing or hereafter arising, and whether or not
specifically sold or purchased in connection with the Program; provided that the
parties hereto agree that each such right to payment evidenced by a separate,
discrete invoice shall constitute a separate Account Receivable hereunder.
"Adjusted LIBOR" means, as applicable to any Settlement Period, a rate per
annum equal to the quotient obtained (rounded upwards, if necessary, to the next
higher 1/100th of one percent) by dividing (i) the applicable LIBOR for such
Settlement Period by (ii) 1.00 minus the LIBOR Reserve Percentage.
"Adjusted Shareholders' Equity" means Seller's and its consolidated
Subsidiaries' shareholders' equity (calculated on a consolidated basis in
accordance with GAAP), plus the aggregate amount of all non-cash charges taken
after March 31, 2005.
"Advance" means each extension of credit made by Lender to Purchaser or on
Purchaser's behalf under this Agreement or relating to the Program.
"Advance Request" means each request substantially in the form of Exhibit
A, attached hereto and made a part hereof.
"Affiliate" of any relevant Person means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the relevant Person (a
"Controlling Person"); (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person; or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, five percent or more of the common stock or equivalent equity
interests. As used herein, the term "control" means 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.
"Aggregate Advances" means, at any time of determination, the aggregate
outstanding principal amount of all Advances.
"Aggregate Cash Payment" means, as of any Settlement Date, an amount equal
to (a) the amount of the Advance (if any) being made on such Settlement Date,
plus (b) the collected balance in the Purchaser's Account as of the open of
business on the Preparation Date immediately preceding such Settlement Date
(other than that portion of such collected balance which represents collections
which have been received, but not yet identified and applied to a specific
Account Debtor in an IRPF Receivables Report delivered to Purchaser by Servicer
and collections on Unsold Receivables), plus (c) the amount of any credit to be
applied to the purchase of any Account Receivable pursuant to Section
2.7(a)(ii)(A) of the Purchase Agreement, less (d) the amounts indicated in items
(i) through (x) of Section 2.08(d), as such items are calculated as of such
Settlement Date.
"Aggregate Insured Value" means, at the time of determination, the
aggregate Insured Value of all Purchased Receivables of all Account Debtors.
"Agreement" means this Credit and Security Agreement, together with all
amendments, restatements, supplements, and other modifications hereto.
"Authority" has the meaning set forth in Section 7.02.
"Available Proceeds" means, at any time of determination, the then-total
amount of proceeds which remains available for payment of claims submitted under
the Policy.
"Bankruptcy Code" means Title 11 of the United States Code, as it may be
amended from time to time.
"Base Rate" means, as of any day, a rate of interest per annum equal to the
higher as of such day of (i) Prime Rate, less one percent and (ii) one-half of
one percent above the Federal Funds Rate. For purposes of determining the Base
Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change.
"Xxxx of Sale" has the meaning given such term in the Purchase Agreement.
"Blocked Account Agreement" means a Deposit Account Control Agreement (No
Notice) substantially in the form of Exhibit B, attached hereto and made part
hereof, with any changes as may be acceptable to Lender in its sole discretion,
executed and delivered by Purchaser, the depositary institution at which the
Purchaser maintains the Purchaser's Account, and Lender, as required by Lender.
"Books and Records" means, with respect to an Obligee's Accounts
Receivable, all of the Obligee's books, records, computer tapes, programs, and
ledger books arising from or relating to such Accounts Receivable.
"Borrowing Base" means, at any time of determination, (a) the lesser of (i)
the Commitment and (ii) an amount equal to 85% of the Aggregate Insured Value,
less (b) the amount of the True-Up Reserve, if any.
2
"Business Day" means each day on which dealings in Dollar deposits are
carried out in the London Interbank market and which is not a Saturday, Sunday,
or a day on which banking institutions in the States of Pennsylvania or North
Carolina are authorized or obligated by law, executive order, or governmental
decree to be closed.
"Cash and Cash Equivalents" means, as of any date of determination, the
aggregate amount set forth in the most recently delivered balance sheet of the
Seller (delivered pursuant to Section 5.01(a) or (b), as applicable) under the
headings "cash," "cash equivalents," and "short-term investments" (determined in
a manner consistent with the manner by which Seller makes such determinations as
of the Closing Date).
"Cash Price" means, with respect to an Account Receivable which is being
purchased on a Settlement Date, an amount equal to the Purchase Price of such
Account Receivable, divided by the Purchase Price of all Accounts Receivable of
Seller being sold on such Settlement Date, times the Aggregate Cash Payment as
of such Settlement Date; provided that (a) the Cash Price for such Account
Receivable shall in no event exceed the Purchase Price of such Account
Receivable and (b) in no event may the Cash Price of such Account Receivable be
less than 85% of its Purchase Price.
"Change of Control" means the occurrence of either of the following: (a)
Seller shall cease to own 100% of the issued and outstanding stock of Purchaser
or (b) (i) any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934, as amended), other than any employee
benefit plan or plans (within the meaning of Section 3(3) of ERISA), shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) of 25% or more in voting
power of the outstanding voting stock of Seller, or (ii) during any period of
twelve (12) consecutive calendar months, individuals who were directors of
Seller on the first day of such period shall cease to constitute a majority of
the board of directors of Seller other than because of the replacement as a
result of death or disability of one or more such directors.
"Change of Law" has the meaning set forth in Section 7.02.
"Closing Certificate" has the meaning set forth in Section 8.01(c).
"Closing Date" means the date of this Agreement as first above written.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Collateral" means the property in which Lender is granted a security
interest pursuant to Section 3.01 or elsewhere in the Program Documents.
"Commitment" means $80,000,000, as such amount may be reduced from time to
time as set forth in Section 2.06.
"Commitment Fee" has the meaning set forth in Section 2.05.
"Conexant" means Conexant Systems, Inc.
3
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with any of Purchaser or Seller, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all payment obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable and accrued expenses arising
in the ordinary course of business, (iv) all obligations of such Person as
lessee under capital leases or leases for which such Person retains tax
ownership of the property subject to a lease, (v) all obligations of such Person
to reimburse any bank or other Person in respect of amounts payable under a
banker's acceptance, (vi) all obligations of such Person to reimburse any bank
or other Person in respect of amounts paid or undrawn amounts available to be
paid under a letter of credit or similar instrument, (viii) all Debt of others
secured by a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, (ix) all obligations of such Person with respect to
interest rate protection agreements, foreign currency exchange agreements or
other hedging arrangements, other than commodity hedging agreements entered into
by such Person as risk protection rather than as an investment (each valued as
the termination value thereof computed in accordance with a method approved by
the International Swap Dealers Association and agreed to by such Person in the
applicable agreement, if any), and (x) all Debt of others guaranteed, in any
form whatsoever, by such Person.
"Deduction" means any credit, allowance, discount, Earned Rebate, rebate,
setoff, counterclaim, settlement, compromise, return, accord and satisfaction,
accommodation, or forgiveness of any nature or type, on, of, or relating to any
Account Receivable or any Account Debtor, as applicable; provided, however, that
the term "Deduction" shall not include any inchoate rebates which an Account
Debtor may have with respect to Seller's incentive programs with such Account
Debtor.
"Default Rate" means, with respect to any of the Obligations, on any day, a
rate of interest per annum equal to the sum of (i) the Interest Rate, plus (ii)
two percent.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Deferred Price" means, with respect to an Account Receivable which is
being purchased on a Settlement Date, an amount equal to the Purchase Price of
such Account Receivable, less the Cash Price of such Account Receivable.
"Designated Receivable" means any Purchased Receivable which:
(a) becomes subject to any dispute between its Account Debtor and Seller
(or Purchaser by virtue of Purchaser's having purchased such Account Receivable)
regarding Seller's performance of its obligations under the Underlying Contract;
provided, however, that such Account Receivable shall not be deemed to be a
Designated Receivable if and for so long as (i) the amount in dispute is less
than (i) if the aggregate amount in dispute with respect to all Purchased
4
Receivables is less than $5,000,000, twenty percent of the Uncollected Value of
such Account Receivable or (ii) if the aggregate amount in dispute with respect
to all Purchased Receivables is equal to or greater than $5,000,000, the amount
in dispute is less than five percent of the Uncollected Value of such Account
Receivable and, in either case (i) or (ii), Purchaser and Lender are notified of
such dispute in writing and any disputed amount is excluded from the calculation
of the Borrowing Base until such dispute is settled;
(b) was sold to Purchaser in violation of any representation, warranty, or
covenant contained in any Program Document; or
(c) was sold to Purchaser fraudulently or unlawfully.
"Discharged Receivable" means any Purchased Receivable (a) the Uncollected
Value of which was fully and finally paid by the Account Debtor or (b) for which
a claim was submitted under the Policy and either (i) initially rejected
(regardless of whether there exists any right to resubmit such Purchased
Receivable or any right to appeal such rejection) or (ii) paid by Underwriter
and the Policy Proceeds received by Lender or deposited into the Purchaser's
Account.
"Dollars" or "$" means dollars in lawful currency of the United States of
America.
"Effective Date" means the date on which each of the conditions precedent
to closing and conditions precedent to the making of the initial Advance are
satisfied, as determined by Lender.
"Earned Rebate" means, with respect to a given Account Debtor, such Account
Debtor's right to a rebate against existing and/or future Accounts Receivable
payable by such Account Debtor on account of an incentive program established by
Seller for such Account Debtor; provided, however, that "Earned Rebate" shall
(a) refer only to those rebates which have been actually earned by such Account
Debtor and for which Seller has issued a credit memorandum and (b) not refer to
rebates which are inchoate.
"Eligible Receivable" means each of the Seller's Accounts Receivable which
has been specifically identified and offered for sale by Seller, accepted or
approved for purchase by Purchaser, is Nominally Covered, and satisfies, at any
time of determination, each of the following other criteria:
(a) Seller has the right to sell such Account Receivable to Purchaser;
(b) is evidenced by a binding Underlying Contract between Seller and the
Account Debtor;
(c) the right to payment of which has been fully earned by Seller and
requires no further performance on Seller's part and the Account Receivable is
due and payable by the Account Debtor in Dollars;
(d) the Account Debtor related to such Account Receivable is not affiliated
with Seller;
5
(e) arises out of a bona fide sale from Seller to the Account Debtor
related to such Account Receivable in a transaction occurring in the ordinary
course of Seller's business;
(f) [Intentionally Omitted];
(g) is free from adverse claims, is not subject to any Deductions other
than Deductions of which the Purchaser has been notified in accordance with the
Program Documents, has not been sold or pledged to any other Person other than
Purchaser or Lender, and is free and clear of all Liens except Liens in favor of
Purchaser or Lender;
(h) upon Purchaser's purchase thereof and for so long as it remains a
Purchased Receivable, Purchaser's ownership thereof and security interest
therein will be evidenced and perfected under the UCC and applicable Financing
Statements filed in appropriate offices and will be subject to Lender's
first-priority, perfected security interest;
(i) such Account Receivable is not past due; provided, however, that any
past due Account Receivable shall not be deemed ineligible pursuant to this
clause (i) so long as (A) the Uncollected Value of such Account Receivable is
greater than any applicable "non-qualifying loss" provisions in the Policy and
(B) at the time of determining eligibility of such Account Receivable, the time
period during which a claim for such Account Receivable may be duly made under
the Policy has not expired);
(j) such Account Receivable did not arise as a result of the sale of
consigned inventory owned by a third party; and
(k) the Account Debtor of such Account Receivable has been directed to make
all payments to the Lockbox.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Event of Default" has the meaning set forth in Section 6.01.
"Face Value" means, with respect to an Account Receivable, the amount the
Account Debtor is obligated to pay the Obligee on account of the sale of goods
or rendition of services as shown on the face of any related documents (e.g.,
the Underlying Contract, invoices, purchase orders, or other shipping
documents), without including any Deductions, interest, or other extraneous
costs and expenses (other than shipping charges, to the extent such shipping
charges are Nominally Covered by the Policy).
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
6
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to Lender on such day on such transactions, as determined in good
faith by Lender.
"Final Payment Date" means the date which is nine months after the Purchase
Termination Date; provided that, if such date is not a Business Day, then the
Final Payment Date shall be the immediately following Business Day.
"Financing Statement" means any financing statement (as such term is used
in the UCC) and any other statement or document which is filed in a public
record for the purpose of giving notice of, or perfecting, a Lien, and
amendments thereto (including, without limitation, any amendments effecting any
assignment of any financing statement from one Person to another).
"Fiscal Quarter" means any fiscal quarter of Seller.
"Fiscal Year" means any fiscal year of Seller.
"GAAP" means generally accepted accounting principles in the United States
of America applied on a basis consistent with those which, in accordance with
Section 1.02, are to be used in making the calculations for purposes of
determining compliance with the terms of this Agreement.
"Governmental Body" means any court, arbitrator, tribunal, or other
governmental authority, agency, or body or any official thereof.
"Independent Member" has the meaning given such term in Section 5.10(b).
"Insured Value" means, with respect to all Purchased Receivables of a
particular Account Debtor and at any time of determination, that portion of the
Uncollected Value of such Purchased Receivables which (a) is Nominally Covered;
(b) does not exceed any buyer, credit, country, or other limitation established
for such Account Debtor by Underwriter pursuant to the Policy, as such
limitations exist at such time; and (c) was calculated in a manner acceptable to
Lender and Purchaser. In determining the Uncollected Value of a Purchased
Receivable for purposes of this definition, such value shall be calculated as of
the date and time of the most recent IRPF Receivables Report delivered by
Servicer and shall be calculated based solely on the information contained in
such IRPF Receivables Report, meaning that collections received, but not yet (i)
identified, (ii) applied to such Purchased Receivable, or (iii) deposited in the
Purchaser's Account, will not be used in determining any part of such
Uncollected Value for purposes of this definition.
"Interest Rate" means (a) a variable rate of interest per annum equal to
Adjusted LIBOR, plus 0.60%, which rate shall be adjusted for each Settlement
Period as set forth herein or (b) such other rate of interest applicable to the
Aggregate Advances as determined from time to time in accordance with Article 7.
7
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person (including,
without limitation, interest rate protection, foreign currency, or other hedging
arrangements to be held by such Person as an investment), capital contribution
to such Person, loan or advance to such Person, making of a time deposit with
such Person, guaranty, suretyship, or assumption of any obligation of such
Person or otherwise.
"IRPF Receivables Report" has the meaning given such term in the Servicing
Agreement.
"LIBOR" means, for the Aggregate Advances outstanding during any Settlement
Period:
(a) the rate of interest per annum at which U.S. Dollar deposits are
offered in the London interbank market in an amount approximately equal to the
Aggregate Advances for a period of time comparable to such Settlement Period
which appears on the Telerate Page 3750 as of 11:00 A.M. London time two
Business Days prior to the first Business Day of such Settlement Period; or
(b) if no such rate appears on the Telerate Page 3750, the rate of interest
per annum determined by Lender to be the average of up to four interest rates
per annum, at which U.S. Dollar deposits are offered in the London interbank
market in an amount approximately equal to the Aggregate Advances for a period
of time comparable to such Settlement Period, which appear on the Xxxxxx'x
Screen LIBO Page as of 11:00 A.M. London time two Business Days prior to the
first Business Day of such Settlement Period, if at least two such offered rates
so appear on the Xxxxxx'x Screen LIBO Page; or
(c) if no such rate appears on the Telerate Page 3750 and fewer than two
offered rates appear on the Xxxxxx'x Screen LIBO Page, the rate of interest per
annum at which deposits in an amount comparable to the Aggregate Advances and
which have a term corresponding to such Settlement Period are offered to Lender
by first class banks in the London inter-bank market for delivery in immediately
available funds at a non-United States office or international banking facility
of Lender, as selected by Lender, on the first day of such Settlement Period as
determined by Lender approximately 10:00 A.M. (Philadelphia, Pennsylvania, time)
two Business Days prior to the date upon which such Settlement Period is to
commence (which determination by such Lender shall, in the absence of manifest
error, be conclusive).
(d) Evidence of LIBOR for a particular Settlement Period will be provided
from time to time by Lender to Purchaser and Servicer upon their respective
request.
"LIBOR Reserve Percentage" shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to "eurocurrency liabilities" as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of the Aggregate Advances is determined), whether or not
8
Lender has any eurocurrency liabilities subject to such reserve requirement at
that time. The Aggregate Advances shall be deemed to constitute eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be available
from time to time to Lender. Adjusted LIBOR shall be adjusted automatically on
and as of the effective date of any change in the LIBOR Reserve Percentage.
"Lien" means, with respect to any asset, any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest, encumbrance, or servitude of any kind in respect of such
asset to secure or assure payment of a Debt or a guarantee of Debt of another,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, Purchaser shall be deemed to own subject to a Lien
any asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease, or other title
retention agreement relating to such asset.
"Lockbox" means a lockbox arrangement on terms, and administered by a
financial institution, satisfactory at all times to Lender.
"Lockbox Agreement" means a lockbox agreement in form and substance
satisfactory at all times to Lender, which agreement shall be by and among
Lender, Purchaser, and the financial institution which serves as administrator
for the Lockbox.
"Losses" means any liability, damage, costs and expenses, including,
without limitation, any attorneys' fees, disbursements and court costs, in each
case reasonably incurred by a Person, as the case may be, without regard to
whether or not such Losses would be deemed material under this Agreement or any
other Program Document, provided, however, that "Losses" shall not include any
losses based on claims for benefit-of-the bargain (other than with respect to
the Purchase Price), lost opportunity costs or similar claims.
"Margin Stock" means "margin stock" as defined in Regulations T, U or X.
"Material Adverse Effect" means a material adverse change in any of (a) the
financial condition, operations, business, properties or prospects of the
Purchaser, (b) the rights and remedies of Lender under the Program Documents,
Lender's security interest and Lien against the Collateral, the ability of
Purchaser to perform its obligations with respect to the Obligations or under
the Program Documents to which it is a party, or the ability of either the
Seller or Servicer to perform its respective obligations under the Program
Documents to which it is a party (including, without limitation, the
repudiation, revocation or any attempt to do the same by any Person obligated
under any other Program Document), as applicable, or (c) the legality, validity
or enforceability of any Program Document.
"Minimum Balance" means (a) for the period commencing on the Effective
Date, through and including January 12, 2006, $7,500,000 and (b) thereafter, at
any time of determination, an amount equal to the greater of (i) the sum of (A)
the deductible then existing under the Policy, plus (B) the amount of any
additional premiums which, though not currently due and payable, have accrued
for payment by Purchaser at the conclusion of the Policy's term, plus (C) an
9
amount equal to three month's interest at an assumed interest rate of four
percent per annum on an amount equal to the initial Commitment and (ii) ten
percent of the initial Commitment hereunder.
"Moody's" means Xxxxx'x Investor Service, Inc.
"Multiemployer Plan" has the meaning set forth in Section 4001(a)(3) of
ERISA.
"Nominally Covered" means, with respect to any Account Receivable and at
any time of determination, the status that (a) such Account Receivable is
eligible for payment under the Policy at such time (assuming a claim with
respect to such Account Receivable were validly made thereunder), without regard
to any monetary limitations set forth in the Policy with respect to the Policy
itself (including, without limitation, any deductible or non-qualifying losses),
the applicable Account Debtor, any country (but only if Accounts Receivable
payable by Account Debtors in such country are not generally excluded from
coverage), or otherwise, and (b) the Account Debtor related to such Account
Receivable (i) has been approved by Underwriter or (ii) is otherwise acceptable
to Underwriter because of the existence of a discretionary credit limit or
similar discretionary approval process allowed under the Policy.
"Note" means a promissory note substantially in the form attached hereto as
Exhibit D, made by Purchaser and payable to Lender with a face amount equal to
the initial Commitment, together with all amendments, consolidations,
modifications, renewals, and supplements thereto.
