EXHIBIT 10.29
SECOND AMENDMENT TO
PARTICIPATION AGREEMENT
THIS SECOND AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment"),
dated as of August 17, 2001, is entered into by and among:
(1) LSI LOGIC CORPORATION, a Delaware corporation ("Lessee");
(2) XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (f/k/a First
Security Bank, National Association), not in its individual capacity but
solely as Certificate Trustee., as "Certificate Trustee" under the
Participation Agreement referred to in Recital A below (in such
capacity, "Certificate Trustee");
(3) XXXXX FARGO BANK NEVADA, NATIONAL ASSOCIATION (f/k/a First
Security Trust Company of Nevada), not in its individual capacity but
solely as Agent (in such capacity, "Agent"); and
(4) Each of the financial institutions currently a "Participant"
under Participation Agreement referred to in Recital A below
(collectively in such capacity, the "Participants").
R E C I T A L S
A. Lessee, Certificate Trustee, Agent and the Participants are parties
to that certain Participation Agreement, dated as of April 20, 2001 (the
"Participation Agreement"), which was amended by the First Amendment to
Participation Agreement dated as of July 13, 2001.
B. Lessee, Certificate Trustee, Agent and the Participants now wish to
amend the Participation Agreement to clarify certain provisions and have agreed
to effect such amendments upon the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions; Interpretation. Unless otherwise indicated in
this Amendment, (a) each term set forth in Appendix I to the Participation
Agreement, when used in this Amendment, shall have the meaning given to that
term in such Appendix I and (b) the rules of interpretation set forth in
Appendix I to the Participation Agreement shall apply to this Amendment and are
incorporated herein by this reference.
Section 2. Amendments to Participation Agreement. The Participation
Agreement is hereby amended as follows:
(a) Section 5.3(c) is amended to read in its entirety as follows:
Minimum Consolidated Tangible Net Worth. Lessee will maintain
Consolidated Tangible Net Worth (exclusive of the cumulative translation
adjustment account as reported in the consolidated balance sheet of
Lessee and its Subsidiaries as of such date) as of the end of each fiscal
quarter of not less than (i) $1,100,000,000 plus (ii) one hundred percent
(100%) of the Net Proceeds received by Lessee or any of its Subsidiaries
from the sale or issuance of equity securities (including equity
securities issued upon the conversion of Subordinated Debt or (regardless
of whether included in the definition of "Subordinated Debt") Existing
Subordinated Debt) to any Person other than Lessee or any of its
Subsidiaries after July 1, 2001, plus (iii) eighty percent (80%) of the
sum of Consolidated Net Income, if such sum is positive, for each fiscal
quarter elapsed after July 1, 2001, minus (iv) the net value of Lessee
stock not exceeding $250,000,000 in aggregate amount repurchased by
Lessee pursuant to employee stock ownership and purchase plans (provided
that Lessee shall not so repurchase stock in an aggregate amount which
exceeds five percent (5%) of its stock outstanding as of the last day of
such fiscal quarter).
(b) Section 5.3(d) is amended to read in its entirety as follows:
Debt Service Coverage Ratio. Lessee will maintain a ratio of (i)
Consolidated EBITDA to (ii) the sum of Consolidated CMLTD, plus
Consolidated Interest Expense, plus Capitalized Interest, that is not
less than 2.00 to 1.00 for the fiscal quarter ending September 30, 2002
and each subsequent fiscal quarter, calculated as of the end of each such
fiscal quarter.
(c) Section 5.3 is amended to add new clauses (f) and (g):
(f) Cash Coverage Ratio. Lessee shall maintain a ratio of
cash to Senior Debt of 1.35:1; provided, however, that at any time
on or after November 15, 2002, this covenant shall be terminated
if the following conditions are met: (i) Consolidated Tangible Net
Worth is greater than $1,900,000,000 as of the end of the most
current fiscal quarter covered by the last compliance certificate
delivered by Lessee pursuant to Section 5.1(a)(iii) of the
Participation Agreement; (ii) Lessee is in compliance with Section
5.3(d); and (iii) no other Event of Default shall have occurred or
shall be occurring. For the purpose of this clause (f), "cash"
shall mean unrestricted and unencumbered cash, cash equivalents
and marketable securities classified on Lessee's balance sheet, on
a consolidated basis, as current assets in accordance with GAAP.
