SECOND AMENDMENT TO CERTAIN
OPERATIVE AGREEMENTS
(RFMD Real Estate Trust No. 1999-1)
Dated as of August 13, 2001
Among
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RF MICRO DEVICES, INC.,
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as the Construction Agent and as the Lessee,
XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
(formerly First Security Bank, National Association),
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the RFMD Real Estate Trust 1999-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO
FROM TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO
FROM TIME TO TIME, as the Lenders,
FIRST UNION NATIONAL BANK,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
and
CREDIT SUISSE FIRST BOSTON,
as Syndication Agent
SECOND AMENDMENT TO CERTAIN
OPERATIVE AGREEMENTS
THIS SECOND AMENDMENT TO CERTAIN OPERATIVE AGREEMENTS dated as of
August 13, 2001 (this "AMENDMENT") is by and among RF MICRO DEVICES, INC., a
North Carolina corporation (the "LESSEE" or the "CONSTRUCTION AGENT"); RFMD,
LLC, a North Carolina limited liability company and RF MICRO DEVICES
INTERNATIONAL, INC., a North Carolina corporation (each a "GUARANTOR" and
collectively the "GUARANTORS"), XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
(formerly First Security Bank, National Association), a national banking
association, not individually, but solely as the Owner Trustee under the RFMD
Real Estate Trust 1999-1 (the "OWNER TRUSTEE", the "BORROWER" or the "LESSOR");
the various banks and other lending institutions which are parties hereto from
time to time as holders of certificates issued with respect to the RFMD Real
Estate Trust 1999-1 (subject to the definition of Holders in APPENDIX A to the
Participation Agreement, individually, a "HOLDER" and collectively, the
"HOLDERS"); the various banks and other lending institutions which are parties
hereto from time to time as lenders (subject to the definition of Lenders in
APPENDIX A to the Participation Agreement, individually, a "LENDER" and
collectively, the "LENDERS"); and FIRST UNION NATIONAL BANK, a national banking
association, as the agent for the Lenders and respecting the Security Documents,
as the agent for the Lenders and the Holders, to the extent of their interests
(in such capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, the parties to this Amendment are parties to (including those
party by joinder) the Amended, Restated and Replacement Participation Agreement
dated as of December 31, 1999 among the parties to this Amendment, as amended by
the First Amendment to certain Operative Agreements dated as of April 17, 2000
among the parties to this Amendment (as further amended, modified, extended,
supplemented, restated and/or replaced from time to time, the "PARTICIPATION
AGREEMENT");
WHEREAS, the Lessee has requested revisions to certain covenants and
definitions with respect to a synthetic lease facility provided in favor of
Lessee by the Financing Parties;
WHEREAS, at the Lessee's request, the Financing Parties have agreed to
make certain amendments to the Operative Agreements and the Lessee has agreed to
pay to the Lenders and Holders an amendment fee; and
WHEREAS, the parties to this Amendment wish to amend certain
agreements, instruments and other documents to which they are a party (or to
which certain of them are parties) in connection with the synthetic lease
facility.
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Amendment
agree as follows:
1. Capitalized terms used herein but not otherwise defined herein shall
have the meaning set forth therefor in APPENDIX A to the Participation
Agreement. The rules of usage set forth in Appendix A to the Participation
Agreement shall apply herein. In the case of any conflict between the provisions
of this Amendment and the provisions of the Operative Agreements, the provisions
of this Amendment shall control construction of the terms.
