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EXHIBIT 10.3
FIRST AMENDMENT TO LOAN DOCUMENTS
THIS FIRST AMENDMENT ("Amendment"), dated as of June 11, 1999, is
entered into by and among CONEXANT SYSTEMS, INC. (the "Company"), each of the
Subsidiaries party to the Credit Agreement as of the date hereof (the "Borrower
Subsidiaries" and together with the Company, each a "Borrower" and collectively,
the "Borrowers"), the Lenders, the Issuing Banks and CREDIT SUISSE FIRST BOSTON,
a bank organized under the laws of Switzerland, acting through its New York
branch, as administrative agent (in such capacity, the "Administrative Agent")
and as collateral agent for the Lenders (in such capacity, the "Collateral
Agent", and together with the Administrative Agent, the "Agents").
RECITALS.
A. The Borrowers, Lenders, and Administrative Agent are parties to a
certain Credit Agreement dated as of December 21, 1998 (the "Credit Agreement")
pursuant to which the Lenders have agreed to extend credit to the Borrower.
B. The Company has requested that the Lenders amend certain provisions
of the Credit Agreement and the Security Agreement and Mortgages referred to
therein.
C. The parties are willing to amend and modify the Credit Agreement, the
Security Agreement and the Mortgages subject to the terms and conditions of this
Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings, if any, assigned to them in the Credit
Agreement, as amended.
2. Amendment of the Credit Agreement.
(a) The Credit Agreement is hereby amended by deleting Section
2.13(b) in its entirety and inserting the following in lieu thereof:
(b) Not later than the six month anniversary of the date
on which the Company or its Subsidiaries receives Net Cash
Proceeds in respect of any Asset Sale in any fiscal year in
which such Net Cash Proceeds, when added to the Net Cash
Proceeds of all prior Asset Sales which have occurred during
such fiscal year, exceeds 10% of the Company's Net Worth as of
the Company's immediately preceding fiscal year end (to the
extent the requirements of Section 6.5(b)(v) have been waived or
modified to permit such Asset Sale), unless the Company shall
have (1) given the Administrative Agent written notice (within
the 6 month period ending on such anniversary date) of the
Company's intention to reinvest such Net Cash Proceeds (or a
portion thereof) to purchase assets (not
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consisting of Permitted Investments) for the Company or its
Subsidiaries and (2) the Company reinvests such Net Cash
Proceeds to purchase assets (not consisting of Permitted
Investments) for the Company or its Subsidiaries within such 6
month period, the Total Revolving Commitment shall be reduced on
a dollar for dollar basis by the amount of such Net Cash
Proceeds or portion thereof not used to purchase such assets.
(b) The Credit Agreement is further amended by deleting Section
2.13(d) in its entirety and inserting the following in lieu thereof:
(d) In the event that there shall occur any Casualty or
Condemnation, unless the Company shall have (1) given the
Administrative Agent written notice (within 6 months after the
occurrence of such Casualty or Condemnation) of the Company's
intention to reinvest such Net Cash Proceeds (or a portion
thereof) to rebuild, replace, repair or restore any property
affected by such Casualty or Condemnation, or otherwise to
purchase assets (not consisting of Permitted Investments) for the
Company or any of its Subsidiaries using Net Cash Proceeds
received by or on behalf of the Company or its Subsidiaries as a
result of such Casualty or Condemnation and (2) pursued such
rebuilding, replacement, repair, restoration or purchase in a
commercially reasonable manner within 6 months of receiving such
Net Cash Proceeds, the Total Revolving Commitment shall be
reduced on a dollar for dollar basis for any Net Cash Proceeds
received by or on behalf of the Company or its Subsidiaries as a
result of such Casualty or Condemnation which have not been
identified by the Company in the notice provided in clause (1)
hereof as intended for use to rebuild, replace, repair, restore
or purchase property as herein provided.
(c) The Credit Agreement is further amended by deleting from
Section 5.11(b)(ii) each reference to "$1,000,000" and substituting therefor
"$5,000,000" in each such place.