"Obligations" means all Debts, indebtedness, liabilities, covenants, duties
and other obligations of Purchaser to Lender included or arising from time to
time under this Agreement or any other Program Document, whether evidenced by
any note or other writing, including, without limitation, principal, interest,
fees, costs, attorneys' fees, and indemnification amounts and any and all
extensions or renewals thereof in whole or in part, direct or indirect, absolute
or contingent, due or to become due, primary or secondary, or joint or several.
"Obligee" means the Person to whom payment of an Account Receivable is
owed.
"Officer's Certificate" has the meaning set forth in Section 8.01(d).
"Original Discount" means, with respect to an Account Receivable purchased
under the Program, two percent (2%), expressed as a decimal, times the
Uncollected Value of such Account Receivable at the time it is purchased by
Purchaser pursuant to the Program Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means, as to the Collateral, (a) the Liens granted
to Lender and Purchaser under the Program Documents, (b) any Liens or other
claims Seller may have to any Designated Receivable and its Related Rights and
Property which arise after Seller pays the Settlement Price for such Designated
Receivable, (c) any Liens or other claims Underwriter may have in any Purchased
Receivable and its Related Rights and Property on account of having paid Policy
Proceeds on such Purchased Receivable, and (d) that judgment (and any related
Lien) filed against Seller in Xxxxxx Court (judgment number 63,382-05) in the
10
State of New Jersey in favor of the State of New Jersey Department of the
Treasury, Division of Taxation, on or about March 10, 2005 (but such judgment
and related Lien shall be permitted under the Program Documents as a "Permitted
Encumbrance" only to the extent the Seller has satisfied the obligation which is
the subject of such judgment and any related Lien).
"Person" means an individual, a corporation, a limited liability company, a
partnership, an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and is either (i) maintained by a member of the Controlled Group
for employees of any member of the Controlled Group or (ii) maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which a member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"Policy" means, in each case in form and substance satisfactory to Lender,
(a) a receivables insurance policy and all endorsements and other agreements,
documents, and instruments relating thereto, issued by Underwriter to Purchaser,
and (b) any replacement, substitution, or extension of, or amendments to, such
receivables insurance policy (and all endorsements and other agreements,
documents, and instruments relating thereto) issued by Underwriter to Purchaser.
"Policies and Procedures" has the meaning given such term in the Servicing
Agreement.
"Policy Proceeds" means the proceeds paid by Underwriter on a Purchased
Receivable submitted for payment under the Policy.
"Preparation Date" means each date which is two Business Days before each
Settlement Date; provided that the initial Preparation Date shall be December 7,
2005, or such other day as to which Purchaser and Lender may agree.
"Prime Rate" refers to that interest rate so denominated and set by Lender
from time to time as an interest rate basis for borrowings. The Prime Rate is
but one of several interest rate bases used by Lender. Lender lends at interest
rates above and below the Prime Rate.
"Program" means the program for the Seller's sale, and Purchaser's
purchase, of certain of the Seller's Accounts Receivable, and for the funding
from time to time of a portion of the Purchase Price thereof by Advances made to
Purchaser under this Agreement, all as contemplated by the Program Documents.
"Program Documents" means each of this Agreement, the Purchase Agreement,
the Note, the Servicing Agreement, the Financing Statements, each Settlement
Report, each IRPF Receivables Report, each Advance Request, the Subordinated
Note, the Purchaser Collateral Disclosure Certificate, the Seller Collateral
Disclosure Certificate, the Lockbox Agreement (if any), the Blocked Account
Agreement (if any), and all other agreements, documents, or instruments entered
11
into in connection with any of the foregoing as the same may be amended,
restated, supplemented, or otherwise modified from time to time.
"Program Termination Date" means the date on which the Obligations shall
have been finally paid in full and Lender's commitment to make Advances has
terminated.
"Public Accountants" means nationally recognized certified public
accountants acceptable to Lender.
"Purchase Agreement" means that certain Receivables Purchase Agreement of
even date herewith by and among Seller and Purchaser, as amended, restated,
supplemented or otherwise modified from time to time.
"Purchase Notice" has the meaning given such term in the Purchase
Agreement.
"Purchase Price" means, with respect to any Account Receivable purchased
under the Program, the price paid by Purchaser for the purchase of such Account
Receivable, which price shall be an amount equal to its Uncollected Value at the
time of purchase by the Purchaser, less the Original Discount, and shall be paid
in cash to the extent of the Cash Price and as an accrual on the Subordinated
Note to the extent of the Deferred Price; provided, however, that the Purchase
Price for a given Account Receivable may be adjusted as set forth in Section 2.5
of the Purchase Agreement to account for a net application of certain Deductions
(as provided in such Section 2.5).
"Purchase Termination Date" means the earliest to occur of the following:
(a) the date on which the Policy is initially scheduled to expire (or, if
the Policy is replaced, substituted, extended, or amended, with Lender's consent
and approval, to provide a later expiration date, then such later expiration
date);
(b) the Scheduled Purchase Termination Date (provided that the Scheduled
Purchase Termination Date is subject to extension for an additional 364 days, in
Lender's sole and absolute discretion, upon Purchaser's request made in writing
not more than sixty and not less than thirty days before the then-pending
Scheduled Purchase Termination Date);
(c) the date following delivery of any the Seller's financial statements
required to be delivered pursuant to Sections 5.01(a) and (b), and the
certificate required pursuant to Section 5.01(d), if such financial statements
and certificate indicate that, as of the last day of the fiscal period for which
such financial statements and certificate were delivered, (i) Seller's Adjusted
Shareholders' Equity is less than $200,000,000.00 or (ii) the aggregate amount
of Seller's and its Consolidated Subsidiaries' (other than Purchaser) Cash and
Cash Equivalents is less than $40,000,000.00;
(d) the date on which any judgment is rendered against Seller (or any of
its consolidated Subsidiaries) which causes the amount of all judgments rendered
against Seller (or such consolidated Subsidiaries) since the Closing Date, in
the aggregate, to exceed $25,000,000.00 (in excess of any insurance coverage) or
any judgment is rendered against Seller or any consolidated Subsidiary in an
aggregate amount in excess of $25,000,000.00, unless (i) such judgment is,
12
within thirty days of the date entered, discharged or stayed pending appeal and,
if stayed, is discharged within thirty days after the expiration of such stay or
(ii) Seller delivers to Purchaser and Lender a certificate showing with
reasonable detail that, after giving effect to a cash payment of such judgment,
Adjusted Shareholders' Equity will equal or exceed $200,000,000.00 and Sellers'
and its consolidated Subsidiaries' Cash and Cash Equivalents will equal or
exceed $40,000,000.00; and
(e) Seller defaults on indebtedness in an aggregate amount greater than
$25,000,000.00 or there occurs an event which permits, or with the giving of
notice or lapse of time (or both) would permit, the holder to accelerate its
indebtedness in excess of $25,000,000.00 or terminate its commitment (or take
any other action which would have the practical effect of either of the
foregoing actions, including, without limitation, any "put" of such
indebtedness); provided that, in any of the foregoing cases, if such date is not
a Business Day, the Purchase Termination Date shall be the Business Day
immediately preceding such date.
"Purchased Receivable" means an Account Receivable which was actually
purchased by Purchaser under and in accordance with the terms of the Purchase
Agreement; provided that such Account Receivable shall no longer constitute a
Purchased Receivable immediately upon its becoming a Designated Receivable or a
Discharged Receivable.
"Purchaser Collateral Disclosure Certificate" means that certain Collateral
Disclosure Certificate dated as of the date hereof, executed and delivered by
Purchaser in favor of the Lender.
"Purchaser's Account" means a deposit account at a domestic financial
institution reasonably acceptable to Lender at all times, which account will be
owned by Purchaser and into which, among other things, (a) all collections on
all Purchased Receivables, Policy Proceeds not received directly by Lender, and
all proceeds of either of them will be deposited and all of Purchaser's cash
will be maintained on deposit and (b) collections on certain Unsold Receivables
may be received, to the extent described in the Purchase Agreement and in the
other Program Documents; provided, however, that for purposes of calculating the
balance of the Purchaser's Account from time to time under the Program
Documents, no items of payment or other collections (or the funds thereof) on
any Unsold Receivable shall be included.
"Related Rights and Property" means, with respect to an Account Receivable
and in each case whether now existing or hereafter acquired or arising, (a) all
of Obligee's interest in all goods represented by such Account Receivable and in
all goods returned by, or reclaimed, repossessed, or recovered from, the Account
Debtor; (b) all of Obligee's Books and Records relating to such Account
Receivable; (c) all of Obligee's rights in and to (but not its obligations
under) the Underlying Contract; (d) all accounts, instruments, general
intangibles, documents, chattel paper, and letter of credit rights related to
such Account Receivable; (e) all of the collections or payments received and all
of Obligee's rights to receive payment and collections on such Account
Receivable (unless otherwise accounted for pursuant to Section 2.5 of the
Purchase Agreement); (f) all of Obligee's rights as an unpaid lienor or vendor
of such goods; (g) all of Obligee's rights of stoppage in transit, replevin, and
reclamation relating to such goods or Account Receivable; (h) all of Obligee's
13
rights in and to all security for such goods or the payment of such Account
Receivable and guaranties thereof; (i) any collections or casualty insurance
proceeds or proceeds from any trade receivables or other insurance (including,
without limitation, the Policy and Policy Proceeds) collected or paid on account
of such Account Receivable or any of the foregoing; and (j) all of Obligee's
rights against third parties with respect thereto.
"Restricted Payment" means (a) any dividend or other distribution on any
shares of Purchaser's equity securities (except dividends payable solely in
shares of its equity securities); (b) any payment on account of the purchase,
redemption, retirement, defeasance, or other acquisition of or sinking fund for
(i) any shares of Purchaser's equity securities (except shares acquired upon the
conversion thereof into other of Purchaser's equity securities), or (ii) any
option, capital appreciation rights, stock appreciation rights, warrant, or
other right to acquire Purchaser's equity securities; or (c) any payment prior
to the scheduled maturity of any of Purchaser's subordinated debt or other Debt
(other than the Obligations), provided that payment on the Subordinated Note in
accordance with the terms of this Agreement shall not constitute a Restricted
Payment.
"S&P" means Standard & Poor's Rating Group, a division of XxXxxx-Xxxx, Inc.
"Scheduled Purchase Termination Date" means the earlier to occur of (a) the
date which is 364 days after the Closing Date and (b) November 30, 2006,
subject, in each case, to extension as provided in the definition of "Purchase
Termination Date."
"Seller" means Conexant Systems, Inc.
"Seller Collateral Disclosure Certificate" means that certain Collateral
Disclosure Certificate dated as of the date hereof, executed and delivered by
Seller in favor of Purchaser and Lender.
"Senior Officer" means (a) with respect to any Person which is a
corporation, limited liability company, or limited partnership which has duly
appointed officers, such Person's president, vice president, treasurer,
secretary, general counsel, controller, chief executive officer, and chief
financial officer, (b) with respect to any Person which is a member managed
limited liability company and which has no duly appointed officers, any member
of such Person, (c) with respect to any Person which is a manager managed
limited liability company, any manager of such Person which is authorized to act
alone on behalf of such Person, and (d) with respect to any Person which is a
limited partnership and which has not duly appointed officers, any general
partner of such limited partnership.
"Servicer" means Seller or any successor servicer selected as provided in
the Program Documents.
"Services" has the meaning given such term in the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement dated as of even date
herewith between Servicer and Purchaser, as amended, restated, supplemented or
otherwise modified from time to time.
14
"Servicing Agreement Event of Default" has the meaning given such term in
the Servicing Agreement.
"Servicing Fee" has the meaning given such term in the Servicing Agreement.
"Settlement Date" means (a) the Business Day which is two Business Days
after the initial Preparation Date (so long as the Effective Date has occurred
before such date), (b) after the initial Settlement Date, the last Business Day
of each calendar week (commencing with the calendar week following the initial
Settlement Date), (c) the Purchase Termination Date, and (d) any other Business
Day agreed to by Lender and Purchaser.
"Settlement Period" means each period commencing on a Settlement Date and
ending on the next occurring Settlement Date; provided that the initial
Settlement Period shall commence on the Effective Date and end on the next
occurring Settlement Date and the last Settlement Period shall end on the
Purchase Termination Date.
"Settlement Price" means, with respect to any Designated Receivable, the
amount Seller is required to pay in repurchasing such Designated Receivable,
which amount shall be equal to the Purchase Price paid by Purchaser for such
Designated Receivable, as adjusted by agreement of Purchaser, Seller, and Lender
on or before the applicable Preparation Date (as part of the settlement process
described in Section 3.02 of the Servicing Agreement) to reflect (a) any
Deductions which have occurred or exist with respect to such Designated
Receivable and (b) any payments which have been made on the principal portion of
such Designated Receivable.
"Settlement Report" means a report substantially in the form of Exhibit C,
as the same may be amended, restated, supplemented, or otherwise modified from
time to time, or such other form acceptable to Lender.
"Standard Terms" means, with respect to any Account Debtor, the terms and
conditions related to the Seller's selling and shipping of its products to such
Account Debtor which have been approved by Underwriter and are in accordance
with the Policy.
"Subordinated Note" means the promissory note substantially in the form of
Exhibit E, attached hereto and made a part hereof, executed and delivered by
Purchaser to Seller.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the such
Person.
"True-Up Reserve" means a reserve which Lender may establish from time to
time in its commercially reasonable discretion but only in accordance with the
following:
(a) the True-Up Reserve shall be implemented only for purposes of
mitigating Lender's credit exposure on account of the accounting for, or the
timing, volume, size, application, or Seller's approval or granting of,
Deductions (including, without limitation, Earned Rebates and rebates which, but
for Seller's delay in issuing a credit memorandum therefor, would constitute
Earned Rebates);
15
(b) the True-Up Reserve shall not be implemented unless Lender demonstrates
in a writing of reasonable detail that, because of the matters described in the
preceding subclause (a), there is a substantial likelihood of Lender's having
credit exposure in excess of that contemplated by the Program Documents;
(c) the True-Up Reserve shall be implemented no earlier than seven days
after Lender shall have provided Purchaser the writing described in the
preceding subclause (b), and, during such seven-day period before the
implementation of any True-Up Reserve, Lender will make itself reasonably
available to Purchaser so that Purchaser has an opportunity to comment on
Lender's accounting of the matters described in the preceding subclauses (a) and
(b);
(d) the True-Up Reserve, if implemented, will be recalculated from time to
time by Lender (not less frequently than monthly or otherwise upon the
reasonable request of Purchaser) so that the amount of the True-Up Reserve is
never in excess of that needed to mitigate the matters described in subclauses
(a) and (b) (as determined by Lender in its commercially reasonable discretion);
and
(e) the True-Up Reserve will be determined by Lender based solely on a
commercially reasonable interpretation of the economic and accounting matters
described in the preceding subclauses (a) and (b) and shall not be arbitrary.
"UCC" shall mean Article 9 of the Uniform Commercial Code as adopted in the
State of New York, as amended from time to time.
"Uncollected Value" means, with respect to a Purchased Receivable, the Face
Value of such Purchased Receivable, less any payments which have been made on
the principal portion of such Purchased Receivable, less any Deductions taken or
existing with respect to such Purchased Receivable, less any portion of the Face
Value of any Purchased Receivable which has been placed in dispute by the
related Account Debtor (but only until such dispute is settled), but excluding
for purposes of calculating its Uncollected Value any unaccrued, accrued, paid,
or unpaid interest, or other extraneous costs and expenses relating to such
Purchased Receivable (other than shipping charges, to the extent such shipping
charges are Nominally Covered by the Policy).
"Underlying Contract" means, with respect to any Account Receivable,
the contract or agreement, in whatever form, which gave rise to such Account
Receivable, but only to the extent such contract or agreement relates to such
Account Receivable.
"Underwriter" means Atradius Trade Credit Insurance, Inc., and, thereafter,
any Person selected by Purchaser, so long as (a) the selection of such Person as
Underwriter will not cause or result in an Event of Default, (b) such Person is
acceptable to Lender at the time of such selection, and (c) such Person
otherwise satisfies any conditions precedent set forth in the Program Documents.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
16
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Unsold Receivable" means an Account Receivable, owned by Seller, but with
respect to which Seller has directed the respective Account Debtor to make
payment on such Account Receivable to the Lockbox, for purposes of mitigating
Account Debtor confusion over to whom such Account Debtor should make payment on
such Account Receivable.
"Unused Commitment" means, at the time of determination, the amount, if
any, by which the Commitment exceeds the Aggregate Advances.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Public Accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements of Seller
and its Subsidiaries delivered to Lender.
SECTION 1.03. References. Unless otherwise indicated, references in this
Agreement to "articles," "exhibits," "schedules," "sections," and other
subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in this Agreement
shall have the same defined meanings when used in any of the other Program
Documents, unless otherwise defined therein or unless the context shall require
otherwise. The terms "accounts," "chattel paper," "instruments," "general
intangibles," "inventory," "equipment," and "fixtures," as and when used herein
and in the other Program Documents, shall have the same meanings given such
terms under the UCC.
SECTION 1.05. Terminology. The terms "herein," "hereof," and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Program Documents shall include any and all amendment or modifications thereto
and any and all restatements, extensions or renewals thereof. All references to
any Person shall mean and include the successors and permitted assigns of such
Person. All references to "including" and "include" shall be understood to mean
"including, without limitation." All references to the time of day shall mean
the time of day on the day in question in Philadelphia, Pennsylvania, unless
otherwise expressly provided in this Agreement. A Default or an Event of Default
shall be deemed to exist at all times during the period commencing on the date
that such Default or Event of Default occurs to the date on which such Default
or Event of Default is waived in writing pursuant to this Agreement or, in the
case of a Default, is cured within any period of cure expressly provided in this
Agreement; and an Event of Default shall "continue," be "continuing," or "in
17
existence" until such Event of Default has been waived in writing by Lender or
cured. Whenever the phrase "to the best of Purchaser's knowledge" or words of
similar import relating to the knowledge or the awareness of any Purchaser are
used herein, such phrase shall mean and refer to the actual knowledge of a
Senior Officer of Purchaser. All references to "acceptable" or "satisfactory"
shall, unless expressly provided otherwise, be deemed to mean "reasonably
acceptable" or "reasonably satisfactory." All calculations of money values shall
be in Dollars, all Advances made hereunder shall be funded in Dollars, and all
amounts payable in respect of any of the Obligations shall be paid in Dollars.
To the extent any party hereto shall have the right to consent to the taking of
any action hereunder, such consent shall not be unreasonably withheld or delayed
(unless otherwise specifically indicated).
ARTICLE 2. ADVANCES
SECTION 2.01. Commitment to Make Advances. Lender agrees, subject to the
terms and conditions set forth herein, to make Advances to Purchaser (each of
which shall be evidenced by the Note) from time to time on a Settlement Date and
before the Purchase Termination Date, so long as no Default or Event of Default
shall be in existence on such Settlement Date; provided that, immediately after
each such Advance is made, the Aggregate Advances will not exceed the Borrowing
Base. Lender shall have no obligation to make any Advance in an amount less than
the lesser of (a) $500,000.00 and (b) the Unused Commitment.
SECTION 2.02. Method of Borrowing. No later than 4:00 P.M. (Philadelphia,
Pennsylvania, time) at least two Business Days before a Settlement Date on which
Purchaser desires Lender to make an Advance, Purchaser shall deliver, or cause
to be delivered, to Lender an Advance Request, which Advance Request need not be
executed when first delivered on such date provided Lender receives a duly
executed Advance Request no later than 10:00 A.M. (Philadelphia, Pennsylvania,
time) on the Settlement Date on which such Advance is to be made. On the
Settlement Date indicated in such Advance Request, Lender will, before 4:00 P.M.
