EXHIBIT 10.124
FOURTH AMENDMENT TO
FIRST AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Amendment"), is entered into as of June 16, 1998, among Micron
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Technology, Inc., a Delaware corporation (the "Company"), the "Banks" party to
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the Credit Agreement (collectively, the "Banks"), and Bank of America National
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Trust and Savings Association, as agent for itself and the other Banks (in such
capacity, the "Agent").
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WHEREAS, the Company, the Banks and the Agent are parties to a First
Amended and Restated Revolving Credit Agreement dated as of May 28, 1997, as
amended by a First Amendment to First Amended and Restated Revolving Credit
Agreement dated as of November 28, 1997, a Second Amendment to First Amended and
Restated Revolving Credit Agreement dated as of February 26, 1998, and a Third
Amendment to First Amended and Restated Revolving Credit Agreement dated as of
May 28, 1998 (as so amended, the "Credit Agreement");
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WHEREAS, the Company has requested that the Agent and the Majority
Banks agree to certain amendments to the Credit Agreement including a waiver of
compliance with a specified financial covenant;
WHEREAS, the Agent and the Banks have agreed to such request, subject
to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereto agree as follows:
1. Definitions; Interpretation.
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(a) Terms Defined in Credit Agreement. All capitalized terms used in
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this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.
(b) Interpretation. The rules of interpretation set forth in Section
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1.02 of the Credit Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.
2. Waiver of Compliance with Covenant.
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(a) For purposes of this Amendment, the "Waived Covenant" shall mean
Section 7.17(a) of the Credit Agreement.
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(b) Subject to and upon the terms and conditions hereof, the Banks
hereby agree that the Credit Agreement shall be deemed amended effective as of
May 28, 1998 to waive compliance with the Waived Covenant until September 3,
1998.
3. Amendments to the Credit Agreement.
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(a) Amendments. The Credit Agreement is hereby further amended as
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follows:
(i) Section 1.01 of the Credit Agreement shall be amended at the
defined term "Loan Documents" by amending and restating such defined term
in its entirety to read as follows:
"Loan Documents" means this Agreement, the Notes, the
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Collateral Documents, the Disclosure Letter, all fee letters and all
other certificates, documents or financial or other statements
delivered at any time to the Agent or any Bank in connection herewith
or with any other Loan Document.
(ii) Section 1.01 of the Credit Agreement shall be amended by
adding the following defined terms in appropriate alphabetical order:
"Collateral" means all property and interests in property and
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proceeds thereof now owned or hereafter acquired by the Company or the
Guarantor in or upon which a Lien now or hereafter exists in favor of
the Banks, or the Agent on behalf of the Banks, whether under this
Agreement or under any other documents executed by any such Person,
and delivered to the Agent or the Banks.
"Collateral Documents" means, collectively, (i) the Company
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Security Agreement, the Guarantor Security Agreement and all other
security agreements, mortgages, deeds of trust, patent and trademark
assignments, lease assignments, guarantees and other similar
agreements between the Company, the Guarantor and the Banks or the
Agent for the benefit of the Banks now or hereafter delivered to the
Banks or the Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable
documents now or hereafter filed in accordance with the Uniform
Commercial Code or comparable law) against the Company or the
Guarantor as debtor in favor of the Banks or the Agent for the benefit
of the Banks as secured party, and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions
and extensions of any of the foregoing.
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"Company Security Agreement" means the Security Agreement
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between the Company and the Agent in substantially the form of Exhibit
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A to the Fourth Amendment.
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"Fourth Amendment" means the Fourth Amendment to First
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Amended and Restated Revolving Credit Agreement, dated as of June 16,
1998, among the Company, the Agent and the Banks.
"Guarantor" means Micron Semiconductor Products, Inc., an
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Idaho corporation and a Semiconductor Operations Subsidiary for
purposes hereof.
"Guarantor Security Agreement" means the Security Agreement
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between the Guarantor and the Agent in substantially the form of
Exhibit B to the Fourth Amendment.
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"Guaranty" means the guaranty executed by the Guarantor in
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substantially the form of Exhibit C to the Fourth Amendment.
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(iii) Article V of the Credit Agreement shall be amended by
inserting the following new Section 5.20 at the end thereof:
5.20 Collateral Documents.
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(a) The provisions of each of the Collateral Documents are
effective to create in favor of the Agent for the benefit of the
Banks, a legal, valid and enforceable first priority security interest
in all right, title and interest of the Company and the Guarantor in
the Collateral described therein; and financing statements have been
filed in the offices in all of the jurisdictions listed in Part 1 of
the Schedule to the Security Agreement.
(b) All representations and warranties of the Company and
the Guarantor contained in the Collateral Documents are true and
correct.
(iv) Article VI of the Credit Agreement shall be amended by
inserting the following new Section 6.15 at the end thereof:
6.15 Further Assurances. Promptly upon request by the Agent
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or the Majority Banks, the Company shall (and shall cause the
Guarantor to) do, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register, any and all such further
acts, deeds, conveyances, security agreements, mortgages, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers,
certificates, assurances and other instruments as the Agent or such
Banks, as the case may be, may reasonably require from time to time in
order
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(i) to carry out more effectively the purposes of this Agreement or
any other Loan Document, (ii) to subject to the Liens created by any
of the Collateral Documents any of the properties, rights or interests
covered by any of the Collateral Documents, (iii) to perfect, protect
and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, and
(iv) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Agent and Banks the rights granted or now
or hereafter intended to be granted to the Banks under any Loan
Document or under any other document executed in connection therewith.
(v) Section 7.01 of the Credit Agreement shall be amended by
inserting the following at the end thereof:
Notwithstanding the foregoing, no Lien otherwise permitted by
this Section 7.01 may be incurred or exist if such Lien would
cause a breach of Section 5(o) of the Company Security Agreement
which is not cured within the cure period set forth in Section
5(o) of the Company Security Agreement. In addition, no Liens
securing Indebtedness may exist at any time with respect to the
Intellectual Property (as such term is defined in the Company
Security Agreement) of the Company and its Semiconductor
Operations Subsidiaries.
(vi) Section 7.02 of the Credit Agreement shall be amended by
deleting the second parenthetical in the lead in paragraph thereto in its
entirety and inserting in lieu thereof the following new parenthetical:
(including all Intellectual Property (as defined in the Company
Security Agreement) and the capital stock of Semiconductor
Operations Subsidiaries)
(vii) Section 7.03 of the Credit Agreement shall be amended by
inserting the following at the end thereof:
Notwithstanding the foregoing, no Disposition otherwise permitted
by this Section 7.03 may be effected if such Disposition would
cause a breach of Section 5(o) of the Company Security Agreement
which is not cured within the cure period set forth in Section
5(o) of the Company Security Agreement.
(viii) Section 8.01 of the Credit Agreement shall be amended by
inserting the following new clauses (o) and (p) at the end thereof:
(o) Guarantor Defaults. The Guarantor fails in any
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material respect to perform or observe any term, covenant or agreement
in the Guaranty;
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or the Guaranty is for any reason partially (including with respect to
future advances) or wholly revoked or invalidated, or otherwise ceases
to be in full force and effect, or the Guarantor or any other Person
contests in any manner the validity or enforceability thereof or
denies that it has any further liability or obligation thereunder;
(p) Collateral. (i) any provision of any Collateral
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Document shall for any reason cease to be valid and binding on or
enforceable against the Company or any Subsidiary party thereto or the
Company or any Subsidiary party thereto shall so state in writing or
bring an action to limit its obligations or liabilities thereunder; or
(ii) any Collateral Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid security interest in the
Collateral purported to be covered thereby or such security interests
shall for any reason cease to be a perfected and first priority
security interest subject only to Permitted Liens.
(ix) Article IX of the Credit Agreement shall be amended by
inserting the following new Section 9.12 at the end thereof:
9.12 Collateral Matters. (a) The Agent is authorized on behalf
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of all the Banks to execute the Collateral Agreements and, without the
necessity of any notice to or further consent from the Banks, from
time to time to take any action with respect to any Collateral or the
Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent
upon any Collateral (i) upon termination of the Commitments and
payment in full of all Loans and all other Obligations known to the
Agent and payable under this Agreement or any other Loan Document;
(ii) constituting property sold or to be sold or disposed of as part
of or in connection with any disposition permitted hereunder; (iii)
constituting property in which the Company or any Subsidiary owned no
interest at the time the Lien was granted or at any time thereafter;
(iv) constituting property to be leased by the Company or the
Guarantor or constituting security for Indebtedness to be incurred by
the Company or the Guarantor, in each case in a transaction permitted
under this Agreement, to the extent that the release thereof would not
result in a violation of Section 5(o) of the Company Security
Agreement or the Guarantor Security Agreement; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the
indebtedness evidenced thereby has been paid in full; or (vi) if
approved, authorized or ratified in writing by the Majority Banks (as
specifically contemplated in the Loan Documents) or all the Banks, as
the case may be, as provided in subsection 10.01(f). Upon request by
the Agent at any time, the Banks will confirm in writing the Agent's
authority to release
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particular types or items of Collateral pursuant to this subsection
9.12(b), provided that the absence of any such confirmation for
whatever reason shall not affect the Agent's rights under this Section
9.12.
(x) Section 10.01 of the Credit Agreement shall be amended by
adding the following new clause (f) immediately following clause (e)
thereof:
(f) discharge the Guarantor, or release any of the Collateral
except as otherwise may be provided herein or in the Collateral
Documents or except where the consent of the Majority Banks only is
specifically provided for;
(b) References Within Credit Agreement. Each reference in the Credit
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Agreement to "this Agreement" and the words "hereof," "herein," "hereunder," or
words of like import, shall mean and be a reference to the Credit Agreement as
amended by this Amendment.
4. Representations and Warranties. The Company hereby represents and
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warrants to the Agent and the Banks as follows:
(a) Other than the Waived Covenant, no Default or Event of Default
has occurred and is continuing.
(b) Except with respect to the Waived Covenant, the
representations and warranties of the Company contained in Article V of the
Credit Agreement (except for the representations and warranties contained in
Sections 5.05, 5.11(c) and 5.14) are true and correct, except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they were true and correct as of such earlier date.
(c) The Company is entering into this Amendment on the basis of
its own investigation and for its own reasons, without reliance upon the Agent
and the Banks or any other Person.
(d) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not (i) require any registration with, consent or approval
of, notice to or action by, any Person (including any Governmental Authority) in
order to be effective and enforceable (ii) contravene the terms of any of the
Company's Organization Documents, (iii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
material Contractual Obligation to which the Company is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Company or
its property is subject, or (iv) violate any Requirement of Law.
(e) This Amendment and the Loan Documents, as amended by this
Amendment, constitute the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms.
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5. Effective Date. The amendments to the Credit Agreement set forth
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in Sections 2 and 3 of this Amendment, will become effective as of the date on
which all of the following conditions precedent set forth in this Section 5 are
satisfied or waived by the Majority Banks (or, in the case of Subsection
5(a)(vi), waived by the Person entitled to receive such payment) and the Agent
has received executed counterparts of this Amendment signed by the Agent, the
Company and the Majority Banks (the "Effective Date"):
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(a) the Agent shall have received all of the following, in form and
substance satisfactory to it and the Majority Banks:
(i) Copies of the resolutions of the board of directors of the
Company and the Guarantor authorizing the transactions contemplated hereby,
certified by the Secretary or an Assistant Secretary of such Person;
(ii) A Certificate of the Secretary or Assistant Secretary of the
Company and the Guarantor certifying the names and true signatures of the
officers of such Person authorized to execute, deliver and perform, as
applicable, this Amendment, and all other Loan Documents to be delivered by
it hereunder;
(iii) the articles or certificate of incorporation and the bylaws
of the Guarantor as in effect on the Effective Date, certified by the
Secretary or Assistant Secretary of the Guarantor;
(iv) a good standing certificate for the Guarantor from the
Secretary of State (or similar, applicable Governmental Authority) of its
state of incorporation as of a recent date, together with bring-down
certificates by facsimile;
(v) opinions addressed to the Agent and the Banks of (i) Wilson,
Sonsini, Xxxxxxxx & Xxxxxx PC, counsel to the Company and the Guarantor
substantially in the form of Exhibit D-1, (ii) Xxxxxx Xxxxxxx Xxxxx &
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Xxxxxx LLP, special Idaho counsel to the Company and the Guarantor
substantially in the form of Exhibit D-2 and (iii) Xxxxx X. Xxxxxxx,
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Esquire, Assistant General Counsel to the Company and the Guarantor,
substantially in the form of Exhibit D-3;
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(vi) evidence of payment by the Company of all accrued and unpaid
fees, costs and expenses to the extent then due and payable on the
Effective Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Effective Date;
(vii) fully executed counterparts of the Company Security
Agreement and the Guarantor Security Agreement, together with:
(a) executed copies of all UCC-1 financing statements to be
filed, registered or recorded pursuant to the Company
Security
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Agreement to perfect the security interests of the Agent for
the benefit of the Banks;
(b) written advice relating to such Lien and judgment
searches as the Agent or any Bank shall have requested, and
such termination statements or other documents as may be
necessary to confirm that the Collateral is subject to no
other Liens in favor of any Persons (other than Permitted
Liens);
(c) evidence that all other actions necessary or, in the
opinion of the Agent and the Banks, desirable to perfect and
protect the first priority security interest created by the
Collateral Documents have been taken;
(d) evidence that the Agent, for the ratable benefit of the
Banks, has been named as loss payee under all policies of
casualty insurance, and as additional insured under all
policies of liability insurance, required by the Company
Security Agreement and the Guarantor Security Agreement; and
(e) a Certificate of a Responsible Officer of the Company
certifying the value of Collateral subject to the perfected
first priority security interest of the Agent as required in
Section 5(o) of the Company Security Agreement; and
(viii) a fully executed counterpart of the Guaranty; and
(b) the Agent shall have received such other approvals, opinions,
documents or materials as the Agent or any Bank may reasonably request.
For purposes of determining compliance with the foregoing conditions,
each Bank that has executed this Amendment shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
either sent by the Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to, such Bank.
6. Miscellaneous.
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(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and effect
and all references therein and in the other Loan Documents to such Credit
Agreement shall henceforth refer to the Credit Agreement as amended by this
Amendment. The Banks' and the Agent's execution and delivery of, or acceptance
of, this Amendment and any other documents and instruments in connection
herewith shall not be deemed to create a course of dealing or otherwise create
any express or implied duty by any of them to provide any other or further
amendments,
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consents or waivers in the future. This Amendment shall be deemed incorporated
into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of California.
(d) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the Agent of a
facsimile transmitted document purportedly bearing the signature of a Bank or
the Company shall bind such Bank or the Company, respectively, with the same
force and effect as the delivery of a hard copy original. Any failure by the
Agent to receive the hard copy executed original of such document shall not
diminish the binding effect of the facsimile transmitted executed original of
such document of the party whose hard copy page was not received by the Agent.
(e) This Amendment, together with the Credit Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This amendment may not be
amended except in accordance with the provisions of Section 10.01 of the Credit
Agreement.
(f) If any term of provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this amendment or the
Credit Agreement, respectively.
