EXHIBIT 10.27
EXECUTION COPY
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$20,000,000
CREDIT AGREEMENT
among
LEXAR MEDIA, INC.,
as Borrower,
The Several Lenders
From Time to Time Parties Hereto,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of June 30, 2000
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CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS....................................................... 1
1.1 Defined Terms........................................................ 1
1.2 Other Definitional Provisions........................................ 23
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................... 23
2.1 Revolving Commitments................................................ 23
2.2 Procedure for Revolving Loan Borrowing............................... 23
2.3 Swingline Commitment................................................. 24
2.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans...... 24
2.5 Commitment Fees, etc................................................. 26
2.6 Termination or Reduction of Revolving Commitments.................... 26
2.7 Optional Prepayments................................................. 26
2.8 Mandatory Prepayments and Revolving Commitment Reductions............ 27
2.9 Conversion and Continuation Options.................................. 28
2.10 Limitations on Eurodollar Tranches................................... 28
2.11 Interest Rates and Payment Dates..................................... 28
2.12 Computation of Interest and Fees..................................... 29
2.13 Inability to Determine Interest Rate................................. 29
2.14 Pro Rata Treatment and Payments...................................... 30
2.15 Requirements of Law.................................................. 31
2.16 Taxes................................................................ 32
2.17 Indemnity............................................................ 33
2.18 Change of Lending Office............................................. 34
2.19 Replacement of Lenders............................................... 34
SECTION 3. LETTERS OF CREDIT................................................. 35
3.1 L/C Commitment....................................................... 35
3.2 Procedure for Issuance of Letter of Credit........................... 35
3.3 Fees and Other Charges............................................... 35
3.4 L/C Participations................................................... 36
3.5 Reimbursement Obligation of the Borrower............................. 36
3.6 Obligations Absolute................................................. 37
3.7 Letter of Credit Payments............................................ 37
3.8 Applications......................................................... 37
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................... 37
4.1 Financial Condition.................................................. 37
4.2 No Change............................................................ 38
4.3 Corporate Existence; Compliance with Law............................. 38
4.4 Corporate Power; Authorization; Enforceable Obligations.............. 38
4.5 No Legal Bar......................................................... 39
4.6 Litigation........................................................... 39
4.7 No Default........................................................... 39
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TABLE OF CONTENTS
(continued)
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4.8 Ownership of Property; Liens.................................... 39
4.9 Intellectual Property........................................... 39
4.10 Taxes........................................................... 39
4.11 Federal Regulations............................................. 40
4.12 Labor Matters................................................... 40
4.13 ERISA........................................................... 40
4.14 Investment Company Act; Other Regulations....................... 40
4.15 Subsidiaries.................................................... 40
4.16 Use of Proceeds................................................. 41
4.17 Environmental Matters........................................... 41
4.18 Accuracy of Information, etc.................................... 42
4.19 Security Documents.............................................. 42
4.20 Solvency........................................................ 42
SECTION 5. CONDITIONS PRECEDENT........................................... 42
5.1 Conditions to Effectiveness..................................... 43
5.2 Conditions to Initial Extension of Credit....................... 44
5.3 Conditions to Each Extension of Credit.......................... 45
SECTION 6. AFFIRMATIVE COVENANTS.......................................... 45
6.1 Financial Statements............................................ 45
6.2 Certificates; Other Information................................. 46
6.3 Payment of Obligations.......................................... 47
6.4 Maintenance of Existence; Compliance............................ 47
6.5 Maintenance of Property; Insurance.............................. 47
6.6 Inspection of Property; Books and Records; Discussions.......... 48
6.7 Notices......................................................... 48
6.8 Environmental Laws.............................................. 48
6.9 Additional Collateral, etc...................................... 49
6.10 Evaluations and Appraisals...................................... 50
6.11 Cash Management System.......................................... 50
6.12 Subordination and Consents...................................... 50
6.13 Fees and Expenses............................................... 50
SECTION 7. NEGATIVE COVENANTS............................................. 51
7.1 Financial Condition Covenants................................... 51
7.2 Indebtedness.................................................... 52
7.3 Liens........................................................... 53
7.4 Fundamental Changes............................................. 54
7.5 Disposition of Property......................................... 54
7.6 Restricted Payments............................................. 54
7.7 Investments..................................................... 55
7.8 Optional Payments and Modifications of Certain Debt Instruments. 55
7.9 Transactions with Affiliates.................................... 55
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TABLE OF CONTENTS
(continued)
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7.10 Sales and Leasebacks............................................ 56
7.11 Changes in Fiscal Periods....................................... 56
7.12 Negative Pledge Clauses......................................... 56
7.13 Lines of Business............................................... 56
SECTION 8. EVENTS OF DEFAULT............................................. 56
SECTION 9. THE ADMINISTRATIVE AGENT...................................... 59
9.1 Appointment..................................................... 59
9.2 Delegation of Duties............................................ 59
9.3 Exculpatory Provisions.......................................... 60
9.4 Reliance by Administrative Agent................................ 60
9.5 Notice of Default............................................... 60
9.6 Non-Reliance on the Administrative Agent and Other Lenders...... 61
9.7 Indemnification................................................. 61
9.8 Administrative Agent in Its Individual Capacity................. 62
9.9 Successor Administrative Agent.................................. 62
SECTION 10. MISCELLANEOUS................................................. 62
10.1 Amendments and Waivers.......................................... 62
10.2 Notices......................................................... 63
10.3 No Waiver; Cumulative Remedies.................................. 64
10.4 Survival of Representations and Warranties...................... 64
10.5 Payment of Expenses and Taxes................................... 64
10.6 Successors and Assigns; Participations and Assignments.......... 65
10.7 Adjustments; Set-off............................................ 68
10.8 Counterparts.................................................... 68
10.9 Severability.................................................... 69
10.10 Integration..................................................... 69
10.11 GOVERNING LAW................................................... 69
10.12 Submission To Jurisdiction; Waivers............................. 69
10.13 Acknowledgements................................................ 70
10.14 Releases of Guarantees and Liens................................ 70
10.15 Confidentiality................................................. 70
10.16 WAIVERS OF JURY TRIAL........................................... 71
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CREDIT AGREEMENT, dated as of June 30, 2000, among LEXAR MEDIA, INC., a
California corporation (the "Borrower"), THE CHASE MANHATTAN BANK, as
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Administrative Agent and the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders").
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The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this
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Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
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next 1/16 of 1.0%) equal to the greatest of (a) the Prime Rate in effect on such
day, (b) the Base CD Rate in effect on such day plus 1.0% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1.0%. For purposes
hereof: "Prime Rate" shall mean the rate of interest per annum publicly
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announced from time to time by the Reference Lender as its prime rate in effect
at its principal office in New York City (the Prime Rate not being intended to
be the lowest rate of interest charged by the Reference Lender in connection
with extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a)
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the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the C/D
Reserve Percentage and (b) the C/D Assessment Rate; and "Three-Month Secondary
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CD Rate" shall mean, for any day, the secondary market rate for three-month
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certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Reference Lender from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based upon
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the ABR.
"Access": Access Technology Partners, L.P.
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"Account Debtor": as to any Account of any Person, any other Person who is
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or may become obligated to such Person under, with respect to, or on account of,
such Account.
"Accounts": as to any Person, any right to payment for goods sold or leased
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or for services rendered by such Person.
"Administrative Agent": Chase, together with its affiliates, as the
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arranger of the Revolving Commitments and as the administrative agent for the
Lenders under this Agreement and the other Loan Documents, together with any of
its successors.
"Affiliate": as to any Person, any other Person that, directly or
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indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Aggregate Exposure": with respect to any Lender at any time, an amount
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equal to the amount of such Lender's Revolving Commitment then in effect or, if
the Revolving Commitments have been terminated, the amount of such Lender's
Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any time,
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the ratio (expressed as a percentage) of such Lender's Aggregate Exposure at
such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented or otherwise
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modified from time to time.
"Amendment to Investors Rights Agreement": the Amendment No. 4 to the
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Investors Rights Agreement, dated as of June 22, 2000, which amends that certain
Investors Rights Agreement, dated as of September 28, 1999, between the Borrower
and certain shareholders of the Borrower listed therein.
"Applicable Margin": for each Type of Loan, the rate per annum set forth
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under the relevant column heading below:
ABR Loans Eurodollar Loans
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Revolving Loans and
Swingline Loans 2.0% 3.0%
"Application": an application, in such form as the Issuing Lender may
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specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Fund": with respect to any Lender that is a fund that invests in
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commercial loans, any other fund that invests in commercial loans and is managed
or advised by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"Asset Sale": any Disposition of property or series of related Dispositions
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of property (excluding any such Disposition permitted by clause (a), (b), (c),
(d) or (e) of Section 7.5) that yields gross proceeds to the Borrower or any of
its Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of $100,000.
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"Assignee": as defined in Section 10.6(c).
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"Assignment and Acceptance": an Assignment and Acceptance, substantially in
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the form of Exhibit D.
"Assignor": as defined in Section 10.6(c).
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"Available Revolving Commitment": as to any Revolving Lender at any time,
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an amount equal to the excess, if any, of (a) such Lender's Revolving Commitment
then in effect over (b) such Lender's Revolving Extensions of Credit then
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outstanding; provided, that in calculating any Lender's Revolving Extensions of
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Credit for the purpose of determining such Lender's Available Revolving
Commitment pursuant to Section 2.5(a), the aggregate principal amount of
Swingline Loans then outstanding shall be deemed to be zero.
"Benefitted Lender": as defined in Section 10.7(a).
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"Board": the Board of Governors of the Federal Reserve System of the United
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States (or any successor).
"Borrower": as defined in the preamble hereto.
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"Borrowing Base": on any date of determination thereof, an amount equal to
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the sum (without duplication) of (a) 85% of (i) Eligible Accounts less (ii) a
Dilution Reserve, (b) 60% of (i) Eligible Inventory that consists of raw
materials and finished goods less (ii) Inventory Reserves, and (c) 30% of (i)
Eligible Inventory that consists of work-in-process less (ii) Inventory
Reserves; provided that (A) the aggregate amount of available work-in-process
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shall not exceed 15% of the sum of the availability calculated under clauses (b)
and (c) above, and (B) the sum of the availability calculated under clauses (b)
and (c) above (after giving effect to clause (A) above) shall not exceed 60% of
the total availability calculated under the Borrowing Base; and provided,
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further, that each of the amounts calculated under clauses (b) and (c) above
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shall be reduced (1) (unless an applicable waiver has been received in form and
substance satisfactory to the Administrative Agent) by an amount equal to the
amount owed by the Borrower to outside contractors or vendors or in the form of
warehousing fees to the extent of the value of Eligible Inventory located on
such premises or possessed by such outside contractors or vendors, but in no
event, shall such amount exceed the amount calculated in clauses (b) and (c)
above, respectively, and (2) by a reserve amount equal to 3 months' rent
payments due on the Borrower's headquarters or warehousing facilities unless an
applicable waiver has been received. The Borrowing Base shall be determined by
the Administrative Agent in its sole discretion exercising reasonable judgment
from time to time by reference to the most recent monthly Borrowing Base
Certificate delivered to the Administrative Agent pursuant to Section 5.3(c) or
6.2(e). Standards used to determine the Borrowing Base may be adjusted and
revised from time to time by the Administrative Agent in its sole discretion
with any changes in such standards to be effective within five days after notice
to the Borrower to the extent that the Administrative Agent determines in good
faith that there have been changes in any material respect to the following
items, but not limited to: (a) accounts receivable and inventory turnover, (b)
product sell through to retail distributors and customers, (c) product margins,
(d) customer credit quality, (e) customer sales terms and selling arrangements,
(f) the nature, quality or mix of
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accounts receivable or inventory, or (g) any external events, conditions or
contingencies considered for the purposes of determining the Borrowing Base.
Unless a Default or Event of Default has occurred and is continuing, the
Administrative Agent shall give five days prior written notice to the Borrower
of any change in the standards of eligibility set forth above, except for
changes relating to the credit or investment grade standing of the Account
Debtor or obligor on any Account.
"Borrowing Base Certificate": a certificate, substantially in the form of
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Exhibit F, or in such other form as the Administrative Agent shall from time to
time request.
"Borrowing Date": any Business Day specified by the Borrower as a date on
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which the Borrower requests the relevant Lenders to make Loans hereunder.
"Bridge Financing": the Note and Warrant Purchase Agreement, dated as of
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May 19, 2000, among the Borrower and the Investors (as defined therein), as
amended, supplemented or otherwise modified from time to time.
"Business": as defined in Section 4.17(b).
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"Business Day": a day other than a Saturday, Sunday or other day on which
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commercial banks in New York City are authorized or required by law to close,
provided, that with respect to notices and determinations in connection with,
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and payments of principal and interest on, Eurodollar Loans, such day is also a
day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capital Expenditures": for any period, with respect to any Person, the
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aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of such
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Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"Capitalized Software Expenses": for any period, with respect to any
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Person, the aggregate of all software development expenses incurred by such
Person and its Subsidiaries that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Stock": any and all shares, interests, participations or other
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equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
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"Cash Equivalents": (a) marketable direct obligations issued by, or
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unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Xxxxx'x
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Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
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nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"C/D Assessment Rate": for any day as applied to any ABR Loan, the annual
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assessment rate in effect on such day that is payable by a member of the Bank
Insurance Fund maintained by the Federal Deposit Insurance Corporation (the
"FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a
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comparable successor assessment risk classification) within the meaning of 12
C.F.R. (S) 327.4 (or any successor provision) to the FDIC (or any successor) for
the FDIC's (or such successor's) insuring time deposits at offices of such
institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan, that
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percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depository Institution (as defined in Regulation D of the Board as in effect
from time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.
"Chase": The Chase Manhattan Bank.
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"Closing Date": the date on which the conditions precedent set forth in
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Section 5.1 shall have been satisfied or, in the Administrative Agent's
discretion, waived until the Initial Funding Date, which date is June 30, 2000.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
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"Collateral": all property of the Loan Parties, now owned or hereafter
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acquired, upon which a Lien is purported to be created by any Security Document.
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"Commitment Fee Rate": 0.75% per annum.
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"Commonly Controlled Entity": an entity, whether or not incorporated, that
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is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a Responsible
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Officer substantially in the form of Exhibit B.
"Conduit Lender": any special purpose corporation organized and
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administered by any Lender for the purpose of making Loans hereunder otherwise
required to be made by such Lender and designated by such Lender in a written
instrument, subject to the consent of the Administrative Agent and the Borrower
(which consent shall not be unreasonably withheld); provided, that the
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designation by any Lender of a Conduit Lender shall not relieve the designating
Lender of any of its obligations to fund a Loan under this Agreement if, for any
reason, its Conduit Lender fails to fund any such Loan, and the designating
Lender (and not the Conduit Lender) shall have the sole right and responsibility
to deliver all consents and waivers required or requested under this Agreement
with respect to its Conduit Lender, and provided, further, that no Conduit
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Lender shall (a) be entitled to receive any greater amount pursuant to Section
2.15, 2.16, 2.17 or 10.5 than the designating Lender would have been entitled to
receive in respect of the extensions of credit made by such Conduit Lender or
(b) be deemed to have any Revolving Commitment hereunder.
"Consolidated Debt to Capital Ratio": at any date, the ratio of (i)
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Consolidated Total Debt to (ii) the sum of Consolidated Total Debt, Consolidated
Net Worth and any preferred or preference stock of the Borrower.