(Philadelphia, Pennsylvania, time) on such Settlement Date make the Advance in
the amount described in the Advance Request (subject to all other conditions set
forth herein) and, where applicable, will initiate wire transfers before close
of business on such Settlement Date to pay the proceeds of such Advance in
accordance with the instructions provided by Purchaser in writing from time to
time in such Advance Request.
SECTION 2.03. Final Payment of Aggregate Advances. All of the Obligations
shall mature, and the principal amount thereof will be due and payable, no later
than the Final Payment Date, unless the Obligations will be due and payable
prior thereto by reason of the provisions of this Agreement. To the extent not
repaid on any Settlement Date, the Aggregate Advances shall automatically be
deemed to have been reborrowed at the Interest Rate for the following Settlement
Period, and the Aggregate Advances (plus any additional Advances accruing
thereto) shall continue to be automatically reborrowed for successive Settlement
Periods at the Interest Rate until paid, except as set forth in Article 7.
SECTION 2.04. Interest Rate.
(a) The Aggregate Advances outstanding from time to time shall bear
interest until paid at a variable rate of interest per annum equal to the
Interest Rate. Except as provided in Article 7, the Interest Rate shall be fixed
18
during each Settlement Period, but shall be subject to increase or decrease on
each Settlement Date in accordance with the definition of "LIBOR." Interest
shall be calculated on an assumed year of 360 days for the actual number of days
elapsed. Accrued but unpaid interest shall be due and payable, in arrears, on
each Settlement Date other than the initial Settlement Date. In no event may the
Interest Rate, or the amount of interest paid on the Aggregate Advances, exceed
the maximum rate of interest permitted by law.
(b) Any overdue principal of and, to the extent permitted by law, overdue
interest on the Aggregate Advances shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the Default Rate. After the
occurrence and during the continuance of an Event of Default, the Aggregate
Advances (and, to the extent permitted by applicable law, all accrued interest
thereon) shall bear interest at the Default Rate from the date of such Event of
Default, which date shall be deemed to be the date on which such Event of
Default occurred and not the date such Event of Default is discovered or
otherwise made known to any Person.
SECTION 2.05. Fees. On each Settlement Date for the Settlement Period then
ending, Purchaser shall pay to Lender, in arrears, a commitment fee (the
"Commitment Fee") equal to 0.20% per annum, times the average daily amount of
the Unused Commitment during such Settlement Period (as determined without
regard to the application of any payments made or to be made on such Settlement
Date or the making of any Advances on such Settlement Date); provided, however,
that the Commitment Fee shall not commence to accrue until December 9, 2005. The
Commitment Fee shall be determined on an assumed year of 360 days for the actual
number of days elapsed. Purchaser shall pay, or cause to be paid, all fees which
are due and payable under that certain mandate letter by and between Lender and
Seller dated July 26, 2005 (as amended), and all other fees, charges, and
expenses required to be paid to Lender from time to time under the Program
Documents; provided, however, that the unpaid portion of the "Final Program Fee"
(as defined in such mandate letter) shall not be due and payable until the first
Settlement Date occurring on or after January 13, 2006.
SECTION 2.06. Termination or Reduction of Commitment.
(a) Purchaser may, with thirty days prior written notice to Lender,
terminate the Commitment in its entirety as of any Settlement Date.
(b) In any event, the Commitment shall terminate in full no later than the
Purchase Termination Date.
(c) The Commitment shall be reduced from time to time without notice to
Purchaser so that it is at no time greater than the Available Proceeds.
(d) By providing thirty days' written notice to Lender, Purchaser may
voluntarily reduce the Commitment in part from time to time (but not more than
two times) by an amount equal to $5,000,000.00 or any greater amount that is an
integral multiple of $5,000,000.00; provided that no such reduction shall be
permitted to the extent it would cause the Commitment to be less than
$50,000,000.00; and provided further that, after any such reduction, the
Commitment may not be increased, except by written agreement of the Lender.
19
SECTION 2.07. Repayment of the Aggregate Advances.
(a) Before the Purchase Termination Date, Purchaser shall have no
obligation to repay any principal amount of the Aggregate Advances, except as
otherwise provided herein.
(b) On any date on which the Commitment is reduced or terminated, Purchaser
shall (i) repay such amounts on the Aggregate Advances which are necessary so
that the Aggregate Advances, after giving effect to such payment, shall not
exceed the Borrowing Base, as reduced on account of the reduction or termination
of the Commitment, and (ii) pay all accrued but unpaid fees and interest.
(c) If on any Settlement Date the Aggregate Advances exceed the Borrowing
Base, Purchaser shall repay such amounts on the Aggregate Advances which are
necessary so that the Aggregate Advances, after giving effect to such payment,
shall not exceed the Borrowing Base.
(d) All Policy Proceeds shall be paid directly to Lender and the Commitment
reduced, without prior notice to Purchaser, by the amount of such Policy
Proceeds.
(e) All cash or cash equivalent amounts received by Purchaser on account of
Seller's repurchase of any Designated Receivable shall be deposited directly
into the Purchaser's Account, without setoff, counterclaim, or any other
deduction, and applied in accordance with Section 2.08.
SECTION 2.08. General Provisions as to Payments.
(a) Purchaser shall make each payment of principal of, and interest on, the
Aggregate Advances and of fees hereunder, without any setoff, counterclaim or
any deduction whatsoever, not later than 1:00 P.M. (Philadelphia, Pennsylvania,
time) on the date when due, in Federal or other funds immediately available in
Philadelphia, Pennsylvania, to Lender at its address referred to in Section
9.01, and all payments received by Lender after 1:00 P.M. (Philadelphia,
Pennsylvania, time) on any Business Day shall be deemed to be received on the
following Business Day; provided, however, that the aforementioned requirements
as to the timing of payment shall not apply with respect to payments to be made
pursuant to or in accordance with a Settlement Report which has been timely
delivered to Lender and for which Seller, Servicer, and Purchaser, as
applicable, have timely delivered all material and information related thereto
in accordance with the Program Documents.
(b) Whenever any payment of principal of, or interest on, the Aggregate
Advances or fees or interest hereunder shall be due on a day which is not a
Business Day, the date for payment thereof shall be due and payable on the
immediately following Business Day.
(c) All payments of principal, interest, fees, and all other amounts to be
made by Purchaser with respect to the Obligations or otherwise pursuant to this
Agreement shall be paid without deduction for, and free from, any tax, imposts,
levies, duties, deductions, or withholdings of any nature now or at anytime
hereafter imposed by any Governmental Body thereon or therein.
20
(d) Except as set forth in Section 2.08(e) and (f), on each Settlement Date
the amount of (x) the Advance (if any) being made on such Settlement Date, plus
(y) the collected balance in the Purchaser's Account as of the open of business
on the Preparation Date immediately preceding such Settlement Date (other than
that portion of such collected balance which represents collections which have
been received, but not yet identified and applied to a specific Account Debtor
in an IRPF Receivables Report delivered to Purchaser by Servicer and collections
on Unsold Receivables), plus (z) subject to the proviso clause below, the
principal balance of, and interest accrued on, any and all of Purchaser's
Investments shall be applied in the following order (and in no other order
without Lender's prior written consent until the amounts due and payable in each
category are fully paid): (i) first, to Underwriter for payment of any premiums
and other fees necessary to keep the Policy in full force and effect; (ii)
second, to Servicer in payment of all Servicing Fees; (iii) third, toward the
payment of all fees and expenses related to the Lockbox and the administration
thereof; (iv) fourth, towards payment of reasonable business costs and expenses
of Purchaser, including without limitation, reasonable attorneys' fees; (v)
fifth, to Lender in payment of accrued interest then due and payable in respect
of the Aggregate Advances; (vi) sixth, to Lender in payment of principal of the
Aggregate Advances, but only to the extent necessary to reduce the Aggregate
Advances to an amount less than or equal to the Borrowing Base; (vii) seventh,
to Lender to pay the amount of expenses that have not been reimbursed to Lender
by Purchaser in accordance with the terms of this Agreement, together with any
interest accrued thereon; (viii) eighth, to Lender to reimburse Lender for any
indemnities owed by Purchaser to Lender under this Agreement or the other
Program Documents; (ix) ninth, to Lender to pay any fees due and payable to
Lender and arising under this or any other Program Document, including, without
limitation, the Commitment Fee; (x) tenth, to Purchaser for deposit into the
Purchaser's Account or to invest in accordance with Section 5.13(f), until the
aggregate amount of the balance in the Purchaser's Account and the amount of
such investments equals the Minimum Balance; (xi) eleventh, to Seller as payment
on the Purchaser's obligations under the Subordinated Note; and (xii) lastly, to
Purchaser or such other Person who is lawfully entitled thereto for proper
disposition (in accordance with this Agreement) as such Person determines;
provided that, in the event any Accounts Receivable are to be purchased by
Purchaser on such Settlement Date, the payments described in this Section
2.08(d)(xi) and (xii) shall be made only after Purchaser pays Seller the Cash
Price for all Accounts Receivable being so purchased; provided further that, (A)
so long as Purchaser has sufficient funds in the Purchaser's Account to satisfy
all payments in clauses (i) through and including (ix), and (B) the Purchaser is
in compliance with all conditions set forth in Section 5.13(f) with respect to
all of its Investments, the Purchaser need not apply the principal balance of,
and interest accrued on, any of Purchaser's Investments to the payments provided
for in this Section 2.08(d).
(e) Except as set forth in Section 2.08(f), during the existence of any
Event of Default or at all times after the Purchase Termination Date or at all
times after the Obligations have become due and payable for whatever reason, all
monies in the Purchaser's Account on any Business Day (other than collections
received on any Unsold Receivables), plus the principal balance of, and interest
accrued on, any and all of Purchaser's Investments shall be applied in the
following order (and in no other order without Lender's prior written consent
until all amounts due and payable within each category are fully paid): (i)
first, to Underwriter for payment of any premiums and other fees necessary to
keep the Policy in full force and effect; (ii) second, to Servicer in payment of
all Servicing Fees; (iii) third, toward the payment of all fees and expenses
21
related to the Lockbox and the administration thereof; (iv) fourth, to Lender in
payment of accrued interest then due and payable in respect of the Aggregate
Advances; (v) fifth, to Lender to pay the amount of expenses that have not been
reimbursed to Lender by Purchaser in accordance with the terms of this Agreement
or the other Program Documents, together with any interest accrued thereon; (vi)
sixth, to Lender to reimburse Lender for any indemnities owed by Purchaser to
Lender under this Agreement or the other Program Documents; (vii) seventh, to
Lender to pay any fees due and payable to Lender and arising under this or any
other Program Document, including, without limitation, the Commitment Fee;
(viii) eighth, to Lender in payment of principal of the Aggregate Advances; (ix)
ninth, to other business costs and expenses, including without limitation
reasonable attorneys' fees; (x) tenth, to Seller as payment on the Purchaser's
obligations under the Subordinated Note; and (xi) lastly, to Purchaser or such
other Person who is lawfully entitled thereto for proper disposition (in
accordance with this Agreement) as such Person determines.
(f) Lender acknowledges and agrees that, in the Purchase Agreement,
Purchaser and Seller (i) have acknowledged that certain, but not necessarily
all, of the Accounts Receivable from time to time owing by a given Account
Debtor may be sold to Purchaser and that each such Account Debtor may experience
confusion at a given time over to whom it should make payment on such Accounts
Receivable and (ii) have agreed that, to mitigate this risk of confusion and the
associated delay in collecting such Accounts Receivable (both Purchased
Receivables and Unsold Receivables), Seller may direct those Account Debtors who
have been pre-approved by the Underwriter and whose Accounts Receivable are
Nominally Covered to make payment on Unsold Receivables to the Lockbox. Any
items of payment or other collections on Unsold Receivables received into the
Lockbox will be endorsed over to Purchaser and deposited in the Purchaser's
Account and, on each Settlement Date, such items of payment or other collections
will paid over to Seller, in full, in accordance with Seller's lawful
instructions provided from time to time to Purchaser, Servicer, and Lender, to
the extent such items of payment or other collections (i) have been reasonably
identified as payment on an Unsold Receivable and (ii) have cleared the
customary bank collection process for payments of like kind. Lender acknowledges
and agrees that neither Purchaser nor Lender has any rights in and to any items
of payment or other collections on any Unsold Receivables (other than as are
necessary to process such items of payment or other collections in accordance
with the terms of the Program Documents) and agrees to cooperate with Servicer
and Purchaser in ensuring that all items of payment or other collections on any
Unsold Receivables (or the funds thereof) are paid over to Seller on each
Settlement Date in accordance with the terms of the Program Documents. To this
end, all funds in the Purchaser's Account which represent items of payment or
other collections on Unsold Receivables shall, without conditions (other than as
provided above), be paid over to Seller on each Settlement Date before any
payments are otherwise made pursuant to Sections 2.08(d) and 2.08(e) or
otherwise, regardless of whether there then exists any Default or Event of
Default. Purchaser and Lender also agree that, any other term of this Agreement
to the contrary notwithstanding, none of the items of payment or other
collections on any Unsold Receivables shall be used in any manner in the
calculation and determination of the balance of the Purchaser's Account.
(g) In addition to the provisions of the foregoing clause (f), in the event
any funds are, through mistake or misdirection (such that Purchaser was not the
intended or rightful recipient of such funds), deposited into the Purchaser's
Account, Lender will cooperate with Purchaser in causing the depository
22
institution at which the Purchaser's Account is maintained to disburse such
funds to the proper Person; provided Lender must receive from Purchaser evidence
of the mistake or misdirection and wire instructions for the Person to whom such
funds should be directed.
SECTION 2.09. Lockbox; Purchaser's Account; Blocked Account Agreement.
(a) Purchaser shall establish and, until the Program Termination Date,
continuously maintain, the Purchaser's Account and the Lockbox into which the
Seller, Servicer, and/or Purchaser shall cause all Account Debtors of the
Purchased Receivables to remit all cash, checks, drafts, items and other
instruments for the payment of money which it now has or may at any time
hereafter receive in full or partial payment on or collection of the Purchased
Receivables or the proceeds of the Purchased Receivables. (Moreover, Seller may
direct certain Account Debtors to make payment on Unsold Receivables to the
Lockbox, to the extent provided for in the Purchase Agreement and the other
Program Documents.) In the event any items of payment on any Purchased
Receivables are inadvertently received by Purchaser or any other Person, whether
or not in accordance with the terms of this Agreement or any other Program
Document, Purchaser or such other Person shall be deemed to hold the same in
trust for the benefit of Lender and shall promptly deposit such items of payment
in the Purchaser's Account without setoff, counterclaim, or other deduction.
Servicer shall cause the Lockbox administrator to remove all payment items from
the Lockbox on each Business Day and deposit such items in the Purchaser's
Account, all without setoff, counterclaim, or other deduction.
(b) If the Lockbox administrator is different from the bank at which the
Purchaser's Account is maintained or if the Lockbox is not administered by
Lender, the Purchaser shall cause the Lockbox administrator to execute and
deliver, and Purchaser shall execute and deliver, a Lockbox Agreement governing
the disposition of collections received in such Lockbox and granting Lender a
security interest in and to Purchaser's rights in and to such Lockbox. If the
Purchaser's Account is not maintained at Lender, Purchaser shall execute and
deliver, and shall cause the bank at which the Purchaser's Account is maintained
to execute and deliver, a Blocked Account Agreement. If the Lockbox
administrator is the same Person at which the Purchaser's Account is maintained,
the Lockbox Agreement and the Blocked Account Agreement may be combined into a
single document in form and substance satisfactory to Lender.
ARTICLE 3. COLLATERAL
SECTION 3.01. Grant of Security Interest. As security for the payment of
all Obligations, Purchaser hereby grants to Lender a continuing, general lien
upon and security interest and security title in and to all of the Purchaser's
assets and properties, whether real, personal, mixed, or tangible or intangible,
including, without limitation, the Purchaser's Account, the Lockbox, all of the
Purchased Receivables and their Related Rights and Property, and all of the
following described property, wherever located, whether now existing or
hereafter acquired or arising, namely, all of Purchaser's (a) "accounts" (as
this and all other terms in quotations in this Section 3.01 are defined in the
UCC), (b) "general intangibles," (c) "instruments," (d) "goods," (e) "chattel
paper," (f) "documents," (g) "letter of credit rights," (h) "deposit accounts,"
(i) "investment property," and (j) all products and/or proceeds of any and all
of the foregoing, and the proceeds of such proceeds, including, without
23
limitation, insurance proceeds, Policy Proceeds, and all Related Rights and
Property; provided, however, that the security interest provided for herein
shall not at any time attach to or cover any items of payment or other
collections received in the Lockbox or by Lender on any Unsold Receivables or
the proceeds thereof (including, without limitation, any funds on deposit in the
Purchaser's Account to the extent such funds represent items of payment or other
collections on Unsold Receivables) and Lender shall not claim any right against
such items of payment or other collections.
SECTION 3.02. Further Assurances. Purchaser shall duly execute and/or
deliver (or cause to be duly executed and/or delivered) to Lender any
instrument, agreement, invoice, document, document of title, dock warrant, dock
receipt, warehouse receipt, xxxx of lading, order, Financing Statement,
assignment, waiver, consent or other writing which may be reasonably necessary
to Lender to carry out the terms of this Agreement and any of the other Program
Documents and to perfect its security interest or intended security interest in
and facilitate the collection of the Collateral, the proceeds thereof, and any
other property at any time constituting security or intended to constitute
security to Lender. Purchaser shall perform or cause to be performed such acts
as Lender may request to establish and maintain for Lender a valid and perfected
security interest in and security title to the Collateral, free and clear of any
Liens except Permitted Encumbrances.
SECTION 3.03. Termination of Security Interest. Lender agrees that it
shall, upon the full and final payment and performance of all Obligations and
the termination of the Commitment, at Purchaser's cost and expense, execute and
deliver such documents, agreements, or instruments which are necessary to
terminate and release all Liens on the Collateral arising pursuant to the
Program Documents.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Lender that:
SECTION 4.01. Limited Liability Company Existence and Power. Purchaser is a
limited liability company duly formed, validly existing, and in good standing
under the laws of the State of Delaware, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all limited liability company powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except where any such failure to qualify or have all
required governmental licenses, authorizations, consents and approvals does not
have and could not reasonably be expected to cause a Material Adverse Effect.
SECTION 4.02. Limited Liability Company and Governmental Authorization; No
Contravention. Purchaser's execution, delivery, and performance of this
Agreement, the Note, and the other Program Documents (i) are within Purchaser's
limited liability company powers, (ii) have been duly authorized by all
necessary limited liability company action, and have been executed on behalf of
Purchaser by duly authorized officers, members, or managers, as applicable,
(iii) require no action by or in respect of or filing with, any Governmental
Body, (iv) do not contravene, or constitute a default under, any provision of
applicable law or regulation or of Purchaser's charter documents or operating or
limited liability company agreement or of any agreement, judgment, injunction,
order, decree, or other instrument binding upon Purchaser, and (v) do not result
24
in the creation or imposition of any Lien on any asset of Purchaser except as
created by the Program Documents.
SECTION 4.03. Litigation. There is no action, suit, or proceeding pending
or threatened against or affecting Purchaser before any Governmental Body which
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.04. Binding Effect. This Agreement constitutes a valid and
binding agreement of Purchaser enforceable in accordance with its terms, and the
Note and the other Program Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding obligations of Purchaser
and the Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting creditors' rights generally or by
general principals of equity.
SECTION 4.05. Financial Information.