(g) The Company covenants to pay to or reimburse the Agent, upon
demand, for all reasonable costs and expenses (including allocated costs of in-
house counsel) incurred in connection with the development, preparation,
negotiation, execution and delivery of this Amendment. Without limiting the
generality of the foregoing, the Company shall pay to or reimburse the Agent for
all search, recording, filing and similar costs, fees and expenses in connection
with the Collateral Documents and the Collateral.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
MICRON TECHNOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxx
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Title: Treasurer
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS AGENT
By: /s/ Xxxxx Xx Xxxxx
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Name: Xxxxx Xx Xxxxx
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Title: Managing Director
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS A BANK
By: /s/ Xxxxx Xx Xxxxx
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Name: Xxxxx Xx Xxxxx
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Title: Managing Director
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ABN AMRO BANK N.V., SEATTLE
BRANCH, AS CO-AGENT AND AS A BANK
By: /s/ Xxx-Xxx Miao / Xxxx X. Xxxxx
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Name: Xxx-Xxx Miao / Xxxx X. Xxxxx
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Title: Vice Presidents
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THE BANK OF NOVA SCOTIA, AS CO-AGENT
AND AS A BANK
By: /s/ J.S. York
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Name: J.S. York
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Title: Vice President
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FLEET NATIONAL BANK, AS CO-AGENT AND
AS A BANK
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Vice President
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PNC BANK, NATIONAL ASSOCIATION, as
Co-Agent and as a Bank
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Senior Vice President
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UNITED STATES NATIONAL BANK OF
OREGON, AS CO-AGENT AND AS A BANK
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: Vice President
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ROYAL BANK OF CANADA
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
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Title: Senior Manager
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BANQUE NATIONALE DE PARIS
By: /s/ Xxxxxxx XxXxxxxxxxx / Xxxxx Xxxxxx
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Name: Xxxxxxx XxXxxxxxxxx / Xxxxx Xxxxxx
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Title: Vice Presidents
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KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Assistant Vice President
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MELLON BANK, N.A.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: First Vice President
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THE DAI-ICHI KANGYO BANK, LIMITED,
SAN FRANCISCO AGENCY
By: /s/ X. Xxxxxxxxx
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Name: X. Xxxxxxxxx
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Title: Joint General Manager
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THE FUJI BANK, LIMITED, LOS ANGELES AGENCY
By: /s/ Xxxxxxxx Xxxxxx
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Name: Xxxxxxxx Xxxxxx
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Title: Joint General Manager
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THE INDUSTRIAL BANK OF JAPAN,
LIMITED, SAN FRANCISCO AGENCY
By: /s/ Xxxxxxxx Xxxxxx
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Name: Xxxxxxxx Xxxxxx
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Title: Deputy General Manager
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THE SUMITOMO BANK LIMITED
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
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Title: Joint General Manager
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FIRST SECURITY BANK, N.A.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
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Title: Vice President
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THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
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Title: Deputy General Manager
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THE SAKURA BANK, LIMITED
By: /s/ Xxxxxxxx Xxxxxxx
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Name: Xxxxxxxx Xxxxxxx
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Title: Senior Vice President
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THE BANK OF NEW YORK
By: /s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
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Title: Vice President
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BANQUE PARIBAS
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: Vice President
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By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
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Title: Managing Director
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EXHIBIT A
to the Fourth Amendment
FORM OF COMPANY SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 16, 1998,
is made between Micron Technology, Inc., a Delaware corporation (the "Company"),
and Bank of America National Trust and Savings Association, as agent for itself
and the Banks referred to below (in such capacity, the "Agent").
The Company, certain financial institutions as lenders (the "Banks")
and the Agent are parties to a Fourth Amendment to First Amended and Restated
Revolving Credit Agreement dated as of June 16, 1998 (the "Amendment") amending
that certain First Amended and Restated Revolving Credit Agreement dated as of
May 28, 1997 among the Company, the Banks and the Agent, as amended (as amended,
modified, renewed or extended from time to time, the "Credit Agreement"). It is
a condition precedent to the Amendment that the Company enter into this
Agreement and grant to the Agent, for itself and for the ratable benefit of the
Banks, the security interests hereinafter provided to secure the obligations of
the Company described below.
Accordingly, the parties hereto agree as follows:
SECTION 1 Definitions; Interpretation.
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(a) Terms Defined in Credit Agreement. All capitalized terms used in
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this Agreement and not otherwise defined herein shall have the meanings assigned
to them in the Credit Agreement.
(b) Certain Defined Terms. As used in this Agreement, the following
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terms shall have the following meanings:
"Accounts" means any and all accounts receivable owed to the Company,
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whether now existing or hereafter acquired or arising, arising out of or in
connection with the sale or lease of merchandise, goods or commodities or the
rendering of services or arising from any other transaction, however evidenced,
and whether or not earned by performance, all guaranties, indemnities and
security with respect to the foregoing, and all letters of credit relating
thereto, in each case whether now existing or hereafter acquired or arising.
"Books" means all books, records and other written, electronic or
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other documentation in whatever form maintained now or hereafter by or for the
Company in connection with the ownership of the Collateral or evidencing or
containing information relating to the Collateral, including: (i) ledgers; (ii)
records indicating, summarizing, or evidencing the Collateral), business
operations or financial condition; (iii) computer programs and software; (iv)
computer discs, tapes, files, manuals, spreadsheets; (v) computer printouts and
output of whatever kind; (vi) any other computer prepared or electronically
stored,
A-1
collected or reported information and equipment of any kind; and (vii) any and
all other rights now or hereafter arising out of any contract or agreement
between the Company and any service bureau, computer or data processing company
or other Person charged with preparing or maintaining any of the Company's books
or records or with credit reporting, including with regard to the Company's
Accounts.
"Collateral" has the meaning set forth in Section 2.
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"Company Intellectual Property" means any Intellectual Property owned
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or held by the Company or in which the Company otherwise has any interest that
allows for transfer or sublicense to third parties, now existing or hereafter
acquired or arising, whether or not relating to or arising out of or existing in
connection with the Equipment.
"Documents" means any and all documents of title, bills of lading,
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dock warrants, dock receipts, warehouse receipts and other documents of the
Company relating to Collateral, whether or not negotiable, and includes all
other documents which purport to be issued by a bailee or agent and purport to
cover goods in any bailee's or agent's possession which are either identified or
are fungible portions of an identified mass, including such documents of title
made available to the Company for the purpose of ultimate sale or exchange of
goods or for the purpose of loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange, in each case whether now existing
or hereafter acquired or arising.
"Equipment" means all now existing or hereafter acquired equipment of
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the Company in all of its forms, located at 0000 Xxxxx Xxxxxxx Xxx, Xxxxx, Xxxxx
00000 including any and all machinery, furniture, equipment, furnishings and
fixtures in which the Company now or hereafter acquires any right, and all other
goods and tangible personal property (other than Inventory), including tools,
parts and supplies, automobiles, trucks, tractors and other vehicles, computer
and other electronic data processing equipment and other office equipment,
Vendor Intellectual Property, and all additions, substitutions, replacements,
parts, accessories, and accessions to and for the foregoing, now owned or
hereafter acquired, and including any of the foregoing which are or are to
become fixtures on real property.
"Excluded Collateral" means the Collateral set forth on Schedule 1.
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"Financing Statements" has the meaning set forth in Section 3.
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"General Intangibles" means all general intangibles of the Company in
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any way relating to or arising out of or existing in connection with the
Accounts, Inventory and Equipment constituting Collateral, now existing or
hereafter acquired or arising and shall include Vendor Intellectual Property and
exclude Company Intellectual Property.
"Idaho Financing Statements" has the meaning set forth in Section 3.
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"Intellectual Property" means the following properties and assets:
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(i) all patents and patent applications, domestic or foreign and all reissues,
divisions, continuations,
A-2
renewals, extensions and continuations-in-part thereof, all licenses relating to
any of the foregoing and all income and royalties with respect to any licenses,
all rights arising therefrom and pertaining thereto (collectively, "Patents");
(ii) all copyrights and applications for copyright, domestic or foreign,
together with the underlying works of authorship (including titles), and all
rights of renewal and extension of copyright; (iii) all state (including common
law), federal and foreign trademarks, service marks and trade names, and
applications for registration of such trademarks, service marks and trade names,
all licenses relating to any of the foregoing and all income and royalties with
respect to any licenses, whether registered or unregistered and wherever
registered, and all rights arising therefrom and pertaining thereto and all
reissues, extensions and renewals thereof; (iv) all trade secrets, trade dress,
trade styles, logos, other source of business identifiers, mask-works, mask-work
registrations, mask-work applications, software, confidential information,
customer lists, license rights, advertising materials, operating manuals,
methods, processes, know-how, algorithms, formulae, databases, quality control
procedures, product, service and technical specifications, operating, production
and quality control manuals, sales literature, drawings, specifications, blue
prints, descriptions, inventions, name plates and catalogs; and (v) the entire
goodwill of or associated with the businesses now or hereafter conducted by the
Company connected with and symbolized by any of the aforementioned properties
and assets.
"Inventory" means any and all of the Company's inventory in all of its
---------
forms, wherever located, whether now owned or hereafter acquired, and in any
event includes all goods (including goods in transit) which are held for sale,
lease or other disposition, including those held for display or demonstration or
out on lease or consignment or to be furnished under a contract of service, or
which are raw materials, work in process, finished goods or materials used or
consumed in the Company's business, and the resulting product or mass, and all
repossessed, returned, rejected, reclaimed and replevied goods, together with
all parts, components, supplies and other materials used or usable in connection
with the manufacture, production, packing, shipping, advertising, selling or
furnishing of such goods; and all other items hereafter acquired by the Company
by way of substitution, replacement, return, repossession or otherwise, and all
additions and accessions thereto, and any Document representing or relating to
any of the foregoing at any time.
"Proceeds" means whatever is receivable or received from or upon the
--------
sale, lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral or other assets of the Company,
including "proceeds" as defined at UCC Section 9306, any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to or for the account of the
Company from time to time with respect to any of the Collateral, any and all
payments (in any form whatsoever) made or due and payable to the Company from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of governmental authority), any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral or for or on account of any damage or injury to or
conversion of any Collateral by any Person, any and all other tangible or
intangible property received upon the sale or disposition of Collateral, and all
proceeds of proceeds.
A-3
"Rights to Payment" means all Accounts and any and all rights and
-----------------
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all Documents, General Intangibles and Proceeds.
"Secured Obligations" means the indebtedness, liabilities and other
-------------------
obligations of the Company to the Agent and the Banks under or in connection
with the Credit Agreement and the Notes, including all unpaid principal of the
Loans, all interest accrued thereon, all fees due under the Credit Agreement and
all other amounts payable by the Company to the Agent and the Banks thereunder
or in connection therewith, whether now existing or hereafter arising, and
whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.
"UCC" means the Uniform Commercial Code as the same may, from time to
---
time, be in effect in the State of California; provided, however, in the event
-------- -------
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of California, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
"Vendor Intellectual Property" means any Intellectual Property owned
----------------------------
by or originating with a vendor from whom Company purchased Equipment, where
such Intellectual Property (i) accompanied the sale of such Equipment to
Company, (ii) which Company utilized or accessed in the operation of such
Equipment, (iii) to which Company was licensed, either expressly or by
implication, and (iv) as to which Vendor placed no restrictions on transfer in
connection with the resale of Equipment.
(c) Terms Defined in UCC. Where applicable and except as otherwise
--------------------
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
(d) Interpretation. The rules of interpretation set forth in Section
--------------
1.03 of the Credit Agreement shall be applicable to this Agreement and are
incorporated herein by this reference.
SECTION 2 Security Interest.
-----------------
(a) Grant of Security Interest. As security for the payment and
--------------------------
performance of the Secured Obligations, the Company hereby pledges, assigns,
transfers, hypothecates and sets over to the Agent, for itself and on behalf of
and for the ratable benefit of the Banks, and hereby grants to the Agent, for
itself and on behalf of and for the ratable benefit of the Banks, a security
interest in all of the Company's right, title and interest in, to and under the
following property, wherever located and whether now existing or owned or
hereafter acquired or arising but excluding the Company's right, title and
interest in, to and under the Excluded Collateral (collectively, the
"Collateral"): (i) all Accounts; (ii) all
A-4
Documents; (iii) all Equipment; (iv) all General Intangibles; (v) all Inventory;
(vi) all Books; and (vii) all products and Proceeds of any and all of the
foregoing.
(b) Continuing Security Interest. The Company agrees that this
----------------------------
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 22.
(c) Excluded General Intangibles. Notwithstanding the foregoing
----------------------------
provisions of this Section 2, the grant of a security interest as provided
herein shall not extend to, and the term "Collateral" shall not include, any
General Intangibles of the Company (whether owned or held as licensee or lessee,
or otherwise), to the extent that (i) such General Intangibles are not
assignable or capable of being encumbered as a matter of law or under the terms
of the license, lease or other agreement applicable thereto (but solely to the
extent that any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other applicable party
thereto and (ii) such consent has not been obtained; provided, however, that the
-------- -------
foregoing grant of security interest shall extend to, and the term "Collateral"
shall include, (A) any General Intangible which is an Account or a proceed of,
or otherwise related to the enforcement or collection of, any Account, or goods
which are the subject of any Account, (B) any and all proceeds of any General
Intangibles which are otherwise excluded to the extent that the assignment or
encumbrance of such proceeds is not so restricted, and (C) upon obtaining the
consent of any such licensor, lessor or other applicable party's consent with
respect to any such otherwise excluded General Intangibles, such General
Intangibles as well as any and all proceeds thereof that might have theretofore
have been excluded from such grant of a security interest and the term
"Collateral".
SECTION 3 Perfection Procedures. The Company shall execute and
---------------------
deliver to the Agent concurrently with the execution of this Agreement Financing
Statements on Form UCC-1 to be filed in the office of the Secretary of State of
the State of Idaho and the office of the county recorder of Ada County, Idaho
(the "Idaho Financing Statements"), and subject to Section 5(o), at any time and
from time to time after execution of this Agreement all other or additional
financing statements, continuation financing statements, termination statements,
security agreements, chattel mortgages, assignments, patent, copyright and
trademark collateral assignments, fixture filings, warehouse receipts, documents
of title, affidavits, reports, notices, schedules of account, letters of
authority and all other documents and instruments, in form satisfactory to the
Agent (the "Financing Statements"), and take all other action, as the Agent may
request, to perfect and continue perfected, maintain the priority of or provide
notice of the Agent's security interest in the Collateral and to accomplish the
purposes of this Agreement.
SECTION 4 Representations and Warranties. In addition to the
------------------------------
representations and warranties of the Company set forth in the Credit Agreement,
which are incorporated herein by this reference, the Company represents and
warrants to each Bank and the Agent that:
A-5
(a) Location of Chief Executive Office and Collateral. The Company's
-------------------------------------------------
chief executive office and principal place of business is located at the address
set forth in Part 1 of Schedule 1.
----------
(b) Locations of Books. All locations where Books pertaining to the
------------------
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for the Company, are set forth in Part 2 of Schedule 1.
----------
(c) Trade Names and Trade Styles. All trade names and trade styles
----------------------------
under which the Company presently conducts its business operations are set forth
in Part 3 of Schedule 1.
----------
(d) Ownership of Collateral. The Company is, and, except as permitted
-----------------------
by Section 5(i), will continue to be, the sole and complete owner of the
Collateral (or, in the case of after-acquired Collateral, at the time the
Company acquires rights in such Collateral, will be the sole and complete owner
thereof), free from any Lien other than Permitted Liens.