"Consolidated EBITDA": for any period, Consolidated Net Income for such
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period plus, without duplication and to the extent reflected as a charge in the
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statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) interest expense, amortization or writeoff of debt discount and
debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any non-recurring non-cash
expenses incurred in connection with the Warrant Documents, (f) any non-
recurring non-cash imputed interest charges associated with any warrants to
purchase the Borrower's common stock, (g) any extraordinary, unusual or non-
recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, non-cash losses on sales of assets outside of the ordinary
course of business), provided, that the amounts referred to in this clause (g)
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shall not, in the aggregate, exceed $1,000,000 for any fiscal year of the
Borrower, and (h) any other non-cash charges, and minus, to the extent included
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in the statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business) and (c) any other non-cash
income, all as determined on a consolidated basis.
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"Consolidated Net Income": for any period, the consolidated net income (or
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loss) of the Borrower and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP; provided that there shall be excluded (a) the income
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(or deficit) of any Person accrued prior to the date it becomes a Subsidiary of
the Borrower or is merged into or consolidated with the Borrower or any of its
Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary
of the Borrower) in which the Borrower or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by the Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.
"Consolidated Net Worth": at any date, all amounts that would, in
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conformity with GAAP, be included on a consolidated balance sheet of the
Borrower and its Subsidiaries under stockholders' equity at such date.
"Consolidated Revenue": for any period, the consolidated revenue of the
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Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Total Debt": at any date, the aggregate principal amount of
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all Indebtedness of the Borrower and its Subsidiaries at such date, determined
on a consolidated basis in accordance with GAAP.
"Continuing Directors": the directors of the Borrower on the Closing Date,
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after giving effect to the transactions contemplated hereby, and each other
director, if, in each case, such other director's nomination for election to the
board of directors of the Borrower is recommended by a majority of the then
Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any security
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issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"Default": any of the events specified in Section 8, whether or not any
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requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Dilution Factor": with respect to any period, (a) the aggregate amount of
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all deductions, discounts, returns, net-out, set-off, other negative
adjustments, credit memos and write-offs with respect to Accounts during such
period, divided by (b) the aggregate gross sales that generated Accounts during
such period.
"Dilution Reserve": as of any date, (a) the Dilution Factor for the
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immediately preceding six-month period (ending as of the date of the calculation
of the Borrowing Base then in effect, which date is set forth on the applicable
Borrowing Base Certificate) multiplied by (b) the Eligible Accounts on such
date.
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"Disposition": with respect to any property, any sale, lease, sale and
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leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" and "$": dollars in lawful currency of the United States.
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"Domestic Subsidiary": any Subsidiary of the Borrower organized under the
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laws of any jurisdiction within the United States.
"Eligible Accounts": as to any Person, at a particular date, the total
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outstanding balance of Accounts of such Person originating from a sale by the
Borrower (and not from a Foreign Subsidiary):
(a) which have been invoiced and which are bona fide, valid and
legally enforceable obligations of the Account Debtor in respect thereof
and arise from the actual sale and delivery of goods or rendition and
acceptance of services in the ordinary course of business to such Account
Debtor;
(b) which are owing from a single Account Debtor (other than Account
Debtors approved by the Administrative Agent and the Required Lenders, in
their sole and absolute discretion); provided that if such Accounts, in the
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aggregate, exceed 15% (or, in the case of an Account Debtor that has long-
term debt securities, which are unsecured and are not subject to any credit
support, rated BBB- or better by S&P or Baa3 or better by Xxxxx'x, 25%) of
the total amount of all Accounts of the Borrower less foreign affiliate
Accounts at the time of any determination, such Accounts shall be deemed
not to be Eligible Accounts to the extent of such excess, it being
understood that the percentage limitation set forth in this clause (b) must
be satisfied when applied to the amount of all Accounts of the Borrower
less foreign affiliate Accounts after excluding all Accounts required to be
excluded by such percentage limitation;
(c) which do not contravene, or arise from sales which contravene,
any Requirement of Law applicable thereto;
(d) which are not subject to any offset, net-out, set-off, deduction
(including for coop advertising liabilities), dispute, counterclaim or
defense, and with respect to which no return, rejection or repossession has
occurred;
(e) which do not represent a consignment sale, guaranteed sale, sale
or return or other similar arrangement;
(f) which are not Accounts relating to sales to employees or
representatives;
(g) which are reduced by any amounts then owing by such Person to the
Account Debtor or obligor in respect of such Accounts, including, without
limitation, any amounts credited or charged back to such Accounts;
(h) which have been invoiced by such Person and which have not been
past due for more than 60 days after the due date of the invoice related to
such Accounts and
8
which have not been written-off the books of the Borrower or otherwise been
designated as uncollectible; provided that in determining the aggregate
--------
amount of Accounts from the same Account Debtor and any Affiliate thereof
that are unpaid more than 60 days from the due date of the invoice pursuant
to this clause (h), there shall be excluded the amount of any net credit
balances due and owing to the Account Debtor in respect of Accounts with
invoice dates more than 60 days from the due date;
(i) with respect to which, the Administrative Agent is, and continues
to be, reasonably satisfied with the credit standing of the Account Debtor
or obligor;
(j) which are not owed by an Account Debtor or obligor which is an
Affiliate or Subsidiary of such Person;
(k) which are not owed by an Account Debtor or obligor which has
taken any of the actions or suffered any of the events of the kind
described in Section 8(f), except to the extent any such Accounts are
entitled to an administrative expense priority under the Bankruptcy Code;
(l) with respect to which more than 50% of the aggregate amount of
Accounts owed by any Account Debtor or obligor, together with its
Affiliates, to such Person are not more than 60 days past due after the
date of the invoice related to such Accounts;
(m) which are (i) with respect to Accounts owed by any Account Debtor
located in the United States, denominated in Dollars and payable only in
Dollars and only in the United States and (ii) with respect to Accounts
owed by any Account Debtor located in the United Kingdom, Japan or Canada,
denominated in Dollars, Pound Sterling, Yen or Canadian Dollars (and
translated into Dollars) and reduced by an amount equal to 50% of the total
outstanding balance thereof;
(n) which are owned solely by such Person free and clear of all Liens
or other rights or claims of any other Person (except in favor of the
Administrative Agent for the benefit of the Lenders);
(o) which (except for Accounts described in clause (s) of this
definition) are subject to a perfected first priority security interest in
favor of the Administrative Agent for the benefit of the Lenders pursuant
to the Guarantee and Collateral Agreement;
(p) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority, required to be obtained, effected or given in connection with
the execution, delivery and performance of such Accounts have been duly
obtained, effected or given, and are in full force and effect;
(q) which are not Accounts owed by any Governmental Authority other
than such Accounts as to which all required filings to perfect the security
interest in such Accounts in favor of the Administrative Agent pursuant to
the Guarantee and Collateral Agreement have been made, including, without
limitation, any filings and/or assignments required under the Assignment of
Claims Act of 1940, as amended;
9
(r) which constitute "accounts" within the meaning of the Uniform
Commercial Code of the state in which the chief executive office of such
Person is located; and
(s) which conform in all other respects to the representations and
warranties contained in the Guarantee and Collateral Agreement;
provided that in determining the amount to be included as an Eligible Account,
--------
the face amount of Accounts shall be reduced by, without duplication, (i) the
amount of all accrued and actual returns, discounts, claims, credits or credits
pending charges, price adjustments or other allowances, (ii) the aggregate
amount of all cash received in respect of Accounts but not yet applied by the
Borrower to reduce the amount of Accounts and (iii) the aggregate amount of all
cash received in respect of Accounts for customer deposits or other similar
advances made by or for the benefit of the Account Debtor.
"Eligible Inventory": all raw materials, finished goods and work-in-process
------------------
Inventory of the Borrower or any of its Domestic Subsidiaries valued at the
lower of (i) cost (less any appropriate revaluation reserves or reserve for
obsolete Inventory and any profits accrued in connection with transfers of
Inventory between any locations) or (ii) fair market value determined in
accordance with the standard cost method of accounting, provided that, in the
--------
event variances under the standard cost method (a) are expensed, favorable
production material, production manufacturing, purchase price or other variances
that result when standard costs are greater than actual costs shall be deducted
from Eligible Inventory value to the extent that the favorable variances are in
excess of 3% of the gross inventory value, and (b) are capitalized, favorable
variances shall be deducted and unfavorable variances shall be included only to
the extent they do not exceed 3% of the gross inventory value, and amounts in
excess of 3% shall not be added to Eligible Inventory value. Unless otherwise
approved from time to time in writing by the Administrative Agent, no item of
Inventory shall be Eligible Inventory if:
(a) such item of Inventory is not assignable or a first priority
security interest in such item of Inventory in favor of the Administrative
Agent for the benefit of the Lenders has not been obtained and fully
perfected by filing UCC financing statements against the Borrower or the
relevant Domestic Subsidiary, as the case may be;
(b) such item of Inventory is subject to any Lien whatsoever, other
than Liens permitted by Section 7.3;
(c) such item of Inventory (i) is obsolete or damaged or not in good
condition (to the extent not provided for by reserves as described above)
or (ii) does not meet all material standards imposed by any Governmental
Authority having regulatory authority over such item of Inventory, its use
or its sale;
(d) such item of Inventory is not currently either readily usable or
salable in the normal course of the business of the Borrower or the
relevant Domestic Subsidiary, as the case may be (to the extent not
provided for by reserves as described above);
(e) any event shall have occurred or any condition shall exist with
respect to such item of Inventory which would result in such item being a
discontinued item or
10
substantially impede the ability of the Borrower or the relevant Domestic
Subsidiary, as the case may be, to continue to use or sell such item of
Inventory in the normal course of business;
(f) any claim disputing the title of the Borrower or the relevant
Domestic Subsidiary, as the case may be, to, or right to possession of or
dominion over, such item of Inventory shall have been asserted;
(g) any representation or warranty contained in this Agreement or in
any other Loan Document applicable to either Inventory in general or to any
such specific item of Inventory has been breached with respect to such
Inventory;
(h) the Borrower or the relevant Domestic Subsidiary, as the case may
be, does not have good and marketable title as sole owner of such item of
Inventory;
(i) except for Inventory located at an outside contractor or vendor
acceptable to the Administrative Agent and subject to the appropriate
deduction provided for in the definition of "Borrowing Base," such item of
Inventory is held on consignment, is owned by the Borrower or any of its
Domestic Subsidiaries and has been consigned to other Persons, or is in
transit to or from, or held or stored by, third parties except for
Inventory in transit between Domestic Subsidiaries of the Borrower;
(j) such item of Inventory is work-in-process the related work order
for which has been issued for more than 30 days; provided that,
--------
notwithstanding anything to the contrary, only 50% of such Inventory shall
be deemed not to be "Eligible Inventory" for purposes of this definition;
(k) such item of Inventory is located outside of the United States;
(l) such item of Inventory is evidenced by an Account;
(m) such item of Inventory is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreements with any third party
from whom the Borrower or any of its Domestic Subsidiaries has received
notice of a dispute in respect of any such agreement that adversely effects
the marketability of such item of Inventory;
(n) such item of Inventory consists of packing, packaging and/or
shipping supplies or materials; or
(o) such item of Inventory has been otherwise determined by the
Administrative Agent (after consultation with the Borrower), exercising its
commercially reasonable discretion, to be unacceptable because the
Administrative Agent believes that such item of Inventory is not readily
salable under the customary terms on which it is usually sold.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or
11
imposing liability or standards of conduct concerning protection of human health
or the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar
---------------------------------
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Dow Xxxxx Markets screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Dow Xxxxx Markets screen (or otherwise on
such screen), the "Eurodollar Base Rate" shall be determined by reference to
such other comparable publicly available service for displaying eurodollar rates
as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is based
----------------
upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
---------------
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1.0%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans the then
------------------
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been
made on the same day).
"Event of Default": any of the events specified in Section 8, provided that
---------------- --------
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of which
---------------------------
either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such
12
Subsidiary of the Obligations, would, in the good faith judgment of the
Borrower, result in adverse tax consequences to the Borrower, which as of the
Closing Date shall include Lexar Media K.K. and Lexar Media (Europe) Limited.
"Federal Funds Effective Rate": for any day, the weighted average of the
----------------------------
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a Domestic
------------------
Subsidiary.
"Funding Office": the office of the Administrative Agent specified in
--------------
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States as in
----
effect from time to time, except that for purposes of Section 7.1, GAAP shall be
determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 4.1. In the event that any
"Accounting Change" (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or terms
in this Agreement, then the Borrower and the Administrative Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Changes had not occurred. "Accounting
Changes" refers to changes in accounting principles required by the promulgation
of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
"Governmental Authority": any nation or government, any state or other
----------------------
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
----------------------------------
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any
-------------------- -------------------
obligation of (a) the guaranteeing person or (b) another Person (including any
bank under any letter of credit)
13
to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
-------------------
"primary obligor") in any manner, whether directly or indirectly, including any
---------------
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
-------- -------
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Hedge Agreements": all interest rate swaps, caps or collar agreements or
----------------
similar arrangements dealing with interest rates or currency exchange rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies.
"Indebtedness": of any Person at any date, without duplication, (a) all
------------
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations
of such Person in respect of obligations of the kind referred to in clauses (a)
through (g) above, (i) all obligations of the kind referred to in clauses (a)
through (h) above secured by (or for which the holder of such obligations has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation, and
(j) for the purposes of Sections 7.2 and 8(e) only, all obligations of such
Person in respect of Hedge Agreements. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest
14
in or other relationship with such entity, except to the extent the terms of
such Indebtedness expressly provide that such Person is not liable therefor.
"Initial Funding Date": the date on which the conditions precedent set
--------------------
forth in Section 5.2 shall have been satisfied.
"Insolvency": with respect to any Multiemployer Plan, the condition that
----------
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": the collective reference to all rights, priorities
---------------------
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses,
domain names, technology, know-how and processes, and all rights to xxx at law
or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Intercreditor Agreement": the Intercreditor Agreement, dated as of June
-----------------------
30, 2000, between Chase and Access, as amended, supplemented or otherwise
modified from time to time.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
---------------------
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period and
(d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any
Swingline Loan), the date of any repayment or prepayment made in respect
thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the period
---------------
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing provisions
--------
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
15
(ii) the Borrower may not select an Interest Period that would
extend beyond the Revolving Termination Date;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan.
"Inventory": shall have the meaning set forth in Section 9-109 of the UCC
---------
as in effect in the State of New York on the Closing Date.
"Inventory Reserves": reserves deemed appropriate by the Administrative
------------------
Agent and in any event the following:
(i) a shrink reserve equal to the percentage of the average of the
results of the two most recent full physicals of the overall value of the
Inventory of the Borrower and its Domestic Subsidiaries, before any
deductions or exclusions;
(ii) a reserve of 50% of Inventory in quality control;
(iii) a reserve of 50% of Inventory in the nature of re-worked or
refurbished or returned (referred to as RMA or RA) or MRB-cards and
subassemblies; and
(iv) a reserve of 100% of Inventory in the nature of other re-
worked or refurbished or returned (referred to as RMA or RA) Inventory,
including MRB-controllers and other inventory items.
"Investments": as defined in Section 7.7.
-----------
"Issuing Lender": Chase, in its capacity as issuer of any Letter of Credit.
--------------
"Kingston Notes": the secured promissory notes in the aggregate principal
--------------
amount of $4,750,000 issued and sold by the Borrower pursuant to that certain
Note Purchase Agreement, dated as of August 8, 1997, as amended, between the
Borrower and Xxxxx Xxx and Xxxx Xx.
"L/C Commitment": $5,000,000.
--------------
"L/C Fee Payment Date": the last day of each March, June, September and
--------------------
December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
16
"L/C Participants": the collective reference to all the Revolving Lenders
----------------
other than the Issuing Lender.
