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EXHIBIT 10.1
CREDIT AGREEMENT
DATED AS OF AUGUST 3, 2001
AMONG
ARRIS INTERNATIONAL, INC.,
ARRIS INTERACTIVE L.L.C.,
AND
CERTAIN SUBSIDIARIES OF ARRIS INTERNATIONAL, INC.
SET FORTH ON THE SIGNATURE PAGES HEREOF
AS BORROWERS,
THE LENDERS LISTED HEREIN,
AS LENDERS,
THE CIT GROUP/BUSINESS CREDIT, INC.
AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT
AND
CREDIT SUISSE FIRST BOSTON,
AS SYNDICATION AGENT, LEAD ARRANGER AND BOOK RUNNING MANAGER
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TABLE OF CONTENTS
Page No.
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Section 1. DEFINITIONS...........................................................................2
1.1 Certain Defined Terms.................................................................2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement............................................................................42
1.3 Other Definitional Provisions and Rules of Construction..............................43
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS...........................................43
2.1 Commitments; Making of Loans; the Register; Notes....................................43
2.2 Interest on the Loans................................................................52
2.3 Fees.................................................................................56
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Guaranties.............................................57
2.5 Use of Proceeds......................................................................65
2.6 Special Provisions Governing Eurodollar Rate Loans...................................65
2.7 Increased Costs; Taxes; Capital Adequacy.............................................67
2.8 Statement of Lenders; Obligation of Lenders to Mitigate..............................71
2.9 Replacement of a Lender..............................................................72
2.10 Joint and Several Liability; Payment Indemnifications................................72
Section 3. LETTERS OF CREDIT....................................................................73
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein..............................................................................73
3.2 Letter of Credit Fees................................................................76
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit...................77
3.4 Rights of Administrative Agent in Connection with Letters of Credit..................80
3.5 Obligations Absolute.................................................................80
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Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT............................................81
4.1 Conditions to Initial Revolving Loans and Swing Line Loans...........................81
4.2 Conditions to All Loans..............................................................90
4.3 Conditions to Letters of Credit......................................................92
Section 5. BORROWERS' REPRESENTATIONS AND WARRANTIES............................................92
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.........................................................................93
5.2 Authorization of Borrowing, etc......................................................93
5.3 Financial Condition..................................................................94
5.4 No Material Adverse Change; No Restricted Junior Payments............................95
5.5 Title to Properties; Liens; Real Property; Intellectual Property.....................95
5.6 Litigation; Adverse Facts............................................................96
5.7 Payment of Taxes.....................................................................96
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts............................................................................96
5.9 Governmental Regulation..............................................................97
5.10 Securities Activities................................................................97
5.11 Employee Benefit Plans...............................................................97
5.12 Certain Fees.........................................................................98
5.13 Environmental Protection.............................................................98
5.14 Employee Matters.....................................................................99
5.15 Solvency.............................................................................99
5.16 Matters Relating to Collateral.......................................................99
5.17 Disclosure..........................................................................100
5.18 Subordinated Indebtedness...........................................................101
5.19 Reorganization Documents............................................................101
5.20 Inventory and Accounts..............................................................101
5.21 Representations Concerning Cash Management System...................................102
Section 6. BORROWERS' AFFIRMATIVE COVENANTS....................................................103
6.1 Financial Statements and Other Reports..............................................103
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6.2 Existence, etc......................................................................107
6.3 Payment of Taxes and Claims; Tax....................................................108
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds...............................................................108
6.5 Inspection Rights; Lender Meeting...................................................110
6.6 Compliance with Laws, etc...........................................................111
6.7 Environmental Matters...............................................................111
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents After the Closing Date....................................................112
6.9 Matters Relating to Additional Real Property Collateral.............................114
6.10 Deposit Accounts and Cash Management Systems........................................114
6.11 Borrowing Base and Inventory Reports................................................115
6.12 Emerald Appraisal/Strategis Assessment/Collateral Audit.............................116
6.13 Mexican Intercompany Security Documents/Subsidiary Guaranty.........................116
6.14 Mandatory Exchange Event............................................................117
6.15 Post-Closing Deliveries.............................................................117
Section 7. BORROWERS' NEGATIVE COVENANTS.......................................................117
7.1 Indebtedness........................................................................118
7.2 Liens and Related Matters...........................................................121
7.3 Investments; Acquisitions...........................................................122
7.4 Contingent Obligations..............................................................125
7.5 Restricted Junior Payments..........................................................127
7.6 Financial Covenants.................................................................129
7.7 Restriction on Fundamental Changes; Asset Sales.....................................130
7.8 Consolidated Capital Expenditures...................................................132
7.9 Transactions with Shareholders and Affiliates.......................................133
7.10 Sales and Lease-Backs...............................................................133
7.11 Conduct of Business.................................................................134
7.12 Amendments or Waivers of Certain Agreements; Amendments of Documents
Relating to Subordinated Indebtedness...............................................134
7.13 Fiscal Year.........................................................................134
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7.14 Sale or Discount of Receivables.....................................................135
7.15 Non-Material Foreign Subsidiaries...................................................135
Section 8. EVENTS OF DEFAULT...................................................................135
8.1 Failure to Make Payments When Due...................................................135
8.2 Default in Other Agreements.........................................................135
8.3 Breach of Certain Covenants.........................................................136
8.4 Breach of Warranty..................................................................136
8.5 Other Defaults Under Loan Documents.................................................136
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc................................136
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc..................................137
8.8 Judgments and Attachments...........................................................137
8.9 Dissolution.........................................................................137
8.10 Employee Benefit Plans..............................................................137
8.11 Change in Control...................................................................138
8.12 Invalidity of Guaranties; Failure of Security; Repudiation of Obligations...........138
8.13 Conduct of Business By Holdings.....................................................138
Section 9. AGENTS..............................................................................139
9.1 Appointment.........................................................................139
9.2 Powers and Duties; General Immunity.................................................141
9.3 Independent Investigation by Lenders; No Responsibility For Appraisal of
Creditworthiness....................................................................142
9.4 Right to Indemnity..................................................................142
9.5 Successor Administrative Agent and Swing Line Lender................................143
9.6 Collateral Documents and Guaranties.................................................144
9.7 Administrative Agent May File Proofs of Claim.......................................144
Section 10. MISCELLANEOUS.......................................................................145
10.1 Successors and Assigns; Assignments and Participations in Loans and
Letters of Credit...................................................................145
10.2 Expenses............................................................................148
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10.3 Indemnity...........................................................................149
10.4 Set-Off; Security Interest in Deposit Accounts......................................150
10.5 Ratable Sharing.....................................................................150
10.6 Amendments and Waivers..............................................................151
10.7 Obligations Designated Senior Debt..................................................152
10.8 Independence of Covenants...........................................................153
10.9 Notices; Effectiveness of Signatures................................................153
10.10 Survival of Representations, Warranties and Agreements..............................153
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative...............................154
10.12 Marshalling; Payments Set Aside.....................................................154
10.13 Severability........................................................................154
10.14 Obligations Several; Independent Nature of Lenders' Rights..........................154
10.15 Headings............................................................................155
10.16 Applicable Law......................................................................155
10.17 Construction of Agreement; Nature of Relationship...................................155
10.18 Consent to Jurisdiction and Service of Process......................................155
10.19 Waiver of Jury Trial................................................................156
10.20 Confidentiality.....................................................................157
10.21 Counterparts; Effectiveness.........................................................157
Signature pages S-1
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EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF BORROWING BASE CERTIFICATE
III FORM OF NOTICE OF CONVERSION/CONTINUATION
IV FORM OF REQUEST FOR ISSUANCE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF OPINION OF COMPANY COUNSEL
IX FORM OF OPINION OF O'MELVENY & MYERS LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF FINANCIAL CONDITION CERTIFICATE
XII-A FORM OF BORROWERS' GUARANTY
XII-B FORM OF SUBSIDIARY GUARANTY
XIII FORM OF SECURITY AGREEMENT
XIV FORM OF COLLATERAL ACCESS AGREEMENTS
XV FORM OF HOLDINGS GUARANTY
XVI [INTENTIONALLY OMITTED]
XVII FORM OF MORTGAGE
XVIII FORM OF NEW LENDER SUPPLEMENT
XIX FORM OF ARRIS SUBORDINATION AGREEMENT
XX FORM OF NO-OFFSET LETTER
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SCHEDULES
1.1 TAX ABATEMENT TRANSACTION DOCUMENTS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP; MANAGEMENT
4.1G FINANCIAL STATEMENTS; PRO FORMA FINANCIAL STATEMENTS
4.1Q REQUIRED ENVIRONMENTAL REPORTS
4.1S CLOSING DATE MORTGAGED PROPERTIES
5.1 SUBSIDIARIES OF COMPANY
5.4 RESTRICTED JUNIOR PAYMENTS
5.5 REAL PROPERTY ASSETS
5.5B REAL PROPERTY
5.5C INTELLECTUAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.13 ENVIRONMENTAL MATTERS
5.16 FINANCING STATEMENTS
6.10 CASH MANAGEMENT SYSTEM
6.15 POST-CLOSING DELIVERIES
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CONTINGENT OBLIGATIONS
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7.9 AT&T STOCK OPTIONS & REGISTRATION RIGHTS
7.15 NON-MATERIAL FOREIGN SUBSIDIARIES
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ARRIS INTERNATIONAL, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of August 3, 2001 and
entered into by and among ARRIS INTERNATIONAL, INC., a Delaware corporation
(formerly known as Antec Corporation; the "COMPANY"), and ARRIS INTERACTIVE
L.L.C., a Delaware limited liability company ("ARRIS"), EACH OF COMPANY'S
SUBSIDIARIES LISTED ON THE SIGNATURE PAGES HEREOF (Company, Arris and each such
subsidiary are individually referred to herein as a "BORROWER" and,
collectively, on a joint and several basis, as the "BORROWERS"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "LENDER" and collectively as "LENDERS"), CREDIT SUISSE FIRST BOSTON
("CSFB"), as syndication agent for Lenders (in such capacity, "SYNDICATION
AGENT"), lead arranger and book running manager, and THE CIT GROUP/BUSINESS
CREDIT, INC. ("CIT"), as administrative agent and collateral agent for Lenders
(in such capacity, "ADMINISTRATIVE AGENT").