(g) Minimum Quarterly Consolidated EBITDA. Lessee shall not
permit its Consolidated EBITDA for each of the fiscal quarters on
the last day of such fiscal quarter set forth below to be less
than the respective amounts set forth below:
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September 2001 $(130,000,000)
December 2001 $ (30,000,000)
March 2002 $ 10,000,000
June 2002 $ 10,000,000
(d) Appendix I is amended by adding thereto, in the appropriate
alphabetical order, the following definitions:
"Intangible Assets" shall have the meaning given to that term in
the definition of "Consolidated Tangible Net Worth" in this Appendix I.
"Net Proceeds" shall mean, with respect to any sale of any asset
(including any sale of assets to be leased back in connection with a
"synthetic" lease of such assets) or any sale or issuance of any
Indebtedness or equity securities by any Person, the aggregate
consideration received by such Person (excluding Intangible Assets
directly or indirectly received) from such sale or issuance less the sum
of the actual amount of the reasonable fees and commissions payable to
Persons other than such Person or any Affiliate of such Person, the
reasonable legal expenses and other costs and expenses directly related
to such sale or issuance that are to be paid by such Person.
(e) Appendix I is further amended by changing the following
definitions to read in their entirety as follows:
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the greater of (a) the Reference Rate in effect on such day and
(b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. Any change in the Alternate Base Rate due to a change in the
Reference Rate or the Federal Funds Effective Rate shall be effective
from and including the effective date of such change in the Reference
Rate or the Federal Funds Effective Rate, respectively, plus, in either
case, at any time that Lessee is required to perform its obligations
under Section 5.3(f) of the Participation Agreement, 1/4 of 1% per annum,
plus, in either case, if a Lease Event of Default exists, 2% per annum.
"Applicable Interest Rate Margin" shall mean, for each Payment
Period, the interest rate margin set forth below (expressed in a
percentage) opposite the Pricing Level for that Payment Period:
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Pricing Level Applicable Margin
I 1.25%
II 1.50%
III 1.75%
; provided, however, at any time that Lessee is required to perform its
obligations under Section 5.3(f) of the Participation Agreement, the
Applicable Margin shall be 2.00%; provided, further, if a Lease Event of
Default exists, the Applicable Margin set forth opposite the Pricing
Levels stated above or in the immediately preceding proviso shall be
increased by 2.00%.
"Applicable Yield Rate Margin" shall mean, for each Payment
Period, the interest rate margin set forth below (expressed in a
percentage) opposite the Pricing Level for that Payment Period:
Pricing Level Applicable Margin
I 2.25%
II 2.50%
III 2.75%
; provided, however, at any time that Lessee is required to perform its
obligations under Section 5.3(f) of the Participation Agreement, the
Applicable Margin shall be 3.00%; provided, further, if a Lease Event of
Default exists, the Applicable Margin set forth opposite the Pricing
Levels stated above or in the immediately preceding proviso shall be
increased by 2.00%.
"Consolidated Tangible Net Worth" shall mean, as of any date of
determination, Consolidated Total Assets minus Consolidated Total
Liabilities, minus (a) all assets which would be classified in a separate
account as intangible assets in accordance with GAAP, including goodwill,
organizational expense, research and development expense, capitalized
software, patent applications, patents, trademarks, trade names, brands,
copyrights, trade secrets, customer lists, licenses, franchises and
covenants not to compete ("Intangible Assets"), (b) all unamortized debt
discount and expense and (c) all treasury stock; provided, however, that
to the extent otherwise included in the amount set forth in the foregoing
clause (a) of this definition, there shall be excluded from such amount
the sum of all engineering costs incurred in connection with the
development of major production capabilities at new manufacturing
facilities or refurbishment of an existing facility or with respect to
introducing a new manufacturing process to existing or new manufacturing
facilities and which are classified as a fixed asset and capitalized on
the consolidated balance sheet of Lessee in accordance with GAAP.
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Section 3. Representations and Warranties. Lessee hereby represents and
warrants to Certificate Trustee, Agent and the Participants that, after giving
effect to the provisions hereunder, the following will be true and correct on
the date hereof:
(a) The representations and warranties of Lessee set forth in
Section 4.1 of the Participation Agreement and in the other Operative
Documents are true and correct in all material respects as if made on
such date (except for representations and warranties expressly made as of
a specified date, which shall be true in all material respects as of such
date);
(b) No Lease Default or Lease Event of Default has occurred and is
continuing; and
(c) All of the Operative Documents are in full force and effect.