2. The table in the definition of "Applicable Percentage" in
Appendix A to the Participation Agreement is replaced with the following:
Funded Debt to Eurodollar Eurodollar ABR Loans ABR Holder Unused Fee Unused Fee When
Book Loans Holder Advances When Total Total
Pricing Capitalization Advances Utilization is Utilization is
Level Less Than or Greater Than
Equal to 25% 25% of the
of the Total Total
Commitments Commitments
-------------- ---------------- ------------- -------------- ---------- ------------ ---------------- -----------------
I =>50% 2.500% 3.250% 1.250% 2.000% 0.750% 0.500%
-------------- ---------------- ------------- -------------- ---------- ------------ ---------------- -----------------
II => 25% but <50% 2.250% 3.000% 1.000% 1.750% 0.750% 0.500%
-------------- ---------------- ------------- -------------- ---------- ------------ ---------------- -----------------
III => 20% but <25% 2.000% 2.750% 0.750% 1.500% 0.750% 0.500%
-------------- ---------------- ------------- -------------- ---------- ------------ ---------------- -----------------
IV => 15% but <20% 1.750% 2.500% 0.500% 1.250% 0.625% 0.375%
-------------- ---------------- ------------- -------------- ---------- ------------ ---------------- -----------------
V <15% 1.500% 2.250% 0.250% 1.000% 0.625% 0.375%
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3. Clause (b) of Section 8.3A(j) of the Participation Agreement
is restated in its entirety to read as follows:
"(b) Lessee's current liabilities determined in accordance
with GAAP (which shall include, (i) without limitation, that portion of
the principal amount of Consolidated Total Funded Debt which is due on
demand or will become due within one year after the date on which the
applicable determination of the quick ratio is required hereunder and
(ii) to the extent not duplicative of the foregoing (i), the total
Loans and Holder Advances made pursuant to the Operative Agreements
which are outstanding as of the date of the applicable determination of
the quick ratio), shall equal or exceed 1.25:1.00."
4. Section 8.3A(k) of the Participation Agreement is restated in
its entirety to read as follows:
"(k) CONSOLIDATED INTEREST COVERAGE RATIO. At all times, the
Consolidated Interest Coverage Ratio shall, with respect to the
applicable fiscal year/quarter set forth in the table below, not be
less than the ratio set forth opposite such fiscal year/quarter in such
table:
FISCAL YEAR/QUARTER ENDING (ON OR ABOUT) RATIO
June 30, 2001 2.20:1.00
September 30, 2001 1.25:1.00
December 31, 2001 1.20:1.00
March 31, 2002 1.50:1.00
June 30, 2002 2.00:1.00
September 30, 2002 2.25:1.00
After September 30, 2002 2.50:1.00."
5. Section 8.3A(l) of the Participation Agreement is restated in
its entirety to read as follows:
"(l) CONSOLIDATED TOTAL LEVERAGE RATIO. At all times, the
Consolidated Total Leverage Ratio shall, with respect to the applicable
fiscal year/quarter set forth in the table below, not be greater than
the ratio set forth opposite such fiscal year/quarter in such table:
FISCAL YEAR/QUARTER ENDING (ON OR ABOUT) RATIO
June 30, 2001 7.75:1.00
September 30, 2001 13.50:1.00
December 31, 2001 17.50:1.00
March 31, 2002 9.00:1.00
June 30, 2002 6.00:1.00
September 30, 2002 5.00:1.00
December 31, 2002 4.25:1.00
After December 31, 2002 4.00:1.00."
6. Section 8.3.A(n) of the Participation Agreement is restated in
its entirety to read as follows:
"(n) CAPITAL EXPENDITURES. Lessee will not make, or permit any
Subsidiary of the Lessee to make, Consolidated Capital Expenditures in
any fiscal year set forth in the table below that exceed, in the
aggregate, the amount set forth opposite such fiscal year in such
table:
FISCAL YEAR ENDING (ON OR ABOUT) AMOUNT
March 31, 2000 $100,000,000.00
March 31, 2001 $150,000,000.00
March 31, 2002 $150,000,000.00
March 31, 2003 $150,000,000.00
March 31, 2004 $150,000,000.00
March 31, 2005 $150,000,000.00"
7. Section 8.3.A(p) of the Participation Agreement restated in
its entirety to read as follows:
"(p) FOREIGN SUBSIDIARIES. As soon as practicable and in any
event within 30 days after any Person becomes a direct or indirect
Foreign Subsidiary of the Lessee, the Lessee shall (i) provide the
Agent with written notice thereof setting forth information in
reasonable detail describing all of the assets of such Person, (ii)
deliver such other documentation as the Agent may reasonably request in
connection with the foregoing, including, without limitation, certified
organizational and authorizing documents, and financial and operational
information of such Foreign Subsidiary."
8. Section 8.3A(q) of the Participation Agreement is restated in
its entirety to read as follows:
"(q) "CONSOLIDATED SENIOR LEVERAGE RATIO. At all times, the
Consolidated Senior Leverage Ratio shall, with respect to the
applicable fiscal year/quarter set forth in the table below, not be
greater than the ratio set forth opposite such fiscal year/quarter in
such table:
FISCAL YEAR/QUARTER ENDING (ON OR ABOUT) RATIO
June 30, 2001 2.00:1.00
September 30, 2001 3.50:1.00
December 31, 2001 4.25:1.00
March 31, 2002 2.25:1.00
After March 31, 2002 2.00:1.00."