"Lenders": as defined in the preamble hereto; provided, that unless the
------- --------
context otherwise requires, each reference herein to the Lenders shall be deemed
to include any Conduit Lender.
"Letters of Credit": as defined in Section 3.1(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents and the Notes.
--------------
"Loan Parties": the Borrower and each Subsidiary of the Borrower that is a
------------
party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the business,
-----------------------
property, operations, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum (including
----------------------------------
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Law, including asbestos, polychlorinated biphenyls and urea-
formaldehyde insulation.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": in connection with any Asset Sale or any Recovery
-----------------
Event, the proceeds thereof in the form of cash and Cash Equivalents (including
any such proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such Asset Sale or Recovery Event,
net of attorneys' fees, accountants' fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness secured by a Lien
expressly permitted hereunder on any asset that is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a Security Document) and
other customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements).
"Non-Excluded Taxes": as defined in Section 2.16(a).
------------------
17
"Non-U.S. Lender": as defined in Section 2.16(d).
---------------
"Notes": the collective reference to any promissory note evidencing Loans.
-----
"Obligations": the unpaid principal of and interest on (including interest
-----------
accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement
entered into with any Lender or any affiliate of any Lender or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary taxes or
-----------
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
----
Subtitle A of Title IV of ERISA (or any successor).
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is covered by
----
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Projections": a detailed consolidated budget for the following fiscal year
-----------
(including a projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the following fiscal year, the related
consolidated statements of projected cash flow, projected changes in financial
position and projected income and a description of the underlying assumptions
applicable thereto), and, as soon as available, significant revisions, if any,
of such budget and projections with respect to such financial year.
"Properties": as defined in Section 4.17(a).
----------
18
"Recovery Event": any settlement of or payment in respect of any property
--------------
or casualty insurance claim or any condemnation proceeding relating to any asset
of the Borrower or any of its Subsidiaries.
"Reference Lender": Chase.
----------------
"Refunded Swingline Loans": as defined in Section 2.7.
------------------------
"Refunding Date": as defined in Section 2.7.
--------------
"Register": as defined in Section 10.6(d).
--------
"Regulation U": Regulation U of the Board as in effect from time to time.
------------
"Reimbursement Obligation": the obligation of the Borrower to reimburse the
------------------------
Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment Event, the
----------------------------
aggregate Net Cash Proceeds received by the Borrower or any of its Subsidiaries
in connection therewith that are not applied to reduce the Revolving Commitments
pursuant to Section 2.8(a) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of which
------------------
the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible Officer
-------------------
stating that no Event of Default has occurred and is continuing and that the
Borrower (directly or indirectly through a Subsidiary) intends and expects to
use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire or repair assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment Event,
------------------------------
the Reinvestment Deferred Amount relating thereto less any amount expended prior
to the relevant Reinvestment Prepayment Date to acquire or repair assets useful
in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment Event, the
----------------------------
earlier of (a) the date occurring six months after such Reinvestment Event and
(b) the date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, acquire or repair assets useful in the Borrower's business
with all or any portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the condition
--------------
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
(S) 4043.
19
"Required Lenders": at any time, the holders of more than 50% of the Total
----------------
Revolving Commitments then in effect or, if the Revolving Commitments have been
terminated, the Total Revolving Extensions of Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate of Incorporation
------------------
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer, president or chief
-------------------
financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
-------------------
"Revolving Commitment": as to any Lender, the obligation of such Lender, if
--------------------
any, to make Revolving Loans and participate in Swingline Loans and Letters of
Credit in an aggregate principal and/or face amount not to exceed the amount set
forth under the heading "Revolving Commitment" opposite such Lender's name on
Schedule 1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof. The original amount of the Total Revolving Commitments is
$20,000,000.
"Revolving Commitment Period": the period from and including the Closing
---------------------------
Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any time,
------------------------------
an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding, (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding and (c) such
Lender's Revolving Percentage of the aggregate principal amount of Swingline
Loans then outstanding.
"Revolving Lender": each Lender that has a Revolving Commitment or that
----------------
holds Revolving Loans.
"Revolving Loans": as defined in Section 2.1(a).
---------------
"Revolving Percentage": as to any Revolving Lender at any time, the
--------------------
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding).
"Revolving Termination Date": the date which is 364 days from the Closing
--------------------------
Date and if such date is not a Business Day, the next preceding Business Day.
20
"SanDisk Litigation": SanDisk Corporation v. Lexar Media, Inc., an action
------------------
filed in March 1998 in the United States District Court for the Northern
District of California, Case No. C98-01115 CRB.
"SEC": the Securities and Exchange Commission, any successor thereto and
---
any analogous Governmental Authority.
"Secured Term Loan": the $10,000,000 Credit Agreement, dated as of June 30,
-----------------
2000, between the Borrower and Access, as amended, supplemented or otherwise
modified from time to time.
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Single Employer Plan": any Plan that is covered by Title IV of ERISA, but
--------------------
that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any date
-------
of determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Sony Consent": the consent, in form and substance satisfactory to the
------------
Administrative Agent, of Sony Corporation to the granting of Liens by the
Borrower and its Subsidiaries in connection with this Agreement and the Secured
Term Loan under the Sony Technology License Agreement and the Lexar Technology
License Agreement, each dated as of March 21, 2000, between Sony Corporation and
the Borrower.
"Sony Debt": the promissory note in the aggregate principal amount of
---------
$2,000,000 issued and sold by the Borrower pursuant to that certain Convertible
Note and Warrant Purchase Agreement, dated as of March 21, 2000, between Sony
Corporation and the Borrower.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power
21
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than any
--------------------
Excluded Foreign Subsidiary.
"Swingline Commitment": the obligation of the Swingline Lender to make
--------------------
Swingline Loans pursuant to Section 2.6 in an aggregate principal amount at any
one time outstanding not to exceed $1,000,000.
"Swingline Lender": Chase, in its capacity as the lender of Swingline
----------------
Loans.
"Swingline Loans": as defined in Section 2.3.
---------------
"Swingline Participation Amount": as defined in Section 2.4.
------------------------------
"Toshiba Debt": the secured promissory note in the aggregate principal
------------
amount of $400,000 issued and sold by the Borrower to Toshiba America Electronic
Components, Inc. on June 26, 1997.
"Total Revolving Commitments": at any time, the aggregate amount of the
---------------------------
Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate amount
------------------------------------
of the Revolving Extensions of Credit of the Revolving Lenders outstanding at
such time.
"Transferee": any Assignee or Participant.
----------
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.
----
"United States": the United States of America.
-------------
"Warrant Documents": the collective reference to (i) the Warrant Agreement,
-----------------
dated as of June 30, 2000, among the Borrower, Access and Chase Securities Inc.,
(ii) the Regulatory Agreement, dated as of June 30, 2000, among the Borrower,
Access and Chase Securities Inc. and (iii) the Common Stock Purchase Warrant,
dated June 30, 2000, issued by the Borrower to Chase Securities Inc.
"Wholly Owned Subsidiary": as to any Person, any other Person all of the
-----------------------
Capital Stock of which (other than directors' qualifying shares required by law)
is owned by such Person directly and/or through other Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is a
---------------------------------
Wholly Owned Subsidiary of the Borrower.
22
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP, (ii)
the words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation", (iii) the word "incur" shall be construed to
mean incur, create, issue, assume, become liable in respect of or suffer to
exist (and the words "incurred" and "incurrence" shall have correlative
meanings), (iv) the words "asset" and "property" shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, Capital Stock, securities, revenues,
accounts, leasehold interests and contract rights, and (v) references to
agreements or other Contractual Obligations shall, unless otherwise specified,
be deemed to refer to such agreements or Contractual Obligations as amended,
supplemented, restated or otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Commitments. (a) Subject to the terms and conditions
---------------------
hereof, each Revolving Lender severally agrees to make revolving credit loans
("Revolving Loans") to the Borrower from time to time during the Revolving
---------------
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Percentage of the sum of (i) the
L/C Obligations then outstanding and (ii) the aggregate principal amount of the
Swingline Loans then outstanding, does not exceed the lesser of (a) the amount
of such Lender's Revolving Commitment and (b) such Lender's Revolving Percentage
of the Borrowing Base then in effect. During the Revolving Commitment Period the
Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans
or ABR Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.2 and 2.9.
(b) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.
2.2 Procedure for Revolving Loan Borrowing. The Borrower may borrow
--------------------------------------
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
--------
irrevocable notice (which notice
23
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the case
of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing
Date, in the case of ABR Loans), specifying (i) the amount and Type of Revolving
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Any Revolving Loans
made on the Initial Funding Date shall initially be ABR Loans. Each borrowing
under the Revolving Commitments shall be in an amount equal to (x) in the case
of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate
Available Revolving Commitments are less than $1,000,000, such lesser amount)
and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; provided, that the Swingline Lender may request,
--------
on behalf of the Borrower, borrowings under the Revolving Commitments that are
ABR Loans in other amounts pursuant to Section 2.4. Upon receipt of any such
notice from the Borrower, the Administrative Agent shall promptly notify each
Revolving Lender thereof. Each Revolving Lender will make the amount of its pro
---
rata share of each borrowing available to the Administrative Agent for the
----
account of the Borrower at the Funding Office prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Lenders and in like funds
as received by the Administrative Agent.
2.3 Swingline Commitment. (a) Subject to the terms and conditions
--------------------
hereof, the Swingline Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Revolving Commitments from time to time
during the Revolving Commitment Period by making swing line loans ("Swingline
Loans") to the Borrower; provided that (i) the aggregate principal amount of
--------
Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect (notwithstanding that the Swingline Loans outstanding
at any time, when aggregated with the Swingline Lender's other outstanding
Revolving Loans hereunder, may exceed the Swingline Commitment then in effect),
(ii) the Borrower shall not request, and the Swingline Lender shall not make,
any Swingline Loan if, after giving effect to the making of such Swingline Loan,
the aggregate amount of the Available Revolving Commitments would be less than
zero and (iii) at no time may the sum of the then outstanding Swingline Loans,
Revolving Loans and L/C Obligations exceed the lesser of (a) the Total Revolving
Commitments and (b) the Borrowing Base then in effect. During the Revolving
Commitment Period, the Borrower may use the Swingline Commitment by borrowing,
repaying and reborrowing, all in accordance with the terms and conditions
hereof. Swingline Loans shall be ABR Loans only.
(b) The Borrower shall repay all outstanding Swingline Loans on the
Revolving Termination Date.
2.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans.
---------------------------------------------------------------
(a) Whenever the Borrower desires that the Swingline Lender make Swingline Loans
it shall give the Swingline Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swingline
Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing
Date), specifying (i) the amount to be borrowed and
24
(ii) the requested Borrowing Date (which shall be a Business Day during the
Revolving Commitment Period). Each borrowing under the Swingline Commitment
shall be in an amount equal to $500,000 or a whole multiple of $100,000 in
excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing
Date specified in a notice in respect of Swingline Loans, the Swingline Lender
shall make available to the Administrative Agent at the Funding Office an amount
in immediately available funds equal to the amount of the Swingline Loan to be
made by the Swingline Lender. The Administrative Agent shall make the proceeds
of such Swingline Loan available to the Borrower on such Borrowing Date by
depositing such proceeds in the account of the Borrower with the Administrative
Agent on such Borrowing Date in immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), on one Business
Day's notice given by the Swingline Lender no later than 12:00 Noon, New York
City time, request each Revolving Lender to make, and each Revolving Lender
hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving
Lender's Revolving Percentage of the aggregate amount of the Swingline Loans
(the "Refunded Swingline Loans") outstanding on the date of such notice, to
------------------------
repay the Swingline Lender. Each Revolving Lender shall make the amount of such
Revolving Loan available to the Administrative Agent at the Funding Office in
immediately available funds, not later than 10:00 A.M., New York City time, one
Business Day after the date of such notice. The proceeds of such Revolving Loans
shall be immediately made available by the Administrative Agent to the Swingline
Lender for application by the Swingline Lender to the repayment of the Refunded
Swingline Loans. The Borrower irrevocably authorizes the Swingline Lender to
charge the Borrower's accounts with the Administrative Agent (up to the amount
available in each such account) in order to immediately pay the amount of such
Refunded Swingline Loans to the extent amounts received from the Revolving
Lenders are not sufficient to repay in full such Refunded Swingline Loans.
(c) If prior to the time a Revolving Loan would have otherwise been
made pursuant to Section 2.4(b), one of the events described in Section 8(f)
shall have occurred and be continuing with respect to the Borrower or if for any
other reason, as determined by the Swingline Lender in its sole discretion,
Revolving Loans may not be made as contemplated by Section 2.4(b), each
Revolving Lender shall, on the date such Revolving Loan was to have been made
pursuant to the notice referred to in Section 2.4(b) (the "Refunding Date"),
--------------
purchase for cash an undivided participating interest in the then outstanding
Swingline Loans by paying to the Swingline Lender an amount (the "Swingline
----------
Participation Amount")
--------------------
equal to (i) such Revolving Lender's Revolving Percentage times (ii) the sum of
-----
the aggregate principal amount of Swingline Loans then outstanding that were to
have been repaid with such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has received
from any Revolving Lender such Lender's Swingline Participation Amount, the
Swingline Lender receives any payment on account of the Swingline Loans, the
Swingline Lender will distribute to such Lender its Swingline Participation
Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was outstanding
and funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal
25
of and interest on all Swingline Loans then due); provided, however, that in the
-------- -------
event that such payment received by the Swingline Lender is required to be
returned, such Revolving Lender will return to the Swingline Lender any portion
thereof previously distributed to it by the Swingline Lender.
(e) Each Revolving Lender's obligation to make the Loans referred to
in Section 2.4(b) and to purchase participating interests pursuant to Section
2.4(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Revolving Lender or the Borrower may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 5; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower; (iv)
any breach of this Agreement or any other Loan Document by the Borrower, any
other Loan Party or any other Revolving Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
2.5 Commitment Fees, etc. (a) The Borrower agrees to pay to the
--------------------
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the Closing Date to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Revolving Termination
Date, commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates previously agreed to in writing by the Borrower
and the Administrative Agent.
2.6 Termination or Reduction of Revolving Commitments. The Borrower
-------------------------------------------------
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
--------
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans and
Swingline Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Commitments. Any such
reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Commitments then in effect.
2.7 Optional Prepayments. The Borrower may at any time and from time
--------------------
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent at least three Business
Days prior thereto in the case of Eurodollar Loans and at least one Business Day
prior thereto in the case of ABR Loans, which notice shall specify the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans or ABR
Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the
--------
last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 2.17. Upon receipt of any such notice the
Administrative
26
Agent shall promptly notify each relevant Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with (except in the case of Revolving Loans that are
ABR Loans and Swingline Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Revolving Loans shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof. Partial prepayments
of Swingline Loans shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof.
2.8 Mandatory Prepayments and Revolving Commitment Reductions. (a)
---------------------------------------------------------
If on any date the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the reduction of the Revolving Commitments as set
forth in Section 2.8(b); provided, that, notwithstanding the foregoing, on each
--------
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be applied toward
the reduction of the Revolving Commitments as set forth in Section 2.8(b).
(b) Amounts to be applied in connection with prepayments and
Revolving Commitment reductions made pursuant to Section 2.8 shall be applied to
reduce permanently the Revolving Commitments. Any such reduction of the
Revolving Commitments shall be accompanied by prepayment of the Revolving Loans
and/or Swingline Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Loans and
--------
Swingline Loans then outstanding is less than the amount of such excess (because
L/C Obligations constitute a portion thereof), the Borrower shall, to the extent
of the balance of such excess, replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent. The application of any prepayment
pursuant to Section 2.8 shall be made, first, to ABR Loans and, second, to
----- ------
Eurodollar Loans. Each prepayment of the Loans under Section 2.8 (except in the
case of Revolving Loans that are ABR Loans and Swingline Loans) shall be
accompanied by accrued interest to the date of such prepayment on the amount
prepaid.
