EXHIBIT 10.25
SECOND AMENDMENT TO
AMENDED AND RESTATED PARTICIPATION AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
(this "Amendment"), dated as of August 17, 2001, is entered into by and among:
(1) LSI LOGIC CORPORATION, a Delaware corporation ("Lessee");
(2) ABN AMRO BANK N.V., KEYBANK NATIONAL ASSOCIATION, FBTC
LEASING CORP., as "Lessors" under the Amended and Restated Participation
Agreement referred to in Recital A below (collectively in such capacity,
"Lessors");
(3) ABN AMRO BANK N.V., as agent for Lessors (in such capacity,
"Lessor Agent");
(4) Each of the financial institutions currently a "Participant"
under the Amended and Restated Participation Agreement referred to in
Recital A below (collectively in such capacity, the Participants"); and
(5) ABN AMRO BANK N.V., as agent for the Participants (in such
capacity, "Agent").
RECITALS
A. Lessee, Lessors, Lessor Agent, the Participants and Agent are parties
to an Amended and Restated Participation Agreement, dated as of April 18, 2000
(the "Participation Agreement"), which amended and restated a Participation
Agreement, dated as of March 31, 2000. The Participation Agreement was further
amended by the First Amendment to Amended and Restated Participation Agreement,
dated as of August 2, 2001.
B. Lessee, Lessors, Lessor Agent, the Participants and Agent now wish to
amend the Participation Agreement to clarify certain provisions and have agreed
to effect such amendments upon the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS; INTERPRETATION. Unless otherwise indicated in this
Amendment, (a) each term set forth in Schedule 1.01 to the Participation
Agreement, when used in this Amendment, shall have the meaning given to that
term in such Schedule 1.01 and (b) the rules of interpretation set forth in
Schedule 1.02 to the Participation Agreement shall apply to this Amendment and
are incorporated herein by this reference.
2. AMENDMENTS TO PARTICIPATION AGREEMENT. The Participation Agreement is
hereby amended as follows:
(a) Section 5.03(c) is amended to read in its entirety as
follows:
Minimum Consolidated Tangible Net Worth. Lessee will maintain
Consolidated Tangible Net Worth (exclusive of the cumulative translation
adjustment account as reported in the consolidated balance sheet of
Lessee and its Subsidiaries as of such date) as of the end of each
fiscal quarter of not less than (i) $1,100,000,000 plus (ii) one hundred
percent (100%) of the Net Proceeds received by Lessee or any of its
Subsidiaries from the sale or issuance of equity securities (including
equity securities issued upon the conversion of Subordinated Debt or
(regardless of whether included in the definition of "Subordinated
Debt") Existing Subordinated Debt) to any Person other than Lessee or
any of its Subsidiaries after July 1, 2001, plus (iii) eighty percent
(80%) of the sum of Consolidated Net Income, if such sum is positive,
for each fiscal quarter elapsed after July 1, 2001, minus (iv) the net
value of Lessee stock not exceeding $250,000,000 in aggregate amount
repurchased by Lessee pursuant to employee stock ownership and purchase
plans (provided that Lessee shall not so repurchase stock in an
aggregate amount which exceeds five percent (5%) of its stock
outstanding as of the last day of such fiscal quarter).
(b) Section 5.03(d) is amended to read in its entirety as
follows:
Debt Service Coverage Ratio. Lessee will maintain a ratio of (i)
Consolidated EBITDA to (ii) the sum of Consolidated CMLTD, plus
Consolidated Interest Expense, plus Capitalized Interest, that is not
less than 2.00 to 1.00 for the fiscal quarter ending September 30, 2002
and each subsequent fiscal quarter, calculated as of the end of each
such fiscal quarter.
(c) Section 5.03 is amended to add new clauses (f) and (g):
(f) Cash Coverage Ratio. Lessee shall maintain a ratio
of cash to Senior Debt of 1.35:1; provided, however, that at any
time on or after November 15, 2002, this covenant shall be
terminated if the following conditions are met: (i) Consolidated
Tangible Net Worth is greater than $1,900,000,000 as of the end
of the most current fiscal quarter covered by the last
compliance certificate delivered by Lessee pursuant to Section
5.01(a)(iii) of the Participation Agreement; (ii) Lessee is in
compliance with Section 5.03(d); and (iii) no other Event of
Default shall have occurred or shall be occurring. For the
purpose of this clause (f), "cash" shall mean unrestricted and
unencumbered cash, cash equivalents and
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marketable securities classified on Lessee's balance sheet, on a
consolidated basis, as current assets in accordance with GAAP.