9. Section 8.3.A(c) of the Participation Agreement is amended by
deleting the text "and 8.3.A(i)-(m)" and replacing it with ", 8.3.A(j)-(n) and
8.3.A(q)".
10. The Participation Agreement is amended by adding Schedule 4
to this Amendment as Schedule 4 to the Participation Agreement.
11. The definition of Consolidated Senior Leverage Ratio in Appendix A
to the Participation Agreement is amended by deleting the text "Consolidated
Senior Funded Debt" and replacing it with "Consolidated Funded Senior Debt".
12. Appendix A to the Participation Agreement is amended by deleting
the following definitions "Consolidated EBIT", "Consolidated EBITDA" and
"Eligible Investments" and replacing them with the definitions below,
respectively:
"Consolidated EBIT" shall mean for any period for the Consolidated
Group, the sum of (i) Consolidated Net Income for such period PLUS (ii)
to the extent deducted in determining net income for such period, (A)
Consolidated Interest Expense and (B) taxes and (C) with respect to the
fiscal quarter ending on or about June 30, 2001 an amount equal to the
non-cash one-time charges associated with the charges announced on or
about July 11, 2001, as set forth in Schedule 4 hereto, but in no event
in excess of $22,100,000.00, in each case on a consolidated basis
determined in accordance with GAAP. Except as otherwise expressly
provided, the applicable period shall be for the four consecutive
fiscal quarters ending as of the date of determination.
"Consolidated EBITDA" shall mean for any period for the Consolidated
Group, the sum of (i) Consolidated Net Income for such period PLUS (ii)
to the extent deducted in determining net income for such period, (A)
Consolidated Interest Expense, (B) taxes, (C) depreciation and
amortization and (D) with respect to the fiscal quarter ending on or
about June 30, 2001 an amount equal to the non-cash one-time charges
associated with the charges announced on or about July 11, 2001, as set
forth in Schedule 4 hereto, but in no event in excess of
$22,100,000.00, in each case on a consolidated basis determined in
accordance with GAAP. Except as otherwise expressly provided, the
applicable period shall be for the four consecutive fiscal quarters
ending as of the date of determination.
""Eligible Investments" shall mean Investments which are (i) cash and
Cash Equivalents; (ii) accounts receivable created, acquired or made in
the ordinary course of business and payable or dischargeable in
accordance with customary trade terms (other than accounts receivable
contemplated in clause (v)(B) below); (iii) Investments consisting of
capital stock, obligations, securities or other property received in
settlement of accounts receivable (created in the ordinary course of
business) from bankrupt obligors; (iv) an amount, at all times, not in
excess of $25,000,000.00 of Investments in companies that are
incorporated or organized under the laws of any State of the United
States or the District of Columbia and that are in the same lines of
business as the Lessee; (v) (A) Investments in the Chinese Subsidiary
in an aggregate amount not in excess of $20,000,000.00 solely for the
purpose of funding the purchase of plant, property and equipment by the
Chinese Subsidiary and (B) Investments in the Chinese Subsidiary
(including Investments represented by accounts receivable owing to the
Lessee by the Chinese Subsidiary in connection with the sale of goods
by the Lessee to the Chinese Subsidiary in the ordinary course of
business) in an aggregate amount not in excess of $35,000,000.00 at any
time outstanding solely for the purpose of funding working capital of
the Chinese Subsidiary; and (vi) an amount, at all times, not in excess
of $7,000,000.00 of Investments in wholly-owned Foreign Subsidiaries
other than the Chinese Subsidiary."
13. Appendix A to the Participation Agreement is amended by adding
the following definition in the appropriate alphabetical order:
""Chinese Subsidiary" shall mean RF Micro Devices (Beijing) Company,
Ltd."
14. The Lessee agrees to pay, on or prior to the date of this
Amendment, to the Agent (for the pro rata account of the Lenders and Holders) a
non-refundable and fully-earned amendment fee in an amount equal to the product
of (a) fifteen basis points (0.15%) and (b) the sum of all outstanding Loans and
Holder Advances as of the date of this Amendment.
15. Each of the Lenders and Holders hereby instructs the Agent
and the Lessor to enter into this Amendment.