R E C I T A L S
WHEREAS, immediately prior to the Closing Date (i) Company
directly owned all of the issued and outstanding shares of capital stock of
Holdings (capitalized terms used in this Agreement have the meanings assigned to
such terms in subsection 1.1) and (ii) Holdings directly owned all of the
outstanding shares of capital stock of Transition;
WHEREAS, on the Closing Date pursuant to the Reorganization
Agreement and the Certificate of Merger, (i) Transition will merge with and into
Company, with Company being the surviving corporation in such merger, (ii) the
outstanding shares of capital stock of Holdings held by Company will be redeemed
and (iii) each stockholder of Company will receive one share of Holdings' common
stock in exchange for each share of Company's common stock owned by such
shareholder, so that immediately after giving effect to such merger Company
shall be a Wholly-Owned subsidiary of Holdings;
WHEREAS, on the Closing Date, Nortel LLC will contribute to
the capital of Arris all of Arris' outstanding obligations under the Existing
Arris Credit Agreement (including the portion of those obligations indirectly
owed to Company), other than the Nortel 2001 Obligations;
WHEREAS, on the Closing Date, Holdings will issue to Nortel
LLC 37,000,000 shares of Holdings common stock in exchange for all of the
membership interests in Arris which are not held by Company;
WHEREAS, on the Closing Date, immediately after consummation
of the transactions described in the foregoing recitals, Arris is entering into
the Loan Documents to which it is a party and will refinance (x) all outstanding
Nortel 2001 Obligations (net of (a)
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amounts owed by Nortel LLC and/or its affiliates to Arris and (b) cash on hand
of Arris) and (y) the Nortel Trade Obligations, by issuing Arris New Membership
Interests to Nortel LLC with an aggregate capital account balance not in excess
of $100,000,000 plus accrued but unpaid return thereon.
WHEREAS, Lenders have agreed to extend certain credit
facilities to Borrowers, on a joint and several basis, the proceeds of which
will be used (i) to refinance the Existing Company Credit Agreement on the
Closing Date and (ii) to provide financing for working capital and other general
corporate purposes of Borrowers and their Subsidiaries;
WHEREAS, Borrowers desire to secure all of the Obligations
hereunder and under the other Loan Documents by granting to Administrative
Agent, on behalf of Lenders, a first priority Lien on substantially all of their
real, personal and mixed property, including a pledge of all of the capital
stock of their Domestic Subsidiaries and 65% of the capital stock of their
Foreign Subsidiaries; and
WHEREAS, Holdings, Arris, Company, the Domestic Subsidiaries
of Company, Antec International and the Mexican Subsidiaries of Company have
agreed to guarantee the Obligations hereunder and under the other Loan Documents
and to secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of their real, personal and
mixed property, including a pledge of all of the capital stock of their
respective Domestic Subsidiaries, Antec International and Mexican Subsidiaries
that are Material Subsidiaries and 65% of the capital stock of their other
Foreign Subsidiaries that are Material Subsidiaries;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrowers, Lenders,
Syndication Agent, and Administrative Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the
following meanings:
"ACCOUNT CLAIMS" means any reclaimed, repossessed or returned
goods, Account Debtor claims relating to any Account and any other matter
affecting the value, enforceability or collectibility of such Account.
"ACCOUNT DEBTOR" means, with respect to any Account, the
Person obligated to pay under such Account.
"ACCOUNTS" shall mean all present and future accounts,
contract rights, general intangibles, chattel paper, documents and instruments,
as such terms are defined in the UCC, of each Borrower, including, without
limitation, all obligations for the payment of money arising
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out of the sale, lease or other disposition of goods or other property or
rendition of services and all proceeds thereof.
"ACQUIRED BUSINESS" has the meaning assigned to that term in
the definition of "Permitted Acquisition" in this subsection 1.1.
"ADDITIONAL MORTGAGED PROPERTY" has the meaning set forth in
subsection 6.9B.
"ADDITIONAL MORTGAGES" has the meaning set forth in subsection
6.9B.
"ADELPHIA" means Adelphia Communications Corporation.
"ADMINISTRATIVE AGENT" has the meaning assigned to that term
in the introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENTS" means Administrative Agent and Syndication Agent.
"AGREEMENT" means this Credit Agreement dated as of August 3,
2001, as it may be amended, supplemented or otherwise modified from time to
time.
"AMENDED AND RESTATED ARRIS MEMBERSHIP AGREEMENT" means the
Second Amended and Restated Limited Liability Company Agreement of Arris dated
as of the Closing Date, by and among Company, Holdings and Nortel LLC, as
amended, supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12.
"ANTEC INTERNATIONAL" means Antec International Corporation, a
corporation organized under the laws of Barbados.
"ANNUALIZED" means (i) with respect to the Fiscal Quarter of
Company ending September 30, 2001, (x) the applicable amount for the period from
and including the Closing Date through and including September 30, 2001
multiplied by (y) (i) 360 divided by (ii) the number of days from and including
the Closing Date through and including September 30, 2001,
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(ii) with respect to the Fiscal Quarter of Company ending December 31, 2001, (x)
the applicable amount for the period from and including the Closing Date through
and including December 31, 2001 multiplied by (y) (i) 360 divided by (ii) the
number of days from and including the Closing Date through and including
December 31, 2001, and (iii) with respect to the Fiscal Quarter of Company
ending March 31, 2001, (x) the applicable amount for the period from and
including the Closing Date through and including March 31, 2002 multiplied by
(y) (i) 360 divided by (ii) the number of days from and including the Closing
Date through and including March 31, 2002.
"APPROVED FUND" means a Fund that is administered or managed
by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an
Affiliate of an entity that administers or manages a Lender.
"ARRIS" has the meaning assigned to that term in the
introduction to this Agreement.
"ARRIS CLASS B MEMBER" means Nortel LLC and any person that
(i) any Arris New Membership Interest has been transferred to in accordance with
the terms of the Amended and Restated Arris Membership Agreement and (ii) has
agreed to abide by the terms of the Arris Subordination Agreement, pursuant to
documentation in form and substance reasonably satisfactory to Administrative
Agent.
"ARRIS NEW MEMBERSHIP INTERESTS" means class B membership
interests issued to Nortel LLC on the Closing Date with a 10% annual interest
rate, as further described in the Amended and Restated Arris Membership
Agreement.
"ARRIS SUBORDINATION AGREEMENT" means the Subordination
Agreement entered into by Arris, Holdings, Nortel LLC and Administrative Agent
on the Closing Date, substantially in the form of Exhibit XIX annexed hereto, as
such Arris Subordination Agreement may hereafter be amended, supplemented or
otherwise modified.
"ASSET SALE" means the sale by Holdings or any of its
Subsidiaries to any Person other than a Borrower or any Wholly-Owned Subsidiary
of a Borrower of (i) any stock of any Subsidiary of any Borrower, (ii)
substantially all of the assets of any division or line of business of any
Borrower or any Subsidiary of any Borrower, or (iii) any other assets (whether
tangible or intangible) of any Borrower or any Subsidiary of any Borrower (other
than (a) inventory sold in the ordinary course of business, (b) the issuance of
the Arris New Membership Interests to Nortel LLC, (c) assets permitted by
subsection 7.7(iv), (v), (vii) and (x); (c) the Excluded Stock; and (d) any such
other assets to the extent that the aggregate value of all such assets sold in
any Fiscal Year does not exceed $5,000,000).