(a) The (i) audited consolidated financial statements (including the
balance sheet and statements of income, shareholders' equity, and cash flows) of
Seller and its consolidated Subsidiaries for the Fiscal Year ending on September
30, 2004, copies of which have been delivered to Lender, and (ii) unaudited
consolidated financial statements (including the balance sheet and statements of
income and cash flows) of Seller and its consolidated Subsidiaries for the
interim periods ended on December 31, 2004, March 31, 2005, and June 30, 2005,
copies of which have been delivered to Lender, fairly present, in conformity
with GAAP, the consolidated financial position of Seller and its consolidated
Subsidiaries as of such dates and their consolidated results of operations and
cash flows for such periods stated, subject, in the case of clause (ii) to the
absence of footnotes and to normal year-end audit adjustments.
(b) Since June 30, 2005, there has been no event, act, condition, or
occurrence having a Material Adverse Effect.
SECTION 4.06. Margin Stock. Purchaser is not engaged principally, or as one
of its important activities, in the business of purchasing or carrying any
Margin Stock, and no part of the proceeds of any Advance will be used to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation T, U, or
X.
SECTION 4.07. Good Title. Purchaser is the legal and beneficial owner of
the Purchased Receivables and their Related Rights and Property, or possesses a
valid and perfected security interest therein, in each case, free and clear of
any Lien, except Permitted Encumbrances. There have been duly filed all
Financing Statement or other similar instruments or documents necessary under
the UCC (or any comparable law) of all appropriate jurisdictions to perfect
Purchaser's ownership in each Purchased Receivable and their Related Rights and
Property.
SECTION 4.08. Perfection; No Liens. This Agreement is effective to create a
valid security interest in the Collateral in favor of Lender. There have been
duly filed all Financing Statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
25
to perfect Lender's security interest in and to the Collateral. The Collateral
is free of any Liens except Permitted Encumbrances.
SECTION 4.09. Compliance with Laws; Payment of Taxes. Purchaser is in
material compliance with all applicable laws, regulations and similar
requirements of governmental authorities. There have been filed on behalf of
Purchaser all Federal, state and local income, excise, property and other tax
returns which are required to be filed by it and all taxes due pursuant to such
returns or pursuant to any assessment received by or on behalf of Purchaser have
been paid.
SECTION 4.10. Investment Company and Public Utility Holding Acts. Purchaser
is not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended. Purchaser is not a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. No Default. Purchaser is not in default under or with respect
to any agreement, instrument, or undertaking to which it is a party or by which
it or any of its property is bound which could reasonably be expected to have or
cause a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
SECTION 4.12. Insolvency. After giving effect to the execution and delivery
of the Program Documents and the incurrence of the Obligations under this
Agreement (a) Purchaser will not (i) be "insolvent," as such term is defined in
ss. 101 of the Bankruptcy Code, or Section 2 of either the "UFTA" or the "UFCA",
or as defined or used in any "Other Applicable Law" (as those terms are defined
below), or (ii) be unable to pay its debts generally as such debts become due
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA
or Section 6 of the UFCA, or (iii) have an unreasonably small capital to engage
in any business or transaction, whether current or contemplated, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section
5 of the UFCA; and (b) the Obligations of Purchaser under the Program Documents
will not be rendered avoidable under any Other Applicable Law. For purposes of
this Section 4.12, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA"
means the Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means
any other applicable law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
SECTION 4.13. Insurance. The Policy has been validly executed and delivered
by Purchaser and all premiums and other fees with respect to the Policy which
are due and payable have been paid, and, to the best knowledge of Purchaser, the
Policy is in full force and effect. Purchaser has delivered to Lender a true and
complete copy of the Policy on or before the date hereof. All information
heretofore furnished by Purchaser, Seller, or Servicer (but only if Servicer is
Conexant or an Affiliate of Conexant) to Underwriter for purposes of or in
connection with the Policy or any transaction contemplated by the Program
Documents is, and all such information hereafter furnished by Purchaser, Seller,
or Servicer (but only if Servicer is Conexant or an Affiliate of Conexant) to
Underwriter will be, true, accurate, and complete in every material respect on
the date such information is stated or certified and does not and will not
26
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein, taken as a whole in
light of the circumstances in which they were made, not misleading.
SECTION 4.14. Capital Structure. All of Purchaser's issued and outstanding
equity securities are legally and beneficially owned by Seller, free and clear
of any Lien; all of such securities have been validly issued, fully paid, and
are nonassessable; and there are no options, warrants, or other rights to
acquire any of Purchaser's securities. Purchaser has no Subsidiaries.
SECTION 4.15. Collateral Information. Purchaser is a limited liability
company validly existing and in good standing under the laws of the state of its
formation or organization and is authorized under such laws to conduct its
business as currently conducted and to own its assets (including but not limited
to its Accounts Receivable) as currently owned. The location of Purchaser's
chief executive office and all of its Books and Records relating to its Accounts
Receivable, the state of formation of the Purchaser, the Purchaser's federal tax
identification number, and the Purchaser's organizational identification number
are identified in the Purchaser Collateral Disclosure Certificate.
SECTION 4.16. Force Majeure. None of Purchaser's or the Seller's respective
businesses is suffering from effects of fire, accident, strike, drought, storm,
earthquake, embargo, tornado, hurricane, act of God, acts of a public enemy, or
other casualty that could reasonably be expected to have or cause a Material
Adverse Effect.
SECTION 4.17. Subordinated Note. The Subordinated Note is subordinate in
payment and all other respects to the payment and performance of the Obligations
to the extent and on the terms described therein.
SECTION 4.18. Program Documents. Each of the Program Documents, including
without limitation, the Purchase Agreement and the Servicing Agreement, is in
full force and effect and each of Seller, Purchaser, and Servicer (but only if
Servicer is Conexant or an Affiliate of Conexant) is in material compliance with
the terms and conditions set forth in such Program Documents.
SECTION 4.19. No Outside Collection Agencies. Purchaser has not employed or
used the services of any outside collection agencies or other third parties for
the purposes of collection or enforcement of any of the Purchased Receivables
other than as contemplated in the Servicing Agreement or as may otherwise be
required by Underwriter, so long as Purchaser has notified Lender of such
Underwriter requirements.
SECTION 4.20. [Intentionally Omitted].
SECTION 4.21. Nature of Purchased Receivables. Each Purchased Receivable
constitutes an "account," "chattel paper," or "general intangible," as such
terms are defined in the UCC.
SECTION 4.22. Purchaser's Account. The information relating to the
Purchaser's Account on Schedule 4.22, attached hereto and made a part hereof, is
true and correct in all respects.
27
SECTION 4.23. Full Disclosure. All information heretofore furnished by
Conexant or an Affiliate of Conexant (but only in their respective capacity as
Servicer), Purchaser, or Seller to Lender for purposes of or in connection with
this Agreement, the other Program Documents, the Program, or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by Conexant or an Affiliate of Conexant (but only in their respective capacity
as Servicer), Purchaser, or Seller to Lender will be, true, accurate, and
complete in every material respect on the date such information is stated or
certified and does not and will not contain any material misstatement of fact or
omit to state a material fact or any fact necessary to make the statements
contained therein, taken as a whole in light of the circumstances in which they
were made, not misleading. Conexant and each of its Affiliates (but only in
their respective capacity as Servicer), Purchaser, and Seller have disclosed to
Lender in writing any and all facts of which they have knowledge and which could
reasonably be expected to have or cause a Material Adverse Effect.
SECTION 4.24. Survival of Representations and Warranties. Purchaser
covenants, warrants, and represents to Lender that all of Purchaser's
representations and warranties contained in this Agreement or any of the other
Program Documents shall be true at the time of the execution of this Agreement
and the other Program Documents and shall survive the execution, delivery, and
acceptance thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
SECTION 4.25. Restating of Representations and Warranties. Each of the
representations and warranties of Purchaser contained herein shall be made as of
the Closing Date and (other than the representation set forth in Section
4.05(b)) shall be deemed restated and made by Purchaser on the date each Advance
is made.
ARTICLE 5. COVENANTS
Purchaser agrees that, until the Program Termination Date:
SECTION 5.01. Information. Purchaser will deliver, or cause to be
delivered, to Lender:
(a) as soon as available and in any event within ninety days after the end
of each Fiscal Year, audited consolidated financial statements (including the
balance sheet and statements of income and cash flows) of Seller and its
consolidated Subsidiaries as of the end of such Fiscal Year, setting forth in
each case in comparative form the figures for the previous fiscal year (which
information shall be deemed delivered for a given Fiscal Year if the United
States Securities and Exchange Commission Form 10-K with respect to Seller for
such Fiscal Year is publicly available within the time constraints set forth
herein at no more than nominal cost);
(b) as soon as available and in any event within forty-five days after the
end of each Fiscal Quarter, consolidated financial statements (including the
balance sheet and statements of income and cash flows) of Seller and its
consolidated Subsidiaries as of the end of such Fiscal Quarter, and for the
portion of the Fiscal Year ending on such date, setting forth in comparative
form the figures for the corresponding Fiscal Quarter and the corresponding
28
portion of the previous Fiscal Year (which information shall be deemed delivered
for a given Fiscal Quarter if the United States Securities and Exchange
Commission Form 10-Q with respect to Seller for such Fiscal Quarter is publicly
available within the time constraints set forth herein at no more than nominal
cost), all certified (subject to the absence of footnotes and normal year-end
adjustments) as to fairness of presentation, GAAP, and consistency by a Senior
Officer of Seller;
(c) simultaneously with the delivery of each set of annual financial
statements referred to in paragraph (a) above, (i) a report and opinion of the
Public Accountants (which report and opinion shall be prepared in accordance
with generally accepted auditing standards and shall not be subject to any
"going concern" or like assumption, qualification or exception or any
assumption, qualification or exception as to the scope of the audit) and (ii)
promptly upon its becoming available to Seller, a copy of each management letter
furnished to Seller by the Public Accountants;
(d) simultaneously with the delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, (i) internally prepared, unaudited
financial statements for Purchaser for the same periods and with the same
reporting requirements as required of Seller and its consolidated Subsidiaries
in paragraphs (a) and (b), above, certified as to fairness of presentation,
GAAP, and consistency by a Senior Officer of Purchaser or on behalf of Purchaser
by a Senior Officer of Servicer and (ii) a certificate in form and substance
reasonably satisfactory to Lender in which the calculation of Adjusted
Shareholders' Equity and the aggregate amount of the Seller's and its
Consolidated Subsidiaries' Cash and Cash Equivalents is set out in reasonable
detail as of the end of the fiscal period for which such financial statements
were delivered.
(e) (i) on each Preparation Date, or at such other times as may be
requested by Lender, a fully executed Settlement Report and (ii) as requested by
Lender, an IRPF Receivables Report;
(f) promptly, but in any event within five Business Days after Purchaser
becomes aware of the occurrence of any Default or Event of Default, a
certificate of a Senior Officer of Purchaser setting forth the details thereof
and the action which Purchaser is taking or proposes to take with respect
thereto;
(g) promptly upon the filing thereof, copies of all material registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly, or monthly reports which
Seller shall have filed with the Securities and Exchange Commission (provided,
however, that any of the foregoing shall be deemed delivered if the same shall
be publicly available for a nominal cost and Purchaser or Seller shall have
notified Lender of such public availability);
(h) if and when any member of the Controlled Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in ERISA ss.
4043) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) receives notice from the PBGC
29
under Title IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice;
(i) written notice of the following:
(i) promptly after Purchaser's learning thereof, of (A) the commencement of
any litigation affecting the Purchaser or any of its assets, whether or
not the claim is considered by Purchaser to be covered by insurance,
and (B) the institution of any administrative proceeding against
Purchaser;
(ii) at least thirty days prior thereto, of Purchaser's opening of any new
office or place of business or the closing of any of their existing
offices or places of business;
(iii) promptly upon receipt, a copy of any correspondence or notices
received from Underwriter regarding the Policy, to the extent such
notice regards the actual or proposed reduction, increase,
cancellation, or other modification of any buyer or Account Debtor,
Policy, or other credit limit, the actual or proposed cancellation,
suspension, termination, or other modification of the Policy, or the
failure or suspected failure of Seller, Servicer, or Purchaser to
comply with any of the Policy's requirements;
(iv) promptly after the rendition thereof, of any judgment rendered against
Purchaser; and
(v) promptly after Purchaser's learning thereof, of any default by
Purchaser under any note, indenture, loan agreement, mortgage, lease,
deed, guaranty, or other similar agreement relating to any Debt of
Purchaser;
(vi) promptly after Purchaser's learning thereof, of any default by
Purchaser, Servicer, Seller or any of their Subsidiaries (other than
Purchaser) under any Program Documents to which any of them is a party;
and
(vii) promptly after Purchaser's learning thereof, of the occurrence of (A)
any default by Seller or any of its Subsidiaries (other than Purchaser)
under any note, indenture, loan agreement, mortgage, lease, deed,
guaranty, or other similar agreement relating to any Debt of Seller or
any of its Subsidiaries (other than Purchaser) in an aggregate amount
greater than $25,000,000.00 and (B) any judgment rendered against
Seller or any of its Subsidiaries (other than Purchaser) in an
aggregate amount greater than $25,000,000.00 (in excess of any
insurance coverage).
SECTION 5.02. Inspection of Property, Books and Records. Purchaser will, in
accordance with the Program Documents, cause Servicer to (a) keep proper books
of record and accounts in which full, true, and correct entries in conformity
with GAAP shall be made of all dealings and transactions in relation to its
business and activities and (b) permit Lender and Underwriter or representatives
of either of them, without hindrance or delay, to (i) visit and inspect any of
its properties, (ii) verify information regarding Purchaser and its assets with
any Person (with Lender's hereby agreeing to exercise its reasonable efforts to
30
conduct such verification with Servicer and Purchaser, so long as no Event of
Default is in existence), (iii) examine and make abstracts from any of its Books
and Records, journals, orders, receipts and any correspondence and other data
relating to the Collateral, to Purchaser's business, or to any other
transactions between the parties hereto or under the Program, and (iv) discuss
its respective affairs, finances, and accounts with its officers, employees, and
the Public Accountants, all for purposes of monitoring compliance with this
Agreement and the other Program Documents, Purchaser agreeing to cooperate and
assist in such visits and inspections at such reasonable times during regular
business hours, with reasonable prior notice, as often as may reasonably be
requested, and during the continuing of any Event of Default, at any time and
without prior notice; provided, however, that, with respect to the exercise of
its rights under Section 5.02(b)(i), Lender shall not make more than two
uninvited visits per Fiscal Year, unless a Servicing Agreement Event of Default
or an Event of Default is in existence, in which case Lender may make as many
such visits as it deems commercially reasonable. At Lender's or Underwriter's
request, Purchaser agrees to exercise its rights of inspection against Seller,
which rights are granted to Purchaser under the Purchase Agreement, and to
include Lender and Underwriter, at their respective request, in the conduct of
such inspections and to share the results of such inspections with Lender and
Underwriter. Lender may select and engage the services of a third-party
accounting firm of national reputation to perform field audits of Purchaser's
books and records; provided that the expense of one (1) such field audit per
calendar year shall be paid by Purchaser and shall occur only upon reasonable
prior notice and at reasonable times during Purchaser's regular business hours,
except that, during the continuation of an Event of Default, the costs of as
many field audits per year as may be required by Lender in the exercise of its
commercially reasonable judgment shall be paid by Purchaser and may be performed
at any time without notice. With respect to any such audit, Purchaser agrees to
(i) provide reasonable cooperation to such accounting firm in the conduct of its
audit and (ii) actively assist such accounting firm in gaining access to the
Seller's books and records relating to the Program, to the extent such books and
records are reasonably relevant to the audit. No Person shall be granted access
to any of Purchaser's properties or other information contemplated by this
Section 5.02 unless such Person is bound (directly or indirectly) by the terms
of Section 9.08 or by an effective confidentiality agreement containing terms
substantively similar to the terms set forth in Section 9.08, with such
conforming changes as are necessary to reflect the agreement of Purchaser and
such Person; provided, however, that such Person and Purchaser may, but neither
shall be obligated to, agree on different terms respecting such confidential
treatment.
SECTION 5.03. Maintenance of Existence and Management. Purchaser shall
maintain (i) its limited liability company existence and carry on its business
in substantially the same manner as such business is now carried on and
maintained and will not reincorporate in the State of Delaware or any other
state; (ii) its certificate of formation and operating agreement and not permit
any amendment or other modification thereto without the prior written consent of
Lender; and (iii) a duly appointed manager or one or more duly appointed or
elected officers with the requisite authority to effect Purchaser's compliance
with the Program Documents.
SECTION 5.04. Compliance with Laws; Payment of Taxes. Purchaser will comply
with applicable laws (including but not limited to ERISA and the Fair Labor
Standards Act of 1938, as amended), regulations, and similar requirements of any
Governmental Body (including but not limited to PBGC), except where the
31
necessity of such compliance is being contested in good faith through
appropriate proceedings diligently pursued and except where failure to comply
would not have and could not reasonably be expected to cause a Material Adverse
Effect. Purchaser will pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent, and other obligations
which, if unpaid, might become a Lien against Purchaser's property, except
liabilities being contested in good faith and against which Purchaser will set
up reserves in accordance with GAAP. If Purchaser fails to pay any such tax,
assessment, governmental charge, claim for labor, supplies, rent, or other
obligation, Lender may, but shall have no obligation to do so, pay such item and
the amount of such payment shall accrue to the Obligations.
SECTION 5.05. Required Cash Price. Purchaser agrees that it shall not
purchase any Account Receivable from Seller unless such Account Receivable is an
Eligible Receivable at the time of such purchase, such Account Receivable is
purchased strictly in accordance with the terms of the Program Documents, and
the Cash Price paid for such Account Receivable on the Settlement Date is at
least equal to 85% of the Uncollected Value of such Account Receivable at the
time it is purchased by Purchaser pursuant to the Program Documents; provided,
however, that any breach of this Section 5.05 shall not constitute an Event of
Default so long as (a) any Account Receivable purchased by Purchaser in
contravention of the foregoing provisions of this Section 5.05 constitutes a
Designated Receivable; (b) such Designated Receivable is duly repurchased by
Seller in accordance with the terms of the Program Documents; and (c) Purchaser
did not purchase such Account Receivable with knowledge that the purchase
thereof would constitute a violation of the foregoing provisions of this Section
5.05.
SECTION 5.06. Maintenance of the Policy. Purchaser shall maintain the
Policy in full force and effect at all times, cooperate with Lender, Servicer,
and Underwriter in the administration of the Policy and the submitting of claims
thereunder, and make all premium payments required to be made thereunder.
Purchaser shall deliver the originals or copies (which copies shall be certified
if requested by Lender) of the Policy to Lender with satisfactory lender's loss
payable endorsements naming Lender, as sole loss payee, assignee, and additional
insured, as its interests may appear. Upon the date of this Agreement, and from
time to time thereafter upon Lender's request, Purchaser shall provide Lender
with a statement from Underwriter providing the foregoing coverage,
acknowledging in favor of Lender the continued effectiveness of the foregoing
insurance clauses. If Purchaser fails to provide and pay for the Policy, Lender
may, at its option, but shall not be required to, procure the same and charge
Purchaser therefor as a part of the Obligations.
SECTION 5.07. Maintenance of Property. Purchaser shall maintain all of its
properties and assets in reasonably good condition, repair, and working order,
ordinary wear and tear excepted.
SECTION 5.08. Physical Inventories. From time to time upon Lender's
reasonable request, Purchaser shall conduct a physical inventory of any
returned, replevined, repossessed, or reclaimed goods which are or were
represented by a Purchased Receivable and to which Purchaser has title and
deliver a report of such inventory to Lender in form reasonably satisfactory to
Lender.
32
SECTION 5.09. Reports Respecting Collateral. Purchaser shall, promptly upon
Lender's request, furnish or cause to be furnished to Lender a status report,
certified by a Senior Officer of Purchaser, showing the aggregate dollar value
and location of any Related Rights and Property which constitutes goods.