(c) If, at any time during the Revolving Commitment Period, the Total
Revolving Extensions of Credit of the Lenders exceed the Borrowing Base then in
effect, the Borrower shall, without notice or demand, immediately prepay the
Revolving Loans and the Swingline Loans in an aggregate principal amount equal
to such excess, together with interest and commitment fees accrued to the date
of such payment or prepayment to the Administrative Agent. To the extent that
after giving effect to any prepayment of any Loans required by the preceding
sentence, the Total Revolving Extensions of Credit at such time exceed the
Borrowing Base at such time, the Borrower shall, without notice or demand,
immediately deposit in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent an amount equal to the aggregate then
outstanding L/C Obligations. The Administrative Agent shall apply any cash
deposited in such cash collateral account (to the extent thereof) to pay any
Reimbursement Obligations which become due thereafter, provided that the
--------
Administrative Agent shall release to the Borrower from time to time such
portion of the amount on deposit in such cash collateral account which is
27
equal to the amount by which the Borrowing Base at such time plus the amount on
deposit in such cash collateral account exceeds the Total Revolving Extensions
of Credit at such time.
2.9 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
--------
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election (which notice shall specify the length of the initial Interest
Period therefor), provided that no ABR Loan may be converted into a Eurodollar
--------
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has determined in its sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
--------
that no Eurodollar Loan may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has determined in its
sole discretion not to permit such continuations, and provided, further, that if
-------- -------
the Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Loans shall be automatically converted to ABR Loans on the last day
of such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.10 Limitations on Eurodollar Tranches. Notwithstanding anything to
----------------------------------
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than five Eurodollar
Tranches shall be outstanding at any one time.
2.11 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
--------------------------------
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations,
----
28
the rate applicable to ABR Loans plus 2%, and (ii) if all or a portion of any
----
interest payable on any Loan or Reimbursement Obligation or any commitment fee
or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to ABR Loans plus
2%, in each case, with respect to clauses (i) and (ii) above, from the date of
such non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
-------
shall be payable from time to time on demand.
2.12 Computation of Interest and Fees. (a) Interest and fees payable
--------------------------------
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to ABR Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.11(a).
2.13 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans
29
shall be converted, on the last day of the then-current Interest Period, to ABR
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Loans to Eurodollar Loans.
2.14 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Revolving Commitments of the Lenders
shall be made pro rata according to the Revolving Percentages of the relevant
--- ----
Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
---
rata according to the respective outstanding principal amounts of the Revolving
----
Loans then held by the Revolving Lenders.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans, on demand, from the Borrower.
30
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
--- ----
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.15 Requirements of Law. (a) If the adoption of or any change in any
-------------------
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.16 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender
31
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such corporation for such reduction;
provided that the Borrower shall not be required to compensate a Lender pursuant
--------
to this paragraph for any amounts incurred more than six months prior to the
date that such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor; and provided further that, if the circumstances giving
--------
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.16 Taxes. (a) All payments made by the Borrower under this Agreement
-----
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
------------------
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
------- -------
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
32
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
---------------
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit E and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U. S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete, execute and deliver such documentation.
(f) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.17 Indemnity. The Borrower agrees to indemnify each Lender for, and
---------
to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in
33
accordance with the provisions of this Agreement, (b) default by the Borrower in
making any prepayment of or conversion from Eurodollar Loans after the Borrower
has given a notice thereof in accordance with the provisions of this Agreement
or (c) the making of a prepayment of Eurodollar Loans on a day that is not the
last day of an Interest Period with respect thereto. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
that would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.18 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.15 or 2.16(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
--------
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
-------- -------
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.15 or 2.16(a).
2.19 Replacement of Lenders. The Borrower shall be permitted to replace
----------------------
any Lender that (a) requests reimbursement for amounts owing pursuant to Section
2.15 or 2.16(a) or (b) defaults in its obligation to make Loans hereunder, with
a replacement financial institution; provided that (i) such replacement does
--------
not conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) prior to any
such replacement, such Lender shall have taken no action under Section 2.18 so
as to eliminate the continued need for payment of amounts owing pursuant to
Section 2.15 or 2.16(a), (iv) the replacement financial institution shall
purchase, at par, all Loans and other amounts owing to such replaced Lender on
or prior to the date of replacement, (v) the Borrower shall be liable to such
replaced Lender under Section 2.17 if any Eurodollar Loan owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of Section 10.6 (provided that the Borrower shall be obligated
--------
to pay the registration and processing fee referred to therein), (viii) until
such time as such replacement shall be consummated, the Borrower shall pay all
additional amounts (if any) required pursuant to Section 2.15 or 2.16(a), as the
case may be, and (ix) any such replacement shall not be deemed to be a waiver of
any rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.
34
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Revolving Lenders
set forth in Section 3.4(a), agrees to issue letters of credit ("Letters of
----------
Credit") for the account of the Borrower on any Business Day during the
------
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; provided that the Issuing Lender shall have no obligation to
--------
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment, (ii) the aggregate amount of the
Available Revolving Commitments would be less than zero or (iii) the sum of the
then outstanding L/C Obligations, Revolving Loans and Swingline Loans would
exceed the Borrowing Base then in effect. Each Letter of Credit shall (i) be
denominated in Dollars, (ii) have a face amount of at least $100,000 (unless
otherwise agreed by the Issuing Lender) and (iii) expire no later than the date
that is five Business Days prior to the Revolving Termination Date.
(b) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from
------------------------------------------
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
----------------------
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans, shared ratably among the
Revolving Lenders and payable quarterly in arrears on each L/C Fee Payment Date
after the issuance date. In addition, the Borrower shall pay to the Issuing
Lender for its own account a fronting fee of 0.25% per annum on the undrawn and
unexpired amount of each Letter of Credit, payable quarterly in arrears on each
L/C Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
35
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
------------------
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions set forth below, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Revolving Percentage in the Issuing Lender's obligations and rights under and in
respect of each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times the daily average Federal Funds
Effective Rate during the period from and including the date such payment is
required to the date on which such payment is immediately available to the
Issuing Lender, times a fraction the numerator of which is the number of days
that elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is
not made available to the Issuing Lender by such L/C Participant within three
Business Days after the date such payment is due, the Issuing Lender shall be
entitled to recover from such L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable
to ABR Loans. A certificate of the Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
----
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
--- ----
provided, however, that in the event that any such payment received by the
-------- -------
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
----------------------------------------
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in
Dollars and in immediately available funds. Interest shall be payable on any
such amounts from the date on
36
which the relevant draft is paid until payment in full at the rate set forth in
(i) until the Business Day next succeeding the date of the relevant notice,
Section 2.11(b) and (ii) thereafter, Section 2.11(c).
3.6 Obligations Absolute. The Borrower's obligations under this
--------------------
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any Application
------------
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:
4.1 Financial Condition. The audited consolidated balance sheets of
-------------------
the Borrower and its Subsidiaries as at December 31, 1999, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
PricewaterhouseCoopers LLP, present fairly the consolidated financial
37
condition of the Borrower as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then
ended. The unaudited interim consolidated balance sheet of the Borrower and the
related unaudited consolidated statements of income and cash flows for the
three-month period ended March 31, 2000 present fairly the consolidated
financial condition of the Borrower as at such date, and the consolidated
results of its operations and its consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments). All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). The Borrower and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in this paragraph. During the period
from December 31, 1999 to and including the date hereof there has been no
Disposition by the Borrower of any material part of its business or property.
4.2 No Change. Since December 31, 1999, there has been no development or
---------
event that has had or could reasonably be expected to have a Material Adverse
Effect (other than with respect to the SanDisk Litigation as of the date
hereof).
4.3 Corporate Existence; Compliance with Law. Each of the Borrower
----------------------------------------
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
failure to so qualify and be in good standing could reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each
-------------------------------------------------------
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to obtain extensions of credit hereunder. Each Loan Party has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the extensions of credit on the terms and conditions of
this Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the extensions of credit hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices (other than the Sony Consent) have been obtained or made and are in full
force and effect and (ii) the filings referred to in Section 4.19. Each Loan
Document has been duly executed and delivered on behalf of each Loan Party party
thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party party thereto, enforceable against each such Loan Party in accordance with
its terms,
38
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Borrower or any of its
Subsidiaries (except to the extent that such violations could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect) and will
not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any Requirement of Law or
any such Contractual Obligation (other than the Liens created by the Security
Documents). No Requirement of Law or Contractual Obligation applicable to the
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
4.6 Litigation. No litigation, investigation or proceeding of or
----------
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a Material
Adverse Effect (other than with respect to the SanDisk Litigation as of the date
hereof).
4.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
----------
default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 7.3.
4.9 Intellectual Property. The Borrower and each of its Subsidiaries
---------------------
owns, or is licensed to use, all Intellectual Property necessary for the conduct
of its business as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Borrower know of any valid basis for any such claim. The use of
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person in any material respect.
4.10 Taxes. Each of the Borrower and each of its Subsidiaries has
-----
filed or caused to be filed all Federal, state and other material tax returns
that are required to be filed and has paid all taxes shown to be due and payable
on said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as
39
the case may be); no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 Federal Regulations. No part of the proceeds of any Loans, and
-------------------
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of Form G-3 or Form U-1, as applicable,
referred to in Regulation U.
4.12 Labor Matters. Except as, in the aggregate, could not reasonably
-------------
be expected to have a Material Adverse Effect: (a) there are no strikes or
other labor disputes against the Borrower or any of its Subsidiaries pending or,
to the knowledge of the Borrower, threatened; (b) hours worked by and payment
made to employees of the Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters; and (c) all payments due from the Borrower or any
of its Subsidiaries on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of the Borrower or the relevant
Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15 Subsidiaries. Except as disclosed to the Administrative Agent by
------------
the Borrower in writing from time to time after the Closing Date, (a) Schedule
4. 15 sets forth the name and jurisdiction of incorporation of each Subsidiary
and, as to each such Subsidiary, the percentage
40
of each class of Capital Stock owned by any Loan Party and there are no
outstanding subscriptions, options, warrants, calls, rights or other agreements
or commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of the
Borrower or any Subsidiary, except as created by the Loan Documents.
4.16 Use of Proceeds. The proceeds of the Revolving Loans and the
---------------
Swingline Loans, and the Letters of Credit, shall be used (a) to repay secured
promissory notes of the Borrower, (b) to invest in property, plant and equipment
and (c) for working capital and general corporate purposes of the Borrower and
its Subsidiaries in the ordinary course of business.
4.17 Environmental Matters. Except as, in the aggregate, could not
---------------------
reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and
----------
have not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under circumstances that constitute or
constituted a violation of, or could give rise to liability under, any
Environmental Law;
(b) neither the Borrower nor any of its Subsidiaries has received or
is aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties or
the business operated by the Borrower or any of its Subsidiaries (the
"Business"), nor does the Borrower have knowledge or reason to believe that
--------
any such notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of by Borrower from the Properties in violation of, or in a manner
or to a location that could give rise to liability under, any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws;
41
(f) the Properties and all operations at the Properties by Borrower
are in compliance with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the Business; and
(g) neither the Borrower nor any of its Subsidiaries has assumed any
liability of any other Person under Environmental Laws.
4.18 Accuracy of Information, etc. No statement or information contained
----------------------------
in this Agreement, any other Loan Document, or any other document, certificate
or statement furnished by or on behalf of any Loan Party to the Administrative
Agent or the Lenders, or any of them, for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in the
--- -----
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan Documents
or in any other documents, certificates and statements furnished to the
Administrative Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
4.19 Security Documents. The Guarantee and Collateral Agreement is
------------------
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements and other filings specified on Schedule
4.19 in appropriate form are filed in the offices specified on Schedule 4.19,
the Guarantee and Collateral Agreement shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in such Collateral and the proceeds thereof, as security for the Obligations (as
defined in the Guarantee and Collateral Agreement), in each case prior and
superior in right to any other Person (except, in the case of Collateral other
than Pledged Stock, Liens permitted by Section 7.3).
4.20 Solvency. Each Loan Party is, and after giving effect to the
--------
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be and will continue to be, Solvent.
42
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness. This Agreement shall become effective on
---------------------------
and as of the first date on which the following conditions precedent shall have
been satisfied:
(a) Credit Agreement; Guarantee and Collateral Agreement;
-----------------------------------------------------
Intercreditor Agreement. The Administrative Agent shall have received (i)
-----------------------
this Agreement, executed and delivered by the Administrative Agent, each
Lender and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by the Borrower and each Subsidiary Guarantor, (iii)
an Acknowledgment and Consent in the form attached to the Guarantee and
Collateral Agreement, executed and delivered by each Issuer (as defined
therein), if any, that is not a Loan Party, and (iv) the Intercreditor
Agreement, executed and delivered by Chase and Access.
(b) Financial Statements. The Lenders shall have received (i) audited
--------------------
consolidated financial statements of the Borrower for the 1999 fiscal year
and (ii) unaudited interim consolidated and consolidating (on a
division-by-division basis) financial statements of the Borrower for the
fiscal month of April 2000 and each quarterly period ended subsequent to
the date of the latest applicable financial statements delivered pursuant
to clause (i) of this paragraph as to which such financial statements are
available, and such financial statements shall not, in the reasonable
judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of the Borrower, as reflected in the
financial statements or projections delivered to the Administrative Agent
prior to the Closing Date.
(c) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary in connection with the continuing
operations of the Borrower and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.
(d) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of the Borrower or its Subsidiaries except for liens
permitted by Section 7.3 or discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the Administrative Agent.
(e) Fees. [Reserved]
----
43
(f) Closing Certificate. The Administrative Agent shall have
-------------------
received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.
(g) Legal Opinions. The Administrative Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of Fenwick & West LLP, counsel to the
Borrower and its Subsidiaries, in form and substance
satisfactory to the Administrative Agent; and
(ii) the legal opinion of Winthrop, Stimson, Xxxxxx & Xxxxxxx,
special New York counsel to the Borrower and its
Subsidiaries, in form and substance satisfactory to the
Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(h) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
------------------------------------------
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note (if any) pledged to the Administrative Agent pursuant to
the Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank) by the pledgor
thereof.
(i) Filings, Registrations and Recordings. Each document (including
-------------------------------------
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Administrative Agent
to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section
7.3), shall be in proper form for filing, registration or recordation.
(j) Insurance. The Administrative Agent shall have received
---------
insurance certificates satisfying the requirements of Section 5. 2(b) of
the Guarantee and Collateral Agreement.
(k) Projections. The Administrative Agent shall have received
-----------
projections and a written analysis of the business and prospects of the
Borrower and its Subsidiaries, for the period from the Closing Date through
the Revolving Termination Date, each in form and substance satisfactory to
the Administrative Agent.
(l) Warrant Documents. The Administrative Agent shall have received
-----------------
copies of the Warrant Documents, each executed and delivered by the parties
thereto.
5.2 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior
44
to or concurrently with the making of such extension of credit on the Initial
Funding Date, of the following conditions precedent:
(a) Existing Debt. Each of the Toshiba Debt and the Kingston Notes
-------------
shall have been either (i) subordinated to the Obligations and to the
obligations under the Secured Term Loan on terms and conditions
satisfactory to the Administrative Agent or (ii) terminated and all amounts
thereunder shall have been paid in full and satisfactory arrangements shall
have been made for the termination of all Liens, if any, granted in
connection therewith.