(g) Minimum Quarterly EBITDA. Lessee shall not permit
its EBITDA for each of the fiscal quarters on the last day of
such fiscal quarter set forth below to be less than the
respective amounts set forth below:
September 2001 $(130,000,000)
December 2001 $ (30,000,000)
March 2002 $ 10,000,000
June 2002 $ 10,000,000
(d) Schedule 1.01 is amended by adding thereto, in the
appropriate alphabetical order, the following definitions:
"Intangible Assets" shall have the meaning given to that term in
the definition of "Consolidated Tangible Net Worth" in this Schedule
1.01.
"Net Proceeds" shall mean, with respect to any sale of any asset
(including any sale of assets to be leased back in connection with a
"synthetic" lease of such assets) or any sale or issuance of any
Indebtedness or equity securities by any Person, the aggregate
consideration received by such Person (excluding Intangible Assets
directly or indirectly received) from such sale or issuance less the sum
of the actual amount of the reasonable fees and commissions payable to
Persons other than such Person or any Affiliate of such Person, the
reasonable legal expenses and other costs and expenses directly related
to such sale or issuance that are to be paid by such Person.
(e) Schedule 1.01 is further amended by changing the following
definitions to read in their entirety as follows:
"Applicable Margin" shall mean:
(a) The per annum margin which is determined pursuant to
the Pricing Grid and added to the LIBO Rate with respect to the
LIBOR Rental Rate; or
(b) Zero percent (0%) per annum with respect to the
Alternate Rental Rate;
provided, however, that each Applicable Margin set forth in
subparagraphs (a) and (b) of this definition shall be increased
by two percent (2.0%) per annum on the date an Event of Default
occurs and shall continue at such increased rate unless and
until such Event of Default is cured or waived in accordance
with this Agreement (the Applicable Margins shall be determined
as provided in the Pricing Grid and may change for each Pricing
Period); provided, further, that for so long as Lessee is
required to perform its obligations under Section 5.03(f), the
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applicable Pricing Period shall be the Level 3 Period and the
Applicable Margin for the LIBOR Rental Rate for such Level 3
Period shall be calculated by adding five-eighths of one percent
(0.625%) per annum to each such margin or rate; and provided,
further, that for so long as Lessee is required to perform its
obligations under Section 5.03(f), the Applicable Margin with
respect to the Alternate Rental Rate shall be calculated by
adding five-eighths of one percent (0.625%) per annum to each
such margin or rate.
"Consolidated Tangible Net Worth" shall mean, as of any date of
determination, Consolidated Total Assets minus Consolidated Total
Liabilities, minus (a) all assets which would be classified in a
separate account as intangible assets in accordance with GAAP, including
goodwill, organizational expense, research and development expense,
capitalized software, patent applications, patents, trademarks, trade
names, brands, copyrights, trade secrets, customer lists, licenses,
franchises and covenants not to compete ("Intangible Assets"), (b) all
unamortized debt discount and expense and (c) all treasury stock;
provided, however, that to the extent otherwise included in the amount
set forth in the foregoing clause (a) of this definition, there shall be
excluded from such amount the sum of all engineering costs incurred in
connection with the development of major production capabilities at new
manufacturing facilities or refurbishment of an existing facility or
with respect to introducing a new manufacturing process to existing or
new manufacturing facilities and which are classified as a fixed asset
and capitalized on the consolidated balance sheet of Lessee in
accordance with GAAP.
3. REPRESENTATIONS AND WARRANTIES. Lessee hereby represents and warrants
to Lessors, Lessor Agent, the Participants and Agent that, after giving effect
to the provisions hereunder, the following will be true and correct on the date
hereof:
(a) The representations and warranties of Lessee set forth in
Paragraph 4.01 of the Participation Agreement and in the other Operative
Documents are true and correct in all material respects as if made on
such date (except for representations and warranties expressly made as
of a specified date, which shall be true in all material respects as of
such date);
(b) No Default has occurred and is continuing; and
(c) All of the Operative Documents are in full force and effect.