Additionally, Lender may, at any time in its sole discretion and upon reasonable
prior notice to Purchaser, require Purchaser to permit Lender in its own name or
any designee of Lender in its own name to verify by telephone the individual
account balances of or any other matter relating to the individual Account
Debtors of the Purchased Receivables immediately upon its request therefor by
mail, telephone, telegraph or otherwise; provided, however, that Lender shall
exercise its reasonable efforts to conduct such verification with Purchaser and
Servicer, so long as no Event of Default is in existence. In any event,
Purchaser shall provide reasonable cooperation to Lender (or its designee) in
its efforts to conduct such verification.
SECTION 5.10. Separate Legal Entity. Purchaser hereby acknowledges that
Lender is entering into the transactions contemplated by this Agreement and the
other Program Documents in reliance upon Purchaser's identity as a legal entity
separate from any other Person. Therefore, from and after the date hereof,
Purchaser shall take all reasonable steps to continue Purchaser's identity as a
separate legal entity and to make it apparent to third Persons that Purchaser is
an entity with assets and liabilities distinct from those of any other Person,
and is not a division of any other Person. Without limiting the generality of
the foregoing and in addition to and consistent with the other covenants set
forth herein, Purchaser shall take such actions as shall be required so that:
(a) Purchaser will be a manager managed limited purpose limited liability
company whose primary activities are restricted in its operating agreement to
owning financial assets and financing the acquisition thereof and conducting
such other activities as it deems necessary or appropriate to carry out its
primary activities;
(b) Not less than one of Purchaser's members (each, an "Independent
Member") shall be a Person who is not, and during the past five years has not
been, a director, officer, member, manager, employee or five percent beneficial
owner of the outstanding common stock or other equity interests of any Person or
entity beneficially owning any outstanding shares of common stock or other
equity interests of Seller or any Affiliate thereof. The operating agreement of
Purchaser shall provide that (i) the Purchaser's managers or members shall not
approve, or take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to Purchaser unless the Independent Member shall approve
the taking of such action in writing prior to the taking of such action, and
(ii) such provision cannot be amended without the prior written consent of the
Independent Member;
(c) Any employee, consultant, or agent of Purchaser will be compensated
from funds of Purchaser, as appropriate, for services provided to Purchaser;
(d) Purchaser will allocate and charge fairly and reasonably overhead
expenses shared with any other Person. To the extent, if any, that Purchaser and
any other Person share items of expenses such as legal, auditing, and other
professional services, such expenses will be allocated to the extent practical
on the basis of actual use or the value of services rendered, and otherwise on a
basis reasonably related to the actual use or the value of services rendered;
33
Purchaser's operating expenses will not be paid by any other Person except as
permitted under the terms of this Agreement or otherwise consented to by Lender;
(e) Purchaser's Books and Records will be maintained separately from those
of any other Person and clearly marked as pledged to Lender hereunder;
(f) All audited financial statements of any Person that are consolidated to
include Purchaser will contain notes clearly stating that (i) all of Purchaser's
assets are owned by Purchaser, and (ii) Purchaser is a separate corporate
entity;
(g) Purchaser's assets will be maintained in a manner that facilitates
their identification and segregation from those of any other Person;
(h) Purchaser will strictly observe limited liability company formalities
in its dealings with all other Persons, and funds or other assets of Purchaser
will not be commingled with those of any other Person, except with respect to
Unsold Receivables;
(i) Purchaser shall not, directly or indirectly, be named or enter into an
agreement to be named, as a direct or contingent beneficiary or loss payee,
under any insurance policy with respect to any amounts payable due to
occurrences or events related to any other Person;
(j) Any Person that renders or otherwise furnishes services to Purchaser
will be compensated thereby at market rates for such services it renders or
otherwise furnishes thereto; and
(k) Purchaser will not hold itself out to be responsible for the debts of
any other Person or the decisions or actions respecting the daily business and
affairs of any other Person.
SECTION 5.11. Use of Collateral. Purchaser will not use the Collateral
illegally.
SECTION 5.12. Payment of Fees. Purchaser will timely pay all fees,
premiums, charges, costs, and expenses which it is required to pay under any of
the Program Documents, including, without limitation, Policy premiums and all
fees associated with the establishment and maintenance of the Lockbox and the
Purchaser's Account.
SECTION 5.13. Additional Negative Covenants. Without Lender's prior written
consent, Purchaser shall not:
(a) enter into any contracts or agreements with any Person other than the
Program Documents or amend, terminate, supplement, or otherwise modify any
contract or agreement to which it is a party;
(b) change the Fiscal Year;
(c) other than as contemplated in the Program Documents, enter into, or be
a party to, any transaction with any Affiliate of Purchaser, Servicer, or
Seller;
34
(d) create or acquire any Subsidiary or engage in any business other than
those businesses directly related to the Program;
(e) declare or make any Restricted Payment; provided that Purchaser may
from time to time make a dividend to Seller so long as:
(i) Lender has consented in writing to such dividend; or
(ii) at the time such dividend is paid:
(A) no Event of Default or Default shall have occurred and be
continuing;
(B) after giving effect to such dividend (1) the aggregate amount of
(x) the Purchaser's Account, plus (y) Purchaser's Investments
permitted by subclauses (i), (ii), and (iii) of Section 5.13(f),
hereof, will equal or exceed (2) the sum of (x) the Minimum
Balance, plus (y) the amount of all Deductions existing with
respect to the Purchased Receivables and (without duplication) the
Account Debtors relating thereto, plus (z) the amount of any
rebates which, but for Seller's not having formally approved such
rebates, would otherwise constitute Earned Rebates;
(C) the principal and interest payable on the Subordinated Note is, in
the aggregate, zero;
(D) the dividend is paid on a Settlement Date; and
(E) the Aggregate Advances at such time are less than or equal to the
Borrowing Base;
(f) make Investments in any Person except Investments in (i) direct
obligations of the United States Government maturing within ninety days; (ii)
certificates of deposit issued by a commercial bank whose credit is satisfactory
to Lender and for a term satisfactory to Lender; (iii) Lender's Sweep Investment
Service and such other Investments which have been specifically approved in
writing from time to time by Lender; and (iv) loans evidenced by the
Subordinated Note; provided, however, that, with respect to Investments made
pursuant to clauses (i), (ii), and (iii), hereof, (A) all actions necessary to
preserve Lender's first priority security interest in the Collateral have been
taken, as required by Lender in its discretion; (B) the aggregate amount of all
such Investments, including any interest accrued thereon, shall not exceed the
Minimum Balance (excluding from the calculation thereof (x) the amount of any
interest accrued on such Investments, to the extent such interest has been paid
over to the Purchaser's Account, and (y) the principal amount of any Investments
otherwise approved as set forth herein and made on an overnight or
Business-Day-to-Business-Day basis, to the extent such Investments are, in fact,
made and returned to the Purchaser's Account on such basis); (C) Purchaser
hereby agrees that it shall take whatever action is necessary to liquidate such
Investment to the extent the principal or interest (or both) of such Investment
is necessary for Purchaser to pay any amounts due and payable under this
Agreement or any other Program Document (including, without limitation, the
incurrence of any breakage, early withdrawal, early termination, or other fees
35
or penalties arising on account of such liquidation); (D) all interest and other
income generated by such Investment shall be reinvested (subject to the
limitations set forth herein) or paid over to the Purchaser's Account; and (E)
immediately after giving effect to the making of any Investment permitted
hereunder, no Default or Event of Default shall have occurred and be continuing;
(g) create, assume, or suffer to exist any Lien, directly or indirectly, on
any asset now owned or hereafter acquired by it, except Permitted Encumbrances;
(h) create, assume, or incur any Debt, except (i) Debt to Lender under this
Agreement; (ii) Debt evidenced solely by the Subordinated Note; (iii) Debt
consisting of deferred taxes; and (iv) Debt resulting from endorsements of
negotiable instruments received in the ordinary course of business;
(i) issue any equity securities other than to Seller and the Independent
Member or permit any Person other than Seller and the Independent Member to own
any of its equity securities;
(j) relocate its principal place of business or chief executive office,
locate its Books and Records relating to the Purchased Receivables at any
location other than at Servicer's chief executive office, or open or otherwise
acquire actual or beneficial ownership of any deposit, savings, commodities, or
securities account other than the Purchaser's Account or as specifically
permitted in connection with the making of Investments in accordance with this
Agreement;
(k) change its federal taxpayer identification number;
(l) allow or consent to the making or taking of any Deductions respecting
any Purchased Receivable, unless Lender is promptly notified of such Deductions
(which notice requirement may be met by ensuring that such Deduction is clearly
indicated on an IRPF Receivables Report delivered after such Deduction was made
or taken);
(m) contract or enter into any agreement for any trade receivables or
credit insurance or other agreement or transaction to mitigate the risk of
nonpayment of any of Purchaser's Accounts Receivables (including, without
limitation, any agreement, policy, or transaction prohibited by the terms of the
Policy) other than the Policy or purchase any Accounts Receivables other than
under the Program in accordance with the Program Documents;
(n) use the proceeds of the Advances for any purpose other than for payment
of the Purchase Price, payment on the Subordinated Note, and payment of fees,
expenses, and costs directly associated with the maintenance and administration
of the Program or except as permitted under Section 5.13(e);
(o) (i) suffer or permit dissolution or liquidation either in whole or in
part, (ii) redeem or retire any shares of its own membership interests, (iii)
merge or consolidate with any Person, or (iv) sell, lease, or otherwise transfer
all or any part of its assets (but excluding sales of returned, reclaimed,
replevined, or repossessed goods represented by a Purchased Receivable, the
granting of a security interest to Lender hereunder, and the resale or transfer
of Designated Receivables in accordance with the Purchase Agreement) to any
other Person.
36
ARTICLE 6. DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) Purchaser shall fail to pay when due (i) any portion or all of the
principal of the Aggregate Advances, (ii) any interest on the Aggregate
Advances, or (iii) any fee or other Obligations owing to Lender hereunder, and,
in any of the foregoing cases, such failure shall continue for more than two
Business Days following the date such payment was due; or
(b) Purchaser shall fail to observe or perform any covenant contained in
Sections 5.01(f), 5.01(j), 5.02(b), 5.03, 5.06, 5.09, 5.10, 5.12, or 5.13; or
(c) Purchaser shall fail to observe or perform any covenant or agreement
herein (other than those covered by paragraph (a) or (b) above) or any Program
Document and such failure shall not have been cured within thirty days after the
earlier to occur of (i) written notice thereof has been given to Purchaser by
Lender or (ii) Purchaser otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by
Purchaser in this Agreement or in any certificate, financial statement, or other
document delivered pursuant to this Agreement or any other Program Document
shall prove to have been incorrect or misleading in any material respect when
made (or deemed made); or
(e) any event of default or default occurs under any other Program Document
(however such terms are defined in such other Program Documents) or any
Servicing Agreement Event of Default shall occur; provided, however, no Default
or Event of Default shall exist hereunder on account of (i) any Servicing
Agreement Event of Default, if a successor Servicer acceptable to Lender is
engaged to provide the Services within twenty days of the date Lender receives
written notice of such Servicing Agreement Event of Default (provided, however,
that no Event of Default shall be deemed to exist under this subclause (i) if
Lender, after receipt of such notice of such Servicing Agreement Event of
Default and during such twenty-day period, delivers the notice described in
Section 4.01(e) of the Servicing Agreement), or (ii) Seller's breach of the
representations or warranties in Section 4.1(k)(i) and (ii) of the Purchase
Agreement, so long as Purchaser obtains the full benefit of its remedies for
such breach to the extent provided in, and in accordance with, Sections
4.1(k)(iii)(B) and (C) of the Purchase Agreement, as applicable; or
(f) the aggregate balance of (i) the Purchaser's Account, plus (ii) the
balance of any and all Investments permitted by subclauses (i), (ii), and (iii)
of Section 5.13(f) shall be less than the Minimum Balance for a period in excess
of thirty consecutive days or shall at any time be less than an amount equal to
ninety percent of the Minimum Balance, in each case without including in the
calculation of such aggregate balance any collections received with respect to
Unsold Receivables;
(g) the Policy shall at any time be cancelled, terminated, suspended,
declared unenforceable or unlawful, or otherwise ineffective, other than by the
natural expiration of the Policy on (i) the date it was initially scheduled to
expire or (ii) if the Policy is replaced, substituted, extended, or amended,
37
with Lender's consent and approval, to provide a later scheduled expiration
date, such later scheduled expiration date;
(h) Underwriter is rated less than (i) Baa2 by Xxxxx'x or (ii) BBB by S&P,
in either case, for more than thirty consecutive days;
(i) either Purchaser or Seller shall commence a voluntary case or other
proceeding seeking liquidation, reorganization, or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(j) an involuntary case or other proceeding shall be commenced against
either Purchaser or Seller seeking liquidation, reorganization, or other relief
with respect to it or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and, only in the case of Seller, such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of ninety days; or an order for relief shall be entered against either
Purchaser or Seller under the federal bankruptcy laws as now or hereafter in
effect; or
(k) Purchaser, or Seller, or any member of the Controlled Group shall fail
to pay when due any material amount which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans shall be filed under Title IV of ERISA by Purchaser, Seller, any
member of the Controlled Group, any plan administrator, or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any such Plan
or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within thirty days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or
(l) a Lien on any Collateral, warrant, or writ of attachment or execution
or similar process shall be ordered or issued by any Governmental Body against
any property of Purchaser in any amount (in each case in excess of amounts
covered by insurance) and such Lien on any Collateral, warrant, writ or process
shall not be discharged, vacated, stayed or bonded within thirty days of the
date of its entry; provided, however, that no Event of Default shall exist if a
bond has been issued in favor of the claimant or other Person obtaining such
attachment or writ and the issuer of such bond shall have executed a waiver or
subordination agreement in form and substance satisfactory to Lender pursuant to
which the issuer of such bond subordinates its right of reimbursement,
contribution or subrogation to the Obligations and waives or subordinates any
Lien it may have on Purchaser's assets; or
38
(m) any Person other than Seller and the Independent Member shall own or
acquire any of Purchaser's equity securities; or
(n) if, on any day, Purchaser could not truthfully make the representations
and warranties contained in Section 4.12; or
(o) there occurs any Change of Control; or
(p) the Lender shall cease to have a valid and perfected first priority
security interest in the Collateral; or
(q) any Program Document shall cease, for any reason, to be in full force
and effect, or the Seller, Purchaser, or Servicer shall so assert in writing or
Seller, Purchaser, or Servicer shall otherwise seek to terminate or disaffirm
its obligations under any such Program Document; then, and in every such event,
Lender may (i) by notice to Purchaser terminate the Commitment; (ii) by notice
to Purchaser declare the Note (together with accrued interest thereon), and all
other amounts payable hereunder and under the other Program Documents, to be,
and the same shall thereupon become, immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
hereby waived by Purchaser together with interest at the Default Rate accruing
on the principal amount thereof from and after the date of such Event of
Default; provided that if any Event of Default specified in paragraph (i) and
(j) above occurs with respect to Purchaser or Seller, without any notice to
Purchaser or any other act by Lender, the Commitment shall thereupon terminate
and the Note (together with accrued interest thereon) and all other amounts
payable hereunder and under the other Program Documents shall automatically and
without notice become immediately due and payable without presentment, demand,
protest, or other notice of any kind, all of which are hereby waived by
Purchaser together with interest thereon at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of Default; or
(iii) exercise any rights, powers or remedies under this Agreement and the other
Program Documents. Notwithstanding the foregoing, Lender shall have available to
it all other remedies at law or equity.
SECTION 6.02. Remedies with Respect to Collateral.
(a) Upon the occurrence and during the continuance of an Event of Default,
Lender or any representative of Lender shall have the rights and remedies of a
secured party under the UCC in effect on the date thereof (regardless of whether
the same has been enacted in the jurisdiction where the rights or remedies are
asserted), including, without limitation, the right to require Purchaser to
assemble the Collateral, at Purchaser' expense, and make it available to Lender
at a place designated by Lender which is reasonably convenient to both parties,
and, subject to the rights of third parties, peaceably to enter any premises
where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the property of
any Purchaser, such Purchaser agrees not to charge Lender for storage thereof),
to take possession of any of the Collateral or the proceeds thereof, to sell or
otherwise dispose of the same, and Lender shall have the right to conduct such
sales on the premises of Purchaser, without charge therefor, and such sales may
be adjourned from time to time in accordance with applicable law. Lender may
sell, lease or dispose of Collateral for cash, credit, or any combination
39
thereof, and shall have the right to appoint a receiver of the Purchased
Receivables and their Related Rights and Goods or any part thereof, and the
right to apply the proceeds therefrom as set forth in Section 6.02(b), below.
Lender shall give Purchaser written notice of the time and place of any public
sale of the Collateral or the time after which any other intended disposition
thereof is to be made. The requirement of sending reasonable notice shall be met
if such notice is given to Purchaser at least ten days before such disposition.
Expenses of retaking, verifying, restoring, holding, insuring, collecting,
preserving, liquidating, protecting, preparing for sale or selling, or otherwise
disposing of or the like with respect to the Collateral shall include, in any
event, reasonable attorneys' fees and other legally recoverable collection
expenses, all of which shall constitute a part of the Obligations.
(b) Proceeds of any of the Collateral and payments by Purchaser during the
existence of an Event of Default received by Lender or any Lender shall be
applied by Lender in accordance with the provisions of Section 2.08(e). In the
event that the proceeds of the Collateral are not sufficient to pay the
Obligations in full, Purchaser shall remain liable for any deficiency.
(c) To the extent permitted therein, Purchaser hereby waives all rights
which Purchaser has or may have under and by virtue of any applicable law
relating to Purchaser's right to redeem any Collateral or Purchaser's right to
require notice or a judicial hearing before seizure of any Collateral by Lender.
(d) Unless and except to the extent expressly provided for to the contrary
herein, the rights of Lender specified herein shall be in addition to, and not
in limitation of, Lender's rights under the UCC, or any other statute or rule of
law or equity, or under any other provision of any of the Program Documents, or
under the provisions of any other document, instrument or other writing executed
by Purchaser or any third party in favor of Lender, all of which may be
exercised successively or concurrently.
(e) Pursuant to the Receivables Purchase Agreement, Seller, among other
things, granted Purchaser a limited license (which Purchaser may not exploit in
its own right, but rather may only assign such license to certain third parties)
to use any of Seller's tradenames, trademarks, or service marks for the limited
purposes of billing, collecting, settling, compromising, or otherwise disposing
of any Purchased Receivable purchased by Purchaser from Seller and its Related
Rights and Property. Pursuant to the terms of the Receivables Purchase
Agreement, Purchaser hereby assigns such limited license to Lender, to be used
by Lender only during the existence of an Event of Default, for purposes of
billing, collecting, settling, compromising, or otherwise disposing of any
Purchased Receivables and its Related Rights and Property.
(f) Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto, except
for reasonable care in the custody thereof while any Collateral is in Lender's
actual possession, or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Purchaser's sole risk.
40
(g) Lender shall not be under any obligation to marshal any assets in favor
of Purchaser or any other Person or against or in payment of any or all of the
Obligations.
SECTION 6.03. Power of Attorney. Purchaser irrevocably designates and
appoints Lender its true and lawful attorney, during the existence of an Event
of Default, either in the name of Lender or in the name of Purchaser to ask for,
demand, xxx for, collect, compromise, compound, receive, give receipt for, and
give acquittances for any and all sums owing or which may become due upon any
items of the Purchased Receivables, their Related Rights and Goods, and the
other Collateral and, in connection therewith, to take any and all actions as
Lender may deem necessary or desirable in order to realize upon the same,
including, without limitation, power to endorse in the name of Purchaser, any
checks, drafts, notes, or other instruments received in payment of or on account
of the Purchased Receivables, their Related Rights and Goods, and the other
Collateral, but Lender shall not be under any duty to exercise any such
authority or power or in any way be responsible for the collection thereof.