(d) The Credit Agreement is further amended by deleting clause
(xi) of Section 6.4(b) and inserting the following in lieu thereof:
(xi) Investments made with the Net Cash Proceeds from
issuance of equity securities or Convertible Debt of the Company
within 6 months of receipt of such Net Cash Proceeds; provided
that such issuance is made in connection with and for the express
purpose of making the specific Investment then being made;
(e) The Credit Agreement is further amended by adding in clause
(xiii) of Section 6.4(b) the following:
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(1) at the beginning of clause (y)(A), immediately
preceding the first "the" in such clause, the phrase, "except as
provided in the last sentence of this Section 6.4(b)(xiii)," and
(2) at the end of Section 6.4(b)(xiii), the following
sentence:
"Notwithstanding any contrary provision in clause (y)(A)
of this Section 6.4(b)(xiii), the Company shall have no
obligation to deliver a certificate certifying the
information set forth in clause (y)(A) in respect of any
Investment in a Related Business which has an Acquisition
Cost of less than $10,000,000 until the first to occur of
(i) the aggregate Acquisition Cost of all such Investments
for which no certificate has been delivered pursuant to
clause (y)(A) exceeds $25,000,000, or (ii) the Company
makes such an Investment with an Acquisition Cost equal to
or greater than $10,000,000, at which time the Company
shall deliver the certificate certifying the information
set forth in clause (y)(A) on a combined basis for all
such Investments in a Related Business for which no
certificate has previously been delivered pursuant to such
clause."
(f) The Credit Agreement is further amended by adding at the
beginning of clause (C) of Section 6.5(a)(i), immediately preceding the first
"the" in such clause, the following:
"any Foreign Subsidiary may merge into or consolidate with any
other Foreign Subsidiary and (D)"
(g) The Credit Agreement is further amended by deleting from
Section 6.9 the reference to "September 30" and substituting therefor "September
30 or the Friday closest to September 30".
(h) The Credit Agreement is further amended by deleting Section
6.10 and inserting the following in lieu thereof:
Section 6.10. Capital Expenditures. Permit the aggregate
amount of Consolidated Capital Expenditures made by the Company
and the Subsidiaries, taken as a whole, in the fiscal year of the
Company ending in calendar year 1999 to exceed $225,000,000, in
the fiscal year of the Company ending in calendar year 2000 to
exceed $275,000,000 and in the fiscal year of the Company ending
in calendar year 2001 to exceed $300,000,000. If the full amount
of Consolidated Capital Expenditures permitted in any fiscal year
are not made, the unused allowance may be carried forward to the
next fiscal year (but not to any subsequent fiscal year).
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(i) The Credit Agreement is further amended by deleting Section
6.14 in its entirety and inserting the following in lieu thereof:
Section 6.14 Minimum Cash Balance. Permit, at any time on
or after March 31, 1999, the sum of (x) the Company's balance of
readily available unencumbered (other than any Lien created under
the Loan Documents, customary banker's liens and rights of
setoff) cash on deposit or similar accounts plus (y) the fair
market value of all Permitted Investments of the Company not
subject to a Lien (other than any Lien created under the Loan
Documents, customary broker's liens and rights of setoff
unrelated to margin activity) to be less than $75,000,000 as at
the last day of any fiscal quarter of the Company.
3. Amendment of the Security Agreement.
(a) Section 3.2(a) of the Security Agreement is hereby amended by
deleting in the fourth parenthetical of the second sentence thereof the
reference to "$20,000,000" and substituting therefor "$75,000,000".
(b) Section 4.1(a) of the Security Agreement is hereby amended by
deleting from clause (ii) thereof each reference to "$1,000,000" and
substituting therefor "$5,000,000" in each such place.
(c) Section 4.9 of the Security Agreement is hereby amended by
deleting the last sentence and substituting therefor the following sentence:
"Without limiting the generality of the foregoing, each Grantor
agrees that it shall not permit any Inventory to be in the
possession or control of any warehouseman, bailee, agent or
processor that is not a Grantor unless either (x) the value of
all Inventory (as shown in the consolidated financial statements
of the Company and its Subsidiaries) as of the end of any fiscal
quarter that is in the possession or control of such
warehouseman, bailee, agent or processor does not exceed an
amount equal to 20% of the aggregate value of all Inventory (as
shown in such consolidated financial statements of the Company
and its Subsidiaries) as of the end of such quarter, or (y) such
warehouseman, bailee, agent or processor shall have been (or
shall promptly be) notified of the Security Interest and such
Grantor shall have taken (or shall promptly take) all
commercially reasonable steps necessary to obtain the agreement
from such warehouseman, bailee, agent or processor in writing to
hold the Inventory subject to the Security Interest and the
instructions of the Collateral Agent and to waive and release any
Lien held by it with respect to such Inventory, whether arising
by operation of law or otherwise."