16. Except as modified hereby, all of the terms and conditions of the
Operative Agreements shall remain in full force and effect and notwithstanding
the provisions of Section 25 of this Amendment, the Lessee hereby ratifies and
affirms the terms and conditions of the Operative Agreements.
17. Any provision of this Amendment 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.
18. Except in accordance with Section 12.4 of the Participation
Agreement, neither this Amendment nor any of the terms hereof may be terminated,
amended, supplemented, waived or modified except by an instrument in writing
signed by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification is sought.
19. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
20. THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
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21. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
agreement.
22. The Lessee agrees to pay all reasonable costs and expenses of the
Agent in connection with the preparation, execution and delivery of this
Amendment, including without limitation the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx, PLLC.
23. As a condition precedent to the effectiveness of this Amendment,
the Lessee shall deliver to the Agent (i) a Secretary's Certificate
substantially in the form of Exhibit D to the Participation Agreement dated as
of the date hereof, (ii) an Officer's Certificate substantially in the form of
Exhibit C to the Participation Agreement dated as of the date hereof, (iii) a
legal opinion, in form and substance acceptable to the Agent, from Lessee's
outside counsel, (iv) an updated schedule of locations of Collateral of the
Lessee and its Domestic Subsidiaries which shall be attached as SCHEDULE A to
this Amendment, (v) UCC-1 financing statements requested by the Agent in
connection with the additional locations of Collateral of the Lessee and its
Domestic Subsidiaries identified on SCHEDULE A to this Amendment and an
authorization letter with respect to revised Article 9 of the Uniform Commercial
Code, and (vi) the amendment fee described in Section 14 of this Amendment.
24. The Lessee covenants and agrees that the Lessee shall at Lessee's
sole cost and expense, within sixty (60) days of the date of this Amendment,
deliver to the Agent (a) pledge agreements in form and substance satisfactory to
the Agent pursuant to which the Lessee pledges to the Agent 66% (or such greater
percentage that may be permitted at any later date, without such pledge being
treated as an indirect pledge, pursuant to Treas. Reg. Section 1.956-2(c)(2)),
as amended or replaced from time to time, or 100% if such regulation is repealed
or no longer in effect and no comparable successor law or regulation is enacted
or promulgated) of the issued and outstanding capital stock and other equity
interests entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) and 100% of the issued and outstanding capital stock and other
equity interests not entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) in RF Micro Devices (Holland), B.V., (b) the certificates (or
other agreements or instruments), if any, representing the capital stock or
other equity interests pledged under the pledge agreements referenced in clause
(a) above (together with undated stock powers signed in blank), (c) such other
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, certified organizational and
authorizing documents of both RF Micro Devices (Holland), B.V. and the Lessee
and favorable opinions of counsel to each of RF Micro Devices (Holland), B.V.
and the Lessee (which shall cover, among other things, the perfection of the
Agent's liens in the pledged capital stock and other equity interests), all in
form, content and scope reasonably satisfactory to the Agent, (d) the Lessee
shall file or cause to be filed all necessary documents with the U.S. Patent and
Trademark Office and each other filing office or location, including without
limitation (in the Agent's discretion) all applicable filing offices and
locations located in each country where any Intellectual Property (hereinafter
defined) had been filed or registered, where filing may be necessary to create a
first priority perfected security interest and lien, in favor of the Agent for
the ratable benefit of the Lenders and the Holders, on the Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses (each as
defined in the Lessee Security Agreement, collectively "INTELLECTUAL Property")
and (e) evidence of completion of the filings described in Section 24(d) of this
Amendment, including without limitation original file-stamped documentation from
the applicable filing offices and locations.