ARTICLE 7. CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 7.01. Basis for Determining Interest Rate Inadequate or Unfair. If
on or prior to the first day of any Settlement Period, LIBOR is not being
offered for such Settlement Period, then Lender shall forthwith give notice
thereof to Purchaser, whereupon the Aggregate Advances (including any additional
Advances accruing thereto) shall bear interest at the Base Rate until the
Settlement Date next occurring after the circumstances giving rise to such
change in the Interest Rate no longer exist, as evidenced by written notice from
Lender to Purchaser to such effect. Lender shall provide Purchaser and Servicer
with evidence of the Base Rate in effect from time to time upon request made by
either of them from time to time.
SECTION 7.02. Illegality. If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein or any existing or
future law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any such
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by Lender (or its lending office) with any
request or directive (whether or not having the force of law) of any Authority
shall make it unlawful or impossible for Lender (or its lending office) to make,
maintain or fund the Aggregate Advances or any Advance accruing interest by
reference to LIBOR and Lender shall so notify Purchaser, whereupon the Aggregate
Advances (including any additional Advances accruing thereto) shall bear
interest at the Base Rate until the Settlement Date next occurring after the
circumstances giving rise to such change in the Interest Rate no longer exist,
as evidenced by written notice from Lender to Purchaser to such effect. Before
giving any notice to Purchaser pursuant to this Section, Lender shall designate
a different lending office if such designation will avoid the need for giving
such notice and will not, in the judgment of Lender, be otherwise economically
disadvantageous to Lender.
SECTION 7.03. Increased Cost and Reduced Return.
(a) If after the date hereof, a Change of Law or compliance by Lender (or
its lending office) with any directive of any Authority:
41
(i) shall impose, modify, or deem applicable any reserve, special deposit,
or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding any such requirement included in an applicable
LIBOR Reserve Percentage) against assets of, deposits with or for the
account of, or credit or letter of credit extended by, Lender; or
(ii) shall impose on Lender or on the United States market for certificates
of deposit or the London Interbank market any other condition affecting
the Aggregate Advances, the Note, or its obligation to make Advances;
and the result of any of the foregoing is to increase the cost to
Lender of making or maintaining any Advance or the Aggregate Advances,
or to reduce the amount of any sum received or receivable by Lender
under this Agreement or under the Note with respect thereto, by an
amount reasonably deemed by Lender to be material, then, within thirty
days after demand by Lender, Purchaser shall pay to Lender such
additional amount or amounts as will compensate Lender for such
increased cost or reduction.
(b) If Lender shall have determined in good faith that after the date
hereof the adoption of any applicable law, rule, or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Lender with any directive regarding
capital adequacy of any Authority, has or would have the effect of reducing the
rate of return on Lender's capital as a consequence of its obligations hereunder
to a level below that which Lender could have achieved but for such adoption,
change, or compliance (taking into consideration Lender's policies with respect
to capital adequacy) by an amount reasonably deemed by Lender to be material,
then from time to time, within thirty days after demand by Lender, Purchaser
shall pay to Lender such additional amount or amounts as will compensate Lender
for such reduction.
(c) Lender will promptly notify Purchaser of any event of which it has
knowledge, occurring after the date hereof, which will entitle Lender to
compensation pursuant to this Section and will designate a different lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of Lender, be otherwise
economically disadvantageous to Lender. A certificate of Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, Lender may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section shall be applicable with respect to any
participant, assignee or other transferee, and any calculations required by such
provisions shall be made based upon the circumstances of such participant,
assignee or other transferee; provided, however, that Lender shall not
participate, assign, or transfer any of its rights under this Agreement to any
Person who (i) is a competitor or direct customer of Seller or (ii) would be, on
the effective date of such participation, assignment, or transfer, entitled to
payment under this Section 7.03.
42
SECTION 7.04. Compensation. Upon Lender's request, Purchaser shall pay
Lender such amount or amounts as shall compensate Lender for any loss, cost, or
expense incurred by Lender as a result of:
(a) any payment or prepayment (pursuant to Article 2 or otherwise) of any
Advance or the Aggregate Advances on a date other than on a Settlement Date; or
(b) any failure by Purchaser to borrow an Advance on the date for such
Advance specified in the applicable Advance Request delivered pursuant to
Section 2.02; such compensation to include, without limitation, an amount equal
to the excess, if any, of (x) the amount of interest which would have accrued on
the amount so paid or prepaid or not borrowed for the period from the date of
such payment, prepayment or failure to borrow to the last day of the then
current Settlement Period for such Advance or the Aggregate Advances (or, in the
case of a failure to prepay or borrow, the Settlement Period which would have
commenced on the date of such failure to prepay or borrow) at the Interest Rate
over (y) the amount of interest (as reasonably determined by Lender) Lender
would have paid on deposits in Dollars of comparable amounts having terms
comparable to such Settlement Period placed with it by leading banks in the
London Interbank market.
ARTICLE 8. CONDITIONS TO MAKING ADVANCES
SECTION 8.01. Conditions to Making Initial Advance. Lender's obligation to
make the initial Advance is subject to the satisfaction of the conditions set
forth in Section 8.02 and receipt by Lender of the following:
(a) duly executed original counterparts of this Agreement and each other
Program Document, all signed by all parties thereto other than Lender;
(b) an opinion letter or letters, each in form and substance reasonably
satisfactory to Lender,
(i) of Xxxxxxxxxx & Xxxxx LLP, counsel for the Seller, Servicer, and
Purchaser, dated as of the Closing Date, which address each of the
following matters and such other matters as Lender may reasonably
request: (A) the due authorization, execution, delivery,
enforceability, and other corporate matters of the Seller, Servicer,
and Purchaser as to the Program Documents; (B) the creation of a valid
security interest in favor of Purchaser in the Purchased Receivables
and the creation of a valid security interest in favor of Lender in the
Collateral; (C) the existence of a "true sale" of the Purchased
Receivables from Seller to Purchaser under the Purchase Agreement; and
(D) the inapplicability of the doctrine of substantive consolidation to
Seller, on the one hand, and Purchaser, on the other, in connection
with any bankruptcy proceeding involving either of them; and
(ii) of Xxxxx Day, counsel for the Lender, dated as of the Closing Date,
which addresses only the perfection of the Purchaser's ownership
interest in and to the Purchased Receivables and their Related Rights
and Property and the perfection of the Lender's security interest in
the Collateral (which opinions may be based solely on Xxxxx Day's
43
review of an acceptable publication of the Uniform Commercial Code as
in effect in the State of Delaware, without regard to any decisions,
regulations, or other law affecting the interpretation or applicability
thereof);
(c) certificates (each, a "Closing Certificate") substantially in the form
of Exhibit G, attached hereto and made a part hereof, dated as of the Closing
Date, signed by a Senior Officer of each of Purchaser and Seller (including
Seller in its capacity as Servicer);
(d) all documents which Lender may reasonably request relating to the
existence of Purchaser, the Servicer, and the Seller, the corporate or limited
liability company authority, as applicable, for and the validity of this
Agreement, the Note, and the other Program Documents, and any other matters
relevant hereto, all in form and substance satisfactory to Lender, including,
without limitation, certificates of such Persons substantially in the form of
Exhibit H (each, an "Officer's Certificate"), signed by the secretary, assistant
secretary, manager, or member(s) of such Person, as applicable, certifying as to
the names, true signatures, and incumbency of the officer or officers, managers,
or members of such Persons authorized to execute and deliver the Program
Documents, and certified copies of the following items: (i) such Person's
certificate of incorporation or other registered, constitutional document, (ii)
such Person's Bylaws or related agreement, (iii) a certificate of good standing
or valid existence of the Secretary of State of the state of the jurisdiction of
its incorporation or formation, and (iv) the action taken by the Board of
Directors or other Persons with management control of such Persons authorizing
the execution, delivery, and performance of this Agreement, the Note, and the
other Program Documents to which such Person is a party;
(e) recorded UCC Financing Statements (satisfactory in form and content to
Lender in all respects) (i) pertaining to (A) Purchaser's ownership and/or
security interest in the Purchased Receivables and their Related Rights and
Property and (B) Lender's first priority security interest in the Collateral and
(ii) evidencing recordation thereof in all filing offices deemed necessary by
Lender;
(f) lien searches reasonably acceptable to Lender, showing no Liens on any
of the Seller's, Servicer's, or Purchaser's Accounts Receivables or Related
Rights and Property other than Permitted Encumbrances;
(g) evidence of the Policy and other insurance as required by this
Agreement;
(h) agreements regarding, and other evidence respecting, the establishment
of the Lockbox and the Purchaser's Account, all in form and substance reasonably
satisfactory to Lender, including, without limitation, the Lockbox Agreement and
Blocked Account Agreement, to the extent applicable;
(i) payment of all fees owed to Lender hereunder;
(j) receipt of an agreement among Underwriter, Purchaser, and Lender in
form satisfactory to all such Persons concerning, among other things,
designation of Lender as the sole loss payee under the Policy, Underwriter's
agreement to notify Lender of certain events, Underwriter's acknowledgment that
the Policy is effective even though Purchaser is not the originator of the
44
insured Accounts Receivables, and that certain requirements under the Policy may
be met by Servicer or Seller rather than strictly by Purchaser; and
(k) a duly executed Settlement Report.
SECTION 8.02. Conditions to the Making of All Advances. Lender's obligation
to make any Advance is subject to the satisfaction of the following conditions:
(a) Lender shall have received originals or copies of all reports,
documents, and certifications which are, in accordance with the terms of the
Program Documents, to be delivered to Lender, including, without limitation,
Bills of Sale evidencing Purchaser's ownership of the Purchased Receivables,
IRPF Receivables Reports, Settlement Reports, reports from the Servicer and
Lockbox administrator, Purchase Notices, and a fully executed Advance Request
pertaining to such Advance;
(b) the Policy must be in full force and effect, with all premiums due and
payable thereon having been paid, and the Lender must be satisfied that the
Borrowing Base has been calculated in the manner agreed upon by Lender and
Purchaser;
(c) the Purchaser's Account and Lockbox shall continue to exist in full
force and effect and Lender shall continue to have a first priority perfected
security interest in each of them;
(d) immediately before and after the making of any Advance, there shall
exist no Default or Event of Default; and
(e) each of the representations and warranties of Purchaser contained in
Article 4 (other than, with respect to each Advance other than the initial
Advance, Section 4.05(b)) shall be true in all material respects on and as of
the date of such Advance.
The making of any Advance shall be deemed to be a representation and
warranty by Purchaser on the date of such Advance as to the complete
satisfaction of the conditions specified in paragraphs (a) through (d) of this
Section.
ARTICLE 9. MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address or telecopier number
set forth on the signature pages hereof or such other address or telecopier
number as such party may hereafter specify for the purpose by notice to each
other party. Each such notice, request, or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified in this Section and the confirmation is received;
(ii) if given by mail, seventy-two hours after such communication is deposited
in the mail with first class postage prepaid, addressed as aforesaid; or (iii)
if given by any other means, when delivered at the address specified in this
Section; provided that notices to Lender under Article 2 shall not be effective
until received.
45
SECTION 9.02. No Waivers. The failure of Purchaser to satisfy, or the
waiver by Lender of, any condition set forth in Article 8 shall not constitute a
waiver of any such condition with respect to any subsequent Advance, unless such
waiver is expressly agreed to in writing as required by Section 9.06. No failure
or delay by Lender in exercising any right, power, or privilege hereunder or
under any other Program Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes. Purchaser shall pay (a) all
reasonably documented out-of-pocket expenses (including, without limitation, all
reasonable attorney and paralegal fees and expenses of Lender, recording costs,
recording or intangible taxes, and title insurance, if any) of Lender reasonably
incurred in connection with this Agreement and the other Program Documents,
including, without limitation, (i) all reasonably documented costs, fees, and
taxes pertaining to the obtaining, preparation, or filing of all Lien searches
and Financing Statements (including, without limitation, any release thereof),
(ii) all reasonably documented costs and fees incurred in connection with the
preparation, negotiation, administration, and execution and delivery of this
Agreement and the other Program Documents, and any waiver or consent hereunder
or thereunder or any amendment hereof or thereof or any Default or alleged
Default hereunder or thereunder, (iii) reasonably documented sums paid or
incurred to pay for any amount or to take any action required of Purchaser
hereunder or under this Agreement that Purchaser fails to pay or take; (iv)
reasonably documented costs and expenses of preserving and protecting the
Collateral; and (b) during the existence of an Event of Default, all reasonably
documented costs and expenses (including reasonable attorney and paralegal fees
and expenses) paid or incurred to obtain payment of the Obligations, enforce the
Lien in the Collateral, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions hereof or of any Program Document or to defend
any claim made or threatened against Lender arising out of the transactions
contemplated hereby (including, without limitation, preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions hereof, or of any Program Document regarding costs
and expenses to be paid by Purchaser or any other Person. In the event Purchaser
becomes a debtor under the Bankruptcy Code, Lender's secured claim in such case
shall include interest on the Obligations and all fees, costs, and charges
provided for herein (including, without limitation, reasonable attorneys' fees
actually incurred), all to the extent allowed by the Bankruptcy Code. Purchaser
shall indemnify Lender against any transfer taxes, documentary taxes,
assessments, or charges made by any Governmental Body or Authority by reason of
the execution and delivery of this Agreement or the other Program Documents.
SECTION 9.04. Indemnification. Purchaser shall indemnify Lender and its
directors, officers, employees, and agents from, and hold each of them harmless
against, any and all Losses to which any of them may become subject, insofar as
such Losses arise out of or result from any actual or proposed use by Purchaser
of the proceeds of any Advance or breach by Purchaser of this Agreement or any
other Program Document or from any investigation, litigation (including, without
limitation, any actions taken by Lender to enforce this Agreement or any of the
other Program Documents), or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and
Purchaser shall reimburse such Persons upon demand and upon delivery of
reasonably detailed supporting documentation for any expenses (including,
46
without limitation, legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such Losses incurred by reason of
the gross negligence or willful misconduct of the Person (or agent thereof) to
be indemnified.
SECTION 9.05. Setoff; Sharing of Setoffs. Purchaser hereby grants to Lender
a lien to secure the payment and performance of the Obligations upon all
deposits or deposit accounts, of any kind, or any interest in any deposits or
deposit accounts thereof, now or hereafter pledged, mortgaged, transferred, or
assigned to Lender or otherwise in the possession or control of Lender for any
purpose for the account or benefit of Purchaser and including any balance of any
deposit account or of any credit of Purchaser with Lender, whether now existing
or hereafter established, hereby authorizing Lender at any time or times with or
without prior notice to apply such balances or any part thereof to such of the
Obligations owing by Purchaser to Lender then past due and in such amounts as
they may elect, and whether or not the Collateral or other collateral, if any,
or the responsibility of other Persons primarily, secondarily, or otherwise
liable may be deemed adequate. For the purposes of this paragraph, all
remittances and property shall be deemed to be in the possession of Lender as
soon as the same may be put in transit to it by mail or carrier or by other
bailee. Any other provision of this Agreement or any other Program Document to
the contrary notwithstanding, Lender agrees that it shall have no security
interest in any items of payment or other collections (or the funds thereof)
received on account of any Unsold Receivables which may be, from time to time,
received into the Lockbox or on deposit in the Purchaser's Account.
SECTION 9.06. Amendments and Waivers. No provision of this Agreement, the Note,
or any other Program Documents to which Lender is a party, may be amended,
restated, supplemented, or otherwise modified except by a writing signed by
Lender and all other parties thereto. Purchaser agrees that it will not amend,
restate, supplement, or otherwise modify any Program Document to which it is,
but Lender is not, a party, without Lender's prior written consent and that it
will not permit, allow, or consent to any amendment, restatement, supplement or
modification of the Standard Terms, the Policies and Procedures, any Underlying
Contract, or the Policy without the prior written consent of Lender.
SECTION 9.07. 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;
provided that Purchaser may not assign or otherwise transfer any of its rights
under this Agreement.
SECTION 9.08. Confidentiality.
(a) Each party hereto agrees to the following confidentiality terms (with
it being understood that, for purposes of this Section 9.08, the "Recipient"
shall mean the Person to whom any Confidential Information is provided, the
"Provider" means the Person who provides such Confidential Information to the
Recipient, and "Confidential Information" (as further defined below) means the
Confidential Information of the Provider):
(i) The Recipient will receive, maintain and hold the Confidential
Information in confidence and will use at least the same level of care
47
in safeguarding the Confidential Information that it uses with respect
to other confidential information in its possession but in no event
less than reasonable care under the circumstances;
(ii) The Recipient agrees to take all steps reasonably necessary and
appropriate to ensure that its employees or other persons to whom
disclosure is authorized hereunder treat the Confidential Information
as confidential and to ensure that such employees or other persons to
whom disclosure is authorized hereunder act in accordance with and
abide by the terms of this Section 9.08 regarding the Confidential
Information;
(iii) The Recipient will use the Confidential Information solely for
purposes of the Program and matters reasonably related thereto and may
disclose Confidential Information to the Underwriter; and
(iv) The Recipient will not disclose, reproduce, distribute, transmit,
reverse engineer, decompile, disassemble or transfer, directly or
indirectly, the Confidential Information, except as authorized in this
Section 9.08, as otherwise authorized in writing by the Provider in
conjunction with the Program, or unless otherwise agreed by the
Provider.
(b) The Recipient agrees that it shall not (without the prior written
consent of the Provider) disclose to any third party, except (i) its affiliates,
officers, employees and legal counsel on a confidential basis, (ii) as required
by law, regulation or other applicable judicial or governmental order, (iii) on
a limited basis as is reasonably necessary to prepare any claim or defense
arising from or in connection with the Program or the Program Documents, or (iv)
as expressly contemplated in the Program Documents: (A) the Confidential
Information or (B) the fact that Confidential Information with respect to the
Program has been disclosed or made available.
(c) As used herein, "Confidential Information" means all information
disclosed or provided by the Provider to the Recipient or its agents or
representatives in connection with the Program and all information regarding the
Provider's business, assets, affiliates, and customers, so long as such
information is marked confidential or otherwise of a type considered
confidential in the ordinary course of business, but does not include
information that: (i) is generally available to the public, (ii) hereafter,
through no breach of this Section 9.08 by the Recipient or its agents or
representatives, becomes generally available to the public, (iii) corresponds in
substance to information furnished to the Recipient hereafter on a
non-confidential basis by any third party having a legal right to do so, or (iv)
was developed by, or for, the Recipient independently of any disclosure or use
of the Confidential Information.
(d) At any time upon the written request of the Provider, the Confidential
Information, including all copies and embodiments thereof (including all copies
and/or any other form or reproduction and/or description thereof made by the
Recipient), in the possession of the Recipient, shall, at Recipient's option, be
promptly returned to the Provider or promptly destroyed, except that the portion
of the Confidential Information that may be found in analyses, compilations,
studies or other documents prepared by the Recipient or its agents, attorneys or
48
employees, oral or electronic Confidential Information, and any Confidential
Information not so requested and returned will be held by the Recipient and kept
subject to the terms of this Section 9.08 or destroyed to the extent practicable
and permitted by law. Whether the Confidential Information or other embodiments
of the Confidential Information is to be returned or destroyed pursuant to this
paragraph, such return or destruction shall, upon written request of the
Provider, be certified in writing by an authorized officer of the Recipient. The
return or destruction of the Confidential Information or other embodiments of
the Confidential Information shall not relieve the Recipient of its
confidentiality obligations contained in this Section 9.08.