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in
substantially the form of Exhibit X annexed hereto.
"AT&T" means AT&T Corp. or any successor to AT&T Corp. that is
the Account Debtor of the Accounts previously owed by AT&T Corp.
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"AVERAGE EXCESS AVAILABILITY" shall mean, for any Fiscal
Quarter, an amount equal to (x) the sum of Excess Availability for each of the
Business Days in such Fiscal Quarter divided by (y) the number of Business Days
in such Fiscal Quarter.
"AVERAGE FACILITY USAGE PERCENTAGE" shall mean, for any Fiscal
Quarter, the percentage equal to (x) the sum of the Facility Usage Percentage
for each of the Business Days in such Fiscal Quarter divided by (y) the number
of Business Days in such Fiscal Quarter.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (i) the Prime
Rate or (ii) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"BASE RATE MARGIN" means the margin over the Base Rate used in
determining the rate of interest of Base Rate Loans pursuant to subsection 2.2A.
"BORROWERS" has the meaning assigned to that term in the
introduction to this Agreement.
"BORROWERS' GUARANTY" means that certain guaranty in the form
attached hereto as Exhibit XII-A, pursuant to which each Borrower shall guaranty
all Loans made to, and related Obligations of, the other Borrowers.
"BORROWING BASE" means, as of any date of determination, the
amount by which: (a) the sum of (i) eighty five percent (85%) of the Net Amount
of Eligible Accounts, (ii) the lesser of (x) eighty five percent (85%) of the
Net Amount of Eligible Foreign Accounts and (y) $5,000,000, (iii) the lesser of
(x) eighty five (85%) of the Net Amount of Eligible Canadian Accounts and (y)
$3,000,000 and (iv) the lesser of (x) 80% of the orderly liquidation value of
each category of Eligible Inventory of Borrowers set forth in the Emerald
Appraisal, in each case minus liquidation costs and (y) $80,000,000 exceeds (b)
such reserves (which may reflect forward-looking industry information provided
by independent third parties) as Administrative Agent may from time to time
require in its reasonable discretion.
"BORROWING BASE AVAILABILITY" means the amount, as of any date
of determination, by which (a) the Borrowing Base exceeds (b) the Total
Utilization of Revolving Loan Commitment, as determined by Administrative Agent.
"BORROWING BASE CERTIFICATE" means a certificate substantially
in the form of Exhibit II annexed hereto delivered by Company to Agent pursuant
to subsection 6.11.
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"BUSINESS DAY" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Eurodollar Rate or
any Eurodollar Rate Loans, any day that is a Business Day described in clause
(i) above and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person; provided, however, that so long as no default has occurred under
any Tax Abatement Transaction Document that (i) cannot be unilaterally waived by
the Company and (ii) would allow any party to such Tax Abatement Transaction
Document (other than the Company) to accelerate the obligations of the Company
thereunder or to terminate or otherwise modify such Tax Abatement Transaction
Document, any leases entered into in connection with the Tax Abatement
Transaction Documents shall be deemed not to be a Capital Lease for purposes of
this Agreement.
"CAPITAL STOCK" means the capital stock or other equity
interests of a Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH BALANCE" means, as at any time of determination, the sum
of the dollar amount of all money, currency, Cash Equivalent and credit balances
held or carried in the Concentration Accounts, after giving effect to checks
issued and outstanding and any administrative holds assessed by the financial
institution maintaining the Concentration Accounts.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's ("S&P") or Moody's Investors Service,
Inc. ("MOODY'S"); (iii) commercial paper maturing no more than one year from the
date of creation thereof and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates
of deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least "adequately capitalized" (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1 capital
(as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual
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fund that (a) has at least 95% of its assets invested continuously in the types
of investments referred to in clauses (i) and (ii) above, (b) has net assets of
not less than $500,000,000, and (c) has the highest rating obtainable from
either S&P or Moody's.
"CASH MANAGEMENT SYSTEM" means the cash management system of
the Borrowers described in Schedule 6.10 hereto.
"CERTIFICATE OF MERGER" means the Certificate of Merger dated
as of August 3, 2001 by and between Transition and Company, in the form
delivered to Agents and Lenders prior to or concurrently with their execution of
this Agreement and as such Certificate of Merger may be amended from time to
time thereafter to the extent permitted under subsection 7.12.
"CHANGE IN CONTROL" means any of the following:
(i) any Person (other than the Permitted Holders) acting
in concert with one or more other Persons (other than the Permitted
Holders) shall have acquired beneficial ownership, directly or
indirectly, of Securities of Holdings (or other Securities convertible
into such Securities) representing 30% or more of the combined voting
power of all Securities of Holdings entitled to vote in the election of
members of the Governing Body of Holdings, other than Securities having
such power only by reason of the happening of a contingency;
(ii) the Permitted Holders acting in concert with one or
more other Persons shall have acquired beneficial ownership, directly
or indirectly, of Securities of Holdings (or other Securities
convertible into such Securities) representing 50% or more of the
combined voting power of all Securities of Holdings entitled to vote in
the election of members of the Governing Body of Holdings, other than
Securities having such power only by reason of the happening of a
contingency;
(iii) the occurrence of a change in the Governing Body of
Holdings such that a majority of members of such Governing Body are not
Continuing Members;
(iv) the failure at any time of Holdings to legally and
beneficially own and control 100% of the issued and outstanding shares
of capital stock of Company or the failure at any time of Holdings to
have the ability to elect all of the Governing Body of Company;
(v) the failure at any time of Company to legally and
beneficially own and control 100% of the issued and outstanding shares
of Capital Stock of all other Borrowers (other than Arris) or the
failure at any time of Company to have the ability to elect all of the
Governing Body of any other Borrower (other than Arris), except as a
result of a merger, dissolution, liquidation, Asset Sale or other
disposition of such Borrower to the extent permitted under Subsection
7.7(i) or 7.7(vii);
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(vi) the failure of Holdings and the Company to legally
and beneficially own and control 100% of the membership interest of
Arris other than the Arris New Membership Interests or the failure at
any time of Holdings and Company to have the ability to elect all of
the Governing Body of Arris; and
(vii) the occurrence of any "Change of Control" as defined
in the Convertible Subordinated Indebtedness Indenture.
As used herein, the term "beneficially own" or "beneficial
ownership" shall have the meaning set forth in the Exchange Act and the rules
and regulations promulgated thereunder.
"CIT" has the meaning assigned to that term in the
introduction to this Agreement.
"CLOSING DATE" means the date on or before August 17, 2001 on
which the initial Loans are made.
"CLOSING DATE MORTGAGED PROPERTY" has the meaning set forth in
subsection 4.1S.
"CLOSING DATE MORTGAGES" has the meaning set forth in
subsection 4.1S.
"COLLATERAL" means, collectively, all of the real, personal
and mixed property (including Capital Stock) in which Liens are purported to be
granted pursuant to the Collateral Documents as security for the Obligations.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver,
mortgagee waiver, bailee letter or any similar acknowledgement or agreement of
any landlord or mortgagee in respect of any Real Property Asset where any
Collateral is located or any warehouseman or processor in possession of any
inventory of any Loan Party, substantially in the form of Exhibit XIV annexed
hereto with such changes thereto as may be agreed to by Administrative Agent in
the reasonable exercise of its discretion.
"COLLATERAL ACCOUNT" means the cash collateral account
maintained by Administrative Agent in accordance with the Cash Management
System.
"COLLATERAL AUDIT" means an audit conducted by Administrative
Agent prior to the Closing Date of certain of the Collateral (including all
accounts receivable, inventory and accounts payable) and the accounting systems,
policies and procedures of Holdings and its Subsidiaries as such audit may be
updated by the Administrative Agent from time to time in accordance with
subsection 6.12.
"COLLATERAL DOCUMENTS" means the Security Agreement, the
Foreign Pledge Agreements, the Mortgages, the Mexican Security Documents and all
other instruments or documents delivered by any Loan Party pursuant to this
Agreement or any of the other Loan
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Documents in order to grant to Administrative Agent, on behalf of Lenders, a
Lien on any real, personal or mixed property of that Loan Party as security for
the Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or
similar instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or services by
any Borrower or any of Subsidiary of any Borrower in the ordinary course of
business of such Borrower or such Subsidiary.
"COMMITMENTS" means the commitments of Lenders to make Loans
as set forth in subsection 2.1A.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY MERGER" means the merger of Transition with and into
Company in accordance with the terms of the Reorganization Agreement and the
Certificate of Merger, with Company being the surviving corporation in such
merger.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit VII annexed hereto.