4. Amendment of the Mortgages.
(a) Section 1.7(a) of each Mortgage is hereby amended by deleting
the
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reference therein to "$10,000" and substituting therefor "$5,000,000".
(b) Section 1.7(b) of each Mortgage is hereby amended by deleting
the reference therein to "$1,000,000" and substituting therefor "$10,000,000".
5. Representations and Warranties. The Borrowers hereby represent and
warrant to the Administrative Agent and the Lenders as follows:
(a) No Default or Event of Default has occurred and is continuing
after giving effect to this Amendment.
(b) The execution, delivery and performance by the Borrowers of
this Amendment has been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any Person in order to be effective and
enforceable. Each of the Credit Agreement, the Security Agreement and the
Mortgages as amended by this Amendment constitutes the legal, valid and binding
obligation of the Borrowers parties thereto, enforceable against them in
accordance with its respective terms.
(c) All representations and warranties of the Borrowers contained
in the Credit Agreement and in the other Loan Documents are true and correct in
all material respects as of the date hereof with the same effect as though made
on the date hereof and as though applied to the Credit Agreement as herein
amended, except to the extent such representations and warranties expressly
relate to an earlier date.
(d) The Borrowers are entering into this Amendment on the basis
of their own investigation and for their own reasons, without reliance upon the
Agents, the Lenders or any other Person.
6. Effectiveness Date. This Amendment shall become effective as of the
date (the "Closing Date") as of which the Administrative Agent shall have
received all of the following, in form and substance satisfactory to the
Administrative Agent:
(a) Counterparts (or if elected by the Administrative Agent, an
executed facsimile copy) of this Amendment executed by (x) in the case of
Section 2, the Required Lenders, the Borrowers and the Administrative Agent, (y)
in the case of Section 3, the Persons referred to in clause (x), the
Subsidiaries that are parties to the Security Agreement and the Collateral Agent
and (z) in the case of Section 4, the respective parties to each Mortgage, the
Required Lenders, the Administrative Agent and the Collateral Agent, together
with a Guarantor Acknowledgment and Consent in the form attached hereto (the
"Acknowledgment") executed by the Company and the Subsidiary Guarantors; and
(b) Evidence of payment of all unpaid fees and expenses of
counsel to the Administrative Agent (XxXxxxxxx, Will & Xxxxx) which have been
incurred and billed pursuant to Section 9.5 of the Credit Agreement and Section
8 of this Agreement.
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7. Reservation of Rights. The Borrowers acknowledge and agree that the
execution and delivery by the Agents and the Lenders of this Amendment, shall
not be deemed (i) to create a course of dealing or otherwise obligate the
Administrative Agent or the Lenders to forbear or execute similar amendments
under the same or similar circumstances in the future, or (ii) to amend,
relinquish or impair any right of the Agents or the Lenders to receive any
indemnity or similar payment from any Person or entity as a result of any matter
arising from or relating to this Amendment.
8. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement, the Security Agreement and the Mortgages are
and shall remain in full force and effect and all references therein to such
Credit Agreement, the Security Agreement and the Mortgages shall henceforth
refer to the Credit Agreement, the Security Agreement and the Mortgages as
amended by this Amendment. This Amendment shall be deemed incorporated into, and
a part of, the Credit Agreement, the Security Agreement and the Mortgages, as
applicable.
(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 New York.
(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
Administrative Agent of a facsimile transmitted document purportedly bearing the
signature of a Lender or a Borrower shall bind such Lender or such Borrower,
respectively, with the same force and effect as the delivery of a hard copy
original. Any failure by the Administrative 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 Administrative Agent.