(e) Enforceability; Priority of Security Interest. (i) This Agreement
---------------------------------------------
creates a security interest which is enforceable against the Collateral in which
the Company now has rights and will create a security interest which is
enforceable against the Collateral in which the Company hereafter acquires
rights at the time the Company acquires any such rights; and (ii) the Agent has
a perfected and first priority security interest in the Collateral covered by
the Idaho Financing Statements and, subject to Section 5(o), any other Financing
Statements, and will have a perfected security interest in the Collateral,
subject only to Permitted Liens, referred to in the Idaho Financing Statements,
and, subject to Section 5(o), any other Financing Statements, in which the
Company hereafter acquires rights at the time the Company acquires any such
rights, in each case securing the payment and performance of the Secured
Obligations, and free from any Lien other than Permitted Liens.
(f) Rights to Payment.
-----------------
(i) The Rights to Payment represent valid, binding and enforceable
obligations of the account debtors or other Persons obligated thereon,
representing undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto, and are and
will be genuine, free from Liens, and not subject to any adverse claims,
counterclaims, setoffs, defaults, disputes, defenses, discounts, retainages,
holdbacks or conditions precedent of any kind of character, except to the extent
reflected by the Company's reserves for uncollectible Rights to Payment or to
the extent, if any, that such account debtors or other Persons may be entitled
to normal and ordinary course trade discounts, returns, adjustments and
allowances in accordance with Section 5(k) or otherwise occurring in the
ordinary course of business;
(ii) all Rights to Payment comply in all material respects with all
applicable laws concerning form, content and manner of preparation and
execution, including where applicable any federal or state consumer credit laws;
A-6
(iii) the Company has not assigned any of its rights under the Rights
to Payment except as provided in this Agreement or as set forth in the other
Loan Documents; and
(iv) all statements made, all unpaid balances and all other
information in the Books and other documentation relating to the Rights to
Payment are true and correct in all material respects and in all material
respects what they purport to be.
SECTION 5 Covenants. In addition to the covenants of the Company set
---------
forth in the Credit Agreement, which are incorporated herein by this reference,
so long as any of the Secured Obligations remain unsatisfied or any Bank shall
have any Commitment, the Company agrees that:
(a) Defense of Collateral. The Company will appear in and defend any
---------------------
action, suit or proceeding which may affect to a material extent its title to,
or right or interest in, or the Agent's right or interest in, any material
portion of Collateral unless the Collateral, could be disposed of under Section
5(o) without resulting in any noncompliance therewith.
(b) Preservation of Collateral. The Company will do and perform all
--------------------------
reasonable acts that may be necessary and appropriate to maintain, preserve and
protect any material Collateral unless the Collateral could be disposed of under
Section 5(o) without resulting in any noncompliance therewith.
(c) Compliance with Laws, Etc. The Company will comply with all laws,
-------------------------
regulations and ordinances, and all policies of insurance, relating in a
material way to the possession, operation, maintenance and control of the
Collateral, except where the failure to do so could not reasonably be expected
to have a material adverse effect on the Collateral position of the Agent and
the Banks.
(d) Location of Books and Chief Executive Office. The Company will
--------------------------------------------
give at least 30 days' prior written notice to the Agent of (A) any changes in
any such location where Books pertaining to the Rights to Payment are kept,
including any change of name or address of any service bureau, computer or data
processing company or other Person preparing or maintaining Books or collecting
material Rights to Payment for the Company or (B) any change in the location of
the Company's chief executive office or principal place of business.
(e) Location of Collateral. As part of the collateral valuation
----------------------
certificate described in Section 5(o), the Company will give the Agent a list of
the current locations of the Inventory of the Company and the Guarantor.
(f) Change in Name, Identity or Structure. The Company will give at
-------------------------------------
least 30 days' prior written notice to the Agent of (i) any change in its name
and (ii) any changes in its identity or structure in any manner which might make
any Financing Statement filed hereunder incorrect or misleading.
A-7
(g) Maintenance of Records. The Company will keep Books with respect
----------------------
to the Collateral which are accurate in all material respects.
(h) Invoicing of Sales. The Company will invoice all of its sales and
------------------
maintain proof of delivery and customer acceptance of goods in accordance with
past practices.
(i) Liens. The Company will keep the Collateral free of all Liens
-----
except Permitted Liens.
(j) Expenses. The Company will pay all expenses of protecting,
--------
storing, warehousing, insuring, handling and shipping the Collateral.
(k) Rights to Payment. The Company will:
-----------------
(i) with such frequency as the Agent may require upon the occurrence
and during the continuance of an Event of Default or after any acceleration of
the Secured Obligations (but in no event more than once during any calendar
month), furnish to the Agent full and complete reports, in form and substance
reasonably satisfactory to the Agent, with respect to the Accounts, including
information as to concentration, aging, identity of account debtors, letters of
credit securing Accounts, disputed Accounts and other matters, as the Agent
shall reasonably request;
(ii) give only normal discounts, allowances and credits as to
Accounts and other Rights to Payment, in the ordinary course of business,
according to normal trade practices, and enforce all Accounts and other Rights
to Payment, and during the existence of an Event of Default, take all such
action to such end as may from time to time be reasonably requested by the
Agent, except that the Company may grant any extension of the time for payment
or enter into any agreement to make a rebate or otherwise to reduce the amount
owing on or with respect to, or compromise or settle for less than the full
amount thereof, any Account or other Right to Payment, in the ordinary course of
business, according to normal trade practices;
(iii) if any discount, allowance, credit, extension of time for
payment, agreement to make a rebate or otherwise to reduce the amount owing on,
or compromise or settle, an Account or other Right to Payment exists or occurs,
or if, to the knowledge of the Company, any dispute, setoff, claim, counterclaim
or defense exists with respect to an Account or other Right to Payment, disclose
such fact in the Books relating to such Account or other Right to Payment;
(iv) to the extent required in accordance with its sound business
judgment perform and comply in all material respects with its obligations in
respect of the Accounts and other Rights to Payment;
(v) upon the request of the Agent at any time that Loans are
outstanding (A) upon the occurrence and during the continuance of an Event of
Default, notify all or any designated portion of the account debtors and other
obligors on the Rights to Payment of the
A-8
security interest hereunder, and (B) upon the occurrence and during the
continuance of an Event of Default, notify the account debtors and other
obligors on the Rights to Payment or any designated portion thereof that payment
shall be made directly to the Agent or to such other Person or location as the
Agent shall specify; and
(vi) upon the occurrence and during the continuance of any Event of
Default, upon the request of Agent, at any time that Loans are outstanding,
establish such lockbox or similar arrangements for the payment of the Accounts
and other Rights to Payment as the Agent shall require.
(l) Instruments, Etc. Upon the request of the Agent, the Company will
----------------
(i) immediately deliver to the Agent, or an agent designated by it,
appropriately endorsed or accompanied by appropriate instruments of transfer or
assignment, Documents, all letters of credit relating to the Collateral, and all
Rights to Payment at any time evidenced by promissory notes, trade acceptances
or other instruments, (ii) xxxx all Documents with such legends as the Agent
shall reasonably specify, and (iii) obtain consents from any letter of credit
issuers with respect to the assignment to the Agent of any Letter of Credit
Proceeds.
(m) Inventory. The Company will:
---------
(i) at such times as the Agent shall request, prepare and deliver to
the Agent a report of all Inventory, in form and substance reasonably
satisfactory to the Agent; and
(ii) upon the reasonable request of the Agent, take a physical
listing of the Inventory (including specification of all locations thereof) and
promptly deliver a copy of such physical listing to the Agent.
(n) Notices, Reports and Information. The Company will (i) notify the
--------------------------------
Agent of any other modifications of or additions to the information contained in
Schedule 1; (ii) notify the Agent of any material claim made or asserted against
----------
the Collateral by any Person or other event other than market changes which
could materially adversely affect the value of the Collateral or the Agent's
Lien thereon; (iii) furnish to the Agent such statements and schedules further
identifying and describing the Collateral and such other reports and other
information in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail; and (iv) upon the reasonable request of the
Agent make such demands and requests for information and reports as the Company
is entitled to make in respect of the Collateral.
(o) Collateral Valuation. The value of the Collateral (which
--------------------
Collateral shall not be subject to any other Liens securing Indebtedness) of the
Company subject to a first priority security interest in favor of the Agent
together with the value of the Collateral (which Collateral shall not be subject
to any other Liens securing Indebtedness) of the Guarantor subject to a first
priority security interest in favor of the Agent under the Guarantor Security
Agreement (the "Aggregate Collateral") shall at all times be equal to or greater
than the Minimum Amounts. "Minimum Amount" means (A) with respect to Accounts
and Inventory (as such terms are defined herein and in the Guarantor Security
Agreement), a value totalling at least $250,000,000 and (B) with respect to
Equipment (as
A-9
defined herein and in the Guarantor Security Agreement), a value totalling at
least $500,000,000. The Company shall deliver a certificate on the twentieth day
following the end of each month setting forth the aggregate value of the
Aggregate Collateral (as determined by the Company using net book values of the
Aggregate Collateral as determined in accordance with GAAP) as well as a list of
the current locations of the Inventory. If the values of the Aggregate
Collateral set forth in the certificate are not equal to or greater than the
Minimum Amounts, then the Company shall designate to the Agent (i) additional
Financing Statements to be filed (and the locations in which such Financing
Statements are to be filed) hereunder and/or under the Guarantor Security
Agreement to perfect the security interest granted hereunder or (ii) additional
collateral of the Company to be included hereunder, so that the Minimum Amounts
shall be attained and, if necessary, this Agreement shall be amended to
accomplish the foregoing. If the Company shall not provide the requisite
information needed or if the Majority Banks determine that the Collateral as to
which the Agent will become perfected hereunder, or additional collateral, as
the case may be, is not acceptable, the Agent (in consultation with the Company
and the Banks, as necessary or appropriate) shall determine when (and which)
filings shall be done and what additional collateral shall be designated. All
such filings shall be accomplished within 10 Business Days of receipt of the
above certificate such that the Minimum Amounts are attained by that date.
(p) Insurance. All insurance maintained by the Company, as required
---------
under Section 6.06 of the Credit Agreement, with respect to Collateral shall
name the Agent as loss payee/mortgagee and as additional insured, for the
benefit of the Banks, as their interests may appear. Upon request of the Agent
or any Bank, the Company shall furnish the Agent, with sufficient copies for
each Bank, at reasonable intervals (but not more than once per calendar year) a
certificate of a Responsible Officer of the Company (and, if requested by the
Agent, any insurance broker of the Company) setting forth the nature and extent
of all insurance maintained by the Company and its Subsidiaries in accordance
with this Section or any Collateral Documents (and which, in the case of a
certificate of a broker, were placed through such broker).
SECTION 6 Rights to Payment.
-----------------
(a) Collection of Rights to Payment. Until the Agent exercises its
-------------------------------
rights hereunder to collect Rights to Payment, the Company shall endeavor in the
first instance diligently to collect all amounts due or to become due on or with
respect to the Rights to Payment unless in its reasonable business judgment it
decides not to collect a Right to Payment. At the request of the Agent, upon
and after the occurrence and during the continuance of any Event of Default if
Loans are outstanding, all remittances received by the Company shall be held in
trust for the Agent and, in accordance with the Agent's instructions, remitted
to the Agent or deposited to an account with the Agent in the form received
(with any necessary endorsements or instruments of assignment or transfer).
SECTION 7 Authorization; Agent Appointed Attorney-in-Fact. The Agent
-----------------------------------------------
shall have the right to, in the name of the Company, or in the name of the Agent
or otherwise, without notice to or assent by the Company, and the Company hereby
constitutes and appoints the Agent (and any of the Agent's officers or employees
or agents designated by
A-10
the Agent) as the Company's true and lawful attorney-in-fact, with full power
and authority to:
(i) if the Company fails to do so promptly, sign any of the Financing
Statements which must be executed or filed to perfect or continue perfected,
maintain the priority of or provide notice of the Agent's security interest in
the Collateral;
(ii) take possession of and endorse any notes, acceptances, checks,
drafts, money orders or other forms of payment or security and collect any
Proceeds of any Collateral;
(iii) sign and endorse any invoice or xxxx of lading relating to any
of the Collateral, warehouse or storage receipts, drafts against customers or
other obligors, assignments, notices of assignment, verifications and notices to
customers or other obligors;
(iv) send requests for verification of Rights to Payment to the
customers or other obligors of the Company;
(v) contact, or direct the Company to contact, all account debtors
and other obligors on the Rights to Payment and instruct such account debtors
and other obligors to make all payments directly to the Agent;
(vi) assert, adjust, xxx for, compromise or release any claims under
any policies of insurance;
(vii) notify each Person maintaining lockbox or similar arrangements
for the payment of the Rights to Payment to remit all amounts representing
collections on the Rights to Payment directly to the Agent;
(viii) ask, demand, collect, receive and give acquittances and
receipts for any and all Rights to Payment, enforce payment or any other rights
in respect of the Rights to Payment and other Collateral, grant consents, agree
to any amendments, modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and otherwise file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as the Agent may deem
necessary or desirable to maintain, preserve and protect the Collateral, to
collect the Collateral or to enforce the rights of the Agent with respect to the
Collateral;
(ix) execute any and all applications, documents, papers and
instruments necessary for the Agent to use the Intellectual Property and grant
or issue any exclusive or non-exclusive license or sublicense with respect to
any Intellectual Property in connection with the exercise of the Agent's rights
and remedies under Section 10;
(x) execute any and all endorsements, assignments or other documents
and instruments necessary to sell, lease, assign, convey or otherwise transfer
title in or dispose of the Collateral; and
A-11
(xi) execute any and all such other documents and instruments, and do
any and all acts and things for and on behalf of the Company, which the Agent
may deem necessary or advisable to (A) realize upon the Collateral, and (B)
maintain, protect, and preserve the Collateral and the Agent's security interest
therein and to accomplish the purposes of this Agreement.
The Agent agrees that, except upon and after the occurrence and during the
continuance of an Event of Default and while Loans are outstanding, it shall not
exercise the power of attorney, or any rights granted to the Agent, pursuant to
clauses (ii) through (x) and (xi)(A). The foregoing power of attorney is
coupled with an interest and irrevocable so long as the Banks have any
Commitments or the Secured Obligations have not been paid and performed in full.
The Company hereby ratifies, to the extent permitted by law, all that the Agent
shall lawfully and in good faith do or cause to be done by virtue of and in
compliance with this Section 7.
SECTION 8 Agent Performance of Company Obligations. If the Company
----------------------------------------
fails to do so promptly after notice, the Agent may perform or pay any
obligation which the Company has agreed to perform or pay under or in connection
with this Agreement, and the Company shall reimburse the Agent on demand for any
amounts paid by the Agent pursuant to this Section 8.
SECTION 9 Agent's Duties. Notwithstanding any provision contained in
--------------
this Agreement, the Agent shall have no duty to exercise any of the rights,
privileges or powers afforded to it and shall not be responsible to the Company
or any other Person for any failure to do so or delay in doing so. Beyond the
exercise of reasonable care to assure the safe custody of Collateral in the
Agent's possession and the accounting for moneys actually received by the Agent
hereunder, the Agent shall have no duty or liability to exercise or preserve any
rights, privileges or powers pertaining to the Collateral.
SECTION 10 Remedies.