"CONCENTRATION ACCOUNTS" means the Concentration Accounts for
the Cash Management System as identified in Schedule 6.10 hereto.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
sum of the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Holdings and
its Subsidiaries) by Holdings and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Holdings and its Subsidiaries; provided, that for purposes of
calculating Consolidated Capital Expenditures in connection with subsection 7.8,
for the period ending (w) September 30, 2001, Consolidated Capital Expenditures
for the Fiscal Quarter ending June 30, 2001 and for that portion of the Fiscal
Quarter ending September 30, 2001 that is prior to the Closing Date shall be
calculated on a Pro Forma Basis, Consolidated Capital Expenditures for the
Fiscal Quarter ending March 31, 2001 shall be deemed to be $3.0 million and
Consolidated Capital Expenditures for the Fiscal Quarter ending December 31,
2000 shall be deemed to be $7.6 million, (x) December 31, 2001, Consolidated
Capital Expenditures for the Fiscal Quarter ending June 30, 2001 and for that
portion of the First Quarter ending September 30, 2001 that is prior to the
Closing Date shall be calculated on a Pro Forma Basis, and Consolidated Capital
Expenditures for the Fiscal Quarter ending March 31, 2001 shall be deemed to be
$3.0 million, (y) March 31, 2002, Consolidated Capital Expenditures for the
Fiscal Quarter ending June 30, 2001 and for that portion of the Fiscal Quarter
ending September 30, 2001 that is prior to the Closing Date shall be calculated
on a Pro Forma Basis and (z) June 30, 2002, Consolidated
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Capital Expenditures for that portion of the Fiscal Quarter ending September 30,
2001 that is prior to the Closing Date shall be calculated on a Pro Forma Basis.
For purposes of this definition, the purchase price of equipment that is
purchased simultaneously with the trade-in of existing equipment or with
insurance proceeds shall be included in Consolidated Capital Expenditures only
to the extent of the gross amount of such purchase price less the credit granted
by the seller of such equipment for the equipment being traded in at such time
or the amount of such proceeds, as the case may be.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).
"CONSOLIDATED CASH TAXES" means, for any period, federal,
state, local and foreign income taxes of Holdings and its Subsidiaries paid in
Cash during such period.
"CONSOLIDATED EBITDA" means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)
total depreciation expense, (v) total amortization expense, and (vi) other
non-cash items (other than any such non-cash item to the extent it represents an
accrual of or reserve for cash expenditures in any future period), but only, in
the case of clauses (ii)-(vi), to the extent deducted in the calculation of
Consolidated Net Income, less other non-cash items added in the calculation of
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Holdings and its Subsidiaries in conformity with GAAP; provided, that
for purposes of calculating Consolidated EBITDA for purposes of each of the
Consolidated Senior Leverage Ratio and the Consolidated Fixed Charge Coverage
Ratio, for the period ending (w) September 30, 2001, Consolidated EBITDA for the
Fiscal Quarter ending June 30, 2001 and for that portion of the Fiscal Quarter
ending September 30, 2001 that is prior to the Closing Date shall be calculated
on a Pro Forma Basis, Consolidated EBITDA for the Fiscal Quarter ending March
31, 2001 shall be deemed to be $22.2 million and Consolidated EBITDA for the
Fiscal Quarter ending December 31, 2000 shall be deemed to be $2.8 million, (x)
December 31, 2001, Consolidated EBITDA for the Fiscal Quarter ending June 30,
2001 and for that portion of the Fiscal Quarter ending September 30, 2001 that
is prior to the Closing Date shall be calculated on a Pro Forma Basis, and
Consolidated EBITDA for the Fiscal Quarter ending March 31, 2001 shall be deemed
to be $22.2 million, (y) March 31, 2002, Consolidated EBITDA for the Fiscal
Quarter ending June 30, 2001 and for that portion of the Fiscal Quarter ending
September 30, 2001 that is prior to the Closing Date shall be calculated on a
Pro Forma Basis and (z) June 30, 2002, Consolidated EBITDA for that portion of
the Fiscal Quarter ending September 30, 2001 that is prior to the Closing Date
shall be calculated on a Pro Forma Basis.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, as of any
date of determination, the ratio computed for the four Fiscal Quarter period
most recently ended on or before such date of determination of (x) the
difference between (a) Consolidated EBITDA for such four Fiscal Quarter period
and (b) Consolidated Capital Expenditures for such four Fiscal
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20
Quarter period to (y) Consolidated Fixed Charges for such four Fiscal Quarter
period; provided, that, Consolidated Fixed Charges for the Fiscal Quarters
ending September 30, 2001, December 31, 2001 and March 31, 2002 shall be
determined on an Annualized Basis.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
(without duplication) of the amounts for such period of (i) Consolidated Cash
Interest Expense, including, without limitation, that portion of payments under
Capital Leases attributable under GAAP to a payment of interest, (ii) scheduled
principal payments in respect of Consolidated Total Debt, including, without
limitation, that portion of payments under Capital Leases attributable under
GAAP to a payment of principal and (iii) Consolidated Cash Taxes, all of the
foregoing as determined on a consolidated basis for Holdings and its
Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum
of total interest expense (including that portion attributable to Capital Leases
in accordance with GAAP and capitalized interest) by Holdings and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Holdings and its Subsidiaries, including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agents
and Lenders on or before the Closing Date.
"CONSOLIDATED INVENTORY TURNS RATIO" means, as of any date of
determination, the ratio computed for the Fiscal Quarter period most recently
ended on or before such date of determination of (i) the sum of the cost of
goods sold during the consecutive four Fiscal Quarters ending on the last day of
the Fiscal Quarter for which such determination is being made for Holdings and
its Subsidiaries divided by (ii) the sum of the inventory balance at the end of
each of the three months during such Fiscal Quarter of Holdings and its
Subsidiaries on a Pro Forma Basis divided by three; provided, that for purposes
of calculating the Consolidated Inventory Turns Ratio, for the period ending (w)
September 30, 2001, the Consolidated Inventory Turns Ratio for the Fiscal
Quarter ending June 30, 2001 and for that portion of the Fiscal Quarter ending
September 30, 2001 that is prior to the Closing Date shall be calculated after
giving effect on a pro forma basis to the Reorganization, the cost of goods sold
for Holdings and its Subsidiaries for the Fiscal Quarter ending March 31, 2001
shall be deemed to be $182.5 million and the cost of goods sold for Holdings and
its Subsidiaries for the Fiscal Quarter ending December 31, 2000 shall be deemed
to be $198.9 million, (x) December 31, 2001, the Consolidated Inventory Turns
Ratio for the Fiscal Quarter ending June 30, 2001 and for that portion of the
First Quarter ending September 30, 2001 that is prior to the Closing Date shall
be calculated after giving effect on a pro forma basis to the Reorganization,
and the cost of goods sold for Holdings and its Subsidiaries for the Fiscal
Quarter ending March 31, 2001 shall be deemed to be $182.5 million, (y) March
31, 2002, the Consolidated Inventory Turns Ratio for the Fiscal Quarter ending
June 30, 2001 and for that portion of the Fiscal Quarter ending September 30,
2001 that is prior to the Closing Date shall be calculated after giving effect
on a pro forma basis to the Reorganization and (z) June 30, 2002, the
Consolidated Inventory Turns
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Ratio for that portion of the Fiscal Quarter ending September 30, 2001 that is
prior to the Closing Date shall be calculated after giving effect on a pro forma
basis to the Reorganization.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Holdings and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded therefrom (i) the income (or loss)
of any Person (other than a Subsidiary of Holdings) in which any other Person
(other than Holdings or any of its Subsidiaries) has a joint interest, except to
the extent of the amount of dividends or other distributions actually paid to
Holdings or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Holdings or is merged into or consolidated with Holdings or any of its
Subsidiaries or that Person's assets are acquired by Holdings or any of its
Subsidiaries, (iii) the income of any Subsidiary of Holdings to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, (iv) any
after-tax gains or losses attributable to Asset Sales or returned surplus assets
of any Pension Plan, (v) (to the extent not included in clauses (i) through (iv)
above) any net extraordinary gains or net non-cash extraordinary losses and (vi)
(to the extent not included in clauses (i) through (v) above) any net cash
extraordinary losses incurred in connection with (x) severance costs during the
Fiscal Quarters ending June 30, 2001, September 30, 2001 and December 31, 2001
in an aggregate amount for all such Fiscal Quarters not to exceed $11,300,000
and (y) costs related to the termination by Arris of the leasehold for its
leased real property located in Atlanta, Georgia during the Fiscal Quarters
September 30, 2001 and December 31, 2001 in an aggregate amount for all such
Fiscal Quarters not to exceed $3,600,000, in each case in this clause (vi)
calculated after giving effect on a pro forma basis to the Reorganization.
"CONSOLIDATED NET WORTH" means, as at any date of
determination, the sum of the capital stock and additional paid-in capital plus
retained earnings (or minus accumulated deficits) of Holdings and its
Subsidiaries on a consolidated basis determined in conformity with GAAP.