(b) Amendment to Investors Rights Agreement. The Administrative Agent
---------------------------------------
shall have received a copy of the Amendment to Investors Rights Agreement,
executed and delivered by the parties thereto.
5.3 Conditions to Each Extension of Credit. The agreement of each Lender
--------------------------------------
to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Borrowing Base. After giving effect to the extensions of credit
--------------
requested to be made on such date, the Total Revolving Extensions of Credit
of the Lenders shall not exceed the Borrowing Base then in effect. In
addition, in the case of (i) a borrowing of Revolving Loans or Swingline
Loans and (ii) an issuance of a Letter of Credit, the Borrower shall have
delivered a Borrowing Base Certificate as of the relevant Borrowing Date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.3 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall and shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and each
--------------------
Lender:
45
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by PricewaterhouseCoopers LLP or other
independent certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(c) as soon as available, but in any event not later than 30 days
after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated balance sheets of the Borrower and its Subsidiaries
as at the end of such month and the related unaudited consolidated
statements of income and of cash flows for such month and the portion of
the fiscal year through the end of such month, setting forth in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative Agent
-------------------------------
and each Lender (or, in the case of clause (f), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer on
behalf of the Borrower stating that, to the best of each such Responsible
Officer's knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Loan Documents to
which it is a party to be observed, performed or satisfied by it, and that
such Responsible
46
Officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate and (ii) in the case of monthly, quarterly
or annual financial statements, (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance by the
Borrower and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year
of the Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or state
within the United States where any Loan Party keeps inventory or equipment
and of any Intellectual Property acquired by any Loan Party since the date
of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);
(c) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year;
(d) within five days after the same are sent, copies of all
financial statements and reports that the Borrower sends to the holders of
any class of its debt securities or public equity securities and, within
five days after the same are filed, copies of all financial statements and
reports that the Borrower may make to, or file with, the SEC;
(e) within 30 days after the last day of each calendar month, a
Borrowing Base Certificate setting forth the Borrowing Base as of such last
day; and (f) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
----------------------
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
6.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and
------------------------------------
keep in full force and effect its corporate existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all property useful
----------------------------------
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its
47
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
------------------------------------------------------
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent and each
-------
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding that may exist at any time between the Borrower
or any of its Subsidiaries and any Governmental Authority, that in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries (i) in which the amount involved is $1,000,000 or more and
not covered by insurance, (ii) in which injunctive or similar relief is
sought or (iii) which relates to any Loan Document;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i)
the occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer on behalf of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower or the
relevant Subsidiary proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with, and
------------------
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and
48
ensure that all tenants and subtenants obtain and comply in all material
respects with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 Additional Collateral, etc. (a) With respect to any property
--------------------------
acquired after the Closing Date by the Borrower or any of its Subsidiaries
(other than (x) any property described in paragraph (b), (c) or (d) below, (y)
any property subject to a Lien expressly permitted by Section 7.3(g) and (z)
property acquired by any Excluded Foreign Subsidiary) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in such property, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $250,000 acquired after
the Closing Date by the Borrower or any of its Subsidiaries (other than (x) any
such real property subject to a Lien expressly permitted by Section 7.3(g) and
(z) real property acquired by any Excluded Foreign Subsidiary), promptly (i)
execute and deliver a first priority mortgage, in favor of the Administrative
Agent, for the benefit of the Lenders, covering such real property, (ii) if
requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Administrative Agent and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by the Borrower
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), the Borrower or
any of its Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new
49
Subsidiary that is owned by the Borrower or any of its Subsidiaries, (ii)
deliver to the Administrative Agent the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the Borrower or such Subsidiary, as the case may be,
(iii) cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement, (B) to take such actions necessary or advisable to grant
to the Administrative Agent for the benefit of the Lenders a perfected first
priority security interest in the Collateral described in the Guarantee and
Collateral Agreement with respect to such new Subsidiary, including the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent and (C) to deliver to the Administrative
Agent a certificate of such Subsidiary, substantially in the form of Exhibit C,
with appropriate insertions and attachments, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by the Borrower or any of its Subsidiaries,
promptly (i) execute and deliver to the Administrative Agent such amendments to
the Guarantee and Collateral Agreement as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected first priority security interest in the Capital Stock
of such new Subsidiary that is owned by the Borrower or any of its Subsidiaries
(provided that in no event shall more than 65% of the total outstanding Capital
--------
Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be, and
take such other action as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Administrative Agent's security
interest therein, and (iii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
6.10 Evaluations and Appraisals. At any time upon the request of the
--------------------------
Administrative Agent or the Required Lenders through the Administrative Agent,
permit the Administrative Agent, or its representatives or professionals
(including consultants, accountants and appraisers) retained or employed by the
Administrative Agent, to conduct evaluations and appraisals of (i) the
Borrower's practices in the computation of the Borrowing Base and (ii) the
assets included in the Borrowing Base (including, without limitation, the Loan
Parties' operating facilities) and pay the reasonable fees and expenses in
connection therewith (including, without limitation, the fees and expenses
associated with services performed by the Administrative Agent for purposes of
monitoring the Collateral and the Borrowing Base).
6.11 Cash Management System. Within 30 days after Closing Date, establish
----------------------
a cash management system that is satisfactory in form and substance to the
Administrative Agent.
6.12 Subordination and Consents. Within 30 days after Closing Date,
--------------------------
(i) subordinate all amounts owing under the Sony Debt and the Bridge Financing
to the Obligations and to the obligations under the Secured Term Loan on terms
and conditions satisfactory to the
50
obligations and to the obligations under the Secured Term Loan on terms and
conditions satisfactory to the Administrative Agent and (ii) obtain the Sony
Consent. The subordination agreement signed by the holders of the Borrower's
notes included in the Bridge Financing shall prohibit any payment or prepayment
of principal thereof or interest thereon, unless, at the date the payment is to
be made, and after giving effect thereto, the Borrower has cash and Cash
Equivalents of not less than three times the "Applicable Amount" (as defined in
the Secured Term Loan), and at said date the trade payables of the Borrower have
not increased over the amounts thereof generally outstanding in relation to the
revenues of the Borrower.
6.13 Fees and Expenses. Within the earlier of (i) 15 days after the
-----------------
Closing Date and (ii) the date on which the conditions precedent set forth in
Section 5.2 shall have been satisfied, pay to the Administrative Agent all fees
required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel), on or before such
date.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
-----------------------------
(a) Consolidated Revenue. Permit the Consolidated Revenue as at the
--------------------
last day of any fiscal quarter of the Borrower set forth below to be less than
the amount set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Revenue
------------- ------------
06/30/00 $22,000,000
09/30/00 $24,000,000
12/31/00 $26,000,000
03/31/01 $28,000,000
(b) Consolidated EBITDA. Permit the Consolidated EBITDA as at the
-------------------
last day of any fiscal quarter of the Borrower set forth below to be less than
the amount set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter EBITDA
------------- ------------
06/30/00 $(6,000,000)
09/30/00 $(8,000,000)
12/31/00 $(8,000,000)
03/31/01 $(6,000,000)
(c) Consolidated Debt to Capital Ratio. Permit the Consolidated Debt
----------------------------------
to Capital Ratio as at the last day of any fiscal quarter of the Borrower set
forth below to exceed the ratio set forth below opposite such fiscal quarter:
51
Consolidated Debt
Fiscal Quarter to Capital Ratio
-------------- ----------------
06/30/00 0.50 to 1.00
09/30/00 0.75 to 1.00
12/31/00 1.00 to 1.00
03/31/01 0.25 to 1.00
(d) Capital Expenditures and Capitalized Software Expenses. Permit
------------------------------------------------------
the sum of (i)Capital Expenditures and (ii) Capitalized Software Expenses of the
Borrower and its Subsidiaries for any period of four consecutive fiscal quarters
of the Borrower ending with any fiscal quarter set forth below to exceed the
amount set forth below opposite such fiscal quarter:
Fiscal Quarter Amount
-------------- ------
12/31/00 $6,000,000
03/31/01 $8,000,000
7.2 Indebtedness. Create, issue, incur, assume, become liable in respect
------------
of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness incurred by the Borrower under the Secured Term
Loan;
(c) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(d) Guarantee Obligations incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of any Wholly
Owned Subsidiary Guarantor;
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(e) and any refinancings, refundings, renewals or extensions
thereof (without increasing, or shortening the maturity of, the principal
amount thereof);
(f) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding;
(g) letters of credit for the account of the Borrower or any of its
Subsidiaries obtained other than pursuant to this Agreement, so long as the
aggregate undrawn face
52
amount thereof, together with any unreimbursed reimbursement obligations in
respect thereof, does not exceed $5,000,000 at any one time; and
(h) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $1,000,000 at any one time outstanding.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of
-----
its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
that are not overdue for a period of more than 30 days or that are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(e), provided that no such
--------
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(f) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
--------
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents or the Secured
Term Loan;
53
(i) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business
and covering only the assets so leased;
(j) Liens consisting of segregated cash collateral accounts or bank
accounts securing obligations of the Borrower or any of its Subsidiaries
under letters of credit issued pursuant to Section 7.2(g) containing cash
and Cash Equivalents in an amount not to exceed 110% of the aggregate face
amount of such letters of credit; and
(k) Liens not otherwise permitted by this Section so long as neither
(i) the aggregate outstanding principal amount of the obligations secured
thereby nor (ii) the aggregate fair market value (determined as of the date
such Lien is incurred) of the assets subject thereto exceeds (as to the
Borrower and all Subsidiaries) $1,000,000 at any one time.
7.4 Fundamental Changes. Enter into any merger, consolidation or
-------------------
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (provided that the Wholly Owned Subsidiary Guarantor shall be the
--------
continuing or surviving corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor.
7.5 Disposition of Property. Dispose of any of its property, whether now
-----------------------
owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell
any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of unneeded, obsolete or worn out property in the
ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(e) so long as no Default or Event of Default has occurred and is
continuing, the Disposition or cancellation of promissory notes issued to
the Borrower by its employees in connection with the repurchase by the
Borrower of Capital Stock owned by employees of the Borrower or any
Subsidiary after such employee discontinues employment with the Borrower or
such Subsidiary; and
54
(f) the Disposition of other property having a fair market value not
to exceed $1,000,000 in the aggregate for any fiscal year of the Borrower.
7.6 Restricted Payments. Declare or pay any dividend (other than dividends
-------------------
payable solely in common stock of the Person making such dividend) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any Capital Stock of the Borrower or any Subsidiary (other than any payments
made in connection with the repurchase or redemption of Capital Stock owned by
employees of the Borrower or any Subsidiary after such employee discontinues
employment with the Borrower or such Subsidiary, provided that the aggregate
--------
amount of such Restricted Payments shall not exceed $250,000 in any fiscal year
of the Borrower), whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary (collectively,
"Restricted Payments"), except that any Subsidiary may make Restricted Payments
to the Borrower or any Wholly Owned Subsidiary Guarantor.
7.7 Investments. Make any advance, loan, extension of credit (by way of
-----------
guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) intercompany Investments by the Borrower or any of its
Subsidiaries in the Borrower or any Person that, prior to such investment,
is a Wholly Owned Subsidiary Guarantor; and
(e) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $1,000,000 during the term
of this Agreement.
7.8 Optional Payments and Modifications of Certain Debt Instruments. Make
---------------------------------------------------------------
any optional payment or prepayment on or redemption or purchase of any
Indebtedness (other than the Loans, any Indebtedness permitted under Section
7.2(b) or (c), or the Bridge Financing or Sony Debt to the extent permitted
under the applicable subordination agreement entered into pursuant to Section
6.12) or amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms relating to the payment or prepayment
or principal of or interest on, any such Indebtedness (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon).
7.9 Transactions with Affiliates. Enter into any transaction, including
----------------------------
any purchase, sale, lease or exchange of property, the rendering of any service
or the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this
55
Agreement, (b) in the ordinary course of business of the Borrower or such
Subsidiary, as the case may be, and (c) upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person that is not an
Affiliate.
7.10 Sales and Leasebacks. Enter into any arrangement with any Person
--------------------
providing for the leasing by the Borrower or any Subsidiary of real or personal
property that has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary.
7.11 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to
-------------------------
end on a day other than December 31 or change the Borrower's method of
determining fiscal quarters.
7.12 Negative Pledge Clauses. Enter into or suffer to exist or become
-----------------------
effective any agreement that prohibits or limits the ability of the Borrower or
any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property or revenues, whether now owned or hereafter acquired,
to secure its obligations under the Loan Documents to which it is a party other
than (a) this Agreement, the other Loan Documents and the Secured Term Loan and
(b) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby).