--------
(a) Remedies. Upon the occurrence and during the continuance of an
--------
Event of Default and acceleration of the Secured Obligations under Section 8.02
of the Credit Agreement, the Agent shall have, in addition to all other rights
and remedies granted to it in this Agreement, the Credit Agreement or any other
Loan Document, all rights and remedies of a secured party under the UCC and
other applicable laws. Without limiting the generality of the foregoing, the
Company agrees that upon the occurrence and during the continuance of an Event
of Default and acceleration of the Secured Obligations under Section 8.02 of the
Credit Agreement:
(i) The Agent may peaceably and without notice enter any premises of
the Company, and using reasonable care, take possession of any Collateral,
remove or dispose of all or part of the Collateral on any premises of the
Company or elsewhere, or, in the case of Equipment, render it nonfunctional, and
otherwise collect, receive, appropriate and realize upon all or any part of the
Collateral, and demand, give receipt for, settle, renew, extend, exchange,
compromise, adjust, or xxx for all or any part of the Collateral, as the Agent
may determine.
A-12
(ii) The Agent may require the Company to assemble all or any part of
the Collateral and make it available to the Agent, at any place and time
designated by the Agent.
(iii) The Agent may secure the appointment of a receiver of the
Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(iv) The Agent may sell, resell, lease, use, assign, transfer or
otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing (utilizing in
connection therewith any of the Company's assets, without charge or liability to
the Agent therefor, except that Company Intellectual Property may only be used
as provided in Subsection (b)) at public or private sale, by one or more
contracts, in one or more parcels, at the same or different times, for cash or
credit or for future delivery without assumption of any credit risk, all as the
Agent deems advisable; provided, however, that the Company shall be credited
-------- -------
with the net proceeds of sale only when such proceeds are finally collected by
the Agent. The Agent and each of the Banks shall have the right upon any such
public sale, and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption, which right or equity of redemption the Company hereby
releases, to the extent permitted by law. The Company hereby agrees that the
sending of notice by ordinary mail, postage prepaid, to the address of the
Company set forth in the Credit Agreement, of the place and time of any public
sale or of the time after which any private sale or other intended disposition
is to be made, shall be deemed reasonable notice thereof if such notice is sent
ten days prior to the date of such sale or other disposition or the date on or
after which such sale or other disposition may occur, provided that the Agent
--------
may provide the Company shorter notice or no notice, to the extent permitted by
the UCC or other applicable law.
(b) License. Solely for the purpose of enabling the Agent to exercise
-------
its rights and remedies under this Section 10 or otherwise in connection with
the disposition of Inventory in accordance with this Agreement, the Company
hereby grants to the Agent an irrevocable, non-exclusive and assignable license
(exercisable without payment or royalty or other compensation to the Company) of
the Intellectual Property necessary to sell or otherwise dispose of Inventory,
provided that such license to use such Intellectual Property does not include
the right to manufacture Inventory.
(c) Application of Proceeds. The cash proceeds actually received from
-----------------------
the sale or other disposition or collection of Collateral, and any other amounts
received in respect of the Collateral the application of which is not otherwise
provided for herein, shall be applied as provided in the Credit Agreement. Any
surplus thereof which exists after payment and performance in full of the
Secured Obligations shall be promptly paid over to the Company or otherwise
disposed of in accordance with the UCC or other applicable law. The Company
shall remain liable to the Agent and the Banks for any deficiency which exists
after any sale or other disposition or collection of Collateral.
X-00
XXXXXXX 00 Xxxxxxx Waivers. The Company waives, to the fullest
---------------
extent permitted by law, (i) any right of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling of the Collateral or other collateral or security for the Secured
Obligations; (ii) any right to require the Agent or the Banks (A) to proceed
against any Person, (B) to exhaust any other collateral or security for any of
the Secured Obligations, (C) to pursue any remedy in the Agent's or any of the
Banks' power, or (D) to make or give any presentments, demands for performance,
notices of nonperformance, protests, notices of protests or notices of dishonor
in connection with any of the Collateral; and (iii) all claims, damages, and
demands against the Agent or the Banks arising out of the repossession,
retention, sale or application of the proceeds of any sale of the Collateral,
other than any resulting from the gross negligence or willful misconduct of such
Person.
SECTION 12 Notices. All notices, requests or other communications
-------
hereunder shall be given in the manner and to the addresses specified in the
Credit Agreement. All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon receipt by the addressee, or if
delivered, upon delivery.
SECTION 13 No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Agent or any Bank, any right,
remedy, power or privilege hereunder, 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.
SECTION 14 Costs and Expenses; Indemnification; Other Charges.
--------------------------------------------------
(a) Costs and Expenses. The Company shall:
------------------
(i) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agent for all reasonable costs and expenses
incurred by it in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement and
any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby; and
(ii) pay or reimburse the Agent, the Arranger and each Bank for all
costs and expenses (including Attorney Costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement during the existence of an Event of Default or
after acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency Proceeding or
appellate proceeding).
(b) Indemnification. The Company shall indemnify, defend and hold the
---------------
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless
A-14
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such Person in favor of
any third-party in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or relating to the
Collateral, whether or not any Indemnified Person is a party thereto (all of the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
--------
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting from the gross negligence or
willful misconduct of such Indemnified Person.
(c) Other Charges. The Company agrees to indemnify the Agent and each
-------------
of the Banks against and hold each of them harmless from any and all present and
future stamp, transfer, documentary and other such taxes, levies, fees,
assessments and other charges made by any jurisdiction by reason of the
execution, delivery, performance and enforcement of this Agreement.
(d) Interest. Any amounts payable to the Agent or any Bank under this
--------
Section 14 or otherwise under this Agreement if not paid upon demand shall bear
interest from the date of such demand until paid in full, at the rate of
interest set forth in Section 2.08(c) of the Credit Agreement.
(e) Survival. The agreements in this Section shall survive payment of
--------
all other Secured Obligations.
SECTION 15 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Bank.
SECTION 16 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN
RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN
CALIFORNIA.
SECTION 17 Entire Agreement; Amendment. This Agreement, together
---------------------------
with the other Loan Documents, embodies the entire agreement and understanding
among the Company, the Banks and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof
A-15
and thereof and shall not be amended except by the written agreement of the
parties as provided in the Credit Agreement.
SECTION 18 Severability. The illegality or unenforceability of any
------------
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
SECTION 19 Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which, when so executed, shall be
deemed an original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this Agreement may be delivered by any party hereto
or thereto either in the form of an executed original or an executed original
sent by facsimile transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Agent of a facsimile transmitted document
purportedly bearing the signature of a Bank of or the Company shall bind such
Bank or the Company, respectively, with the same force and effect as the
delivery of a hard copy original. Any failure by the Agent to receive the hard
copy executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Agent.
SECTION 20 Incorporation of Provisions of the Credit Agreement. To
---------------------------------------------------
the extent the Credit Agreement contains provisions of general applicability to
the Loan Documents, including any such provisions contained in Article X
thereof, such provisions are incorporated herein by this reference.
SECTION 21 No Inconsistent Requirements. The Company acknowledges
----------------------------
that this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms.
SECTION 22 Termination. Upon the termination of the Commitments of
-----------
the Banks and payment and performance in full of all Secured Obligations, this
Agreement shall terminate and the Agent shall promptly execute and deliver to
the Company such documents and instruments reasonably requested by the Company
as shall be necessary to evidence termination of all security interests given by
the Company to the Agent hereunder; provided, however, that the obligations of
-------- -------
the Company under Section 14 shall survive such termination.
A-16
EXHIBIT B
to the Fourth Amendment
FORM OF GUARANTOR SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 16, 1998,
is made between Micron Semiconductor Products, Inc., an Idaho corporation (the
"Guarantor"), and Bank of America National Trust and Savings Association, as
agent for itself and the Banks referred to below (in such capacity, the
"Agent").
Micron Technology, Inc. (the "Company"), certain financial
institutions as lenders (the "Banks") and the Agent are parties to a Fourth
Amendment to First Amended and Restated Revolving Credit Agreement dated as of
June 16, 1998 (the "Amendment") amending that certain First Amended and Restated
Revolving Credit Agreement dated as of May 28, 1997 among the Company, the Banks
and the Agent, as amended (as amended, modified, renewed or extended from time
to time, the "Credit Agreement"). To guarantee the indebtedness and other
obligations of the Company under the Credit Agreement, the Guarantor has made a
Guaranty dated as of the date hereof (as amended, modified, renewed or extended
from time to time, the "Guaranty") in favor of the Agent. It is a condition
precedent to the Amendment that the Guarantor enter into this Agreement and
grant to the Agent, for itself and for the ratable benefit of the Banks, the
security interests hereinafter provided to secure the obligations of the
Guarantor under the Guaranty described below.
Accordingly, the parties hereto agree as follows:
SECTION 1 Definitions; Interpretation.
---------------------------
(a) Terms Defined in Credit Agreement. All capitalized terms used in
---------------------------------
this Agreement and not otherwise defined herein shall have the meanings assigned
to them in the Credit Agreement.
(b) Certain Defined Terms. As used in this Agreement, the following
---------------------
terms shall have the following meanings:
"Accounts" means any and all accounts receivable owed to the
--------
Guarantor, whether now existing or hereafter acquired or arising, arising out of
or in connection with the sale or lease of merchandise, goods or commodities or
the rendering of services or arising from any other transaction, however
evidenced, and whether or not earned by performance, all guaranties, indemnities
and security with respect to the foregoing, and all letters of credit relating
thereto, in each case whether now existing or hereafter acquired or arising.
"Books" means all books, records and other written, electronic or
-----
other documentation in whatever form maintained now or hereafter by or for the
Guarantor in connection with the ownership of the Collateral or evidencing or
containing information
B-1
relating to the Collateral, including: (i) ledgers; (ii) records indicating,
summarizing, or evidencing the Collateral), business operations or financial
condition; (iii) computer programs and software; (iv) computer discs, tapes,
files, manuals, spreadsheets; (v) computer printouts and output of whatever
kind; (vi) any other computer prepared or electronically stored, collected or
reported information and equipment of any kind; and (vii) any and all other
rights now or hereafter arising out of any contract or agreement between the
Guarantor and any service bureau, computer or data processing company or other
Person charged with preparing or maintaining any of the Guarantor's books or
records or with credit reporting, including with regard to the Guarantor's
Accounts.
"Collateral" has the meaning set forth in Section 2.
----------
"Documents" means any and all documents of title, bills of lading,
---------
dock warrants, dock receipts, warehouse receipts and other documents of the
Guarantor relating to Collateral, whether or not negotiable, and includes all
other documents which purport to be issued by a bailee or agent and purport to
cover goods in any bailee's or agent's possession which are either identified or
are fungible portions of an identified mass, including such documents of title
made available to the Guarantor for the purpose of ultimate sale or exchange of
goods or for the purpose of loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange, in each case whether now existing
or hereafter acquired or arising.
"Equipment" means all now existing or hereafter acquired equipment of
---------
the Guarantor in all of its forms, located at 0000 Xxxxx Xxxxxxx Xxx, Xxxxx,
Xxxxx 00000 and including any and all machinery, furniture, equipment,
furnishings and fixtures in which the Guarantor now or hereafter acquires any
right, and all other goods and tangible personal property (other than
Inventory), including tools, parts and supplies, automobiles, trucks, tractors
and other vehicles, computer and other electronic data processing equipment and
other office equipment, Vendor Intellectual Property, and all additions,
substitutions, replacements, parts, accessories, and accessions to and for the
foregoing, now owned or hereafter acquired, and including any of the foregoing
which are or are to become fixtures on real property.
"Excluded Collateral" means the Collateral set forth on Schedule 1.
------------------- ----------
"Financing Statements" has the meaning set forth in Section 3.
--------------------
"General Intangibles" means all general intangibles of the Guarantor
-------------------
in any way relating to or arising out of or existing in connection with the
Accounts, Inventory and Equipment constituting Collateral, now existing or
hereafter acquired or arising and shall include Vendor Intellectual Property and
exclude Guarantor Intellectual Property.
"Guarantor Documents" has the meaning set forth in the Guaranty.
-------------------
"Guarantor Intellectual Property" means any Intellectual Property
-------------------------------
owned or held by the Guarantor or in which the Guarantor otherwise has any
interest that allows for
B-2
transfer or sublicense to third parties, now existing or hereafter acquired or
arising, whether or not relating to or arising out of or existing in connection
with the Equipment.
"Idaho Financing Statements" has the meaning set forth in Section 3.
--------------------------
"Intellectual Property" means the following properties and assets:
---------------------
(i) all patents and patent applications, domestic or foreign, and all reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, all licenses relating to any of the foregoing and all income and
royalties with respect to any licenses, all rights arising therefrom and
pertaining thereto (collectively, "Patents"); (ii) all copyrights and
applications for copyright, domestic or foreign, together with the underlying
works of authorship (including titles), and all rights of renewal and extension
of copyright; (iii) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses, whether
registered or unregistered and wherever registered, and all rights arising
therefrom and pertaining thereto and all reissues, extensions and renewals
thereof; (iv) all trade secrets, trade dress, trade styles, logos, other source
of business identifiers, mask-works, mask-work registrations, mask-work
applications, software, confidential information, customer lists, license
rights, advertising materials, operating manuals, methods, processes, know-how,
algorithms, formulae, databases, quality control procedures, product, service
and technical specifications, operating, production and quality control manuals,
sales literature, drawings, specifications, blue prints, descriptions,
inventions, name plates and catalogs; and (v) the entire goodwill of or
associated with the businesses now or hereafter conducted by the Guarantor
connected with and symbolized by any of the aforementioned properties and
assets.
"Inventory" means any and all of the Guarantor's inventory in all of
---------
its forms, wherever located, whether now owned or hereafter acquired, and in any
event includes all goods (including goods in transit) which are held for sale,
lease or other disposition, including those held for display or demonstration or
out on lease or consignment or to be furnished under a contract of service, or
which are raw materials, work in process, finished goods or materials used or
consumed in the Guarantor's business, and the resulting product or mass, and all
repossessed, returned, rejected, reclaimed and replevied goods, together with
all parts, components, supplies and other materials used or usable in connection
with the manufacture, production, packing, shipping, advertising, selling or
furnishing of such goods; and all other items hereafter acquired by the
Guarantor by way of substitution, replacement, return, repossession or
otherwise, and all additions and accessions thereto, and any Document
representing or relating to any of the foregoing at any time.
"Proceeds" means whatever is receivable or received from or upon the
--------
sale, lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral or other assets of the Guarantor,
including "proceeds" as defined at UCC Section 9306, any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to or for the account of the
Guarantor from time to time with respect to any of the Collateral, any and all
payments (in any form whatsoever) made or due and payable to the
B-3
Guarantor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), any and all other amounts from time to time paid or payable under or
in connection with any of the Collateral or for or on account of any damage or
injury to or conversion of any Collateral by any Person, any and all other
tangible or intangible property received upon the sale or disposition of
Collateral, and all proceeds of proceeds.
"Rights to Payment" means all Accounts and any and all rights and
-----------------
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all Documents, General Intangibles and Proceeds.
"Secured Obligations" means the "Guaranteed Obligations" of the
-------------------
Guarantor as defined in the Guaranty.
"UCC" means the Uniform Commercial Code as the same may, from time to
---
time, be in effect in the State of California; provided, however, in the event
-------- -------
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of California, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
"Vendor Intellectual Property" means any Intellectual Property owned
----------------------------
by or originating with a vendor from whom Guarantor purchased Equipment, where
such Intellectual Property (i) accompanied the sale of such Equipment to
Guarantor, (ii) which Guarantor utilized or accessed in the operation of such
Equipment, (iii) to which Guarantor was licensed, either expressly or by
implication, and (iv) as to which Vendor placed no restrictions on transfer in
connection with the resale of Equipment.