"CONSOLIDATED SENIOR LEVERAGE RATIO" means, as of any date of
determination, the ratio of (a) Consolidated Total Debt (excluding the
Convertible Subordinated Notes and any refinancing of the Convertible
Subordinated Notes permitted in accordance with subsection 7.1(ix)) as of the
last day of each of the three months in such Fiscal Quarter for which such
determination is being made divided by three to (b) Consolidated EBITDA for the
consecutive four Fiscal Quarters ending on the last day of the Fiscal Quarter
for which such determination is being made.
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
Holdings and its Subsidiaries (other than the Nortel Trade Payable), determined
on a consolidated basis in accordance with GAAP.
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"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Hedge Agreements. Contingent Obligations shall include
(a) the direct or indirect guaranty, endorsement (otherwise than for collection
or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another, (b)
the obligation to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (1) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (2) to maintain the solvency
or any balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (1) or (2) of this
sentence, the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less, the amount
to which such Contingent Obligation is specifically limited.
"CONTINUING MEMBER" means, as of any date of determination any
member of the Governing Body of Holdings who (i) was a member of such Governing
Body on the Closing Date or (ii) was nominated for election or elected to such
Governing Body with the affirmative vote of a majority of the members who were
either members of such Governing Body on the Closing Date or whose nomination or
election was previously so approved.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"CONVERTIBLE SUBORDINATED NOTE INDENTURE" means that certain
Indenture dated as of May 8, 1998 pursuant to which the Convertible Subordinated
Notes were issued by Company, as such Indenture has been supplemented as of the
date hereof and as such Indenture may be further amended, supplemented or
otherwise modified from time to time to the extent permitted under subsection
7.12.
"CONVERTIBLE SUBORDINATED NOTES" means Company's $115,000,000
in original aggregate principal amount of 4 1/2% Convertible Subordinated Notes
due 2003, issued pursuant to the Convertible Subordinated Note Indenture.
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"COX" means Cox Communications, Inc.
"CSFB" has the meaning set forth in the introduction to this
Agreement.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement to which any Borrower or any Subsidiary
of any Borrower is a party.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
similar account maintained with a Person engaged in the business of banking,
including a savings bank, savings and loan association, credit union or trust
company.
"DISCRETIONARY LOAN" has the meaning assigned to that term in
subsection 2.1A(ii)(a).
"DISCRETIONARY OVERDRAFT LOAN" means any Discretionary Loan if
(i) the making of such Discretionary Loan would cause the Total Utilization of
Revolving Loan Commitments to exceed the Borrowing Base then in effect or (ii)
at the time such Discretionary Loan is made the Total Utilization of Revolving
Loan Commitments exceeds the Borrowing Base then in effect.
"DISCRETIONARY POST-DEFAULT LOAN" means any Discretionary Loan
that is made when an Event of Default or Potential Event of Default has occurred
and is continuing.
"DISCRETIONARY POST-DEFAULT OVERDRAFT LOAN" means any
Discretionary Post-Default Loan if (i) the making of such Discretionary
Post-Default Loan would cause the Total Utilization of Revolving Loan
Commitments to exceed the Borrowing Base then in effect or (ii) at the time such
Discretionary Post-Default Loan is made the Total Utilization of Revolving Loans
exceeds the Borrowing Base then in effect.
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary of a Borrower that
is incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.
"ELIGIBLE ACCOUNTS" means Accounts created by Borrowers in the
ordinary course of business arising out of the sale of goods or rendition of
services, which are acceptable to Administrative Agent in all respects in its
reasonable discretion. Standards of eligibility may be fixed and revised from
time to time by Administrative Agent in Administrative Agent's reasonable
judgment. In determining eligibility, Administrative Agent may, but need not,
rely on agings, reports and schedules of Accounts furnished by any Borrower, but
reliance by Administrative Agent thereon from time to time shall not be deemed
to limit Administrative Agent's right to revise standards of eligibility at any
time as to both present and future Accounts
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of Borrowers. In general, except as otherwise agreed to by Administrative Agent
in its reasonable discretion, Eligible Accounts shall not include:
(a) any Account with respect to which the Account
Debtor on such Account is not acceptable to Administrative
Agent in its reasonable discretion;
(b) any Account which does not comply in all respects
with the representations, covenants and warranties set forth
herein or in any of the other Loan Documents;
(c) any Account for which more than (x) one hundred
and twenty (120) days in the case of any Accounts in which
both (i) AT&T is the Account Debtor and (ii) have 60 day
payment terms and (y) ninety (90) days in the case of all
other Accounts, have elapsed since the invoice date of such
Account;
(d) any Account with respect to which the Account
Debtor is a director, officer, employee, Subsidiary or
Affiliate of any Borrower or any Subsidiary of any Borrower;
provided, however, that this clause (d) shall not exclude
Accounts owed by (i) Nortel or its Subsidiaries, so long as
the applicable Account Debtor has delivered to Administrative
Agent a No-Offset Letter and (ii) AT&T; provided, further,
that notwithstanding the foregoing proviso, if at any time
AT&T acting in concert with one or more other Persons shall
have acquired beneficial ownership, directly or indirectly, of
Securities of Holdings (or other Securities convertible into
such Securities) representing 15% or more of the combined
voting power of all Securities of Holdings entitled to vote in
the election of members of the Governing Body of Holdings,
other than Securities having such power only by reason of the
happening of a contingency, this clause (d) shall exclude any
account of AT&T unless the applicable Account Debtor has
delivered to Administrative Agent a No-Offset Letter;
(e) all Accounts owing by a single Account Debtor if
Accounts constituting greater than fifty percent (50%) of the
aggregate balance owing by such Account Debtor to Borrowers
and their Subsidiaries remains unpaid more than (x) one
hundred and twenty (120) days in the case of any Accounts in
which both (i) AT&T is the Account Debtor and (ii) have 60 day
payment terms and (y) ninety (90) days in the case of all
other Accounts, after the applicable invoice dates of such
Accounts;
(f) all Accounts from any Account Debtor who is also
a creditor of any Borrower or any Subsidiary of any Borrower,
but only to the extent of the outstanding amount owing by such
Borrower or such Subsidiary to such Account Debtor, unless
such Account Debtor has delivered to Administrative Agent a
No-Offset Letter;
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(g) any Account with respect to which the Account
Debtor is the United States of America or any department,
agency or instrumentality thereof, unless the applicable
Borrower assigns its right to payment of such Accounts to
Administrative Agent pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. ss. 3727) and notice of such
assignment has been provided to the applicable department,
agency or instrumentality in accordance with such act;
(h) any Account with respect to which the Account
Debtor is not a resident of the United States of America
unless (i) the Account Debtor has delivered to Administrative
Agent an irrevocable letter of credit naming Administrative
Agent as payee (or which has been pledged to Administrative
Agent in a manner reasonably acceptable to Administrative
Agent), (ii) such letter of credit has been issued by a
financial institution satisfactory to Administrative Agent,
and (iii) such letter of credit is satisfactory in form and
substance to Administrative Agent, in which event such Account
may be eligible to the extent of the face amount of such
letter of credit;
(i) any Account with respect to which the Account
Debtor is located in the States of New Jersey, Minnesota, or
any other State requiring the filing of a Business Activity
Report or similar document in order to bring suit or otherwise
enforce its remedies against such Account Debtor in the courts
or through any judicial process of such State, unless the
Borrower generating such Account is qualified to do business
in such state or has filed a Notice of Business Activities
Report with the New Jersey Division of Taxation, the Minnesota
Department of Revenue, or with such other States, as
appropriate, for the current year;
(j) any Account with respect to which Administrative
Agent does not have a first and valid fully perfected security
interest and for which Administrative Agent has not received
adequate certificates, reports and other assurances (the
adequacy of which shall be determined by Administrative Agent
in its reasonable discretion) of such priority and perfection;
(k) any Account with respect to which the Account
Debtor is the subject of a case under the Bankruptcy Code or a
similar insolvency proceeding or has made an assignment for
the benefit of creditors or whose assets have been conveyed to
a receiver or trustee;
(l) any Account with respect to which the Account
Debtor's obligation to pay the Account is conditional upon the
Account Debtor's approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a
bill-and-hold (unless made at the direction of the Account
Debtor and payment of such Account is not conditional),
guaranteed sale, sale-and-return, sale on approval or
consignment basis;
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(m) any Account in respect of a deferred payment
program;
(n) all Accounts from an Account Debtor if fifty
percent (50%) or more of the total face value of the Accounts
from such Account Debtor are ineligible under any of the
foregoing provisions of this definition.