7.13 Lines of Business. Enter into any business, either directly or through
-----------------
any Subsidiary, except for those businesses in which the Borrower and its
Subsidiaries are engaged on the date of this Agreement or that are reasonably
related thereto.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within three days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) any Loan Party shall default in the observance or performance of
any agreement contained in clause (i) or (ii) of Section 6. 4(a) (with
respect to the Borrower only), Section 6. 7(a) or Section 7 of this
Agreement or Sections 5. 4 and 5. 6(b) of the Guarantee and Collateral
Agreement; or
56
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Administrative Agent; or
(e) the Borrower or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including any
Guarantee Obligation, but excluding the Loans) on the scheduled or original
due date with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such
holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided, that a default, event or condition described in
--------
clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default unless, at such time, one or more defaults,
events or conditions of the type described in clauses (i), (ii) and (iii)
of this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $1,000,000; or
(f) (i) the Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above that
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower
or any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in
the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Borrower or any of its Subsidiaries shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
57
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected
to have a Material Adverse Effect; or
(h) (i) one or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or (ii) any
preliminary or permanent injunction(s) shall be issued in the SanDisk
Litigation against the Borrower or its Subsidiaries adversely affecting the
business practices of the Borrower, including, without limitation, its
ability to manufacture products; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall become, or obtain rights (whether by means or
warrants, options or otherwise) to become, the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 20% of the outstanding common stock of the
Borrower; or (ii) the board of directors of the Borrower shall cease to
consist of a majority of Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments
58
shall immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Revolving
Commitments to be terminated forthwith, whereupon the Revolving Commitments
shall immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to this
paragraph, the Borrower shall at such time deposit in a cash collateral account
opened by the Administrative Agent an amount equal to the aggregate then undrawn
and unexpired amount of such Letters of Credit. Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other obligations of the Borrower hereunder and
under the other Loan Documents. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
other Loan Documents shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower (or such other Person
as may be lawfully entitled thereto). Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and appoints
-----------
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
59
9.2 Delegation of Duties. The Administrative Agent may execute any of its
--------------------
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither The Administrative Agent nor any of
----------------------
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall be
--------------------------------
entitled to rely, and shall be fully protected in relying, upon any instrument,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of the Required Lenders (or, if so specified by this Agreement, all Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice
60
of default". In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); provided that unless and until
--------
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on the Administrative Agent and Other Lenders. Each
----------------------------------------------------------
Lender expressly acknowledges that neither the Administrative Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereafter taken, including any review of the affairs of
a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents
to the Administrative Agent that it has, independently and without reliance upon
any Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and made
its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Revolving Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against the Administrative Agent
in any way relating to or arising out of, the Revolving Commitments, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
--------
61
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
that are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the Administrative Agent's gross negligence
or willful misconduct. The agreements in this Section shall survive the payment
of the Loans and all other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The
-----------------------------------------------
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not an Administrative Agent. With respect to its
Loans made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 10
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party to the relevant Loan Document may, or, with
the written consent of the Required Lenders, the Administrative Agent and each
Loan Party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder
62
or thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
-------- -------
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount or extend the final scheduled date of maturity of any Loan,
reduce the stated rate of any interest or fee payable hereunder (except (x) in
connection with the waiver of applicability of any post-default increase in
interest rates and (y) that any amendment or modification of defined terms used
in the financial covenants in this Agreement shall not constitute a reduction in
the rate of interest or fees for purposes of this clause (i)) or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender's Revolving Commitment, in each case without the
written consent of each Lender directly affected thereby; (ii) eliminate or
reduce the voting rights of any Lender under this Section 10. 1 without the
written consent of such Lender; (iii) reduce any percentage specified in the
definition of Required Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents, release all or substantially all of the Collateral or release
all or substantially all of the Subsidiary Guarantors from their obligations
under the Guarantee and Collateral Agreement, in each case without the written
consent of all Lenders; (iv) amend, modify or waive any provision of Section 9
without the written consent of the Administrative Agent; (v) amend, modify or
waive any provision of Section 2.3 or 2.4 without the written consent of the
Swingline Lender; or (vi) amend, modify or waive any provision of Section 3
without the written consent of the Issuing Lender. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Loan Parties, the Lenders, the Administrative
Agent and all future holders of the Loans. In the case of any waiver, the Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
For the avoidance of doubt, this Agreement may be amended (or amended and
restated) with the written consent of the Required Lenders, the Administrative
Agent and the Borrower (a) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
-------------------------------
benefits of this Agreement and the other Loan Documents with the Revolving
Extensions of Credit and the accrued interest and fees in respect thereof and
(b) to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
63
The Borrower: Lexar Media, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: The Chase Manhattan Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxXxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: The Chase Manhattan Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
provided that any notice, request or demand to or upon the Administrative Agent
--------
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
-----------------------------
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification
64
to, this Agreement and the other Loan Documents and any other documents prepared
in connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including the reasonable fees
and disbursements of counsel to the Administrative Agent and filing and
recording fees and expenses, with statements with respect to the foregoing to be
submitted to the Borrower prior to the Closing Date (in the case of amounts to
be paid on the Closing Date) and from time to time thereafter on a quarterly
basis or such other periodic basis as the Administrative Agent shall deem
appropriate, (b) to pay or reimburse each Lender and the Administrative Agent
for all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
----------
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower any of
its Subsidiaries or any of the Properties and the reasonable fees and expenses
of legal counsel in connection with claims, actions or proceedings by any
Indemnitee against any Loan Party under any Loan Document (all the foregoing in
this clause (d), collectively, the "Indemnified Liabilities"), provided, that
----------------------- --------
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
Indemnitee. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries to waive,
all rights for contribution or any other rights of recovery with respect to all
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee. All
amounts due under this Section 10.5 shall be payable not later than 10 days
after written demand therefor. Statements payable by the Borrower pursuant to
this Section 10.5 shall be submitted to the Chief Financial Officer of the
Borrower, at the address of the Borrower set forth in Section 10.2, or to such
other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Administrative
65
Agent, all future holders of the Loans and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender other than any Conduit Lender may, without the consent of
the Borrower, in accordance with applicable law, at any time sell to one or more
banks, financial institutions or other entities (each, a "Participant")
-----------
participating interests in any Loan owing to such Lender, any Revolving
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Loans or any fees payable hereunder, or postpone the date of
the final maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.15, 2.16 and 2.17 with respect to its participation
in the Revolving Commitments and the Loans outstanding from time to time as if
it was a Lender; provided that, in the case of Section 2. 16, such Participant
--------
shall have complied with the requirements of said Section and provided, further,
-------- -------
that no Participant shall be entitled to receive any greater amount pursuant to
any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
--------
accordance with applicable law, at any time and from time to time assign to any
Lender, any affiliate of any Lender or any Approved Fund or, with the consent of
the Borrower and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed), to an additional bank, financial institution
or other entity (an "Assignee") all or any part of its rights and obligations
--------
under this Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, executed by such Assignee, such Assignor and any other Person whose
consent is required pursuant to this paragraph, and delivered to the
Administrative Agent for its acceptance and recording in the Register; provided
--------
that no such assignment to an Assignee (other than any Lender, any affiliate of
any Lender or any Approved Fund) shall be in an aggregate
66
principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. For purposes of
the proviso contained in the preceding sentence, the amount described therein
shall be aggregated in respect of each Lender and its related Approved Funds, if
any. Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Revolving Commitment and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto). Notwithstanding any provision of this Section 10.6, the consent of the
Borrower shall not be required for any assignment that occurs when an Event of
Default pursuant to Section 8(f) shall have occurred and be continuing with
respect to the Borrower. Notwithstanding the foregoing, any Conduit Lender may
assign at any time to its designating Lender hereunder without the consent of
the Borrower or the Administrative Agent any or all of the Loans it may have
funded hereunder and pursuant to its designation agreement and without regard to
the limitations set forth in the first sentence of this Section 10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower, maintain at
its address referred to in Section 10.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
--------
and addresses of the Lenders and the Revolving Commitment of, and the principal
amount of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, each other Loan Party, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register as the owner of the
Loans and any Notes evidencing the Loans recorded therein for all purposes of
this Agreement. Any assignment of any Loan, whether or not evidenced by a Note,
shall be effective only upon appropriate entries with respect thereto being made
in the Register (and each Note shall expressly so provide). Any assignment or
transfer of all or part of a Loan evidenced by a Note shall be registered on the
Register only upon surrender for registration of assignment or transfer of the
Note evidencing such Loan, accompanied by a duly executed Assignment and
Acceptance, and thereupon one or more new Notes shall be issued to the
designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register on the effective date determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section 10.6 concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including any pledge or assignment by a
Lender of any Loan or Note to any Federal Reserve Bank in accordance with
applicable law.
67
(g) The Borrower, upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender requiring Notes to facilitate transactions
of the type described in paragraph (f) above.
(h) Each of the Borrower, each Lender and the Administrative Agent hereby
confirms that it will not institute against a Conduit Lender or join any other
Person in instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
-------- -------
that each Lender designating any Conduit Lender hereby agrees to indemnify, save
and hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its inability to institute such a proceeding against such Conduit
Lender during such period of forbearance.
10.7 Adjustments; Set-off. (a) Except to the extent that this
--------------------
Agreement expressly provides for payments to be allocated to a particular
Lender, if any Lender (a "Benefited Lender") shall, at any time after the Loans
----------------
and other amounts payable hereunder shall immediately become due and payable
pursuant to Section 8, receive any payment of all or part of the Obligations
owing to it, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of the Obligations owing to such other Lender, such Benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral ratably with each of the Lenders; provided, however, that if
-------- -------
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall not
--------
affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a
68
manually executed counterpart hereof. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
-----------
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the courts of the State of New York, the courts of the United
States for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in Section 10.2 or
at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
69
10.13 Acknowledgements. The Borrower hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
10.14 Releases of Guarantees and Liens. (a) Notwithstanding
--------------------------------
anything to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 10.1) to take any action requested by the Borrower having the effect
of releasing any Collateral or guarantee obligations (i) to the extent necessary
to permit consummation of any transaction not prohibited by any Loan Document or
that has been consented to in accordance with Section 10.1 or (ii) under the
circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations
and the other obligations under the Loan Documents (other than obligations under
or in respect of Hedge Agreements) shall have been paid in full, the Revolving
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Loan Party under the Security Documents shall terminate, all without
delivery of any instrument or performanc e of any act by any Person.
10.15 Confidentiality. Each of the Administrative Agent and each
---------------
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
--------
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender, any affiliate of any Lender or any
Approved Fund, (b) to any actual or prospective Transferee or Hedge Agreement
counterparty that agrees to comply with the provisions of this Section, (c) to
its employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates, (d) upon the request or demand of
any Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect
70
to such Lender, or (i) in connection with the exercise of any remedy hereunder
or under any other Loan Document.
10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
---------------------
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of Page Intentionally Left Blank]
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
LEXAR MEDIA, INC.
By:________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender
By:________________________________________
Name:
Title:
72
SCHEDULE 1.1A
-------------
REVOLVING COMMITMENTS
Lender Revolving Commitment
------ --------------------
The Chase Manhattan Bank $20,000,000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxXxxxxx
SCHEDULE 4.4
------------
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
The following material agreements contain rights that are required to be
assigned in connection with the execution, delivery, and performance of the
Agreement and/or the Loan Documents and prohibit any assignment of these rights
under such agreements without the prior written consent of the other party:
1. SONY Technology License Agreement between SONY Corporation and the
Company dated March 21, 2000.
2. Lexar Technology License Agreement between SONY Corporation and the
Company dated March 21, 2000.
The following agreements to which the Company is a party prohibit the
incurrence of additional indebtedness without the prior written consent of the
other party:
1. Series E Stock Purchase Agreement dated September 28, 1999 requires the
consent of the holders of at least seventy-five percent (75%) of the Company's
outstanding Series E Preferred Stock to incur additional indebtedness.
2. Note Purchase Agreement between the Company and Xxxx Xx and Xxxxx Xxx
dated August 8, 1997, as amended by that certain Amendment to the Note Purchase
Agreement dated February 23, 1998.
SCHEDULE 4.15
-------------
SUBSIDIARIES
------------------------------------------------------------------------------------------
Name Jurisdiction Ownership
---- ------------ ---------
------------------------------------------------------------------------------------------
Lexar Media K.K. Japan Wholly-owned subsidiary of
Lexar Media, Inc.
------------------------------------------------------------------------------------------
XxxxxXxxx.xxx California Wholly-owned subsidiary of
Lexar Media, Inc.
------------------------------------------------------------------------------------------
Lexar Media (Europe) Limited United Kingdom Wholly-owned subsidiary of
Lexar Media, Inc.
------------------------------------------------------------------------------------------
-2-
SCHEDULE 4.19
-------------
UCC FILING JURISDICTIONS
California Secretary of State
U.S. Patent and Trademark Office
-3-
SCHEDULE 7.2(E)
---------------
EXISTING INDEBTEDNESS
-------------------------------------------------------------------------------------------
Lendor Principal Amount Total Outstanding
------ ---------------- -----------------
-------------------------------------------------------------------------------------------
SONY Corporation $2,000,000 $2,000,000
-------------------------------------------------------------------------------------------
Xxxx Xx and Xxxxx Xxx $4,750,000 $4,750,000
-------------------------------------------------------------------------------------------
Toshiba America Electronic $ 400,000 $ 400,000
Components, Inc.
-------------------------------------------------------------------------------------------
APV Technologies Partners II, $ 300,000* $ 300,000
L.P.
-------------------------------------------------------------------------------------------
St. Xxxx Venture Capital $1,575,000* $1,575,000
Partners V, LLC
-------------------------------------------------------------------------------------------
GE Capital Equity $ 500,000* $ 500,000
Investments, Inc.
-------------------------------------------------------------------------------------------
SunAmerica Inc. $5,000,000* $5,000,000
-------------------------------------------------------------------------------------------
Mellon Ventures, L.P. $3,000,000* $3,000,000
-------------------------------------------------------------------------------------------
Thomvest Ventures, Inc. $1,399,545* $1,399,545
-------------------------------------------------------------------------------------------
* Each of these Notes was issued by Lexar pursuant to a Note and Warrant
Purchase Agreement dated as of May 19, 2000 which allows the Company to issue up
to a total of $16 million dollars under this facility for a period of 90 days
after closing, the full amount of which will be deemed to be existing
indebtedness of Lexar.
-4-
SCHEDULE 7.3(F)
---------------
EXISTING LIENS
In addition to security interests held in certain personal property of Lexar
pursuant to various equipment leases, certain tangible and intangible property
of Lexar is encumbered as follows:
1. The Company entered into a Note Purchase Agreement (the "Note Agreement") on
August 8, 1997 with Xxxx Xx and Xxxxx Xxx. Pursuant to the Note Agreement, Xxxx
Xx and Xxxxx Xxx made a loan to the Company in an aggregate principal amount of
$4,750,000. The loan is secured by all of the assets of the Company including
its intellectual property.
2. In June and July 1997, the Company received a cash advance for working
capital in the amount of $400,000 from Toshiba America Electronics Components,
Inc. This advance is secured by all of the assets of the Company including its
intellectual property.
-5-
EXHIBIT A
---------
-------------------------------------------------------------------------------
GUARANTEE AND COLLATERAL AGREEMENT
made by
LEXAR MEDIA, INC.,
as Borrower,
and certain of its Subsidiaries
in favor of
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of June 30, 2000
--------------------------------------------------------------------------------
-6-
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of June 30, 2000, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the "Grantors"), in favor of THE CHASE
MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative
--------------
Agent") for the banks and other financial institutions or entities (the
-----
"Lenders") from time to time parties to the Credit Agreement, dated as of June
-------
30, 2000 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among LEXAR MEDIA, INC., a California corporation (the
----------------
"Borrower"), the Lenders and the Administrative Agent.
--------
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Credit Agreement, dated as of June 30, 2000
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), between Lender and LEXAR MEDIA, INC., a California corporation (the
"Borrower"), the Lender has agreed to make extensions of credit to the Borrower
upon the terms and subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lender
to make extensions of credit to the Borrower under the Credit Agreement that the
Grantors shall have executed and delivered this Agreement to the Lender;
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to enter into the Credit Agreement and to induce the Lender to make
extensions of credit to the Borrower thereunder, each Grantor hereby agrees with
the Lender as follows:
SECTION 1. DEFINED TERMS; CONSTRUCTION
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
-----------
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms are used herein as defined in the
New York UCC: Accounts, Certificated Security, Chattel Paper, Documents,
Equipment, Farm Products, Instruments and Inventory.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
--------------------
principal of and interest on the Loans and all other obligations and liabilities
of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such
-7-
proceeding) to the Lender (or, in the case of any Lender Hedge Agreement, any
Affiliate of Lender), whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Lender Hedge Agreement or any other document made, delivered or
given in connection with any of the foregoing, in each case whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Lender that are required to be paid by the Borrower pursuant
to the terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
----------
"Collateral Account": any collateral account established by the
------------------
Lender as provided in Section 6.1 or 6.4.
"Contracts": the contracts and agreements listed in Schedule 7, as the
--------- ----------
same may be amended, supplemented or otherwise modified from time to time,
including, without limitation, (i) all rights of any Grantor to receive moneys
due and to become due to it thereunder or in connection therewith, (ii) all
rights of any Grantor to damages arising thereunder and (iii) all rights of any
Grantor to perform and to exercise all remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of the United
----------
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
----------
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
------------------
licensor or licensee (including, without limitation, those listed in Schedule
--------
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
---------------
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
------------------
jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
-------------------------------
Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the New York UCC and, in any event, including,
without limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or interest
or to which such Grantor or any property of such Grantor is subject, as the same
may from time to time be amended, supplemented or otherwise modified, including,
without limitation, (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights of such
Grantor to damages arising thereunder and (iii) all rights of such Grantor to
perform and to exercise all remedies thereunder, in each case to the extent the
terms thereof (after giving effect to any consent that has been obtained, it
being understood that such Grantor is not obligated to obtain any such consent)
do not prohibit the grant
-8-
by such Grantor of a security interest pursuant to this Agreement in its right,
title and interest therein without the consent of any other party thereto and do
not give any other party thereto the right to terminate its obligations
thereunder; provided, that the foregoing limitation shall not affect, limit,
--------
restrict or impair the grant by such Grantor of a security interest pursuant to
this Agreement in any Receivable or Intellectual Property or any money or other
amounts due or to become due or other right to payment under any such contract,
agreement, instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, all
---------------------
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2) or any
other Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Lender that are required to be paid by such
Guarantor pursuant to the terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than the
----------
Borrower.