(c) Terms Defined in UCC. Where applicable and except as otherwise
--------------------
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
(d) Interpretation. The rules of interpretation set forth in Section
--------------
1.03 of the Credit Agreement shall be applicable to this Agreement and are
incorporated herein by this reference.
SECTION 2 Security Interest.
-----------------
(a) Grant of Security Interest. As security for the payment and
--------------------------
performance of the Secured Obligations, the Guarantor hereby pledges, assigns,
transfers, hypothecates and sets over to the Agent, for itself and on behalf of
and for the ratable benefit of the Banks, and hereby grants to the Agent, for
itself and on behalf of and for the ratable benefit of the Banks, a security
interest in all of the Guarantor's right, title and interest in, to
B-4
and under the following property, wherever located and whether now existing or
owned or hereafter acquired or arising but excluding the Guarantor's right,
title and interest in, to and under the Excluded Collateral (collectively, the
"Collateral"): (i) all Accounts; (ii) all Documents; (iii) all Equipment; (iv)
all General Intangibles; (v) all Inventory; (vi) all Books; and (vii) all
products and Proceeds of any and all of the foregoing.
(b) Continuing Security Interest. The Guarantor agrees that this
----------------------------
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 22.
(c) Excluded General Intangibles. Notwithstanding the foregoing
----------------------------
provisions of this Section 2, the grant of a security interest as provided
herein shall not extend to, and the term "Collateral" shall not include, any
General Intangibles of the Guarantor (whether owned or held as licensee or
lessee, or otherwise), to the extent that (i) such General Intangibles are not
assignable or capable of being encumbered as a matter of law or under the terms
of the license, lease or other agreement applicable thereto (but solely to the
extent that any such restriction shall be enforceable under applicable law),
without the consent of the licensor or lessor thereof or other applicable party
thereto and (ii) such consent has not been obtained; provided, however, that the
-------- -------
foregoing grant of security interest shall extend to, and the term "Collateral"
shall include, (A) any General Intangible which is an Account or a proceed of,
or otherwise related to the enforcement or collection of, any Account, or goods
which are the subject of any Account, (B) any and all proceeds of any General
Intangibles which are otherwise excluded to the extent that the assignment or
encumbrance of such proceeds is not so restricted, and (C) upon obtaining the
consent of any such licensor, lessor or other applicable party's consent with
respect to any such otherwise excluded General Intangibles, such General
Intangibles as well as any and all proceeds thereof that might have theretofore
have been excluded from such grant of a security interest and the term
"Collateral".
SECTION 3 Perfection Procedures. The Guarantor shall execute and
---------------------
deliver to the Agent concurrently with the execution of this Agreement Financing
Statements on Form UCC-1 to be filed in the office of the Secretary of State of
the State of Idaho and the office of the county recorder of Ada County, Idaho
(the "Idaho Financing Statements"), and subject to Section 5(o), at any time and
from time to time after execution of this Agreement all other or additional
financing statements, continuation financing statements, termination statements,
security agreements, chattel mortgages, assignments, patent, copyright and
trademark collateral assignments, fixture filings, warehouse receipts, documents
of title, affidavits, reports, notices, schedules of account, letters of
authority and all other documents and instruments, in form satisfactory to the
Agent (the "Financing Statements"), and take all other action, as the Agent may
request, to perfect and continue perfected, maintain the priority of or provide
notice of the Agent's security interest in the Collateral and to accomplish the
purposes of this Agreement.
SECTION 4 Representations and Warranties. In addition to the
------------------------------
representations and warranties of the Guarantor set forth in the Guaranty, which
are incor-
B-5
porated herein by this reference, the Guarantor represents and warrants to each
Bank and the Agent that:
(a) Location of Chief Executive Office and Collateral. The
-------------------------------------------------
Guarantor's chief executive office and principal place of business is located at
the address set forth in Part 1 of Schedule 1.
----------
(b) Locations of Books. All locations where Books pertaining to the
------------------
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for the Guarantor, are set forth in Part 2 of Schedule 1.
----------
(c) Trade Names and Trade Styles. All trade names and trade styles
----------------------------
under which the Guarantor presently conducts its business operations are set
forth in Part 3 of Schedule 1.
----------
(d) Ownership of Collateral. The Guarantor is, and, except as
-----------------------
permitted by Section 5(i), will continue to be, the sole and complete owner of
the Collateral (or, in the case of after-acquired Collateral, at the time the
Guarantor acquires rights in such Collateral, will be the sole and complete
owner thereof), free from any Lien other than Permitted Liens.
(e) Enforceability; Priority of Security Interest. (i) This Agreement
---------------------------------------------
creates a security interest which is enforceable against the Collateral in which
the Guarantor now has rights and will create a security interest which is
enforceable against the Collateral in which the Guarantor hereafter acquires
rights at the time the Guarantor acquires any such rights; and (ii) the Agent
has a perfected and first priority security interest in the Collateral covered
by the Idaho Financing Statements and, subject to Section 5(o), any other
Financing Statements, and will have a perfected security interest in the
Collateral, subject only to Permitted Liens, referred to in the Idaho Financing
Statements, and, subject to Section 5(o), any other Financing Statements, in
which the Guarantor hereafter acquires rights at the time the Guarantor acquires
any such rights, in each case securing the payment and performance of the
Secured Obligations, and free from any Lien other than Permitted Liens.
(f) Rights to Payment.
-----------------
(i) The Rights to Payment represent valid, binding and enforceable
obligations of the account debtors or other Persons obligated thereon,
representing undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto, and are and
will be genuine, free from Liens, and not subject to any adverse claims,
counterclaims, setoffs, defaults, disputes, defenses, discounts, retainages,
holdbacks or conditions precedent of any kind of character, except to the extent
reflected by the Guarantor's reserves for uncollectible Rights to Payment or to
the extent, if any, that such account debtors or other Persons may be entitled
to normal and ordinary course trade discounts, returns, adjustments and
allowances in accordance with Section 5(k) or otherwise occurring in the
ordinary course of business;
B-6
(ii) all Rights to Payment comply in all material respects with all
applicable laws concerning form, content and manner of preparation and
execution, including where applicable any federal or state consumer credit laws;
(iii) the Guarantor has not assigned any of its rights under the
Rights to Payment except as provided in this Agreement or as set forth in the
other Loan Documents; and
(iv) all statements made, all unpaid balances and all other
information in the Books and other documentation relating to the Rights to
Payment are true and correct in all material respects and in all material
respects what they purport to be.
SECTION 5 Covenants. In addition to the covenants of the Guarantor
---------
set forth in the Guaranty, which are incorporated herein by this reference, so
long as any of the Secured Obligations remain unsatisfied or any Bank shall have
any Commitment, the Guarantor agrees that:
(a) Defense of Collateral. The Guarantor will appear in and defend
---------------------
any action, suit or proceeding which may affect to a material extent its title
to, or right or interest in, or the Agent's right or interest in, any material
portion of Collateral unless the Collateral, could be disposed of under Section
5(o) without resulting in any noncompliance therewith.
(b) Preservation of Collateral. The Guarantor will do and perform all
--------------------------
reasonable acts that may be necessary and appropriate to maintain, preserve and
protect any material Collateral unless the Collateral could be disposed of under
Section 5(o) without resulting in any noncompliance therewith.
(c) Compliance with Laws, Etc. The Guarantor will comply with all
-------------------------
laws, regulations and ordinances, and all policies of insurance, relating in a
material way to the possession, operation, maintenance and control of the
Collateral, except where the failure to do so could not reasonably be expected
to have a material adverse effect on the Collateral position of the Agents and
the Banks.
(d) Location of Books and Chief Executive Office. The Guarantor will
--------------------------------------------
give at least 30 days' prior written notice to the Agent of (A) any changes in
any such location where Books pertaining to the Rights to Payment are kept,
including any change of name or address of any service bureau, computer or data
processing company or other Person preparing or maintaining Books or collecting
material Rights to Payment for the Guarantor or (B) any change in the location
of the Guarantor's chief executive office or principal place of business.
(e) Location of Collateral. As part of the collateral valuation
----------------------
certificate described in Section 5(o) of the Company Security Agreement, the
Company will give the Agent a list of the current locations of the Inventory of
the Company and the Guarantor.
B-7
(f) Change in Name, Identity or Structure. The Guarantor will give at
-------------------------------------
least 30 days' prior written notice to the Agent of (i) any change in its name
and (ii) any changes in its identity or structure in any manner which might make
any Financing Statement filed hereunder incorrect or misleading.
(g) Maintenance of Records. The Guarantor will keep Books with
----------------------
respect to the Collateral which are accurate in all material respects.
(h) Invoicing of Sales. The Guarantor will invoice all of its sales
------------------
and maintain proof of delivery and customer acceptance of goods in accordance
with past practices.
(i) Liens. The Guarantor will keep the Collateral free of all Liens
-----
except Permitted Liens.
(j) Expenses. The Guarantor will pay all expenses of protecting,
--------
storing, warehousing, insuring, handling and shipping the Collateral.
(k) Rights to Payment. The Guarantor will:
-----------------
(i) with such frequency as the Agent may require upon the occurrence
and during the continuance of an Event of Default or after any acceleration of
the Secured Obligations (but in no event more than once during any calendar
month), furnish to the Agent full and complete reports, in form and substance
reasonably satisfactory to the Agent, with respect to the Accounts, including
information as to concentration, aging, identity of account debtors, letters of
credit securing Accounts, disputed Accounts and other matters, as the Agent
shall reasonably request;
(ii) give only normal discounts, allowances and credits as to
Accounts and other Rights to Payment, in the ordinary course of business,
according to normal trade practices, and enforce all Accounts and other Rights
to Payment, and during the existence of an Event of Default, take all such
action to such end as may from time to time be reasonably requested by the
Agent, except that the Guarantor may grant any extension of the time for payment
or enter into any agreement to make a rebate or otherwise to reduce the amount
owing on or with respect to, or compromise or settle for less than the full
amount thereof, any Account or other Right to Payment, in the ordinary course of
business, according to normal trade practices;
(iii) if any discount, allowance, credit, extension of time for
payment, agreement to make a rebate or otherwise to reduce the amount owing on,
or compromise or settle, an Account or other Right to Payment exists or occurs,
or if, to the knowledge of the Guarantor, any dispute, setoff, claim,
counterclaim or defense exists with respect to an Account or other Right to
Payment, disclose such fact in the Books relating to such Account or other Right
to Payment;
B-8
(iv) to the extent required in accordance with its sound business
judgment perform and comply in all material respects with its obligations in
respect of the Accounts and other Rights to Payment;
(v) upon the request of the Agent at any time that Loans are
outstanding (A) upon the occurrence and during the continuance of an Event of
Default, notify all or any designated portion of the account debtors and other
obligors on the Rights to Payment of the security interest hereunder, and (B)
upon the occurrence and during the continuance of an Event of Default, notify
the account debtors and other obligors on the Rights to Payment or any
designated portion thereof that payment shall be made directly to the Agent or
to such other Person or location as the Agent shall specify; and
(vi) upon the occurrence and during the continuance of any Event of
Default, upon the request of Agent, at any time that Loans are outstanding,
establish such lockbox or similar arrangements for the payment of the Accounts
and other Rights to Payment as the Agent shall require.
(l) Instruments, Etc. Upon the request of the Agent, the Guarantor
----------------
will (i) immediately deliver to the Agent, or an agent designated by it,
appropriately endorsed or accompanied by appropriate instruments of transfer or
assignment, Documents, all letters of credit relating to the Collateral, and all
Rights to Payment at any time evidenced by promissory notes, trade acceptances
or other instruments, (ii) xxxx all Documents with such legends as the Agent
shall reasonably specify, and (iii) obtain consents from any letter of credit
issuers with respect to the assignment to the Agent of any Letter of Credit
Proceeds.
(m) Inventory. The Guarantor will:
---------
(i) at such times as the Agent shall request, prepare and deliver to
the Agent a report of all Inventory, in form and substance reasonably
satisfactory to the Agent; and
(ii) upon the reasonable request of the Agent, take a physical
listing of the Inventory (including specification of all locations thereof) and
promptly deliver a copy of such physical listing to the Agent.
(n) Notices, Reports and Information. The Guarantor will (i) notify
--------------------------------
the Agent of any other modifications of or additions to the information
contained in Schedule 1; (ii) notify the Agent of any material claim made or
----------
asserted against the Collateral by any Person or other event other than market
changes which could materially adversely affect the value of the Collateral or
the Agent's Lien thereon; (iii) furnish to the Agent such statements and
schedules further identifying and describing the Collateral and such other
reports and other information in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail; and (iv) upon the reasonable
request of the Agent make such demands and requests for information and reports
as the Guarantor is entitled to make in respect of the Collateral.
B-9
(o) Collateral Valuation. The value of the Collateral (which
--------------------
Collateral shall not be subject to any other Liens securing Indebtedness) of the
Guarantor subject to a first priority security interest in favor of the Agent
together with the value of the Collateral (which Collateral shall not be subject
to any other Liens securing Indebtedness) of the Company subject to a first
priority security interest in favor of the Agent under the Company Security
Agreement (collectively, the "Aggregate Collateral") shall at all times be equal
to or greater than the Minimum Amounts. "Minimum Amount" means (A) with respect
to Accounts and Inventory (as such terms are defined herein and in the Company
Security Agreement), a value totalling at least $250,000,000 and (B) with
respect to Equipment (as defined herein and in the Company Security Agreement),
a value totalling at least $500,000,000. Pursuant to the Company Security
Agreement, the Company shall deliver a certificate on the twentieth day
following the end of each month setting forth the aggregate value of the
Aggregate Collateral (as determined by the Company using net book values of the
Aggregate Collateral as determined in accordance with GAAP) as well as a list of
the current locations of the Inventory. If the values of the Aggregate
Collateral set forth in the certificate are not equal to or greater than the
Minimum Amounts, then the Company shall designate to the Agent (i) additional
Financing Statements to be filed (and the locations in which such Financing
Statements are to be filed) hereunder and/or under the Company Security
Agreement to perfect the security interest granted hereunder or (ii) additional
collateral of the Guarantor to be included hereunder, so that the Minimum
Amounts shall be attained and, if necessary, this Agreement shall be amended to
accomplish the foregoing. If the Company shall not provide the requisite
information needed or if the Majority Banks determine that the Collateral as to
which the Agent will become perfected hereunder, or additional collateral is not
acceptable, as the case may be, the Agent (in consultation with the Company and
the Banks, as necessary or appropriate) shall determine when (and which filings)
shall be done and what additional collateral shall be designated. All such
filings shall be accomplished within 10 Business Days of receipt of the above
certificate such that the Minimum Amounts are attained by that date.
(p) Insurance. All insurance maintained by the Guarantor, as required
---------
under Section 6.06 of the Credit Agreement, with respect to Collateral shall
name the Agent as loss payee/mortgagee and as additional insured, for the
benefit of the Banks, as their interests may appear. Upon request of the Agent
or any Bank, the Guarantor shall furnish the Agent, with sufficient copies for
each Bank, at reasonable intervals (but not more than once per calendar year) a
certificate of a Responsible Officer of the Guarantor (and, if requested by the
Agent, any insurance broker of the Guarantor) setting forth the nature and
extent of all insurance maintained by the Guarantor and its Subsidiaries in
accordance with this Section or any Collateral Documents (and which, in the case
of a certificate of a broker, were placed through such broker).