(o) any Account that is not owned by a Borrower free
and clear of all Liens other than any Lien in favor of the
Administrative Agent granted pursuant to the Loan Documents;
(p) any Account that is not a legal, valid, binding
and enforceable obligation of an Account Debtor (except as
such enforceability may be, at any time of determination,
limited by applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally and by
principles of equity);
(q) the percentage of the Accounts that are owed by
an Account Debtor that at the time of any determination of
Eligible Accounts exceeds 10% of the aggregate face amount of
all Eligible Accounts of all Account Debtors; provided,
however, that so long as Adelphia has a senior secured credit
rating of no less than (a) BB+ from S&P (to the extent S&P has
provided such entity a senior secured credit rating) and (b)
Ba1 from Moody's (to the extent Moody's has provided such
entity a senior secured credit rating), only that percentage
of any Account owed by such entity that, at any time of any
determination of Eligible Accounts, exceeds 20% of the
aggregate face amount of all Eligible Accounts of all Account
Debtors will be excluded from Eligible Accounts pursuant to
this clause (q); provided, further, that so long as AT&T or
Cox, respectively, has a corporate credit rating of no less
than (a) BBB from S&P (to the extent S&P has provided such
entity a corporate credit rating) and (b) Baa2 from Moody's
(to the extent Moody's has provided such entity a corporate
credit rating), only that percentage of any Account owed by
such entity that, at any time of any determination of Eligible
Accounts, exceeds (x) 40%, in the case of AT&T and (y) 20%, in
the case of Cox, of the aggregate face amount of all Eligible
Accounts of all Account Debtors will be excluded from Eligible
Accounts pursuant to this clause (q); provided, further, that,
notwithstanding the foregoing proviso, if at any time and for
so long as AT&T has a corporate credit rating of no less than
(a) A- from S&P (to the extent S&P has provided such entity a
corporate credit rating) and (b) A3 from Moody's (to the
extent Moody's has provided such entity a corporate credit
rating), only that percentage of any Account owed by AT&T
that, at any time of any determination of Eligible Accounts,
exceeds 45% will be excluded from Eligible Accounts pursuant
to this clause (q);
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"ELIGIBLE ASSIGNEE" means (i) any Lender, any Affiliate of any
Lender and any Approved Fund of any Lender; and (ii) (a) a commercial bank
organized under the laws of the United States or any state thereof; (b) a
savings and loan association or savings bank organized under the laws of the
United States or any state thereof; (c) a commercial bank organized under the
laws of any other country or a political subdivision thereof; provided that (1)
such bank is acting through a branch or agency located in the United States or
(2) such bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country; and (d) any other entity that is an "accredited investor" (as
defined in Regulation D under the Securities Act) that extends credit or buys
loans as one of its businesses including insurance companies, mutual funds and
lease financing companies; provided that neither any Borrower nor any Affiliate
of any Borrower shall be an Eligible Assignee.
"ELIGIBLE CANADIAN ACCOUNTS" means any Eligible Account
(determined without regard to clause (h) thereof) with respect to which the
Account Debtor is a resident of Canada without duplication with any such
Eligible Account that meets the requirements of clause (h) of the definition of
Eligible Accounts.
"ELIGIBLE FOREIGN ACCOUNTS" means any Eligible Account
(determined without regard to clause (h) thereof) with respect to which the
Account Debtor is not a resident of the United States of America or Canada
without duplication with any such Eligible Account that meets the requirements
of clause (h) of the definition of Eligible Accounts.
"ELIGIBLE INVENTORY" means and includes Inventory consisting
of first quality finished goods held for resale in the ordinary course of the
business of any Borrower, which are owned by any Borrower and located at
premises in the United States of America and reasonably acceptable to
Administrative Agent in all respects. General criteria for Eligible Inventory
may be established and revised from time to time by Administrative Agent in
Administrative Agent's reasonable judgment. In determining such acceptability
Administrative Agent may, but need not, rely on reports and schedules of
Inventory furnished to Administrative Agent by any Borrower, but reliance
thereon by Administrative Agent from time to time shall not be deemed to limit
Administrative Agent's right to revise standards of eligibility at any time. In
general, except as otherwise agreed to by Administrative Agent in its reasonable
discretion, Eligible Inventory shall not include the following:
(a) work in process (including, without limitation,
any sub-assemblies) and raw materials;
(b) components;
(c) spare parts not held for sale in the ordinary
course of Borrowers' business;
(d) packaging and shipping materials;
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(e) supplies used or consumed in the business of
Borrowers and their Subsidiaries;
(f) Inventory at the premises of third parties unless
such third party has signed a lien waiver and access agreement
acceptable to the Administrative Agent in its sole discretion;
(g) Inventory held on consignment by third parties.
(h) Inventory subject to a Lien in favor of any third
party, except for Liens permitted hereunder;
(i) bill and hold goods;
(j) Inventory which is not subject to Administrative
Agent's first and valid fully perfected security interest and
for which Administrative Agent has not received adequate
certificates, reports and other assurances (the adequacy of
which is to be determined by Administrative Agent in its sole
discretion) of such priority and perfection;
(k) returned goods which are not either currently
usable or currently saleable in the ordinary course of
business of the Borrowers,
(l) damaged and/or defective goods;
(m) "seconds";
(n) Inventory purchased on consignment;
(o) Inventory produced in violation of the Fair Labor
Standards Act or subject to the so-called "hot goods"
provisions contained in Title 29 U.S.C. 215(a)(i);
(p) finished goods which do not meet the
specifications of the purchase order for such goods in any
material respect;
(q) Inventory which is not in good condition, is
obsolete, does not meet all standards imposed by any
governmental agency, or department or division thereof, having
regulatory authority over the Inventory, or which is not
either currently usable or currently saleable in the ordinary
course of the business of Borrowers, except to the extent such
Inventory was included in the lendable Inventory in, and is
reflected in the advance rates set forth in, the Emerald
Appraisal;
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(r) Inventory which is not otherwise acceptable to
Administrative Agent in its sole discretion because of age,
type, category, quality and/or quantity, except to the extent
such Inventory was included in the lendable Inventory in, and
is reflected in the advance rates set forth in, the Emerald
Appraisal;
(s) Inventory which has been consigned to a customer
of Administrative Agent, has been used, or has been attached,
seized, made subject to a writ or distress warrant, levied
upon or brought within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors;
(t) Inventory which does not comply in all respects
with each of the representations, warranties and covenants set
forth in this Agreement and the other Loan Documents;
(u) Inventory that is not owned by a Borrower free
and clear of all liens other than any lien in favor of the
Administrative Agent granted pursuant to this Agreement or any
other Loan Document; and
(v) Inventory purchased in or as part of a "bulk"
transfer or sale of assets unless Debtor has complied with all
applicable bulk sales or bulk transfer laws.
"EMERALD APPRAISAL" means the net orderly liquidation analysis
of the inventory of the Borrowers and their respective Subsidiaries conducted by
Emerald Technology Valuations, LLC and delivered to Agents prior to the Closing
Date, in form and substance reasonably satisfactory to Agents, as such appraisal
may be updated by Emerald Technology Valuations, LLC or such other independent
third party consultant selected by Agents in their reasonable discretion from
time to time in accordance with subsection 6.12.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or contributed to by
Holdings, any Borrower, any of their respective Subsidiaries or any of their
respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), made in writing by any Government
Authority or any other Person, arising (i) pursuant to or in connection with any
actual or alleged violation of any Environmental Law, (ii) in connection with
any Hazardous Materials or any actual or alleged Hazardous Materials Activity,
or (iii) in connection with any actual or alleged damage, injury, threat or harm
to health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future
statutes, ordinances, orders, rules, regulations, judgments, Governmental
Authorizations, or any other requirements of any Government Authority relating
to (i) environmental matters, including those relating to any Hazardous
Materials Activity, (ii) the generation, use, storage, transportation or
disposal of Hazardous Materials, or (iii) pollution or protection of the
environment (including, without
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limitation, atmosphere, surface water, ground water and land), occupational
safety and health, industrial hygiene and land use, in any manner applicable to
Holdings or any of its Subsidiaries or any Facility.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA AFFILIATE", as applied to any Person, means (i) any
corporation that is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) that is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is a
member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of a Person or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of such
Person or such Subsidiary within the meaning of this definition with respect to
liabilities for which such Person or such Subsidiary could be liable under the
Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Holdings, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing sponsors or
the termination of any such Pension Plan resulting in liability pursuant to
Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Holdings, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of
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ERISA; (viii) the assertion of a material claim (other than routine claims for
benefits) against any Pension Plan other than a Multiemployer Plan or the assets
thereof, or against Holdings, any of its Subsidiaries or any of their respective
ERISA Affiliates in connection with any Pension Plan; (ix) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (x) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the rate per annum (rounded upward to the nearest
1/16 of one percent) that appears on page 3750 of the Telerate Plus Service (or
such other comparable page as may, in the opinion of Administrative Agent,
replace such page for the purpose of displaying such rate) with maturities
comparable to such Interest Period as of approximately 11:00 a.m. (London time)
on such Interest Rate Determination Date by (ii) a percentage equal to 100%
minus the stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D); provided that, to the
extent that an interest rate is not ascertainable pursuant to the foregoing
provisions of this definition the "Eurodollar Rate" shall be the interest rate
per annum determined by Administrative Agent as the average of the rates per
annum at which deposits in Dollars are offered for such Interest Period to major
banks in the London interbank market in London, England by CSFB at approximately
11:00 a.m. (London time) on the Interest Rate Determination Date for such
Interest Period. Each determination by Administrative Agent pursuant to this
definition shall be conclusive absent manifest error.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Eurodollar Rate as provided in subsection 2.2A.