(Without limiting the scope of the term "Operative Documents," Lessee expressly
acknowledges in making the representations and warranties set forth in this
Section 3 that, on and after the date hereof, such term includes this
Amendment.)
Section 4. Effectiveness of Amendments. The amendments set forth in
Section 2 above shall become effective upon receipt by Agent (a) of this
Amendment duly executed by Lessee, Certificate Trustee, Agent and the Required
Participants, (b) for the benefit of each Participant that duly executes this
Amendment prior to 5:00 P.M. San Francisco time on August 17, 2001 amendment
fees equal to two-tenths of one percent (0.20%) of each such Participant's
respective Commitment and (c) that certain Second Amendment to Amended and
Restated Participation Agreement dated as of August 17, 2001 duly executed by
and among Lessee, ABN AMRO Bank, as Agent for the Lessors and Participants, and
the Lessors and the Participants party thereto. Upon such receipt, this
Amendment shall be deemed to amend the Participation Agreement from the original
date thereof as though incorporated in the Participation Agreement as originally
executed; subject, however, to the following: in order to more accurately
reflect the intention of the parties, the following amendments set forth in
Section 2 above shall be effective as of March 31, 2001: (i) the definition of
"Consolidated Tangible Net Worth"; (ii) the definition of "Intangible Assets";
and (iii) the definition of "Net Proceeds."
Section 5. Effect of this Amendment. During the period that the
amendments set forth in Section 2 above are effective, each reference in the
Participation Agreement and the other Operative Documents to the Participation
Agreement shall mean the Participation Agreement as amended by this Amendment.
Except as expressly amended pursuant hereto: (a) the Participation Agreement and
the other Operative Documents shall remain unchanged and in full force and
effect and are hereby ratified and affirmed and (b) the execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power, or remedy of Certificate Trustee, Agent
or the Participants, nor constitute a waiver of any provision of the
Participation Agreement or any other Operative Document.
Section 6. Miscellaneous.
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(a) Binding Effect. This Amendment shall be binding upon and inure to the
benefit of Lessee, Certificate Trustee, Agent and the Participants and their
respective permitted successors and assigns. All references in this Amendment to
any Person shall be deemed to include all successors and assigns of such Person.
(b) Counterparts. This Amendment may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
[Signature pages follow]
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IN WITNESS WHEREOF, Lessee, Certificate Trustee, Agent and the
Participants have caused this Second Amendment to Participation Agreement to be
executed as of the day and year first above written.
LESSEE: LSI LOGIC CORPORATION
By:____________________________________________
Name:_______________________________________
Title:______________________________________
CERTIFICATE TRUSTEE: XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION (f/k/a First
Security Bank, National
Association), not in its
individual capacity but solely
as Certificate Trustee
By:____________________________________________
Name:_______________________________________
Title:______________________________________
AGENT: XXXXX FARGO BANK NEVADA, NATIONAL ASSOCIATION
(f/k/a First Security Trust Company of
Nevada), not in its individual capacity but
solely as Agent
By:____________________________________________
Name:_______________________________________
Title:______________________________________
PARTICIPANTS: BANC OF AMERICA LEASING & CAPITAL, LLC
By:____________________________________________
Name:_______________________________________
Title:______________________________________
By:____________________________________________
Name:_______________________________________
Title:______________________________________
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BANK OF AMERICA, NATIONAL ASSOCIATION
By:____________________________________________
Name:_______________________________________
Title:______________________________________
GOLDEN STATE SANWA BANCLEASING
By:____________________________________________
Name:_______________________________________
Title:______________________________________
KEY CORPORATE CAPITAL, INC.
By:____________________________________________
Name:_______________________________________
Title:______________________________________
U.S. BANK NATIONAL ASSOCIATION
By:____________________________________________
Name:_______________________________________
Title:______________________________________
THE BANK OF NOVA SCOTIA
By:____________________________________________
Name:_______________________________________
Title:______________________________________
FLEET NATIONAL BANK
By:____________________________________________
Name:_______________________________________
Title:______________________________________
BNP PARIBAS
By:____________________________________________
Name:_______________________________________
Title:______________________________________
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XXXXX XXXX XX XXXXXXXXXX, N.A.
By:____________________________________________
Name:_______________________________________
Title:______________________________________
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