SECTION 6 Rights to Payment.
-----------------
(a) Collection of Rights to Payment. Until the Agent exercises its
-------------------------------
rights hereunder to collect Rights to Payment, the Guarantor shall endeavor in
the first instance diligently to collect all amounts due or to become due on or
with respect to the Rights to Payment unless in its reasonable business judgment
it decides not to collect a Right to
B-10
Payment. At the request of the Agent, upon and after the occurrence and during
the continuance of any Event of Default, if Loans are outstanding, all
remittances received by the Guarantor shall be held in trust for the Agent and,
in accordance with the Agent's instructions, remitted to the Agent or deposited
to an account with the Agent in the form received (with any necessary
endorsements or instruments of assignment or transfer).
SECTION 7 Authorization; Agent Appointed Attorney-in-Fact. The Agent
-----------------------------------------------
shall have the right to, in the name of the Guarantor, or in the name of the
Agent or otherwise, without notice to or assent by the Guarantor, and the
Guarantor hereby constitutes and appoints the Agent (and any of the Agent's
officers or employees or agents designated by the Agent) as the Guarantor's true
and lawful attorney-in-fact, with full power and authority to:
(i) if the Guarantor fails to do so promptly, sign any of the
Financing Statements which must be executed or filed to perfect or continue
perfected, maintain the priority of or provide notice of the Agent's security
interest in the Collateral;
(ii) take possession of and endorse any notes, acceptances, checks,
drafts, money orders or other forms of payment or security and collect any
Proceeds of any Collateral;
(iii) sign and endorse any invoice or xxxx of lading relating to any
of the Collateral, warehouse or storage receipts, drafts against customers or
other obligors, assignments, notices of assignment, verifications and notices to
customers or other obligors;
(iv) send requests for verification of Rights to Payment to the
customers or other obligors of the Guarantor;
(v) contact, or direct the Guarantor to contact, all account debtors
and other obligors on the Rights to Payment and instruct such account debtors
and other obligors to make all payments directly to the Agent;
(vi) assert, adjust, xxx for, compromise or release any claims under
any policies of insurance;
(vii) notify each Person maintaining lockbox or similar arrangements
for the payment of the Rights to Payment to remit all amounts representing
collections on the Rights to Payment directly to the Agent;
(viii) ask, demand, collect, receive and give acquittances and
receipts for any and all Rights to Payment, enforce payment or any other rights
in respect of the Rights to Payment and other Collateral, grant consents, agree
to any amendments, modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and otherwise file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as the Agent may deem
B-11
necessary or desirable to maintain, preserve and protect the Collateral, to
collect the Collateral or to enforce the rights of the Agent with respect to the
Collateral;
(ix) execute any and all applications, documents, papers and
instruments necessary for the Agent to use the Intellectual Property and grant
or issue any exclusive or non-exclusive license or sublicense with respect to
any Intellectual Property in connection with the exercise of the Agent's rights
and remedies under Section 10;
(x) execute any and all endorsements, assignments or other documents
and instruments necessary to sell, lease, assign, convey or otherwise transfer
title in or dispose of the Collateral; and
(xi) execute any and all such other documents and instruments, and do
any and all acts and things for and on behalf of the Guarantor, which the Agent
may deem necessary or advisable to (A) realize upon the Collateral, and (B)
maintain, protect, and preserve the Collateral and the Agent's security interest
therein and to accomplish the purposes of this Agreement.
The Agent agrees that, except upon and after the occurrence and during the
continuance of an Event of Default and while Loans are outstanding, it shall not
exercise the power of attorney, or any rights granted to the Agent, pursuant to
clauses (ii) through (x) and (xi)(A). The foregoing power of attorney is
coupled with an interest and irrevocable so long as the Banks have any
Commitments or the Secured Obligations have not been paid and performed in full.
The Guarantor hereby ratifies, to the extent permitted by law, all that the
Agent shall lawfully and in good faith do or cause to be done by virtue of and
in compliance with this Section 7.
SECTION 8 Agent Performance of Guarantor Obligations. If the
------------------------------------------
Guarantor fails to do so promptly after notice, the Agent may perform or pay any
obligation which the Guarantor has agreed to perform or pay under or in
connection with this Agreement, and the Guarantor shall reimburse the Agent on
demand for any amounts paid by the Agent pursuant to this Section 8.
SECTION 9 Agent's Duties. Notwithstanding any provision contained in
--------------
this Agreement, the Agent shall have no duty to exercise any of the rights,
privileges or powers afforded to it and shall not be responsible to the
Guarantor or any other Person for any failure to do so or delay in doing so.
Beyond the exercise of reasonable care to assure the safe custody of Collateral
in the Agent's possession and the accounting for moneys actually received by the
Agent hereunder, the Agent shall have no duty or liability to exercise or
preserve any rights, privileges or powers pertaining to the Collateral.
SECTION 10 Remedies.
--------
(a) Remedies. Upon the occurrence and during the continuance of an
--------
Event of Default and acceleration of the Secured Obligations under Section 8.02
of the Credit Agreement, the Agent shall have, in addition to all other rights
and remedies granted to it in
B-12
this Agreement, the Credit Agreement or any other Loan Document, all rights and
remedies of a secured party under the UCC and other applicable laws. Without
limiting the generality of the foregoing, the Guarantor agrees that upon the
occurrence and during the continuance of an Event of Default and acceleration of
the Secured Obligations under Section 8.02 of the Credit Agreement:
(i) The Agent may peaceably and without notice enter any premises of
the Guarantor, and using reasonable care, take possession of any Collateral,
remove or dispose of all or part of the Collateral on any premises of the
Guarantor or elsewhere, or, in the case of Equipment, render it nonfunctional,
and otherwise collect, receive, appropriate and realize upon all or any part of
the Collateral, and demand, give receipt for, settle, renew, extend, exchange,
compromise, adjust, or xxx for all or any part of the Collateral, as the Agent
may determine.
(ii) The Agent may require the Guarantor to assemble all or any part
of the Collateral and make it available to the Agent, at any place and time
designated by the Agent.
(iii) The Agent may secure the appointment of a receiver of the
Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(iv) The Agent may sell, resell, lease, use, assign, transfer or
otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing (utilizing in
connection therewith any of the Guarantor's assets, without charge or liability
to the Agent therefor, except that Guarantor Intellectual Property may only be
used as provided in Subsection (b)) at public or private sale, by one or more
contracts, in one or more parcels, at the same or different times, for cash or
credit or for future delivery without assumption of any credit risk, all as the
Agent deems advisable; provided, however, that the Guarantor shall be credited
-------- -------
with the net proceeds of sale only when such proceeds are finally collected by
the Agent. The Agent and each of the Banks shall have the right upon any such
public sale, and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption, which right or equity of redemption the Guarantor hereby
releases, to the extent permitted by law. The Guarantor hereby agrees that the
sending of notice by ordinary mail, postage prepaid, to the address of the
Guarantor set forth in the Guaranty, of the place and time of any public sale or
of the time after which any private sale or other intended disposition is to be
made, shall be deemed reasonable notice thereof if such notice is sent ten days
prior to the date of such sale or other disposition or the date on or after
which such sale or other disposition may occur, provided that the Agent may
--------
provide the Guarantor shorter notice or no notice, to the extent permitted by
the UCC or other applicable law.
(b) License. Solely for the purpose of enabling the Agent to exercise
-------
its rights and remedies under this Section 10 or otherwise in connection with
the disposition of Inventory in accordance with this Agreement, the Guarantor
hereby grants to the Agent an irrevocable, non-exclusive and assignable license
(exercisable without payment or royalty or other compensation to the Guarantor)
of the Intellectual Property necessary to sell or
B-13
otherwise dispose of Inventory, provided that such license to use such
Intellectual Property does not include the right to manufacture Inventory.
(c) Application of Proceeds. The cash proceeds actually received from
-----------------------
the sale or other disposition or collection of Collateral, and any other amounts
received in respect of the Collateral the application of which is not otherwise
provided for herein, shall be applied as provided in the Credit Agreement. Any
surplus thereof which exists after payment and performance in full of the
Secured Obligations shall be promptly paid over to the Guarantor or otherwise
disposed of in accordance with the UCC or other applicable law. The Guarantor
shall remain liable to the Agent and the Banks for any deficiency which exists
after any sale or other disposition or collection of Collateral.
SECTION 11 Certain Waivers. The Guarantor waives, to the fullest
---------------
extent permitted by law, (i) any right of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling of the Collateral or other collateral or security for the Secured
Obligations; (ii) any right to require the Agent or the Banks (A) to proceed
against any Person, (B) to exhaust any other collateral or security for any of
the Secured Obligations, (C) to pursue any remedy in the Agent's or any of the
Banks' power, or (D) to make or give any presentments, demands for performance,
notices of nonperformance, protests, notices of protests or notices of dishonor
in connection with any of the Collateral; and (iii) all claims, damages, and
demands against the Agent or the Banks arising out of the repossession,
retention, sale or application of the proceeds of any sale of the Collateral,
other than any resulting from the gross negligence or willful misconduct of such
Person.
SECTION 12 Notices. All notices, requests or other communications
-------
hereunder shall be given in the manner and to the addresses specified in the
Guaranty. All such notices, requests and communications shall, when transmitted
by overnight delivery, or faxed, be effective when delivered for overnight
(next-day) delivery, or transmitted in legible form by facsimile machine,
respectively, or if mailed, upon receipt by the addressee, or if delivered, upon
delivery.
SECTION 13 No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Agent or any Bank, any right,
remedy, power or privilege hereunder, 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.
SECTION 14 Costs and Expenses; Indemnification; Other Charges.
(a) Costs and Expenses. The Guarantor shall:
------------------
(i) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agent for all reasonable costs and expenses
incurred by it in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not
B-14
consummated), this Agreement and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby; and
(ii) pay or reimburse the Agent, the Arranger and each Bank for all
costs and expenses (including Attorney Costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement during the existence of an Event of Default or
after acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency Proceeding or
appellate proceeding).
(b) Indemnification. The Guarantor shall indemnify, defend and hold
---------------
the Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any such Person in favor of any third-party in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement or relating to the Collateral, whether or not any Indemnified Person
is a party thereto (all of the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Guarantor shall have no obligation hereunder
--------
to any Indemnified Person with respect to Indemnified Liabilities resulting from
the gross negligence or willful misconduct of such Indemnified Person.
(c) Other Charges. The Guarantor agrees to indemnify the Agent and
-------------
each of the Banks against and hold each of them harmless from any and all
present and future stamp, transfer, documentary and other such taxes, levies,
fees, assessments and other charges made by any jurisdiction by reason of the
execution, delivery, performance and enforcement of this Agreement.
(d) Interest. Any amounts payable to the Agent or any Bank under this
--------
Section 14 or otherwise under this Agreement if not paid upon demand shall bear
interest from the date of such demand until paid in full, at the rate of
interest set forth in Section 2.08(c) of the Credit Agreement.
(e) Survival. The agreements in this Section shall survive payment of
--------
all other Secured Obligations.
SECTION 15 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Guarantor may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and the Majority Banks.
B-15
SECTION 16 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN
RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN
CALIFORNIA.
SECTION 17 Entire Agreement; Amendment. This Agreement, together
---------------------------
with the other Loan Documents, embodies the entire agreement and understanding
among the Guarantor, the Banks and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof and shall not be
amended except by the written agreement of the parties as provided in the Credit
Agreement.
SECTION 18 Severability. The illegality or unenforceability of any
------------
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
SECTION 19 Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which, when so executed, shall be
deemed an original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this Agreement may be delivered by any party hereto
or thereto either in the form of an executed original or an executed original
sent by facsimile transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Agent of a facsimile transmitted document
purportedly bearing the signature of a Bank of or the Guarantor shall bind such
Bank or the Guarantor, respectively, with the same force and effect as the
delivery of a hard copy original. Any failure by the Agent to receive the hard
copy executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Agent.
SECTION 20 Incorporation of Provisions of the Guaranty. To the
-------------------------------------------
extent the Guaranty contains provisions of general applicability to the
Guarantor Documents, such provisions are incorporated herein by this reference.
SECTION 21 No Inconsistent Requirements. The Guarantor acknowledges
----------------------------
that this Agreement and the other Guarantor Documents may contain covenants and
other terms and provisions variously stated regarding the same or similar
matters, and agrees that all such covenants, terms and provisions are cumulative
and all shall be performed and satisfied in accordance with their respective
terms.
X-00
XXXXXXX 00 Xxxxxxxxxxx. Xxxx the termination of the Commitments of
-----------
the Banks and payment and performance in full of all Secured Obligations, this
Agreement shall terminate and the Agent shall promptly execute and deliver to
the Guarantor such documents and instruments reasonably requested by the
Guarantor as shall be necessary to evidence termination of all security
interests given by the Guarantor to the Agent hereunder; provided, however, that
-------- -------
the obligations of the Guarantor under Section 14 shall survive such
termination.
B-17
EXHIBIT C
to the Fourth Amendment
FORM OF GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of June 16, 1998, is made by
Micron Semiconductor Products, Inc., an Idaho corporation (the "Guarantor"), in
favor of the Banks party to the Credit Agreement referred to below and Bank of
America National Trust and Savings Association, as agent for itself and such
Banks (in such capacity, the "Agent").
Micron Technology, Inc., a Delaware corporation (the "Company"),
certain financial institutions as lenders (the "Banks") and the Agent are
parties to a Fourth Amendment to First Amended and Restated Revolving Credit
Agreement dated June 16, 1998 (the "Amendment") amending that certain First
Amended and Restated Revolving Credit Agreement among the Company, the Banks and
the Agent dated as of May 28, 1997 (as amended, modified, renewed or extended
from time to time, the "Credit Agreement"). It is a condition precedent to the
Amendment that the Guarantor guarantee the indebtedness and other obligations of
the Company to the Agent and the Banks under or in connection with the Credit
Agreement as set forth herein. The Guarantor, as a subsidiary of the Company,
will derive substantial direct and indirect benefits from the credit extensions
to the Company pursuant to the Credit Agreement and the amendment contemplated
by the Amendment (which benefits are hereby acknowledged by the Guarantor).
Accordingly, to induce the Banks to enter into this Amendment and in
consideration thereof, the Guarantor hereby agrees as follows:
SECTION 1 Definitions; Interpretation.
---------------------------
(a) Terms Defined in Credit Agreement. All capitalized terms used in
---------------------------------
this Guaranty and not otherwise defined herein shall have the meanings assigned
to them in the Credit Agreement.
(b) Certain Defined Terms. As used in this Guaranty, the following
---------------------
terms shall have the following meanings:
"Guaranteed Obligations" has the meaning set forth in Section 2.
----------------------
"Guarantor Documents" means this Guaranty, the Guarantor Security
-------------------
Agreement and all other certificates, documents, agreements and instruments
delivered to the Agent and the Banks under or in connection with this Guaranty.
"Solvent" means, as to any Person at any time, that (a) the fair value
-------
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for
C-1
purposes of the California Uniform Fraudulent Transfer Act; (b) the present fair
saleable value of the property of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.
"Subordinated Debt" has the meaning set forth in Section 7.