25. RF Micro Devices, Inc. and each of the Lenders and Holders agree
that the Agent shall be the joint and several creditor ("HOOFDELIJK CREDITEUR")
of each and every obligation (which obligations were assigned by the Lessor to
the Agent, each Lender and each Holder) solely to the extent such obligations
are secured by the pledge of stock of RF Micro Devices (Holland) B.V. (the
"Pledged Stock") and RF Micro Devices, Inc. with respect to each of the Lenders
and Holders under each of the Operative Agreements, and that accordingly, the
Agent will have its own independent right to demand performance by RF Micro
Devices, Inc. of those obligations. However, (i) any discharge of any obligation
of RF Micro Devices, Inc. to one of the Agent or the relevant Lender or Holder
shall, solely with respect to the Pledged Stock to the same extent, discharge
the corresponding obligation owing to the other and (ii) a Lender or Holder or
the Agent shall not, by virtue of this provision, be entitled to collect from RF
Micro Devices, Inc. concurrently for the same obligation. Without limiting or
affecting the Agent's rights against RF Micro Devices, Inc. (whether under this
paragraph or under any other provisions of the Operative Agreements), the Agent
agrees with each other Lender or Holder (on a several or divided basis) that,
subject as set out in the next sentence, it will not exercise its rights as a
joint and several creditor with respect to the Pledged Stock with a Lender or
Holder except with the consent of the relevant Lender or Holder. Nothing in the
previous sentence shall in any way limit the Agent's right to act in the
protection or preservation of rights under or to enforce any Security Document
or provision of the Operative Agreements as contemplated therein (or to do any
act reasonably incidental to any of the foregoing). The proceeds of any
foreclosure or enforcement of the Pledged Stock shall be held by the Agent
exclusively for and on behalf of the Lenders and the Holders jointly, and these
proceeds shall be distributed in accordance with Section 8.7(b)(iv) of the
Participation Agreement. The parties acknowledge and confirm that the provisions
contained in this Section 25 shall not be interpreted so as to increase the
maximum total amount of RF Micro Devices, Inc.'s liabilities under this
Amendment or any of the other Operative Agreements.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CONSTRUCTION AGENT
AND LESSEE: RF MICRO DEVICES, INC.,
as the Construction Agent and as the Lessee
By:
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Name:
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Title:
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GUARANTORS: RFMD, LLC, as a Guarantor
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By:
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Name:
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Title:
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RF MICRO DEVICES INTERNATIONAL, INC., as a Guarantor
By:
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Name:
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Title:
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[signature pages continue]
OWNER TRUSTEE
AND LESSOR: XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
(formerly First Security Bank, National Association),
not individually, except as expressly stated herein,
but solely as the Owner Trustee under the RFMD Real
Estate Trust 1999-1
By:
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Name:
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Title:
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[signature pages continue]
AGENT AND LENDERS: FIRST UNION NATIONAL BANK, as a Lender and as the Agent
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By: -------------------------------------------------
Name: -----------------------------------------------
Title: -----------------------------------------------
[signature pages continue]
CREDIT SUISSE FIRST BOSTON, as a Lender
By: --------------------------------------------------
Name: ------------------------------------------------
Title: -----------------------------------------------
[signature pages continue]
COMERICA BANK, as a Lender
By:
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Name:
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Title:
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[signature pages continue]
SUNTRUST BANK, ATLANTA, as a Lender
By:
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Name:
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Title:
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[signature pages continue]
CITICORP USA, Inc., as a Lender
By:
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Name:
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Title:
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[signature pages continue]
FLEET NATIONAL BANK, as a Lender
By:
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Name:
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Title:
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[signature pages continue]
HOLDERS: FIRST UNION NATIONAL BANK, as a Holder
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By:
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Name:
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Title:
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[signature pages continue]
CREDIT SUISSE LEASING 92A, LP, as a Holder
By:
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Name: ------------------------------------------------
Title:------------------------------------------------
[signature pages continue]
FLEET NATIONAL BANK, as a Holder
By:
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Name:
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Title:
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[signature pages end]
SCHEDULE A
LOCATIONS OF COLLATERAL OF
THE LESSEE AND ITS DOMESTIC SUBSIDIARIES
SCHEDULE 4
RF MICRO DEVICES
NON-CASH ITEMS TO BE CONSIDERED EXTRAORDINARY
FOR PURPOSES OF EBITDA CALCULATIONS
(000s) 6/31/2001 09/30/2001 12/31/2001 03/31/2002
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Quarter YTD Rolling 4 Quarter YTD Rolling 4 Quarter YTD Rolling 4 Quarter YTD Rolling 0
Xxxxxxxx Xxxxxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxxxx:
Inventory 15,300 15,300 15,300 -- 15,300 15,300 -- 15,300 15,300 -- 15,300 15,300
MMIC Test Equipment 2,800 2,800 2,800 -- 2,800 2,800 -- 2,800 2,800 -- 2,800 2,800
Module Assembly line 4,000 4,000 4,000 -- 4,000 4,000 -- 4,000 4,000 -- 4,000 4,000
22,100 22,100 22,100 -- 22,100 22,100 -- 22,100 22,100 -- 22,100 22,100
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