(e) This Amendment, together with the Credit Agreement and the
other Loan Documents, 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 9.8 of the Credit Agreement.
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(f) If any term or 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, the Security Agreement or the Mortgages, respectively.
(g) The Borrowers covenant to pay to or reimburse the
Administrative Agent, upon demand, for all reasonable costs and expenses
(including costs of its outside legal counsel and allocated costs of in-house
counsel) actually incurred by the Administrative Agent in connection with the
development, preparation, negotiation, execution and delivery of this Amendment.
(a) The Borrowers (and each Guarantor by execution of the
Acknowledgement) confirm that the Security Documents secure the Obligations
under the Credit Agreement as amended. Each Guarantor by execution of the
Acknowledgment confirms that the benefit of such Guarantor's Company Guarantee
Agreement or Subsidiary Guarantee Agreement, as applicable, applies to all
Obligations under the Credit Agreement as amended.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment as of the date first above written.
CONEXANT SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
CONEXANT SYSTEMS WORLDWIDE, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Treasurer
BROOKTREE CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Treasurer
BROOKTREE WORLDWIDE SALES CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Treasurer
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CONEXANT SYSTEMS FRANCE S.A.S.
By: /s/ Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
Title: President
CONEXANT SYSTEMS U.K. LIMITED
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
CONEXANT SYSTEMS HOLDINGS LIMITED
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Treasurer
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CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Associate
UNION BANK OF CALIFORNIA, N.A.
as a Lender
By:
--------------------------------------
Name:
Title:
BANK POLSKA KASA OPIEKI, S.A.-PEKAO S.A.
GROUP, NEW YORK BRANCH,
as a Lender
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ X. Xxxxxxx
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Name: X. Xxxxxxx
Title: Sr. Vice President & Manager
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By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx, CFA
Title: Assistant Vice President
COMERICA WEST INCORPORATED,
as a Lender
By: /s Xxxxxxxx Xxxxxxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: First Vice President
KEYBANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
NATIONAL BANK OF CANADA,
as a Lender
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
By: /s/ X.X. XxXxxxxxx
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Name: X.X. XxXxxxxxx
Title: Vice President
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TRANSAMERICA COMMERCIAL FINANCE
CORPORATION,
as a Lender
By: /s/ Xxxxxx X. Kefsa
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Name: Xxxxxx X. Kefsa
Title: Vice President
XXXXX XXXX BANK,
as a Lender
By:
--------------------------------------
Name:
Title:
XXXXXXXX BANK,
as a Lender
By: /s/ X.X. Bemaci
-------------------------------------
Name: X.X. Bemaci
Title: President
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
IBM CREDIT CORPORATION,
as a Lender
By: /s/ Xxxxxxxxx Xxxxxx
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Name: Xxxxxxxxx Xxxxxx
Title: Manager Credit Operations
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UBS AG, STAMFORD BRANCH,
as a Lender
By: /s/ Xxxxxx X. Xxxxx III
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Name: Xxxxxx X. Xxxxx III
Title: Executive Director
By: /s/ Xxx [Last Name Illegible]
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Name: Xxx [Last Name Illegible]
Title: Director
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GUARANTOR ACKNOWLEDGMENT
AND CONSENT
The undersigned, each a guarantor or third party pledgor with respect to
the Borrowers' obligations to the Agents and the Lenders under the Credit
Agreement, each hereby (i) acknowledges and consents to the execution, delivery
and performance by the Company and the Borrower Subsidiaries of the foregoing
First Amendment to Credit Agreement ("Amendment"), and (ii) reaffirm and agree
that the respective guaranty, pledge agreement or security agreement to which
the undersigned is party and all other documents and agreements executed and
delivered by the undersigned to the Administrative Agent or the Collateral Agent
and the Lenders in connection with the Credit Agreement are in full force and
effect, without defense, offset or counterclaim. (Capitalized terms used herein
have the meanings specified in the Amendment.)
GUARANTORS
CONEXANT SYSTEMS, INC.
CONEXANT SYSTEMS WORLDWIDE, INC
BROOKTREE CORPORATION
BROOKTREE WORLDWIDE SALES CORPORATION
Dated: June 11, 1999 By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Title: Treasurer
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