-----------------
(c) Interpretation. The rules of interpretation set forth in Section
--------------
1.03 of the Credit Agreement shall be applicable to this Guaranty and are
incorporated herein by this reference.
SECTION 2 Guaranty.
--------
(a) Guaranty. The Guarantor hereby unconditionally and irrevocably
--------
guarantees to the Agent and the Banks, and their respective successors,
endorsees, transferees and assigns, the full and prompt payment when due
(whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise) and performance of the indebtedness, liabilities and other
obligations of the Company to the Agent and the Banks under or in connection
with the Credit Agreement, the Notes and the other Loan Documents, including all
unpaid principal of the Loans, all interest accrued thereon, all fees due under
the Credit Agreement and all other amounts payable by the Company to the Agent
and the Banks thereunder or in connection therewith. The terms "indebtedness,"
"liabilities" and "obligations" are used herein in their most comprehensive
sense and include any and all advances, debts, obligations and liabilities, now
existing or hereafter arising, whether voluntary or involuntary and whether due
or not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether recovery upon such indebtedness, liabilities and
obligations may be or hereafter become unenforceable or shall be an allowed or
disallowed claim under the Bankruptcy Code or other applicable law. The
foregoing indebtedness, liabilities and other obligations of the Company, and
all other indebtedness, liabilities and obligations to be paid or performed by
the Guarantor in connection with this Guaranty (including any and all amounts
due under Section 15), shall hereinafter be collectively referred to as the
"Guaranteed Obligations."
(b) Limitation of Guaranty. To the extent that any court of competent
----------------------
jurisdiction shall impose by final judgment under applicable law (including the
California Uniform Fraudulent Transfer Act and (S)(S)544 and 548 of the
Bankruptcy Code) any limitations on the amount of the Guarantor's liability with
respect to the Guaranteed Obligations which the Agent or the Banks can enforce
under this Guaranty, the Agent and the Banks by their acceptance hereof accept
such limitation on the amount of the Guarantor's liability hereunder to the
extent needed to make this Guaranty and the Guarantor Documents fully
enforceable and nonavoidable.
C-2
SECTION 3 Liability of Guarantor. The liability of the Guarantor
----------------------
under this Guaranty shall be irrevocable, absolute, independent and
unconditional, and shall not be affected by any circumstance which might
constitute a discharge of a surety or guarantor other than the indefeasible
payment and performance in full of all Guaranteed Obligations. In furtherance
of the foregoing and without limiting the generality thereof, the Guarantor
agrees as follows:
(i) the Guarantor's liability hereunder shall be the immediate,
direct, and primary obligation of the Guarantor and shall not be contingent upon
the Agent's or any Bank's exercise or enforcement of any remedy it may have
against the Company or any other Person, or against any Collateral;
(ii) this Guaranty is a guaranty of payment when due and not merely of
collectibility;
(iii) the Guarantor's payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge the
Guarantor's liability for any portion of the Guaranteed Obligations remaining
unsatisfied; and
(iv) the Guarantor's liability with respect to the Guaranteed
Obligations shall remain in full force and effect without regard to, and shall
not be impaired or affected by, nor shall the Guarantor be exonerated or
discharged by, any of the following events:
(A) any Insolvency Proceeding with respect to the Company, any
other guarantor or any other Person;
(B) any limitation, discharge, or cessation of the liability of
the Company, any other guarantor or any other Person for any Guaranteed
Obligations due to any statute, regulation or rule of law, or any invalidity or
unenforceability in whole or in part of any of the Guaranteed Obligations or the
Loan Documents;
(C) any merger, acquisition, consolidation or change in structure
of the Company, the Guarantor or any other guarantor or Person, or any sale,
lease, transfer or other disposition of any or all of the assets or shares of
the Company, the Guarantor, any other guarantor or other Person;
(D) any assignment or other transfer, in whole or in part, of the
Agent's or any Bank's interests in and rights under this Guaranty or the other
Loan Documents, including the Agent's or any Bank's right to receive payment of
the Guaranteed Obligations, or any assignment or other transfer, in whole or in
part, of the Agent's or any Bank's interests in and to any of the Collateral;
(E) any claim, defense, counterclaim or setoff, other than that
of prior performance, that the Company, the Guarantor, any other guarantor or
other Person may have or assert, including any defense of incapacity or lack of
corporate or other authority to execute any of the Loan Documents;
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(F) the Agent's or any Bank's amendment, modification, renewal,
extension, cancellation or surrender of any Loan Document, any Collateral, or
the Agent's or any Bank's exchange, release, or waiver of any Collateral;
(G) the Agent's or any Bank's exercise or nonexercise of any
power, right or remedy with respect to any of the Collateral, including the
Agent's or any Bank's compromise, release, settlement or waiver with or of the
Company, any other guarantor or any other Person;
(H) the Agent's or any Bank's vote, claim, distribution,
election, acceptance, action or inaction in any Insolvency Proceeding related to
the Guaranteed Obligations;
(I) any impairment or invalidity of any of the Collateral or any
other collateral securing any of the Guaranteed Obligations or any failure to
perfect any of the Liens of the Agent and the Banks thereon or therein; and
(J) any other guaranty, whether by the Guarantor or any other
Person, of all or any part of the Guaranteed Obligations or any other
indebtedness, obligations or liabilities of the Company to the Agent or the
Banks.
SECTION 4 Consents of Guarantor. The Guarantor hereby
---------------------
unconditionally consents and agrees that, without notice to or further assent
from the Guarantor:
(i) the principal amount of the Guaranteed Obligations may be
increased or decreased and additional indebtedness or obligations of the Company
under the Loan Documents may be incurred, by one or more amendments,
modifications, renewals or extensions of any Loan Document or otherwise;
(ii) the time, manner, place or terms of any payment under any Loan
Document may be extended or changed, including by an increase or decrease in the
interest rate on any Guaranteed Obligation or any fee or other amount payable
under such Loan Document, by an amendment, modification or renewal of any Loan
Document or otherwise;
(iii) the time for the Company's (or any other Person's) performance
of or compliance with any term, covenant or agreement on its part to be
performed or observed under any Loan Document may be extended, or such
performance or compliance waived, or failure in or departure from such
performance or compliance consented to, all in such manner and upon such terms
as the Agent and the Banks may deem proper;
(iv) the Agent or the Banks may discharge or release, in whole or in
part, any other guarantor or any other Person liable for the payment and
performance of all or any part of the Guaranteed Obligations, and may permit or
consent to any such action or any result of such action, and shall not be
obligated to demand or enforce payment upon any of the Collateral or any other
collateral, nor shall the Agent or the Banks be liable to the Guarantor for any
failure to collect or enforce payment or performance of the Guaranteed
Obligations from any Person or to realize on the Collateral or other collateral
therefor;
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(v) in addition to the Collateral, the Agent and the Banks may take
and hold other security (legal or equitable) of any kind, at any time, as
collateral for the Guaranteed Obligations, and may, from time to time, in whole
or in part, exchange, sell, surrender, release, subordinate, modify, waive,
rescind, compromise or extend such security and may permit or consent to any
such action or the result of any such action, and may apply such security and
direct the order or manner of sale thereof;
(vi) the Agent and the Banks may request and accept other guaranties
of the Guaranteed Obligations and any other indebtedness, obligations or
liabilities of the Company to the Agent or the Banks and may, from time to time,
in whole or in part, surrender, release, subordinate, modify, waive, rescind,
compromise or extend any such guaranty and may permit or consent to any such
action or the result of any such action; and
(vii) the Agent and the Banks may exercise, or waive or otherwise
refrain from exercising, any other right, remedy, power or privilege (including
the right to accelerate the maturity of any Loan and any power of sale) granted
by any Loan Document or other security document or agreement, or otherwise
available to the Agent and the Banks, with respect to the Guaranteed Obligations
or any of the Collateral, even if the exercise of such right, remedy, power or
privilege affects or eliminates any right of subrogation or any other right of
the Guarantor against the Company;
all as the Agent and the Banks may deem advisable, and all without impairing,
abridging, releasing or affecting this Guaranty.
SECTION 5 Guarantor's Waivers.
-------------------
(a) Certain Waivers. The Guarantor waives and agrees not to assert:
---------------
(i) any right to require the Agent or any Bank to marshal assets in
favor of the Company, the Guarantor, any other guarantor or any other Person, to
proceed against the Company, any other guarantor or any other Person, to proceed
against or exhaust any of the Collateral, to give notice of the terms, time and
place of any public or private sale of personal property security constituting
the Collateral or other collateral for the Guaranteed Obligations or comply with
any other provisions of (S)9504 of the California UCC (or any equivalent
provision of any other applicable law) or to pursue any other right, remedy,
power or privilege of the Agent or any Bank whatsoever;
(ii) the defense of the statute of limitations in any action hereunder
or for the collection or performance of the Guaranteed Obligations;
(iii) any defense arising by reason of any lack of corporate or other
authority or any other defense of the Company, the Guarantor or any other
Person;
(iv) any defense based upon the Agent's or any Bank's errors or
omissions in the administration of the Guaranteed Obligations;
(v) any rights to set-offs and counterclaims;
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(vi) any defense based upon an election of remedies (including, if
available, an election to proceed by nonjudicial foreclosure) which destroys or
impairs the subrogation rights of the Guarantor or the right of the Guarantor to
proceed against the Company or any other obligor of the Guaranteed Obligations
for reimbursement; and
(vii) without limiting the generality of the foregoing, to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by applicable law limiting the liability of or exonerating
guarantors or sureties, or which may conflict with the terms of this Guaranty,
including any and all benefits that otherwise might be available to the
Guarantor under California Civil Code (S)(S)1432, 2809, 2810, 2815, 2819, 2839,
2845, 2848, 2849, 2850, 2899 and 3433 and California Code of Civil Procedure
(S)(S)580a, 580b, 580d and 726.
(b) Additional Waivers. The Guarantor waives any and all notice of
------------------
the acceptance of this Guaranty, and any and all notice of the creation,
renewal, modification, extension or accrual of the Guaranteed Obligations, or
the reliance by the Agent and the Banks upon this Guaranty, or the exercise of
any right, power or privilege hereunder. The Guaranteed Obligations shall
conclusively be deemed to have been created, contracted, incurred and permitted
to exist in reliance upon this Guaranty. The Guarantor waives promptness,
diligence, presentment, protest, demand for payment, notice of default, dishonor
or nonpayment and all other notices to or upon the Company, the Guarantor or any
other Person with respect to the Guaranteed Obligations.
(c) Independent Obligations. The obligations of the Guarantor
-----------------------
hereunder are independent of and separate from the obligations of the Company
and any other guarantor and upon the occurrence and during the continuance of
any Event of Default, a separate action or actions may be brought against the
Guarantor, whether or not the Company or any such other guarantor is joined
therein or a separate action or actions are brought against the Company or any
such other guarantor.
(d) Financial Condition of Company. The Guarantor shall not have any
------------------------------
right to require the Agent or the Banks to obtain or disclose any information
with respect to: (i) the financial condition or character of the Company or the
ability of the Company to pay and perform the Guaranteed Obligations; (ii) the
Guaranteed Obligations; (iii) the Collateral; (iv) the existence or nonexistence
of any other guarantees of all or any part of the Guaranteed Obligations; (v)
any action or inaction on the part of the Agent or the Banks or any other
Person; or (vi) any other matter, fact or occurrence whatsoever.
SECTION 6 Subrogation. Until the Guaranteed Obligations shall be
-----------
satisfied in full and the Commitments shall be terminated, the Guarantor shall
not have, and shall not directly or indirectly exercise, (i) any rights that it
may acquire by way of subrogation under this Guaranty, by any payment hereunder
or otherwise, (ii) any rights of contribution, indemnification, reimbursement or
similar suretyship claims arising out of this Guaranty or (iii) any other right
which it might otherwise have or acquire (in any way whatsoever) which could
entitle it at any time to share or participate in any right, remedy or security
of the Banks or the Agent as against the Company or other guarantors, whether in
connection with this Guaranty, any of the other Loan Documents or otherwise. If
any amount shall be paid
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to the Guarantor on account of the foregoing rights at any time when all the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Agent and the Banks and shall forthwith be
paid to the Agent to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.
SECTION 7 Subordination.
-------------
(a) Subordination to Payment of Guaranteed Obligations. All payments
--------------------------------------------------
on account of all indebtedness, liabilities and other obligations of the Company
to the Guarantor, whether created under, arising out of or in connection with
any documents or instruments evidencing any credit extensions to Company or
otherwise, including all principal on any such credit extensions, all interest
accrued thereon, all fees and all other amounts payable by the Company to the
Guarantor in connection therewith, whether now existing or hereafter arising,
and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined (the "Subordinated Debt") shall be
subject, subordinate and junior in right of payment and exercise of remedies, to
the extent and in the manner set forth herein, to the prior payment in full in
cash or cash equivalents of the Guaranteed Obligations.
(b) No Payments. As long as any of the Guaranteed Obligations shall
-----------
remain outstanding and unpaid, the Guarantor shall not accept or receive any
payment or distribution by or on behalf of the Company, directly or indirectly,
of assets of the Company of any kind or character, whether in cash, property or
securities, including on account of the purchase, redemption or other
acquisition of Subordinated Debt, as a result of any collection, sale or other
disposition of collateral, or by setoff, exchange or in any other manner, for or
on account of the Subordinated Debt ("Subordinated Debt Payments"), except that
if no Event of Default exists and no notice described below has been received by
the Guarantor, the Guarantor shall be entitled to accept and receive regularly
scheduled payments and other payments in the ordinary course on the Subordinated
Debt, in accordance with the terms of the documents and instruments governing
the Subordinated Debt and other Subordinated Debt Payments in respect of
Subordinated Debt not evidenced by documents or instruments (including in
respect of Dispositions), in each case to the extent permitted under Article VII
of the Credit Agreement. During the existence of an Event of Default (or if any
Event of Default would exist immediately after the making of a Subordinated Debt
Payment), and upon receipt by the Company of notice from the Agent or any Bank
of such Default, and until such Event of Default is cured or waived, the Company
shall not make, accept or receive any Subordinated Debt Payment. In the event
that, notwithstanding the provisions of this Section 7, any Subordinated Debt
Payments shall be received in contravention of this Section 7 by the Guarantor
before all Guaranteed Obligations are paid in full in cash or cash equivalents,
such Subordinated Debt Payments shall be held in trust for the benefit of the
Agent and the Banks and shall be paid over or delivered to the Agent for
application to the payment in full in cash or cash equivalents of all Guaranteed
Obligations remaining unpaid to the extent necessary to give effect to this
Section 7, after giving effect to any concurrent payments or distributions to
the Agent and the Banks in respect of the Guaranteed Obligations.
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(c) Subordination of Remedies. As long as any Guaranteed Obligations
-------------------------
shall remain outstanding and unpaid, the Guarantor shall not, without the prior
written consent of the Agent:
(i) accelerate or bring suit or institute any other actions or
proceedings to enforce its rights or interests under or in respect of the
Subordinated Debt;
(ii) exercise any rights under or with respect to (A) any guaranties
of the Subordinated Debt, or (B) any collateral held by it, including causing or
compelling the pledge or delivery of any collateral, any attachment of, levy
upon, execution against, foreclosure upon or the taking of other action against
or institution of other proceedings with respect to any collateral held by it,
notifying any account debtors of the Company or asserting any claim or interest
in any insurance with respect to any collateral, or attempt to do any of the
foregoing;
(iii) exercise any rights to set-offs and counterclaims in respect of
any indebtedness, liabilities or obligations of the Guarantor to the Company
against any of the Subordinated Debt; or
(iv) commence, or cause to be commenced, or join with any creditor
other than the Agent and the Banks in commencing, any Insolvency Proceeding.