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
xxx at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made by any
-----------------
Grantor to the Borrower or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all
-------------------
"investment property" as such term is defined in Section 9-115 of the New York
UCC (other than any Foreign Subsidiary Voting Stock excluded from the definition
of "Pledged Stock") and (ii) whether or not constituting "investment property"
as so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
-------
Property.
"Lender Hedge Agreements": all Hedge Agreements (if any) entered into
-----------------------
by the Borrower with Lender (or any Affiliate of Lender).
"New York UCC": the Uniform Commercial Code as from time to time in
------------
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
-----------
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"Patents": (i) all letters patent of the United States, any other
-------
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without limitation,
any of the foregoing referred to in Schedule 6, (ii) all applications for
----------
letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to in Schedule 6, and (iii) all rights to obtain
----------
any reissues or extensions of the foregoing.
-9-
"Patent License": all agreements, whether written or oral, providing
--------------
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
----------
"Pledged Notes": all promissory notes listed on Schedule 2, all
------------- ----------
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
------------- ----------
together with any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of any Person that may
be issued or granted to, or held by, any Grantor while this Agreement is in
effect; provided that in no event shall more than 66% of the total outstanding
--------
Foreign Subsidiary Voting Stock of any Foreign Subsidiary be required to be
pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-
--------
306(1) of the New York UCC and, in any event, shall include, without limitation,
all dividends or other income from the Investment Property, collections thereon
or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
----------
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
--------------
"Trademarks": (i) all trademarks, trade names, corporate names,
----------
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in Schedule 6, and (ii) the right to obtain all renewals thereof.
----------
"Trademark License": any agreement, whether written or oral,
-----------------
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule 6.
----------
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
-----------------------------
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Except as the context otherwise requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
-10-
1.3 Construction. Reference is made to: (1) that certain other
------------
Guarantee and Collateral Agreement, dated as of even date herewith, made by each
of the Grantors in favor of the Chase Manhattan Bank, as Administrative Agent
(the `Senior Agent") for the "Lenders" identified therein (the "Senior Lenders")
(such other Guarantee and Collateral Agreement, the "Senior G&C Agreement"); and
(2) that certain Intercreditor Agreement, dated as of even date herewith, among
the Lender hereunder, the Senior Agent, and the Senior Lenders. So long as the
Intercreditor Agreement remains in full force and effect, the applicable rights
and remedies of the Lender hereunder are subject to the superior applicable
rights and remedies of the Senior Agent and the Senior Lenders under the Senior
G&C Agreement in accordance with the Intercreditor Agreement, and the applicable
duties and obligations of the Grantors hereunder owing in favor of the Lender
hereunder are subject to the superior applicable duties and obligations of the
Grantors under the Senior G&C Agreement owing in favor of the Senior Agent and
the Senior Lenders under the Senior G&C Agreement in accordance with the
Intercreditor Agreement.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
---------
severally, unconditionally and irrevocably, guarantees to the Lender and its
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Lender from the
Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are paid in full and the Commitments are terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
---------------------
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such
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Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such
payment. Each Guarantor's right of contribution shall be subject to the terms
and conditions of Section 2.3. The provisions of this Section 2.2 shall in no
respect limit the obligations and liabilities of any Guarantor to the Lender,
and each Guarantor shall remain liable to the Lender for the full amount
guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
--------------
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Lender, no Guarantor shall be entitled to be subrogated to any of the rights
of the Lender against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Lender for the payment of
the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Lender by the Borrower on account of the Borrower Obligations are paid in
full and the Commitments are terminated. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Borrower Obligations shall not have been paid in full, such amount shall be held
by such Guarantor in trust for the Lender, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Lender in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Lender, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Lender may
determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
---------------------------------------------------------
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Lender may be rescinded by the Lender and any of the
Borrower Obligations continued, and the Borrower Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Lender, and the Credit
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Lender may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Lender for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. The Lender shall not have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Borrower Obligations or for the guarantee contained in this
Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Lender upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Borrower Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Borrower and any of the Guarantors, on the one
hand, and the Lender, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Borrower Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Credit Agreement or
any other Loan Document, any of the Borrower Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or
-12-
from time to time held by the Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower or any other Person against the
Lender, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Borrower Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Lender to make any such demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Lender against any Guarantor. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
-------------
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
--------
hereunder will be paid to the Lender without set-off or counterclaim in Dollars
at the office of the Lender located at Xxx Xxxx Xx., Xxxxx 0000, Xxx Xxxxxxxxx,
XX 00000.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby grants, assigns, and transfers to the Lender a
security interest in all of the following property now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
"Collateral"), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations,:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Deposit Accounts;
(e) all Documents;
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(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all other property not otherwise described above;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees given
by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into the Credit Agreement and to induce
the Lender to make extensions of credit to the Borrower thereunder, each Grantor
hereby represents and warrants to the Lender that:
4.1 Title; No Other Liens. Except for the security interest granted
---------------------
to the Lender pursuant to this Agreement and the other Liens permitted to exist
on the Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Lender, pursuant to this Agreement or as are
permitted by the Credit Agreement.
4.2 Perfected First Priority Liens. The security interests granted
------------------------------
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other documents
----------
referred to on said Schedule, have been delivered to the Lender in completed and
duly executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Lender, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for Liens permitted by the Credit Agreement.
4.3 Jurisdiction of Organization; Chief Executive Office. On the
----------------------------------------------------
date hereof, such Grantor's jurisdiction of organization and the location of
such Grantor's chief executive office or sole place of business are specified on
Schedule 4.
----------
4.4 Inventory and Equipment. On the date hereof, the Inventory and
-----------------------
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
----------
4.5 Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
-14-
4.6 Investment Property. (a) The shares of Pledged Stock pledged by
-------------------
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 66% of the outstanding Foreign
Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement.
4.7 Receivables. (a) No amount payable to such Grantor under or in
-----------
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Lender.
(b) None of the obligors on any Receivable is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Lender from time to
time as owing to such Grantor in respect of the Receivables will at such times
be accurate.
4.8 Contracts. (a) No consent of any party (other than such Grantor)
---------
to any Contract is required, or purports to be required, in connection with the
execution, delivery and performance of this Agreement.
(b) Each Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Contracts by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or general
in nature.
(d) Neither such Grantor nor (to the best of such Grantor's knowledge)
any of the other parties to the Contracts is in default in the performance or
observance of any of the terms thereof in any manner that, in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(e) The right, title and interest of such Grantor in, to and under the
Contracts are not subject to any defenses, offsets, counterclaims or claims
that, in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
-15-
(f) Such Grantor has delivered to the Lender a complete and correct
copy of each Contract, including all amendments, supplements and other
modifications thereto.
(g) No amount payable to such Grantor under or in connection with any
Contract is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Lender.
(h) None of the parties to any Contract is a Governmental Authority.
4.9 Intellectual Property. (a) Schedule 6 lists all Intellectual
--------------------- ----------
Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned and does not
infringe the intellectual property rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof, none of the
----------
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, or (ii) which, if adversely determined, would have a material adverse
effect on the value of any Intellectual Property.
SECTION 5 COVENANTS
Each Grantor covenants and agrees with the Lender that, from and after
the date of this Agreement until the Obligations shall have been paid in full,
no Letter of Credit shall be outstanding and the Commitments shall have
terminated:
5.1 Delivery of Instruments, Certificated Securities and Chattel
------------------------------------------------------------
Paper. If any amount payable under or in connection with any of the Collateral
-----
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper shall be
immediately delivered to the Lender, duly indorsed in a manner satisfactory to
the Lender, to be held as Collateral pursuant to this Agreement.
5.2 Maintenance of Insurance. (a) Such Grantor will maintain, with
------------------------
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Lender and (ii) to the
extent requested by the , insuring such Grantor and the Lender against liability
for personal injury and property damage relating to such Inventory and
Equipment, such policies to be in such form and amounts and having such coverage
as may be reasonably satisfactory to the Lender.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Lender of written notice
thereof, (ii) name the Lender as insured party or loss payee, (iii) if
reasonably
-16-
requested by the Lender, include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to the Lender.
(c) The Borrower shall deliver to the Lender a report of a reputable
insurance broker with respect to such insurance substantially concurrently with
each delivery of the Borrower's audited annual financial statements and such
supplemental reports with respect thereto as the Lender may from time to time
reasonably request.
5.3 Payment of Obligations. Such Grantor will pay and discharge or
----------------------
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.4 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Lender from time to time
statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith as the
Lender may reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of
the Lender, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded,
such further instruments and documents and take such further
actions as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without
limitation, (i) filing any financing or continuation statements
under the Uniform Commercial Code (or other similar laws) in
effect in any jurisdiction with respect to the security interests
created hereby and (ii) in the case of Investment Property,
Deposit Accounts and any other relevant Collateral, taking any
actions necessary to enable the Lender to obtain "control"
(within the meaning of the applicable Uniform Commercial Code)
with respect thereto.
(d) Without limiting the generality of the foregoing, as soon as
reasonably possible, but in any event within 30 days after the
date hereof, each Grantor shall (i) duly file applications for
copyright registration with the United States Copyright Office of
all computer software and firmware now owned by such Grantor and
incorporated in, or utilized in connection with, such Grantor's
products, (ii) provide copies of all such copyright applications
to the Lender, and (iii) execute and deliver to the Lender
documentation, in form suitable for filing in the United States
Copyright Office, confirming the grant of a security interest
therein to the Lender and containing other customary terms
consistent with this Agreement. Hereafter, each Grantor shall
perform the foregoing actions with respect to all computer
software and firmware hereafter developed, created or acquired by
-17-
such Grantor and incorporated in, or utilized in connection with,
such Grantor's products, promptly after the development, creation
or acquisition of the same, but not more frequently than every
four months.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except
--------------------------------
upon 15 days' prior written notice to the Lender and delivery to the Lender of
(a) all additional executed financing statements and other documents reasonably
requested by the Lender to maintain the validity, perfection and priority of the
security interests provided for herein and (b) if applicable, a written
supplement to Schedule 5 showing any additional location at which Inventory or
Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule 5;
(ii) change its jurisdiction of organization or the location of its
chief executive office or sole place of business from that referred to in
Section 4.3; or
(iii) change its name, identity or corporate or other organizational
structure to such an extent that any financing statement filed by the Lender in
connection with this Agreement would become misleading.
5.6 Notices. Such Grantor will advise the Lender promptly, in
-------
reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Lender to exercise any of its remedies
hereunder; and
(b) the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.7 Investment Property. (a) If such Grantor shall become entitled
-------------------
to receive or shall receive any certificate (including, without limitation, any
certificate representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the Lender, hold the
same in trust for the Lender and deliver the same forthwith to the Lender in the
exact form received, duly indorsed by such Grantor to the Lender, if required,
together with an undated stock power covering such certificate duly executed in
blank by such Grantor and with, if the Lender so requests, signature guaranteed,
to be held by the Lender, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Lender to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Investment Property or any property shall be
distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Lender, be delivered to
the Lender to be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in respect
of the Investment Property shall be received by such Grantor, such Grantor
shall, until such money or property is paid or delivered to the Lender, hold
such money or property in trust for the Lender, segregated from other funds of
such Grantor, as additional collateral security for the Obligations.
-18-
(b) Without the prior written consent of the Lender, such Grantor
will not (i) vote to enable, or take any other action to permit, any Issuer to
issue any Capital Stock of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any Capital
Stock of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Investment
Property or Proceeds thereof (except pursuant to a transaction expressly
permitted by the Credit Agreement), (iii) create, incur or permit to exist any
Lien or option in favor of, or any claim of any Person with respect to, any of
the Investment Property or Proceeds thereof, or any interest therein, except for
the security interests created by this Agreement or (iv) enter into any
agreement or undertaking restricting the right or ability of such Grantor or the
Lender to sell, assign or transfer any of the Investment Property or Proceeds
thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Lender promptly in writing
of the occurrence of any of the events described in Section 5.7(a) with respect
to the Investment Property issued by it and (iii) the terms of Sections 6.3(c)
and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that
------- --------
may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Investment Property issued by it.
5.8 Receivables. (a) Other than in the ordinary course of business
-----------
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Lender a copy of each material
demand, notice or document received by it that questions or calls into doubt the
validity or enforceability of more than 5% of the aggregate amount of the then
outstanding Receivables.
5.9 Contracts. (a) Such Grantor will perform and comply in all
---------
material respects with all its obligations under the Contracts.
(b) Such Grantor will not amend, modify, terminate or waive any
provision of any Contract in any manner which could reasonably be expected to
materially adversely affect the value of such Contract as Collateral.
(c) Such Grantor will exercise promptly and diligently each and every
material right which it may have under each Contract (other than any right of
termination).
(d) Such Grantor will deliver to the Lender a copy of each material
demand, notice or document received by it relating in any way to any Contract
that questions the validity or enforceability of such Contract.
5.10 Intellectual Property. (a) Such Grantor (either itself or
---------------------
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law,
(iv) not adopt or use any xxxx which is confusingly similar or a colorable
imitation of such
-19-
Trademark unless the Lender shall obtain a perfected security interest in such
xxxx pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise impaired.
Such Grantor will not (either itself or through licensees) do any act whereby
any material portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Lender immediately if it knows, or
has reason to know, that any application or registration relating to any
material Intellectual Property may become forfeited, abandoned or dedicated to
the public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any material Intellectual Property
or such Grantor's right to register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Lender within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Lender, such Grantor
shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Lender may request to evidence the
Lender's security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the Lender
after it learns thereof and xxx for infringement, misappropriation or dilution,
to seek injunctive relief where appropriate and to recover any and all damages
for such infringement, misappropriation or dilution.
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SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Lender shall
---------------------------------------
have the right to make test verifications of the Receivables in any manner and
through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Lender may require in
connection with such test verifications. At any time and from time to time,
upon the Lender's request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the
Lender to furnish to the Lender reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Lender hereby authorizes each Grantor to collect such
Grantor's Receivables, subject to the Lender's direction and control, and the
Lender may curtail or terminate said authority at any time after the occurrence
and during the continuance of an Event of Default. If required by the Lender at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the Lender,
if required, in a Collateral Account maintained under the sole dominion and
control of the Lender, subject to withdrawal by the Lender only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Lender, segregated from other funds of such Grantor. Each such
deposit of Proceeds of Receivables shall be accompanied by a report identifying
in reasonable detail the nature and source of the payments included in the
deposit.
(c) At the Lender's request, each Grantor shall deliver to the Lender
all original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
----------------------------------------------------
Lender in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Receivables and parties to the Contracts to verify with them
to the Lender's satisfaction the existence, amount and terms of any Receivables
or Contracts.
(b) Upon the request of the Lender at any time after the occurrence
and during the continuance of an Event of Default, each Grantor shall notify
obligors on the Receivables and parties to the Contracts that the Receivables
and the Contracts have been assigned to the Lender and that payments in respect
thereof shall be made directly to the Lender.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. The Lender shall not have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by the Lender of any payment
relating thereto, nor shall the Lender be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
-------------
occurred and be continuing and the Lender shall have given notice to the
relevant Grantor of the Lender's intent to exercise its corresponding rights
pursuant to Section 6.3(b), each Grantor shall be permitted to receive all
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cash dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes, in each case paid in the normal course of
business of the relevant Issuer and consistent with past practice, to the
extent permitted in the Credit Agreement, and to exercise all voting and
corporate or other organizational rights with respect to the Investment
Property; provided , however, that no vote shall be cast or corporate or other
-------- -------
organizational right exercised or other action taken which, in the Lender's
reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Lender shall give notice of its intent to exercise such rights to the relevant
Grantor or Grantors, (i) the Lender shall have the right to receive any and all
cash dividends, payments or other Proceeds paid in respect of the Investment
Property and make application thereof to the Obligations in such order as the
Lender may determine, and (ii) any or all of the Investment Property shall be
registered in the name of the Lender or its nominee, and the Lender or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Investment Property at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate or
other organizational structure of any Issuer, or upon the exercise by any
Grantor or the Lender of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Lender may determine), all without liability except to account
for property actually received by it, but the Lender shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Lender in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Lender.