"EURODOLLAR RATE MARGIN" means the margin over the Eurodollar
Rate used in determining the rate of interest of Eurodollar Rate Loans pursuant
to subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCESS AVAILABILITY" means the amount, as of any date of
determination, by which (a) the lesser of (x) the Borrowing Base or (y) the
Revolving Loan Commitments exceeds (b) the Total Utilization of Revolving Loan
Commitments, as determined by Administrative Agent.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCLUDED STOCK" means any stock of Lucent Technologies Inc.
or Avaya Inc. held or owned by Holdings or any of its Subsidiaries.
"EXISTING ARRIS CREDIT AGREEMENT" means that certain Secured
Loan Agreement dated as of November 17, 1995, by and among Arris, Company and
Nortel LLC, as amended, restated, supplemented or otherwise modified as of the
Closing Date.
"EXISTING COMPANY CREDIT AGREEMENT" means that certain Credit
and Guarantee Agreement dated as of May 21, 1998 by and among Company, the
financial institutions party thereto as lenders, Bank of America National Trust
and Savings Association, as collateral agent, and The Bank of New York, as
administrative agent, as amended and restated on April 28, 1999 and as further
amended, restated, supplemented or otherwise modified as of the Closing Date.
"FACILITIES" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by any Borrower or any Subsidiary of
any Borrower or any of their respective predecessors or Affiliates.
"FACILITY USAGE PERCENTAGE" shall mean as of any date of
determination the percentage equal to (x) the Total Utilization of Revolving
Loan Commitments on such date divided by (y) the Revolving Loan Commitments on
such date.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
"FINANCIAL PLAN" has the meaning assigned to that term in
subsection 6.1(xii).
"FIRST PRIORITY" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that (i) such
Lien is perfected and has priority over any other Lien on such Collateral (other
than (w) Permitted Encumbrances which are given priority as a matter of law, (x)
Liens described on Schedule 7.2, so long as such Liens are only on the assets
encumbered by such Liens on the Closing Date, (y) Liens related to Indebtedness
incurred in connection with a Permitted Acquisition, so long as such Liens only
attach to the assets acquired in such Permitted Acquisition and are otherwise
permitted by subsection 7.2(v) and (z) Liens securing Purchase Money
Indebtedness, so long as such Liens only attach to the
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assets being acquired with such Purchase Money Indebtedness and are otherwise
permitted by subsection 7.2(vii)) and (ii) such Lien is the only Lien (other
than Liens permitted pursuant to subsection 7.2) to which such Collateral is
subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Holdings and its
Subsidiaries ending on December 31st of each calendar year.
"FLOOD HAZARD PROPERTY" means a Closing Date Mortgaged
Property or an Additional Mortgaged Property located in an area designated by
the Federal Emergency Management Agency as having special flood or mud slide
hazards.
"FOREIGN PLEDGE AGREEMENT" means each pledge agreement or
similar instrument governed by the laws of a country other than the United
States, executed on the Closing Date or from time to time thereafter in
accordance with subsection 6.8 by any Borrower or any Domestic Subsidiary that
owns capital stock of one or more Foreign Subsidiaries organized in such
country, in form and substance satisfactory to Administrative Agent, as such
Foreign Pledge Agreement may be amended, supplemented or otherwise modified from
time to time.
"FOREIGN SUBSIDIARY" means any Subsidiary of any Borrower that
is not a Domestic Subsidiary.
"FUND" means any Person (other than a natural Person) that is
(or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.
"FUNDING AND PAYMENT OFFICE" means (i) the office of
Administrative Agent and Swing Line Lender located at 1211 Avenue of the
Americas, New York, New York or (ii) such other office of Administrative Agent
and Swing Line Lender as may from time to time hereafter be designated as such
in a written notice delivered by Administrative Agent and Swing Line Lender to
Borrowers and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
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"GOVERNING BODY" means the board of directors or other body
having the power to direct or cause the direction of the management and policies
of a Person that is a corporation, partnership, trust or limited liability
company.
"GOVERNMENT AUTHORITY" means any political subdivision or
department thereof, any other governmental or regulatory body, commission,
central bank, board, bureau, organ or instrumentality or any court, in each case
whether federal, state, local or foreign.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
registration, authorization, plan, directive, consent, order or consent decree
of or from, or notice to, any Government Authority.
"GUARANTIES" means the Borrowers' Guaranty, Holdings Guaranty
and the Subsidiary Guaranty.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws) under or pursuant to any
applicable Environmental Law; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any Government Authority of
competent jurisdiction.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current or
proposed activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively, and not entered into for speculative purposes.
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"HOLDINGS" means Arris Group, Inc., a Delaware corporation.
"HOLDINGS GUARANTY" means the Holdings Guaranty executed and
delivered by Holdings on the Closing Date, substantially in the form of Exhibit
XV annexed hereto, as such Holdings Guaranty may thereafter be amended,
supplemented or otherwise modified from time to time.
"INCREASING LENDERS" has the meaning set forth in subsection
2.1A(iii).
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute (1) in the case of Hedge Agreements, Contingent
Obligations, and (2) in all other cases, Investments, and in neither case
constitute Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, software, know-how and processes used in or
necessary for the conduct of the business of the Borrowers and their
Subsidiaries as currently conducted that are material to the condition
(financial or otherwise), business or operations of the Borrowers and their
Subsidiaries, taken as a whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, the last Business Day of each March, June, September and December of
each year, commencing on the first such date to occur after the Closing Date,
and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each Interest
Period of longer than three months, "Interest Payment Date" shall also include
the date that is three months, or a multiple thereof, after the commencement of
such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which any Borrower or any Subsidiary of any
Borrower is a party.
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"INTEREST RATE DETERMINATION DATE", with respect to any
Interest Period, means the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"INVENTORY" shall mean any "inventory," as such term is
defined in the UCC, now or hereafter owned or acquired by Borrowers wherever
located, and, in any event, including all inventory, merchandise, goods and
other personal property which are held by or on behalf of Borrowers for sale or
lease or are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process, or materials used or consumed
or to be used or consumed in the business of Borrowers or in the processing,
packaging, advertising, promotion, delivery or shipping of the same, and all
finished goods and all proceeds and products thereof.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by Holdings or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Holdings), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Holdings from any Person other than
Holdings or any of its Subsidiaries, of any equity Securities of such
Subsidiary, (iii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
by Holdings or any of its Subsidiaries to any other Person (other than a
Wholly-Owned Subsidiary of Holdings), including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business, or (iv)
Interest Rate Agreements or Currency Agreements not constituting Hedge
Agreements. Investments shall not include accounts receivable from any Person
other than Holdings and its Subsidiaries that are current assets and arose from
sales to that other Person in the ordinary course of business). The amount of
any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment
(other than adjustments for the repayment of, or the refund of capital with
respect to, the original principal amount of any such Investment).
"IP COLLATERAL" means, collectively, the Intellectual Property
that constitutes Collateral under the Security Agreement.
"ISSUING BANK" means, with respect to any Letter of Credit,
the financial institution that agrees to issue such Letter of Credit, as
provided in subsection 3.1B.
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any Subsidiary of any Person be considered to be
a Joint Venture to which such Person is a party.
"LEAD ARRANGER" means CSFB as lead arranger and book running
manager.
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"LEASEHOLD PROPERTY" means any leasehold interest of any Loan
Party (other than a Foreign Subsidiary) as lessee under any lease of real
property, other than any such leasehold interest designated from time to time by
Administrative Agent in its sole discretion as not being required to be included
in the Collateral.
"LENDER" and "LENDERS" means the Persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1, and the term
"Lenders" shall include Swing Line Lender unless the context otherwise requires.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial
Letters of Credit and Standby Letters of Credit issued or to be issued by
Issuing Banks for the account of any Borrower pursuant to subsection 3.1.
"LETTER OF CREDIT GUARANTY" shall mean any guaranty entered
into by Administrative Agent for the benefit of any Issuing Bank guaranteeing
any Borrower's reimbursement obligations under any Letter of Credit or any
related Letter of Credit Document.
"LETTER OF CREDIT DOCUMENTS" means the Letters of Credit and
any applications for, or reimbursement agreements or other documents or
certificates executed by any Borrower in favor of an Issuing Bank relating to,
the Letters of Credit.
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which Administrative
Agent is or at any time thereafter may be required to pay under all Letter of
Credit Guaranties plus (ii) the aggregate amount of all payments made by
Administrative Agent to any Issuing Bank under any Letter of Credit Guaranty and
not theretofore reimbursed out of the proceeds of Swing Line Loans or Revolving
Loans pursuant to subsection 3.3B or otherwise reimbursed by Borrowers.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Revolving Loans or
Swing Line Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, any Letter
of Credit Guaranty, the Guaranties and the Collateral Documents.