(d) Subordination Upon Any Distribution of Assets of the Company. In the
------------------------------------------------------------
event of any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, upon any Insolvency
Proceeding with respect to or involving the Company, (i) all amounts owing on
account of the Guaranteed Obligations, including all interest accrued thereon at
the contract rate both before and after the initiation of any such proceeding,
whether or not an allowed claim in any such proceeding, shall first be paid in
full in cash, or payment provided for in cash or in cash equivalents, before any
Subordinated Debt Payment is made; and (ii) to the extent permitted by
applicable law, any Subordinated Debt Payment to which the Guarantor would be
entitled except for the provisions hereof, shall be paid or delivered by the
trustee in bankruptcy, receiver, assignee for the benefit of creditors or other
liquidating agent making such payment or distribution directly to the Agent (on
behalf of the Banks) for application to the payment of the Guaranteed
Obligations in accordance with clause (i), after giving effect to any concurrent
payment or distribution or provision therefor to the Agent or the Banks in
respect of such Guaranteed Obligations.
(e) Authorization to Agent. If, while any Subordinated Debt is
----------------------
outstanding, any Insolvency Proceeding is commenced by or against the Company or
its property:
(i) the Agent, when so instructed by the Majority Banks, is hereby
irrevocably authorized and empowered (in the name of the Banks or in the name of
the Guarantor or otherwise), but shall have no obligation, to demand, xxx for,
collect and receive every payment or distribution in respect of the Subordinated
Debt and give acquittance therefor and to file claims and proofs of claim and
take such other action (including voting the
C-8
Subordinated Debt) as it may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the Agent and the Banks; and
(ii) the Guarantor shall promptly take such action as the Agent (on
instruction from the Majority Banks) may reasonably request (A) to collect the
Subordinated Debt for the account of the Banks and to file appropriate claims or
proofs of claim in respect of the Subordinated Debt, (B) to execute and deliver
to the Agent, such powers of attorney, assignments and other instruments as it
may request to enable it to enforce any and all claims with respect to the
Subordinated Debt, and (C) to collect and receive any and all Subordinated Debt
Payments.
SECTION 8 Continuing Guaranty; Reinstatement.
----------------------------------
(a) Continuing Guaranty. This Guaranty is a continuing guaranty and
-------------------
agreement of subordination and shall continue in effect and be binding upon the
Guarantor until termination of the Commitments and payment and performance in
full of the Guaranteed Obligations.
(b) Reinstatement. This Guaranty shall continue to be effective or
-------------
shall be reinstated and revived, as the case may be, if, for any reason, any
payment of the Guaranteed Obligations by or on behalf of the Company (or receipt
of any proceeds of Collateral) shall be rescinded, invalidated, declared to be
fraudulent or preferential, set aside, voided or otherwise required to be repaid
to the Company, its estate, trustee, receiver or any other Person (including
under the Bankruptcy Code or other state or federal law), or must otherwise be
restored by the Agent or any Bank, whether as a result of Insolvency Proceedings
or otherwise. To the extent any payment is so rescinded, set aside, voided or
otherwise repaid or restored, the Guaranteed Obligations shall be revived in
full force and effect without reduction or discharge for such payment. All
losses, damages, costs and expenses that the Agent or the Banks may suffer or
incur as a result of any voided or otherwise set aside payments shall be
specifically covered by the indemnity in favor of the Banks and the Agent
contained in Section 16.
SECTION 9 Payments. The Guarantor hereby agrees, in furtherance of
--------
the foregoing provisions of this Guaranty and not in limitation of any other
right which the Agent or any Bank or any other Person may have against the
Guarantor by virtue hereof, upon the failure of the Company to pay any of the
Guaranteed Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under (S)362(a) of the Bankruptcy Code), the Guarantor shall forthwith pay,
or cause to be paid, in cash, to the Agent an amount equal to the amount of the
Guaranteed Obligations then due as aforesaid (including interest which, but for
the filing of a petition in any Insolvency Proceeding with respect to the
Company, would have accrued on such Guaranteed Obligations, whether or not a
claim is allowed against the Company for such interest in any such Insolvency
Proceeding). The Guarantor shall make each payment hereunder, unconditionally
in full without set-off, counterclaim or other defense, or deduction for any
Taxes, on the day when due in Dollars and in same day or immediately available
funds, to the Agent at such office of the Agent and to such account as are
specified in the
C-9
Credit Agreement. All such payments shall be promptly applied from time to time
by the Agent as provided in the Credit Agreement.
SECTION 10 Representations and Warranties. The Guarantor represents
------------------------------
and warrants to the Agent and each Bank that:
(a) Organization and Powers. The Guarantor is a corporation duly
-----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, is qualified to do business and
is in good standing in each jurisdiction in which the failure so to qualify or
be in good standing would have a Material Adverse Effect and has all requisite
power and authority to own its assets and carry on its business and, with
respect to the Guarantor, to execute, deliver and perform its obligations under
the Guarantor Documents.
(b) Authorization; No Conflict. The execution, delivery and
--------------------------
performance by the Guarantor of this Guaranty and any other Guarantor Documents
have been duly authorized by all necessary corporate action of the Guarantor,
and do not and will not: (i) contravene the terms of the Guarantor's
organization documents or (ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
material Contractual Obligation to which the Guarantor is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Guarantor
or its property is subject, or (iii) violate any Requirement of Law.
(c) Binding Obligation. This Guaranty and the other Guarantor
------------------
Documents constitute the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
(d) Governmental Consents. No authorization, consent, approval,
---------------------
license, exemption of, or filing or registration with, any Governmental
Authority, or approval or consent of any other Person, is required for the due
execution, delivery or performance by, or enforcement against, the Guarantor of
the Guarantor Documents.
(e) No Prior Assignment. The Guarantor has not previously assigned
-------------------
any interest in the Subordinated Debt or any collateral relating thereto, no
Person other than the Guarantor owns an interest in the Subordinated Debt or any
such collateral (whether as joint holders of the Subordinated Debt, participants
or otherwise), and the entire Subordinated Debt is owing only to the Guarantor.
(f) Solvency. Immediately prior to and after and giving effect to the
--------
incurrence of the Guarantor's obligations under this Guaranty the Guarantor will
be Solvent.
(g) Consideration. The Guarantor has received at least "reasonably
-------------
equivalent value" (as such phrase is used in (S)548 of the Bankruptcy Code, in
(S)3439.04 of the California Uniform Fraudulent Transfer Act and in comparable
provisions of other applicable
C-10
law) and more than sufficient consideration to support its obligations hereunder
in respect of the Guaranteed Obligations and under any of the Collateral
Documents to which it is a party.
(h) Independent Investigation. The Guarantor hereby acknowledges that
-------------------------
it has undertaken its own independent investigation of the financial condition
of the Company and all other matters pertaining to this Guaranty and further
acknowledges that it is not relying in any manner upon any representation or
statement of the Agent or any Bank with respect thereto. The Guarantor
represents and warrants that it has received and reviewed copies of the Loan
Documents and that it is in a position to obtain, and it hereby assumes full
responsibility for obtaining, any additional information concerning the
financial condition of the Company and any other matters pertinent hereto that
the Guarantor may desire. The Guarantor is not relying upon or expecting the
Agent or any Bank to furnish to the Guarantor any information now or hereafter
in the Agent's or any such Bank's possession concerning the financial condition
of the Company or any other matter.
SECTION 11 Reporting Covenant. So long as any Guaranteed Obligations
------------------
shall remain unsatisfied or any Bank shall have any Commitment, the Guarantor
agrees that it shall furnish to the Agent such information respecting the
operations, properties, business or condition (financial or otherwise) of the
Guarantor or its Subsidiaries as the Agent, at the request of any Bank, may from
time to time reasonably request.
SECTION 12 Additional Covenants. So long as any Guaranteed
--------------------
Obligations shall remain unsatisfied or any Bank shall have any Commitment, the
Guarantor agrees that:
(a) Preservation of Existence, Etc. The Guarantor shall, and shall
------------------------------
cause each of its Subsidiaries to, maintain and preserve (i) its legal existence
and (ii) its rights to transact business and all other rights, franchises and
privileges necessary or desirable in the normal course of its business and
operations and the ownership of its properties, except in the case of this
clause (ii) where the non-preservation could not reasonably be expected to have
a Material Adverse Effect.
(b) Further Assurances and Additional Acts. The Guarantor shall
--------------------------------------
execute, acknowledge, deliver, file, notarize and register at its own expense
all such further agreements, instruments, certificates, documents and assurances
and perform such acts as the Agent or the Majority Banks shall deem reasonably
necessary or appropriate to effectuate the purposes of this Guaranty and the
other Guarantor Documents, and promptly provide the Agent with evidence of the
foregoing satisfactory in form and substance to the Agent and the Majority
Banks.
SECTION 13 Notices. All notices, requests or other communications
-------
hereunder shall be given in the manner and to the addresses specified in the
Credit Agreement. Notices to the Guarantor shall be sent or delivered to the
address set forth therein for the Company. All such notices, requested and
communications shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or transmitted in
legible form by facsimile machine, respectively, or if mailed, upon receipt by
the addressee, or if delivered, upon delivery.
X-00
XXXXXXX 00 Xx Xxxxxx; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise, and no delay in exercising on the part of the
Agent or any Bank, any right, remedy, power or privilege hereunder or under any
other Guarantor Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
SECTION 15 Costs and Expenses; Indemnification.
-----------------------------------
(a) Costs and Expenses. The Guarantor shall:
------------------
(i) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agent for all costs and expenses incurred by
it in connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Guaranty, any other Guaranty Document
and any other documents prepared in connection herewith or therewith and the
consummation of the transactions contemplated hereby and thereby; and
(ii) pay or reimburse the Agent, the Arranger and each Bank for all
costs and expenses (including Attorney Costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Guaranty or any other Guaranty Document during the existence
of an Event of Default or after acceleration of the Loans (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
(b) Indemnification. The Company shall indemnify, defend and hold the
---------------
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suites, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any such Person in favor of any third-party in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement or relating to the Collateral, whether or not any Indemnified Person
is a "Indemnified Liabilities"); provided, that the Company shall have no
--------
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting from the gross negligence or willful misconduct of such
Indemnified Person.
(c) Defense. At the election of any Indemnified Person, the Guarantor
-------
shall defend such Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the sole cost and
expense of the Guarantor.
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(d) Interest. Any amounts payable to the Agent or any Bank under this
--------
Section 15 if not paid upon demand shall bear interest from the date of such
demand until paid in full, at the rate of interest set forth in Section 2.08 of
the Credit Agreement.
(e) Survival. The agreements in this Section shall survive payment of
--------
all other Secured Obligations.
SECTION 16 Right of Set-Off. In addition to any rights and remedies
----------------
of the Banks provided by law, if an Event of Default exists or the Loans have
been accelerated, each Bank is hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit or the account of the Guarantor
against any and all of the obligations of the Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not such Bank shall
have made any demand upon the Company or the Guarantor under the Loan Documents
and although such obligations may be contingent and unmatured. Each Bank shall
promptly notify the Guarantor (through the Agent) after any such set-off and
application made by it; provided, however, that the failure to give such notice
-------- -------
shall not affect the validity of such setoff and application. The rights of the
Banks under this Section 16 are in addition to other rights and remedies
(including other rights of set-off) which the Banks may have.
SECTION 17 Marshalling; Payments Set Aside. Neither the Agent nor
-------------------------------
the Banks shall be under any obligation to xxxxxxxx any assets in favor of the
Guarantor or any other Person or against or in payment of any or all of the
Guaranteed Obligations. To the extent that the Guarantor makes a payment to the
Agent or the Banks, or the Agent or the Banks exercise their right of set-off,
and such payment or the proceeds of such set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Agent or
such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b) each
Bank severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.
SECTION 18 Benefits of Guaranty. This Guaranty is entered into for
--------------------
the sole protection and benefit of the Agent and each Bank and its successors
and assigns, and no other Person (other than any Indemnified Person specified
herein) shall be a direct or indirect beneficiary of, or shall have any direct
or indirect cause of action or claim in connection with, this Guaranty. The
Agent and the Banks, by their acceptance of this Guaranty, shall not have any
obligations under this Guaranty to any Person other than the Guarantor, and such
obligations shall be limited to those expressly stated herein.
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SECTION 19 Binding Effect; Assignment.
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(a) Successors and Assigns. The provisions of this Agreement shall be
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binding upon and insure to the benefit of the parties hereto and their
respective successors and assigns.
(b) Assignment. The Guarantor shall not have the right to assign or
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transfer its rights and obligations hereunder or under any other Guarantor
Documents without the prior written consent of the Majority Banks. Each Bank
may, without notice to or consent by the Guarantor, sell, assign, transfer or
grant participations in all or any portion of such Bank's rights and obligations
hereunder and under the other Guarantor Documents in connection with any sale,
assignment, transfer or grant of a participation by such Bank in accordance with
Section 10.08 of the Credit Agreement of or in its rights and obligations
thereunder and under the other Loan Documents. The Guarantor agrees that in
connection with any such sale, assignment, transfer or grant by any Bank, such
Bank may deliver to the prospective participant or assignee financial statements
and other relevant information relating to the Guarantor and its Subsidiaries.
SECTION 20 Governing Law and Jurisdiction.
------------------------------
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER GUARANTOR DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND
THE GUARANTOR HEREBY CONSENTS, AND BY ACCEPTANCE OF THIS GUARANTY, EACH OF THE
AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE COMPANY IRREVOCABLY WAIVES, AND
EACH OF THE AGENT AND THE BANKS BY ITS ACCEPTANCE HEREOF IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY GUARANTOR DOCUMENT. THE COMPANY WAIVES, AND EACH OF THE AGENT
AND THE BANKS BY ITS ACCEPTANCE HEREOF WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
SECTION 21 Waiver of Jury Trial. THE GUARANTOR HEREBY AGREES TO
--------------------
WAIVE, AND THE AGENT AND THE BANKS BY THEIR ACCEPTANCE HEREOF HEREBY AGREE TO
WAIVE, THEIR RESPECTIVE RIGHTS TO A TRAIL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT
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OF OR RELATED TO THIS GUARANTY, THE OTHER GUARANTOR DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR HEREBY AGREES, AND THE
AGENT AND THE BANKS BY THEIR ACCEPTANCE HEREOF HEREBY AGREE, THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT IN
ANY WAY LIMITING THE FOREGOING, THE GUARANTOR FURTHER AGREES, AND THE AGENT AND
THE BANKS BY THEIR ACCEPTANCE HEREOF FURTHER AGREE, THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER GUARANTOR DOCUMENTS
OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE
OTHER GUARANTOR DOCUMENTS.
SECTION 22 Entire Agreement; Amendments. This Guaranty, together
----------------------------
with the other Guaranty Documents, embodies the entire agreement of the
Guarantor with respect to the matters set forth herein, and supersedes all prior
or contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof and shall not be
amended except by written agreement of the Guarantor, the Agent and the Majority
Banks.
SECTION 23 Severability. The illegality or unenforceability of any
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provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
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