(Without limiting the scope of the term "Operative Documents," Lessee expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
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4. EFFECTIVENESS OF AMENDMENTS. The amendments set forth in Paragraph 2
above shall become effective upon receipt by Agent of (a) this Amendment duly
executed by Lessee and the Required Participants and (b) for the benefit of each
Participant that (i) duly executes this Amendment and the waiver and consent of
Section 5.03(c) of the Participation Agreement for the period of June 30, 2001
through August 20, 2001 (the "Waiver") prior to 12:00 noon San Francisco time on
August 14, 2001 or (ii) duly executed the Waiver by 12:00 noon San Francisco
time on August 14, 2001 and duly executes this Amendment by 12:00 noon San
Francisco time on August 17, 2001, amendment fees equal to one-fourth of one
percent (0.25%) (which includes the one-twentieth of one percent (0.05%)
pursuant to the Waiver) of each such Participant's respective aggregate
Outstanding Participation Amount. Upon such receipt, this Amendment shall be
deemed to amend the Participation Agreement from the original date thereof as
though incorporated in the Participation Agreement as originally executed;
subject, however, to the following: in order to more accurately reflect the
intention of the parties, the following amendments set forth in Paragraph 2
above shall be effective as of March 31, 2001: (i) the definition of
"Consolidated Tangible Net Worth"; (ii) the definition of "Intangible Assets";
and (iii) the definition of "Net Proceeds."
5. EFFECT OF THIS AMENDMENT. During the period that the amendments set
forth in Paragraph 2 above are effective, each reference in the Participation
Agreement and the other Operative Documents to the Participation Agreement shall
mean the Participation Agreement as amended by this Amendment. Except as
expressly amended pursuant hereto, (a) the Participation Agreement and the other
Operative Documents shall remain unchanged and in full force and effect and are
hereby ratified and affirmed and (b) the execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power, or remedy of Lessors, Lessor Agent, the Participants
or Agent, nor constitute a waiver of any provision of the Participation
Agreement or any other Operative Document.
6. MISCELLANEOUS.
(a) Binding Effect. This Amendment shall be binding upon and
inure to the benefit of Lessee, Lessors, the Participants, Lessor Agent,
Agent and their respective permitted successors and assigns. All
references in this Amendment to any Person shall be deemed to include
all successors and assigns of such Person.
(b) Counterparts. This Amendment may be executed in any number of
identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
[Signature pages follow]
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IN WITNESS WHEREOF, Lessee and the Required Participants have caused
this Second Amendment to Restated Participation Agreement to be executed as of
the day and year first above written.
LESSEE: LSI LOGIC CORPORATION
By:______________________________________
Name:______________________________
Title:_____________________________
PARTICIPANTS: ABN AMRO BANK N.V.
By:______________________________________
Name:______________________________
Title:_____________________________
By:______________________________________
Name:______________________________
Title:_____________________________
BANK ONE, N.A.
By:______________________________________
Name:______________________________
Title:_____________________________
BANQUE NATIONALE DE PARIS
By:______________________________________
Name:______________________________
Title:_____________________________
THE DAI-ICHI KANGYO BANK, LTD.
By:______________________________________
Name:______________________________
Title:_____________________________
WELLS FARGO BANK NATIONAL ASSOCIATION
By:______________________________________
Name:______________________________
Title:_____________________________
FBTC LEASING CORP.
By:______________________________________
Name:______________________________
Title:_____________________________
THE FUJI BANK, LIMITED
By:______________________________________
Name:______________________________
Title:_____________________________
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:______________________________________
Name:______________________________
Title:_____________________________
KEYBANK NATIONAL ASSOCIATION
By:______________________________________
Name:______________________________
Title:_____________________________
NATIONAL CITY BANK
By:______________________________________
Name:______________________________
Title:_____________________________
SMBC LEASING AND FINANCE, INC.
By:______________________________________
Name:______________________________
Title:_____________________________
UNION BANK OF CALIFORNIA, N.A.
By:______________________________________
Name:______________________________
Title:_____________________________