(e) The Recipient acknowledges that the disclosure or unauthorized use of
all or any part of the Confidential Information disclosed could result in
irreparable harm to the Provider, for which there may be no adequate remedy at
law. In the event of an unauthorized disclosure of the Confidential Information
by the Recipient, or other unauthorized use thereof, the Provider shall be
entitled to seek equitable relief, including an injunction to restrain the
unauthorized disclosure or unauthorized use and to prevent further breach of
this Section 9.08. The foregoing remedy of injunctive relief shall not be the
sole and exclusive remedy available to the Provider, and the Provider shall be
entitled to damages occasioned by the unauthorized disclosure or use to the
extent determined by law.
(f) Neither this Section 9.08 nor any disclosure made hereunder by the
Provider shall be deemed, by implication or otherwise, to vest in the Recipient
any license or other ownership rights to or under any of the Confidential
Information, patents, copyrights, trademark rights, intellectual property,
know-how or trade secrets, or any other proprietary rights whatsoever.
(g) The confidentiality provisions set forth in this Section 9.08 shall (i)
survive the Program Termination Date and (ii) terminate upon the earliest to
occur of five (5) years after the Program Termination Date or such other date
mutually agreed upon by the parties hereto.
SECTION 9.09. New York Law. This Agreement and the Note shall be construed
in accordance with and governed by the law of the State of New York, without
regard for its conflicts of law principles (other than Section 5-1401 of the New
York General Obligations Laws).
SECTION 9.10. Severability. In case any one or more of the provisions
contained in this Agreement, the Note, or any of the other Program Documents to
which Purchaser and Lender are the only parties should be invalid, illegal, or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby and shall be enforced to the greatest extent
permitted by law.
SECTION 9.11. Interpretation. No provision of this Agreement or any of the
other Program Documents to which Purchaser and Lender are the only parties shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such provision.
49
SECTION 9.12. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. PURCHASER AND
LENDER EACH IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT
OR ANY OTHER PROGRAM DOCUMENT; (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL
JURISDICTION IN THE XXXXX XXXXXX XX XXX XXXXX XX XXX XXXX AND THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK FOR THE ENFORCEMENT OF THIS
AGREEMENT, THE NOTE, AND THE OTHER PROGRAM DOCUMENTS; (C) WAIVES ANY AND ALL
PERSONAL RIGHTS UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS
(INCLUDING, WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE
WITHIN THE STATE AND DISTRICT DESCRIBED ABOVE FOR THE PURPOSE OF LITIGATION TO
ENFORCE THIS AGREEMENT, THE NOTE, OR THE OTHER PROGRAM DOCUMENTS; AND (D) AGREES
THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN THE MANNER PRESCRIBED IN SECTION
9.01 FOR THE GIVING OF NOTICE TO PURCHASER. NOTHING HEREIN CONTAINED, HOWEVER,
SHALL PREVENT LENDER FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST
ANY SECURITY AND AGAINST PURCHASER PERSONALLY, AND AGAINST ANY ASSETS OF
PURCHASER, WITHIN ANY OTHER STATE OR JURISDICTION.
SECTION 9.13. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 9.14. Consequential Damages. NEITHER PARTY SHALL BE RESPONSIBLE OR
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY PUNITIVE, EXEMPLARY, OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS AGREEMENT, THE
OTHER PROGRAM DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
SECTION 9.15. Entire Agreement. This Agreement, together with the other
Program Documents, constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof, and supersede and replace any
agreement, written or oral, existing between or among the parties hereto in
respect of such subject matter.
[Signatures are contained on the following pages.]
50
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.
PURCHASER:
CONEXANT USA, LLC
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
Conexant USA, LLC
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxx,
Vice President and Treasurer
Telecopier No.: 000-000-0000
Confirmation No.: 000-000-0000
51
LENDER:
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Director
Lending Office:
Wachovia Bank, National Association
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx,
Structured Trade Finance
Telecopier No.: 000-000-0000
Confirmation No.: 000-000-0000
52
SCHEDULE 4.22--PURCHASER'S ACCOUNT INFORMATION
Account Number Related Lockbox Account Name State in Which
Number, if any, Account is Located
-------------- --------------- ----------------- ------------------
2000028322904 951802 Conexant USA, LLC New Jersey
EXHIBIT A FORM OF ADVANCE REQUEST
EXHIBIT B FORM OF BLOCKED ACCOUNT AGREEMENT
EXHIBIT C FORM OF SETTLEMENT REPORT
EXHIBIT D FORM OF PROMISSORY NOTE
EXHIBIT E FORM OF SUBORDINATED NOTE
EXHIBIT F FORM OF COUNSEL OPINION
EXHIBIT G FORM OF CLOSING CERTIFICATE
EXHIBIT H FORM OF OFFICER'S CERTIFICATE
EXHIBIT A
FORM OF ADVANCE REQUEST
Settlement Date: _____________________
Wachovia Bank, National Association.
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Re: Credit and Security Agreement (as amended, restated,
supplement, or otherwise modified from time to time, the
"Credit Agreement") dated as of November 29, 2005, by and
between Conexant USA, LLC ("Purchaser"), and Wachovia Bank,
National Association ("Lender").
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement. This Advance
Request is delivered to you pursuant to SECTION 2.02 of the Credit Agreement.
Purchaser hereby requests an Advance in the aggregate principal amount
of $[__________] to be made on [___________ __], [20__], which date is the
next-occurring Settlement Date, at the Interest Rate as determined by the Credit
Agreement [and to apply the proceeds of such Advance as follows:
[________________]].
Purchaser hereby represents and warrants that each of the conditions
set forth in Section 8.02 of the Credit Agreement is satisfied as of this date
and will continue to be satisfied as of the date of the Advance described above.
In addition, Purchaser represents and warrants that each of the representations
and warranties made in the Credit Agreement is true and correct in all material
respects as if made on this date.
Purchaser has caused this Advance Request to be executed and delivered
by its duly authorized Senior Officer as of [___________ __], [20__].
CONEXANT USA, LLC
By:____________________________________________
Title:_________________________________________
EXHIBIT B
DEPOSIT ACCOUNT CONTROL AGREEMENT
(No Notification)
This DEPOSIT ACCOUNT CONTROL AGREEMENT ("Agreement") is made and entered into as
of this ____ day of November 2005 by and among WACHOVIA BANK, NATIONAL
ASSOCIATION as depositary bank (the "Bank"), the Bank's depositor customer,
CONEXANT USA, LLC, a Delaware limited liability company (the "Company"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (the
"Secured Party").
Statement of Facts
The Company, as purchaser, and the Secured Party, as lender, are parties to a
Credit and Security Agreement dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement").
The Bank acknowledges that, as of the date hereof, it maintains in the name of
the Company the deposit account(s) identified on Exhibit A attached hereto and
made a part hereof (each an "Account" and, collectively, the "Accounts"). One or
more of the Accounts may be served by one or more lockboxes operated by the
Bank, which lockboxes (if any) also are listed on Exhibit A (each a "Lockbox"
and, collectively, the "Lockboxes"). The Account(s) and any Lockbox(es) are
governed by the terms and conditions of the Company's commercial deposit account
agreement published by the Bank from time to time and, with respect to any
Lockbox, also may be governed by a lockbox service description between the Bank
and the Company (collectively, with all applicable services descriptions and/or
agreements, the "Deposit Agreement").
The Company hereby confirms to the Bank that the Company has granted to the
Secured Party a security interest in the following (collectively, the "Account
Collateral"): (a) the Account(s), (b) the Lockbox(es) and (c) the Items
Collateral. The term "Items Collateral" means, collectively, all checks, drafts,
instruments, cash and other items at any time received in any Lockbox or for
deposit in any Account (subject to specific Lockbox instructions in effect for
processing items), wire transfers of funds, automated clearing house ("ACH")
entries, credits from merchant card transactions and other electronic funds
transfers or other funds deposited in, credited to, or held for deposit in or
credit to, any Account, other than to the extent any of the foregoing relate to
Unsold Receivables (as such term is defined in the Credit Agreement).
The parties desire to enter into this Agreement in order to set forth their
relative rights and duties with respect to the Account Collateral. In
consideration of the mutual covenants herein as well as other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
2. Control of the Accounts
(a) The Statement of Facts is incorporated herein by reference. The Bank
represents that it is a "bank". The Company and the Bank acknowledge that each
Account is a "deposit account". Each party to this Agreement acknowledges that
this Agreement is an "authenticated" record and that the arrangements
established under this Agreement constitute "control" of each Account.
Each of these terms is used in this Agreement as defined in Article 9 of
the Uniform Commercial Code as adopted by the State of New York (the "NY UCC").
(b) The Company represents and warrants to the Secured Party that Exhibit A
contains a complete and accurate list of all Accounts and Lockboxes maintained
by the Company with the Bank and subject to this Agreement. The Company
covenants for the benefit of the Secured Party that the Company shall not open
or maintain any deposit account with the Bank other than the Account(s). Nothing
in this Agreement shall impose upon the Bank any duty to monitor or assure the
Company's compliance with this Section 1(b).
(c) The Bank confirms that, as of the date of this Agreement, the Company and
the Bank have not entered into any agreement (other than the Deposit Agreement)
with any person pursuant to which the Bank is obligated to comply with
instructions from such person as to the disposition of funds in any Account or
of Items Collateral. During the term of this Agreement the Bank will not enter
into any agreement with any person other than the Secured Party pursuant to
which the Bank will be obligated to comply with instructions from such person as
to the disposition of funds in any Account or of Items Collateral.
(d) The Company authorizes and directs the Bank to comply with all instructions
given by the Secured Party in accordance with this Agreement and permissible
under the Deposit Agreement, including directing the disposition of funds in any
Account or as to any other matter relating to any Account or other Account
Collateral, without further consent by the Company.
(e) The Secured Party hereby authorizes and instructs the Bank to act solely
upon the instructions of the Secured Party concerning the Lockbox(es) and the
Account(s) including, but not limited to, instructions to: (i) direct
disposition of funds in the Account(s) (including, but not limited to,
dispositions to or for the benefit of the Secured Party and/or the Bank), (ii)
withdraw any amount from the Account(s), and (iii) otherwise exercise any
authority or power with respect to the Lockbox(es), the Account(s) and other
Account Collateral, which instructions shall be delivered to the Bank in
accordance with the provisions of Section 7 of this Agreement. The Secured
Party's right to give instructions to the Bank regarding any Account Collateral
also shall include the right to give "stop payment orders" to the Bank for any
item presented to it against any Account even if it results in dishonor of the
item presented against the Account.
(f) Effective as of the date of this Agreement, all Items Collateral received by
the Bank in a Lockbox (subject to specific Lockbox instructions for processing
the contents of mail received in the Lockbox) shall be deposited to the Account
listed opposite such Lockbox in Exhibit A; all other Items Collateral received
directly by the Bank for credit to an Account shall be credited to such Account.
The Bank shall not permit any of the officers, agents or other representatives
of the Company or any of its affiliates to direct the disposition of funds in
any Account or to otherwise exercise any authority or power with respect to any
Lockbox, Account or other Account Collateral.
(g) Federal Reserve Regulations and Operating Circulars, ACH or other clearing
house rules and other applicable law (including, without limitation, the Uniform
Commercial Code as adopted by the State in which the respective Account
identified on Exhibit A is located (hereinafter, the "Applicable UCC")) and the
Deposit Agreement shall also apply to the Secured Party's exercise of control
2
over the Account(s) and the Account Collateral and to the performance of
services hereunder by the Bank. Each of the Company and the Secured Party
authorizes and instructs the Bank to supply the Company's or the Secured Party's
endorsement, as appropriate, to any Items Collateral that the Bank shall receive
for deposit to any Account.
3. Statements and Other Information. If so requested of the Bank by the Secured
Party in writing, the Bank will send to the Secured Party (in a manner
consistent with the Bank's standard practices) at the Secured Party's address
specified in Section 7, copies of all Account statements and communications (but
not canceled checks) that the Bank is required to send to the Company under the
Deposit Agreement. The Bank also shall provide to each of the Company and the
Secured Party when requested (as a service under this Agreement and/or the
Deposit Agreement) copies of Account statements and other deposit account
information, including Account balances, by telephone and by computer
communication, to the extent practicable when requested by the Company or by the
Secured Party. The Company consents to the Bank's release of such Account
information to the Secured Party. The Bank's liability for its failure to comply
with this Section 2 shall not exceed its cost of providing such information.
4. Setoff; Returned Items and Charges
(a) The Bank will not exercise any security interest (except for the security
interest provided in Section 4-210, "Security Interest of Collecting Bank in
Items, Accompanying Documents and Proceeds", of the Applicable UCC), lien, right
of setoff, deduction, recoupment or banker's lien or any other interest in or
against any Account or any other Account Collateral, and the Bank hereby
subordinates to the Secured Party any such security interest (except for such
security interest provided in such Section 4-210 of the Applicable UCC), lien or
right which the Bank may have against any Account or other Account Collateral.
Notwithstanding the preceding sentence, the Secured Party and the Company agree
that the Bank at all times (including following commencement of any bankruptcy
or insolvency proceeding by or against the Company) may set off and charge
against any Account (regardless of any agreement by the Company to compensate
the Bank by means of balances in the Account) all of the following as permitted
by the Deposit Agreement (collectively, the "Permitted Debits"): (i) the face
amount of each Returned Item (hereinafter defined), (ii) usual and customary
service charges and fees, (iii) account maintenance fees, (iv) transfer fees,
(v) out-of-pocket fees and expenses (including attorneys' reasonable fees)
incurred by the Bank (including those in connection with the negotiation,
administration or enforcement of this Agreement), and (vi) adjustments or
corrections of posting or encoding errors; whether any Permitted Debit shall
have accrued or been incurred before or after the date of this Agreement.
"Returned Item" means any (i) Items Collateral deposited into or credited to an
Account before or after the date of this Agreement and returned unpaid or
otherwise uncollected or subject to an adjustment entry, whether for
insufficient funds or any other reason, and without regard to the timeliness of
such return or adjustment or the occurrence or timeliness of any other party's
notice of nonpayment or adjustment; (ii) Items Collateral subject to a claim
against the Bank for breach of transfer, presentment, encoding, retention or
other warranty under Federal Reserve Regulations or Operating Circulars, ACH or
other clearing house rules, or applicable law (including, without limitation,
Articles 3, 4 and 4A of the Applicable UCC); and (iii) demand for chargeback in
connection with a merchant card transaction.
3
(b) If (i) the Bank were unable to set off or charge any Permitted Debit against
any Account because of insufficient funds in the Account, or (ii) the Bank in
good faith were to believe that any legal process or applicable law prohibited
such setoff or charge against any Account, or (iii) the Account were closed,
then: (A) the Bank may charge such Permitted Debits to and set off same against
any other Account; and (B) if there were insufficient funds in the Account(s)
against which to charge or set off such Permitted Debits, then the Bank shall
demand (unless the Bank shall believe in good faith that any legal process or
applicable law prohibits such demand) that the Company pay, and the Company
shall pay, to the Bank promptly upon the Company's receipt of the Bank's written
demand therefor, the full amount of all unpaid Permitted Debits.
(c) If there were insufficient funds in the Account(s) against which the Bank
could charge or set off Permitted Debits and the Company shall have failed to
pay the Bank the full amount of unpaid Permitted Debits as described in
paragraph (b) of this Section 3, then the Bank may demand that the Secured Party
pay, and the Secured Party shall pay, to the Bank within five (5) business days
of the Secured Party's receipt of the Bank's written demand therefor, the full
amount of unpaid Permitted Debits; provided, however, as to unpaid Permitted
Debits that are service charges, fees or expenses, the Secured Party shall be
required to pay to the Bank only those service charges, fees or expenses
attributable to any Account that shall have been incurred in connection with any
Account on or after the date of this Agreement and on or before the date of
termination of this Agreement.
5. Exculpation of Bank
(a) At all times the Bank shall be entitled to rely upon any communication it
receives from the Secured Party or the Company in connection with this Agreement
or that the Bank shall believe in good faith to be a communication received from
the Secured Party or the Company in connection with this Agreement, and the Bank
shall have no obligation to investigate or verify the authenticity or
correctness of any such communication. The Bank shall have no liability to the
Company or the Secured Party for (i) honoring or following any instruction the
Bank shall receive from (or shall believe in good faith to be from) the Secured
Party in accordance with this Agreement and (ii) not honoring or following any
instruction the Bank shall receive from (or shall believe in good faith to be
from) the Company in accordance with this Agreement or the Deposit Agreement.
The Bank shall not be responsible for the validity, priority or enforceability
of the Secured Party's security interest in any Account Collateral, nor shall
the Bank be responsible for enforcement of any agreement between the Company and
the Secured Party.
(b) The Bank shall be responsible only for the actual loss that a court having
jurisdiction over the Account(s) shall have determined had been incurred by the
Company or the Secured Party and had been caused by the Bank's gross negligence
or willful misconduct in its performance of its obligations under this
Agreement. The Bank shall have no liability to any party for failure of, or
delay in, its performance under this Agreement resulting from any "act of God",
war or terrorism, fire, other catastrophe or force majeure, electrical or
computer or telecommunications failure, any event beyond the control of the
Bank, or fraud committed by any third party. Nothing in this Agreement shall
create any agency, fiduciary, joint venture or partnership relationship between
the Bank and the Company or between the Bank and the Secured Party. Except as
shall be specifically required under this Agreement or the Deposit Agreement or
applicable law, the Bank shall have no duty whatsoever to the Company in
4
connection with the subject matter of this Agreement. Except as shall be
specifically required under this Agreement or applicable law, the Bank shall
have no duty whatsoever to the Secured Party in connection with the subject
matter of this Agreement.
6. Indemnification
(a) The Company hereby indemnifies the Bank and holds it harmless against, and
shall reimburse the Bank for, any loss, damage or expense (including attorneys'
reasonable fees and expenses, court costs and other expenses) including, but not
limited to, (i) unpaid charges, fees, and Returned Items for which the Company
and/or the Secured Party originally received credit or remittance by the Bank,
and (ii) any loss, damage or expense the Bank shall incur as a result of (A)
entering into or acting pursuant to this Agreement, (B) honoring and following
any instruction the Bank may receive from (or shall believe in good faith to be
from) the Secured Party, and (C) not honoring or following any instruction it
shall receive from (or shall believe in good faith to be from) the Company in
accordance with this Agreement. The Company shall not be responsible for any
loss, damage, or expense that a court having jurisdiction shall have determined
had been caused by the Bank's gross negligence or willful misconduct in its
performance of its obligations under this Agreement.
(b) Without limiting in any way the Secured Party's obligation to pay or
reimburse the Bank as otherwise specified in this Agreement, the Secured Party
hereby indemnifies the Bank and holds it harmless against any loss, damage or
expense (including attorneys' reasonable fees and expenses, court costs and
other expenses) which the Bank shall incur as a result of honoring or following
any instruction it shall receive from (or shall believe in good faith to be
from) the Secured Party under this Agreement and not honoring or following any
instruction the Bank shall receive from (or shall believe in good faith to be
from) the Company in accordance with this Agreement. The Secured Party shall not
be responsible for any loss, damage, or expense that a court having jurisdiction
shall have determined had been caused by the Bank's gross negligence or willful
misconduct in its performance of its obligations under this Agreement.
(c) No party hereto shall be liable to any other party under this Agreement for
lost profits or special, indirect, exemplary, consequential or punitive damages,
even if such party shall have been advised of the possibility of such damages.