6.4 Proceeds to be Turned Over To Lender. In addition to the rights
------------------------------------
of the Lender specified in Section 6.1 with respect to payments of Receivables,
if an Event of Default shall occur and be continuing, all Proceeds received by
any Grantor consisting of cash, checks and other near-cash items shall be held
by such Grantor in trust for the Lender, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Lender in the exact form received by such Grantor (duly indorsed by such
Grantor to the Lender, if required). All Proceeds received by the Lender
hereunder shall be held by the Lender in a Collateral Account maintained under
its sole dominion and control. All Proceeds while held by the Lender in a
Collateral Account (or by such Grantor in trust for the Lender) shall continue
to be held as collateral security for all the Obligations and shall not
constitute payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed upon
-----------------------
by the Borrower and the Lender, or, if an Event of Default shall have occurred
and be continuing, at any time at the Lender's election, the Lender may apply
all or any part of Proceeds constituting Collateral, whether or not held in
any Collateral Account, in payment of the Obligations in such order as the
Lender may elect, and any part of such funds which the Lender elects not so to
apply and deems not required as collateral
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security for the Obligations shall be paid over from time to time by the
Lender to the Borrower or to whomsoever may be lawfully entitled to receive
the same. Any balance of such Proceeds remaining after the Obligations shall
have been paid in full, no Letters of Credit shall be outstanding and the
Commitments shall have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
-----------------------
be continuing, the Lender may exercise, in addition to all other rights and
remedies granted to the Lender in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law.
Without limiting the generality of the foregoing, the Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. Each Grantor further
agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at such Grantor's premises or elsewhere. The Lender shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Lender may elect,
and only after such application and after the payment by the Lender of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Lender account for the surplus, if
any, to any Grantor. To the extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the Lender arising
out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.
6.7 Registration Rights. (a) If the Lender shall determine to
-------------------
exercise its right to sell any or all of the Pledged Stock pursuant to Section
6.6, and if in the opinion of the Lender it is necessary or advisable to have
the Pledged Stock, or that portion thereof to be sold, registered under the
provisions of the Securities Act, the relevant Grantor will cause the Issuer
thereof to (i) execute and deliver, and cause the directors and officers of such
Issuer to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts as may be, in the opinion of the Lender,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Lender, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Lender shall designate and to
-23-
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Lender may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Lender shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Lender, that the Lender
has no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
------------------
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Lender to collect such deficiency.
SECTION 7. THE LENDER
7.1 Lender's Appointment as Attorney-in-Fact, etc. (a) Each Grantor
---------------------------------------------
hereby irrevocably constitutes and appoints the Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-
fact with full irrevocable power and authority in the place and stead of such
Grantor and in the name of such Grantor or in its own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Lender the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Lender for the purpose of collecting any
and all such moneys due under any Receivable or Contract or with respect to
any other Collateral whenever payable;
-24-
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments, documents and
papers as the Lender may request to evidence the Lender's security interest in
such Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance called
for by the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (2) ask or
demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect
of or arising out of any Collateral; (3) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (4) commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against such Grantor with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as
the Lender may deem appropriate; (7) assign any Copyright, Patent or Trademark
(along with the goodwill of the business to which any such Copyright, Patent
or Trademark pertains), throughout the world for such term or terms, on such
conditions, and in such manner, as the Lender shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for all
purposes, and do, at the Lender's option and such Grantor's expense, at any
time, or from time to time, all acts and things which the Lender deems
necessary to protect, preserve or realize upon the Collateral and the Lender's
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Lender agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.1(a) unless an Event of Default shall have
occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Lender, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Lender incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate per annum equal to the highest rate per annum at which interest would then
be payable on any category of past due Loans under the Credit Agreement, from
the date of payment by the Lender to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Lender on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are
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coupled with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.
7.2 Duty of Lender. The Lender's sole duty with respect to the
--------------
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the Lender deals with similar property for
its own account. Neither the Lender nor any of its officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon the Lender or any Lender to exercise any such
powers. The Lender shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
---------------------------------
the New York UCC and any other applicable law, each Grantor authorizes the
Lender to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature of
such Grantor in such form and in such offices as the Lender determines
appropriate to perfect the security interests of the Lender under this
Agreement. A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.
7.4 [Intentionally Omitted]
SECTION . MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the Lender
-------
or any Grantor hereunder shall be effected in the manner provided for in Section
10.2 of the Credit Agreement; provided that any such notice, request or demand
--------
to or upon any Guarantor shall be addressed to such Guarantor at its notice
address set forth on Schedule 1.
----------
8.3 No Waiver by Course of Conduct; Cumulative Remedies. The Lender
---------------------------------------------------
shall not by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Lender would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees
-------------------------------------
to pay or reimburse the Lender for all its costs and expenses incurred in
collecting against such Guarantor under the guarantee contained in Section 2 or
otherwise enforcing or preserving any rights under this Agreement
-26-
and the other Loan Documents to which such Guarantor is a party, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to the Lender and of counsel
to the Lender.
(b) Each Guarantor agrees to pay, and to save the Lender harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Lender harmless
from, any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement to the extent the Borrower would be required to
do so pursuant to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Grantor and shall inure to the benefit of the
Lender and its successors and assigns; provided that no Grantor may assign,
--------
transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Lender.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Lender
-------
at any time and from time to time while an Event of Default shall have occurred
and be continuing, without notice to such Grantor or any other Grantor, any such
notice being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender to or for the
credit or the account of such Grantor, or any part thereof in such amounts as
the Lender may elect, against and on account of the obligations and liabilities
of such Grantor to the Lender hereunder and claims of every nature and
description of the Lender against such Grantor, in any currency, whether arising
hereunder, under the Credit Agreement, any other Loan Document or otherwise, as
the Lender may elect, whether or not the Lender has made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured. The Lender shall notify such Grantor promptly of any such set-off
and the application made by the Lender of the proceeds thereof, provided that
--------
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Lender under this Section 8.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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8.9 Section Headings. The Section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Grantors and the Lender with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to subject matter hereof
and thereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action
or proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the Lender
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) the Lender has no fiduciary relationship with or duty to any
Grantor arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Grantors, on the one hand, and
the Lender, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Grantors and the Lender.
-28-
8.14 Additional Grantors. Each Subsidiary of the Borrower that is
-------------------
required to become a party to this Agreement pursuant to Section 6.9 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15 Releases. (a) At such time as the Loans and the other
--------
Obligations (other than Obligations in respect of Lender Hedge Agreements) shall
have been paid in full and the Commitments have been terminated, the Collateral
shall be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Lender and each Grantor hereunder shall terminate, all without delivery of
any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Lender shall deliver to such Grantor
any Collateral held by the Lender hereunder, and execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Lender, at the request and sole expense of such Grantor, shall execute
and deliver to such Grantor all releases or other documents reasonably necessary
or desirable for the release of the Liens created hereby on such Collateral. At
the request and sole expense of the Borrower, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the Capital Stock
of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of
in a transaction permitted by the Credit Agreement; provided that the Borrower
--------
shall have delivered to the Lender, at least ten Business Days prior to the date
of the proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of Page Intentionally Left Blank]
-29-
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
LEXAR MEDIA, INC.
By:_____________________________________
Name:
Title:
XXXXXXXXX.XXX
By:_____________________________________
Name:
Title:
-2
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement, dated as of June 30, 2000 (the "Agreement"), made by
---------
the Grantors parties thereto for the benefit of The Chase Manhattan Bank, as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent as follows:
1. The undersigned will be bound by the terms of the Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.7(a) of
the Agreement.
3. The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply
to it, mutatis mutandis, with respect to all actions that may be required of it
------- --------
pursuant to Section 6.3(c) or 6.7 of the Agreement.
[NAME OF ISSUER]
By_______________________________________
Name:
Title:
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
Fax:
Annex 1 to
Guarantee and Collateral Agreement
----------------------------------
ASSUMPTION AGREEMENT, dated as of ________________, 200_, made by
______________________________, a ______________ corporation (the "Additional
----------
Grantor"), in favor of THE CHASE MANHATTAN BANK, as Administrative Agent (the
-------
"Lender"). All capitalized terms not defined herein shall have the meaning
------
ascribed to them in such Credit Agreement referred to below.
W I T N E S S E T H :
---------------------
WHEREAS, LEXAR MEDIA, INC. (the "Borrower") and the Lender have
--------
entered into a Credit Agreement, dated as of June 30, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
----------------
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered into
the Guarantee and Collateral Agreement, dated as of June 30, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee and
-------------
Collateral Agreement") in favor of the Lender;
--------------------
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
----------------------------------
this Assumption Agreement, the Additional Grantor, as provided in Section 8.14
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in the Schedules to the
Guarantee and Collateral Agreement. The Additional Grantor hereby represents
and warrants that each of the representations and warranties contained in
Section 4 of the Guarantee and Collateral Agreement is true and correct on and
as the date hereof (after giving effect to this Assumption Agreement) as if made
on and as of such date.
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:_________________________________
Name:
Title:
Annex 1-A to
Assumption Agreement
--------------------
Supplement to Schedule 1
------------------------
Supplement to Schedule 2
------------------------
Supplement to Schedule 3
------------------------
Supplement to Schedule 4
------------------------
Supplement to Schedule 5
------------------------
Supplement to Schedule 6
------------------------
Supplement to Schedule 7
------------------------
EXHIBIT B
---------
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to Section 6.2(b) of the
Credit Agreement, dated as of June 30, 2000, as amended, supplemented or
otherwise modified from time to time (the "Credit Agreement"), among LEXAR
MEDIA, INC., a California corporation (the "Borrower"), and THE CHASE MANHATTAN
BANK, as Administrative Agent. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
1. I am the duly elected, qualified and acting Chief Financial Officer of
the Borrower.
2. I have reviewed and am familiar with the contents of this Certificate.
3. I have reviewed the terms of the Credit Agreement and the Loan Documents
and have made or caused to be made under my supervision, a review in reasonable
detail of the transactions and condition of the Borrower during the accounting
period covered by the financial statements attached hereto as Attachment 1 (the
"Financial Statements"). Such review did not disclose the existence during or at
the end of the accounting period covered by the Financial Statements, and I have
no knowledge of the existence, as of the date of this Certificate, of any
condition or event which constitutes a Default or Event of Default[, except as
set forth below].
4. Attached hereto as Attachment 2 are the computations showing compliance
with the covenants set forth in Sections 7.1, 7.2, 7.3, 7.5, 7.6 and 7.7 of the
Credit Agreement.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of ,
200_.
LEXAR MEDIA, INC.
By:
Name:
Title:
Attachment 1 to
Exhibit B
Financial Statements
Attachment 2
to Exhibit B
The information described herein is as of , 200_, and pertains to the
period from
_________, __ 200_ to ________________ __, 200_.
[Set forth Covenant Calculations]
Exhibit C
---------
FORM OF CLOSING CERTIFICATE
Pursuant to Section 5.1(f) of the Credit Agreement, dated as of June __,
2000 (the "Credit Agreement"; terms defined therein being used herein as therein
defined), among LEXAR MEDIA, INC., a California corporation (the "Borrower"),
and THE CHASE MANHATTAN BANK, as Administrative Agent, the undersigned [INSERT
TITLE OF OFFICER] of [INSERT NAME OF COMPANY] (the "Company") hereby certifies
as follows:
1. The representations and warranties of the Company set forth in each of
the Loan Documents to which it is a party or which are contained in any
certificate furnished by or on behalf of the Company pursuant to any of the Loan
Documents to which it is a party are true and correct in all material respects
on and as of the date hereof with the same effect as if made on the date hereof,
except for representations and warranties expressly stated to relate to a
specific earlier date, in which case such representations and warranties were
true and correct in all material respects as of such earlier date.
2. [_____________] is the duly elected and qualified Corporate Secretary of
the Company and the signature set forth for such officer below is such officer's
true and genuine signature.
3. No Default or Event of Default has occurred and is continuing as of the
date hereof or after giving effect to the Loans to be made on the date hereof
and the use of the proceeds thereof. [Borrower only].
4. The conditions precedent set forth in Section 5.1 of the Credit
Agreement were satisfied as of the Closing Date. [Borrower only].
The undersigned Corporate Secretary of the Company certifies as follows:
1. There are no liquidation or dissolution proceedings pending or to my
knowledge threatened against the Company, nor has any other event occurred
adversely affecting or threatening the continued corporate existence of the
Company.
2. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its organization.
3. Attached hereto as Annex 1 is a true and complete copy of resolutions
duly adopted by the Board of Directors of the Company as of the date set forth
on such resolutions; such resolutions have not in any way been amended,
modified, revoked or rescinded, have been in full force and effect since their
adoption to and including the date hereof and are now in full force and effect
and are the only corporate proceedings of the Company now in force relating to
or affecting the matters referred to therein.
4. Attached hereto as Annex 2 is a true and complete copy of the By-Laws of
the Company as in effect on the date hereof.
5. Attached hereto as Annex 3 is a true and complete copy of the
Certificate of Incorporation of the Company as in effect on the date hereof, and
such certificate has not been amended, repealed, modified or restated.
6. The following persons are now duly elected and qualified officers of the
Company holding the offices indicated next to their respective names below, and
such officers have held such offices with the Company at all times since the
date indicated next to their respective titles to and including the date hereof,
and the signatures appearing opposite their respective names below are the true
and genuine signatures of such officers, and each of such officers is duly
authorized to execute and deliver on behalf of the Company each of the Loan
Documents to which it is a party and any certificate or other document to be
delivered by the Company pursuant to the Loan Documents to which it is a party:
Name Office Date Signature
----- ------ ---- ---------
IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the
date set forth below.
_______________________________ ____________________________________
Name: Name:
Title: Title:
Date: _______________, 200_
Annex 1 to
Exhibit C
Board Resolutions
Annex 2 to
Exhibit C
By-Laws
Annex 3 to
Exhibit C
Articles of Incorporation
EXHIBIT E
---------
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Credit Agreement, dated as of June 30, 2000 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among LEXAR MEDIA, INC., a California corporation (the
"Borrower"), THE CHASE MANHATTAN BANK, as Administrative Agent. Capitalized
terms used herein that are not defined herein shall have the meanings given to
them in the Credit Agreement. ______________________ (the "Non-U.S. Lender")
is providing this certificate pursuant to Section 2.16(d) of the Credit
Agreement. The Non-U.S. Lender hereby represents and warrants that:
1. The Non-U.S. Lender is the sole record and beneficial owner of the Loans
in respect of which it is providing this certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section 881(c)(3)(A)
of the Internal Revenue Code of 1986, as amended (the "Code"). In this regard,
the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other legal requirements
as a bank in any jurisdiction; and (b) the Non-U.S. Lender has not been treated
as a bank for purposes of any tax, securities law or other filing or submission
made to any Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements.
3. The Non-U.S. Lender is not a 10-percent shareholder of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code.
4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
[NAME OF NON-U.S. LENDER]
By:_______________________________
Name:
Title:
Date: ___________________