7. Third Party Claims; Insolvency of Company
(a) In the event that the Bank shall receive notice that any third party shall
have asserted an adverse claim by legal process against any Account or any sums
on deposit therein, any Lockbox or other Account Collateral, whether such claim
shall have arisen by tax lien, execution of judgment, statutory attachment,
garnishment, levy, claim of a trustee in bankruptcy, debtor-in-possession,
post-bankruptcy petition lender, court appointed receiver, or other judicial or
regulatory order or process (each, a "Claim"), the Bank may, in addition to
other remedies it possesses under the Deposit Agreement, this Agreement or at
law or in equity: (i) suspend disbursements from such Account without any
liability until the Bank shall have received an appropriate court order or other
assurances reasonably acceptable to the Bank in its sole discretion establishing
that funds may continue to be disbursed according to instructions then
applicable to such Account, and/or (ii) interplead such funds in such Account as
5
permitted by applicable law. The Bank's costs, expenses and attorneys'
reasonable fees incurred in connection with any such Claim are Permitted Debits
and shall be reimbursed to the Bank in accordance with the provisions of Section
3 above.
(b) If a bankruptcy or insolvency proceeding were commenced by or against the
Company, the Bank shall be entitled, without any liability, to refuse to permit
withdrawals or transfers from the Account(s) until the Bank shall have received
an appropriate court order or other assurances reasonably acceptable to the Bank
in its sole discretion establishing that (i) continued withdrawals or transfers
from the Account(s) or honoring or following any instruction from either the
Company or the Secured Party are authorized and shall not violate any law,
regulation, or order of any court and (ii) the Bank shall have received adequate
protection for its right to set off against or charge the Account(s) or
otherwise be reimbursed for all Permitted Debits.
8. Notice and Communications
(a) All communications given by any party to another as required or permitted
under this Agreement must be in writing, directed to the respective designated
officer ("Designated Officer") set forth under paragraph (c) of this Section 7,
and delivered to each recipient party at its address (or at such other address
and to such other Designated Officer as such party may designate in writing to
the other parties in accordance with this Section 7) either by U.S. Mail,
receipted delivery service or via telecopier facsimile transmission. All
communications given by the Secured Party to the Bank must be addressed and
delivered contemporaneously to both the Bank's Designated Officer and the Bank's
"with copy to" addressee at their respective addresses set forth below.
(b) Any communication made to the Bank under this Agreement shall be deemed
delivered to the Bank if delivered by: (i) U.S. Mail, on the date that such
communication shall have been delivered to the Bank's Designated Officer; (ii)
receipted delivery service, on the date and time that such communication shall
have been delivered to the Bank's Designated Officer and receipted by the
delivery service; or (iii) telecopier facsimile transmission, on the date and at
the time that such communication shall have been delivered to the Bank's
Designated Officer and receipt of such delivery shall have been acknowledged by
the recipient telecopier equipment. Notwithstanding the provisions of the
preceding sentence, any communication hereunder to the Bank that is an
instruction delivered to the Bank and made by (or believed by the Bank in good
faith to be made by) the Secured Party shall be deemed received by the Bank when
actually delivered to the Bank's Designated Officer if delivered before 2:00 PM
Eastern time on a banking day or, if such communication were delivered after
2:00 PM Eastern time on a banking day or delivered on a day that is not a
banking day, then such communication shall be deemed delivered to the Bank's
Designated Officer at the Bank's opening of its business on the next succeeding
banking day. A "banking day" means any day other than any Saturday or Sunday or
other day on which the Bank is authorized or required by law to close.
(c) Any instruction delivered to the Bank shall be implemented by the Bank by
the close of the Bank's business on the banking day that shall be two (2)
banking days after the banking day on which such instruction was actually
received by the Bank's Designated Officer.
6
Address for Company: Conexant USA, LLC
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn.: Xx. Xxxxx X. Xxxxx, Designated Officer
Fax: 000-000-0000
Address for Bank: Wachovia Bank, National Association
Mail Code NC 0817
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn.: TS Risk Management, Designated Officer
Fax: 000-000-0000
with copy to: Wachovia Bank, National Association
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxx
Fax: 000-000-0000
Address for Secured Party: Wachovia Bank, National Association
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn.: Xxxxxx Xxxxx, Designated Officer
Fax: 000-000-0000
9. Termination
(a) This Agreement may be terminated by the Secured Party at any time upon
receipt by the Bank of the Secured Party's written notice of termination issued
substantially in the form of Exhibit C attached hereto and made a part hereof.
This Agreement may be terminated by the Company only with the express prior
written consent of the Secured Party and, in that case, the Secured Party and
the Company shall jointly so notify the Bank in writing.
(b) This Agreement may be terminated by the Bank at any time on not less than
thirty (30) calendar days' prior written notice given to each of the Company and
the Secured Party.
(c) The Bank's rights to demand and receive reimbursement from the Company under
Section 3 above and the Company's indemnification of the Bank under Section 5
above shall survive termination of this Agreement. The Bank's right to demand
reimbursement from the Secured Party under Section 3 above shall survive
termination of this Agreement for a period of ninety (90) calendar days after
the date of termination of this Agreement. The Bank's right to demand
indemnification of the Bank from the Secured Party under Section 5 above shall
survive termination of this Agreement for a period of one hundred eighty (180)
calendar days after the date of termination of this Agreement.
(d) Upon termination of this Agreement, all funds thereafter on deposit or
deposited in the Accounts and all Items Collateral thereafter received by the
Bank shall be subject solely to the provisions of the Deposit Agreement between
the Company and the Bank.
7
10. Miscellaneous
(a) The Company shall not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Bank and the
Secured Party. The Secured Party shall not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of the
Bank. The Bank shall not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Secured Party and
the Company, except that the Bank may transfer its rights and obligations under
this Agreement to any direct or indirect depositary subsidiary of Wachovia
Corporation or, in the event of a merger or acquisition of the Bank, to the
Bank's successor depositary institution (which subsidiary or successor shall be
a "bank" as defined in Section 9-102 of the NY UCC).
(b) The law governing the perfection and priority of the Secured Party's
security interest in the Account Collateral shall be the law of the State of New
York, which State shall also be the "jurisdiction" of the Bank within the
meaning of Section 9-304 of the NY UCC. The Accounts, Items Collateral,
operation of the Accounts, and Deposit Agreement shall be governed by the
Applicable UCC, Federal Regulations and Operating Circulars, ACH or other
clearing house rules, and other applicable laws.
(c) This Agreement may be executed in any number of counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same Agreement. Delivery of an executed signature page counterpart to this
Agreement via telecopier facsimile transmission shall be effective as if it were
delivery of a manually delivered, original, executed counterpart thereof. This
Agreement can be modified or amended only by written agreement of all of the
parties hereto evidencing such modification or amendment.
(d) To the extent that any conflict may exist between the provisions of any
other agreement between the Company and the Bank and the provisions of this
Agreement, then this Agreement shall control. It is understood and agreed that
nothing in this Agreement shall give the Secured Party any benefit or legal or
equitable right, remedy or claim against the Bank under the Deposit Agreement.
[THE REMAINING SPACE ON THIS PAGE IS LEFT BLANK INTENTIONALLY.]
8
11. Waiver of Jury Trial. EXCEPT AS PROHIBITED BY APPLICABLE LAW, EACH PARTY
HERETO IRREVOCABLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
(INCLUDING ANY COUNTERCLAIM) OF ANY TYPE IN WHICH ANOTHER PARTY SHALL BE A PARTY
AS TO ALL MATTERS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT.
IN WITNESS WHEREOF, each of the parties by its respective duly authorized
officer has executed and delivered this Agreement as of the day and year first
written above.
BANK: WACHOVIA BANK, NATIONAL ASSOCIATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
COMPANY: CONEXANT USA, LLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
SECURED PARTY: WACHOVIA BANK, NATIONAL ASSOCIATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
9
EXHIBIT A
ACCOUNTS OF COMPANY
Account Number Related Lockbox Account Name State in Which
Number, if any, Account is Located
-------------- --------------- ----------------- ------------------
2000028322904 951802 Conexant USA, LLC New Jersey
10
EXHIBIT C
[To Be Issued on Letterhead of Secured Party]
________________200_
WACHOVIA BANK, NATIONAL ASSOCIATION
Mail Code NC 0817
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: TS Risk Management, Designated Officer
CONEXANT USA, LLC
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Vice President and Treasurer
NOTICE OF TERMINATION OF DEPOSIT ACCOUNT CONTROL AGREEMENT
Ladies and Gentlemen:
We refer you to the Deposit Account Control Agreement (No Notification)
among Conexant USA, LLC (the "Company"), you and us dated as of _____________
__, 200_ (the "Agreement"), a photocopy of which is attached hereto. Capitalized
terms used but not defined in this letter shall have the meanings given them in
the Agreement.
We hereby notify you that by this letter we are exercising our right
under Section 8(a) of the Agreement (subject to your rights as set forth in the
Agreement) to terminate the Agreement in accordance with its terms. Accordingly
the Agreement shall terminate at the close of the Bank's business [this day] [on
___________ __, 200_], subject to those undertakings that shall survive
termination of the Agreement. Upon termination of the Agreement, all funds
thereafter on deposit or deposited in the Account(s) and all Items Collateral
received by the Bank shall be subject solely to the provisions of the Deposit
Agreement between the Company and the Bank.
Very truly yours,
WACHOVIA BANK, NATIONAL ASSOCIATION
By___________________________________________
Name:________________________________________
Title:_______________________________________
Attachment
WachDACC(nn)/BPB/1204
11
EXHIBIT C
FORM OF SETTLEMENT REPORT
[TO BE PROVIDED BY WACHOVIA]
EXHIBIT D
PROMISSORY NOTE
November 29, 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx
$80,000,000.00
For value received, CONEXANT USA, LLC, a Delaware limited liability
company (the "Purchaser"), promises to pay to the order of WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association (the "Lender"), the
principal sum of EIGHTY MILLION DOLLARS AND NO/100 DOLLARS ($80,000,000.00) or
such lesser amount as shall equal the unpaid principal amount of all Advances
made by Lender to Purchaser pursuant to the Credit Agreement referred to below,
on the dates and in the amounts provided in the Credit Agreement. Purchaser
promises to pay interest on the unpaid principal amount of this Promissory Note
on the dates and at the rate or rates provided for in the Credit Agreement.
Interest on any overdue principal of and, to the extent permitted by law,
overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Wachovia Bank,
National Association, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000,
or such other address as may be specified from time to time pursuant to the
Credit Agreement.
All Advances made by Lender, the interest rates from time to time
applicable thereto, and all repayments of the principal thereof shall be
recorded by Lender and, prior to any transfer hereof, endorsed by Lender on the
schedule attached hereto, or on a continuation of such schedule attached to and
made a part hereof; provided that the failure of Lender to make any such
recordation or endorsement shall not affect the obligations of Purchaser
hereunder or under the Credit Agreement.
This Promissory Note is the "Note" referred to in the Credit and
Security Agreement of even date herewith by and between Purchaser and Lender (as
the same may be amended and modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional and
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof, as well as the obligation of Purchaser to pay all costs of
collection, including reasonable attorneys' fees, in the event this Promissory
Note is collected by law or through an attorney at law.
Purchaser hereby waives presentment, demand, protest, notice of demand
and nonpayment, and any other notice required by law relative hereto, except to
the extent as otherwise may be expressly provided for in the Credit Agreement.
[SIGNATURE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, Purchaser has caused this Promissory Note to be
duly executed, under seal, by its duly authorized officer as of the day and year
first above written.
CONEXANT USA, LLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
2
SCHEDULE OF ADVANCES
--------------------------------------------------------------------------------
----------------------------- --------------------------------------------------
DATE PRINCIPAL AMOUNT
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
----------------------------- --------------------------------------------------
3
EXHIBIT E
FORM OF SUBORDINATED NOTE
Philadelphia, Pennsylvania
November 29, 2005
$15,000,000.00
This SUBORDINATED PROMISSORY NOTE is the "Subordinated Note" described
in that certain Credit and Security Agreement dated as of the date hereof (as
the same may be amended, restated, supplemented, or otherwise modified from time
to time, the "Credit Agreement") by and between Wachovia Bank, National
Association (the "Lender"), and Conexant USA, LLC, a Delaware limited liability
company ("Purchaser"). Unless otherwise defined herein, all terms used in this
Subordinated Note shall have the meanings given such terms in the Credit
Agreement or the other Program Documents. Sections 1.02, 1.03, 1.04, and 1.05 of
the Credit Agreement are incorporated herein by this reference, mutatis mutandi.
For value received, Purchaser promises to pay to the order of Conexant
Systems, Inc., a Delaware corporation (the "Holder"), the principal sum of
FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) or such lesser amount as
shall equal the unpaid principal amount accrued and outstanding from time to
time hereunder, such amount representing the outstanding Deferred Price
component of the Purchase Price for those of Holder's Accounts Receivable
purchased by Purchaser from time to time under the Purchase Agreement and the
application of any cash collateral payable to Seller in accordance with Section
2.5 of the Purchase Agreement. The Purchaser agrees to pay interest on the
aggregate principal amount outstanding from time to time at an annual rate of
interest of six (6) percent. Such interest shall be calculated on the basis of
an assumed year of 360 days for the actual number of days elapsed. All payments
received on payment of this Subordinated Note shall first be applied to the
payment of accrued but unpaid interest and then to principal. Purchaser agrees
to make all payments of principal and interest as provided in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds c/o
Seller, 0000 XxxXxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, XX 00000 for the account of the
Holder, or at such other address as the Holder my designate in writing.
Purchaser hereby waives presentment, demand, protest, notice of demand
and nonpayment, and any other notice required by law relative hereto.
Holder hereby subordinates and postpones the payment and the time of
payment of all principal, interest and all other sums payable hereunder (the
"Subordinated Indebtedness") to and in favor of the payment and the time of
payment of all of the Senior Indebtedness. The term "Senior Indebtedness" shall
mean all principal, interest, fees, other costs and expenses, and the
"Obligations" (as defined in the Credit Agreement) owing by Purchaser to Lender
(as such Senior Indebtedness is evidenced by that certain Promissory Note dated
on or about even date herewith payable to the order of Lender). So long as all
or any part of the Senior Indebtedness remains unpaid, Holder shall not, without
the prior written consent of Lender, ask, demand, accelerate, declare a default
under, xxx for, set off, accept or receive any payment of all or any part of the
Subordinated Indebtedness; provided, however, that the Holder may receive
payment of principal and interest hereunder paid in accordance with the Credit
Agreement, so long as the making of such payments do not cause or result in a
default under the Senior Indebtedness. Holder and the undersigned agree in favor
of Lender that the Subordinated Indebtedness is not secured and shall not be
secured by collateral security in any way directly or indirectly, other than any
lien Holder may have in any Designated Receivables and their Related Rights and
Property for which Holder has paid the Settlement Price thereof and Holder
hereby subordinates any lien and the priority of any security interest, lien or
encumbrance and other interests of Holder in and to any collateral security to
the lien and security interest of Lender therein notwithstanding the time of
attachment of that interest (other than any lien Holder may have in any
Designated Receivables and their Related Rights and Property for which Holder
has paid the Settlement Price thereof).
Should any payment or distribution with respect to the Subordinated
Indebtedness not permitted by the provisions hereof be received by Holder prior
to the full payment and satisfaction of the Senior Indebtedness, Holder will
deliver the same to Lender in precisely the form received (except for the
endorsement or assignment of Holder where necessary), for application to the
Senior Indebtedness (whether due or not due and in such order and manner as
Lender may elect), and, until so delivered, the same shall be held in trust by
Holder as property of Lender. In the event of the failure of Holder to make any
such endorsement or assignment, Lender, or any of its officers or employees on
behalf of Lender, is hereby irrevocably authorized in its own name or in the
name of Holder to make the same, and is hereby appointed Holder's
attorney-in-fact for those purposes, that appointment being coupled with an
interest and irrevocable. Lender is a third party beneficiary of the terms of
this instrument.
Holder hereby consents that at any time and from time to time and with
or without consideration, Lender may, without further consent of or notice to
Holder and without in any manner affecting, impairing, lessening or releasing
any of the provisions hereof, renew, extend, amend, supplement, modify, change
the manner, time, place and terms of payment of, sell, exchange, release,
substitute, surrender, realize upon, modify, waive, grant indulgences with
respect to and otherwise deal with in any manner (a) all or any part of the
Senior Indebtedness, the Credit Agreement, and the other Program Documents; (b)
all or any part of any property at any time securing all or any part of the
Senior Indebtedness; and (c) any Person at any time primarily or secondarily
liable for all or any part of the Senior Indebtedness and/or any collateral
security therefor.
IN WITNESS WHEREOF, Purchaser has caused this Subordinated Promissory
Note to be duly executed, under seal, by its duly authorized officer as of the
day and year first above written.
CONEXANT USA, LLC, a Delaware limited
liability company
BY:______________________________________
TITLE:___________________________________
2
EXHIBIT F
OPINION OF
COUNSEL FOR PURCHASER, SERVICER, AND SELLER
1. True Sale and Non-Consolidation Opinion
2. General Corporate Opinions for
Purchaser, Seller, and Servicer
EXHIBIT G
CLOSING CERTIFICATE
Reference is made to the Credit and Security Agreement (the "Credit
Agreement") dated as of November 29, 2005, by and between Conexant USA, LLC
("Purchaser"), and Wachovia Bank, National Association, as "Lender." Capitalized
terms used herein have the meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 8.01(c) of the Credit Agreement, Xxxxx Xxxxx, the
duly authorized Vice President and Treasurer of Purchaser, hereby certifies to
Lender that (i) no Default has occurred and is continuing as of the date hereof,
and (ii) the representations and warranties contained in Article 4 of the Credit
Agreement are true in all material respects on and as of the date hereof.
Certified as of November 29, 2005.
CONEXANT USA, LLC
By:_____________________________________
Title:__________________________________
EXHIBIT H
[ONE EACH FOR SELLER, SERVICER, AND PURCHASER]
FORM OF OFFICER'S CERTIFICATE
The undersigned, [___________________], [___________________] of
[___________________], a [___________________] (the "Certifying Entity"), hereby
certifies that s/he has been duly elected, qualified and is acting in such
capacity and that, as such, s/he is familiar with the facts herein certified and
is duly authorized to certify the same, and hereby further certifies, in
connection with the Credit and Security Agreement dated as of November 29, 2005
(the "Credit Agreement") among Conexant USA, LLC, and Wachovia Bank, National
Association ("Lender"), that:
1. Attached hereto as Exhibit A is a complete and correct copy of the
Certificate of Incorporation of the Certifying Entity as in full force and
effect on the date hereof as certified by the Secretary of State of the State of
Delaware, the Certifying Entity's state of organization.
2. Attached hereto as Exhibit B is a complete and correct copy of the By-Laws of
the Certifying Person as in full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a complete and correct copy of the
resolutions duly adopted by the Board of Directors of the Certifying Entity on
[____________ ___], 2005, approving, and authorizing the execution and delivery
of, the Credit Agreement, the Note, the Purchase Agreement, the Servicing
Agreement, the Policy, and the other Program Documents (as such terms are
defined in the Credit Agreement) to which Purchaser is a party. Such resolutions
have not been repealed or amended and are in full force and effect, and no other
resolutions or consents have been adopted by such Board of Directors in
connection therewith.
4. [[___________________], who is [___________________] of the Certifying Entity
signed the [Credit Agreement, the Note, the Purchase Agreement, the Servicing
Agreement, the Policy, and the other Program Documents to which Purchaser is a
party], was duly elected, qualified and acting as such at the time s/he signed
the [Credit Agreement, the Notes and other Program Documents to which Purchaser
is a party], and his/her signature appearing on such Program Documents is
his/her genuine signature.]
Terms with their initial letters capitalized but not otherwise defined
herein shall have the meanings given such terms in the Credit Agreement and
other Program Documents.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand as of
November 29, 2005.
________________________________
Attach the following Exhibits:
Exhibit A--Certificate of Incorporation or Organization
Exhibit B--Bylaws or Operating Agreement
Exhibit C--Authorizing Resolutions
2