"LOAN PARTY" means each of Holdings, Company, Arris, the other
Borrowers and any Subsidiary of any Borrower, respectively, from time to time
executing a Loan Document, and "LOAN PARTIES" means all such Persons,
collectively.
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"MANDATORY EXCHANGE EVENT" means the mandatory exchange, if
any, of the Arris New Membership Interest into (a) Subordinated Holdings
Indebtedness, (b) common stock of Holdings and/or (c) Preferred Holdings Stock,
in each case, in accordance with and pursuant to the terms of the Amended and
Restated Arris Membership Agreement.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, financial condition or
prospects of Holdings and its Subsidiaries, taken as a whole or (ii) the
material impairment of the ability of any Loan Party to perform, or of
Administrative Agent or Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to
which Holdings or any of its Subsidiaries is a party (other than the Loan
Documents) for which breach, nonperformance, cancellation or failure to renew
could have a Material Adverse Effect.
"MATERIAL SUBSIDIARY" means any Domestic Subsidiary or Mexican
Subsidiary of any Borrower acquired or formed by any Borrower after the Closing
Date that owns or acquires (i) assets with an aggregate fair market value
(without netting such fair market value against any liability of such
Subsidiary) exceeding $100,000 or (ii) any material patent, trademark,
tradename, copyright, technology, software, know-how or process.
"MAXIMUM DISCRETIONARY AMOUNT" means, as of any date of
determination $7,500,000.
"MAXIMUM DISCRETIONARY BORROWING BASE AMOUNT" means, as of any
date of determination, the sum of (x) the Borrowing Base and (y) the Maximum
Discretionary Amount.
"MEXICAN SECURITY DOCUMENTS" means each security agreement or
similar instrument governed by the laws of Mexico, executed on the Closing Date
by the Company, any other Borrower and any Mexican Subsidiary in accordance with
subsection 4.1R(vi), as such Mexican Security Documents may be amended,
restated, supplemented or otherwise modified from time to time.
"MEXICAN INTERCOMPANY INDEBTEDNESS" has the meaning assigned
to that term in subsection 7.1(iv).
"MEXICAN INTERCOMPANY SECURITY DOCUMENTS" means each security
agreement or similar instrument governed by the laws of Mexico, executed after
the Closing Date in accordance with subsection 6.13 by any Mexican Subsidiary
and/or the Company, in form and substance satisfactory to Administrative Agent,
as such Mexican Intercompany Security Document may be amended, supplemented or
otherwise modified from time to time.
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"MEXICAN SUBSIDIARY" means any Subsidiary of a Borrower that
is incorporated or organized under the laws of Mexico.
"MOODY'S" means Moody's Investors Services, Inc.
"MORTGAGE" means (i) a security instrument (whether designated
as a deed of trust or a mortgage or by any similar title) executed and delivered
by any Loan Party, substantially in the form of Exhibit XVII annexed hereto or
in such other form as may be approved by Administrative Agent in its reasonable
discretion, in each case with such changes thereto as may be recommended by
Administrative Agent's local counsel based on local laws or customary local
mortgage or deed of trust practices, or (ii) at Administrative Agent's option,
in the case of an Additional Mortgaged Property, an amendment to an existing
Mortgage, in form satisfactory to Administrative Agent, adding such Additional
Mortgaged Property to the Real Property Assets encumbered by such existing
Mortgage, in either case as such security instrument or amendment may be
amended, supplemented or otherwise modified from time to time. "MORTGAGES" means
all such instruments, including the Closing Date Mortgages and any Additional
Mortgages, collectively.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan that is a
"multiemployer plan" as defined in Section 3(37) of ERISA excluding any Employee
Benefit Plan solely providing dental benefits.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" shall mean the gross amount
of Eligible Accounts less returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed.
"NET AMOUNT OF ELIGIBLE CANADIAN ACCOUNTS" shall mean the
gross amount of Eligible Canadian Accounts less returns, discounts, claims,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"NET AMOUNT OF ELIGIBLE FOREIGN ACCOUNTS" shall mean the gross
amount of Eligible Foreign Accounts less returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed.
"NET ASSET SALE PROCEEDS", with respect to any Asset Sale,
means Cash payments (including any Cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) received from such Asset Sale, net of any bona fide direct
costs incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset Sale
and (ii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans) that is secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale; provided, however, that
Net Asset Sale Proceeds shall not include any cash payments received
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from any Asset Sale by a Foreign Subsidiary unless such proceeds may be
repatriated (by reason of a repayment of an intercompany note or otherwise) to
the United States without (in the reasonable judgment of Company) resulting in a
material tax liability to Holdings and its Subsidiaries taken as a whole.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments
or proceeds received by Holdings or any of its Subsidiaries (i) under any
business interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Holdings or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Holdings or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Holdings or such Subsidiary in respect thereof.
"NET SECURITIES PROCEEDS" means the cash proceeds (net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses) from the (i)
issuance of Capital Stock of or incurrence of Indebtedness by Holdings or any of
its Subsidiaries and (ii) capital contributions made by a holder of Capital
Stock of Arris other than Company or Holdings.
"NEW LENDER" has the meaning assigned to that term in
subsection 2.1A(iii).
"NEW LENDER SUPPLEMENT" has the meaning assigned to that term
in subsection 2.1A(iii).
"NON-US LENDER" has the meaning assigned to that term in
subsection 2.7B(iii)(a).
"NORTEL" means Nortel Networks Corporation, a Canadian
corporation.
"NORTEL INTEREST AMOUNT" means the interest accrued as of the
Closing Date on the Year-End 2000 Loan Amount for the 2001 Interim Period, in
accordance with the terms of the Existing Arris Credit Agreement and the
Reorganization Agreement.
"NORTEL NETWORKS" means Nortel Networks Inc., a Delaware
corporation
"NORTEL LLC" means Nortel Networks LLC, a Delaware limited
liability company.
"NORTEL TRADE OBLIGATIONS" means all accrued and unpaid trade
obligations and royalty payments owing by Arris and/or any of its Subsidiaries
to Nortel LLC and/or any of its Affiliates incurred through the Closing Date
(other than the Nortel Trade Payable).
"NORTEL TRADE PAYABLE" has the meaning assigned to such term
in subsection 7.1(x).
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"NORTEL 2001 OBLIGATIONS" means all of Arris' obligations owed
to Nortel LLC under the Existing Arris Credit Agreement incurred during the
period from January 1, 2001 to the Closing Date (other than the Nortel Interest
Amount) that are outstanding on the Closing Date.
"NOTES" means one or more of the Revolving Notes or Swing Line
Note or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit III annexed hereto.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Administrative Agent, Lenders or any of
them under the Loan Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
"OFFICER" means the president, chief executive officer, a vice
president, chief financial officer, treasurer, general partner (if an
individual), managing member (if an individual) or other individual appointed by
the Governing Body or the Organizational Documents of a corporation,
partnership, trust or limited liability company to serve in a similar capacity
as the foregoing.
"OFFICER'S CERTIFICATE", as applied to any Person that is a
corporation, partnership, trust or limited liability company, means a
certificate executed on behalf of such Person by one or more Officers of such
Person or one or more Officers of a general partner or a managing member if such
general partner or managing member is a corporation, partnership, trust or
limited liability company.
"NO-OFFSET LETTER" means an offset letter executed and
delivered by any Account Debtor, substantially in the form of Exhibit XX annexed
hereto and with such changes or in such other form as may be approved by
Administrative Agent in its reasonable discretion.
"OPERATING LEASE", as applied to any Person, means any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"ORGANIZATIONAL DOCUMENTS" means the documents (including
Bylaws, if applicable) pursuant to which a Person that is a corporation,
partnership, trust or limited liability company is organized.
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"PARTICIPANT" means a purchaser of a participation in the
rights and obligations under this Agreement pursuant to subsection 10.1C.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means any Employee Benefit Plan maintained by
Holdings, any Borrower or any of their respective Subsidiaries, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ACQUISITION" means any acquisition, whether by
purchase, merger, reorganization or any other method, by any Borrower of (x)
another Person which is engaged primarily in the same or a related line of
business as the Borrowers and their Subsidiaries or (y) any assets or other
property of another Person consisting of substantially all of the assets of a
division or line of business of such Person and which division or line of
business is primarily engaged in the same or a related line of business as
Borrowers and their Subsidiaries (any such Person, assets or other property
being an "ACQUIRED BUSINESS"); provided that any such Permitted Acquisition
shall comply with the provisions of subsection 7.3(vii).
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA, any such Lien relating to or imposed in
connection with any Environmental Claim, and any such Lien expressly prohibited
by any applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges
or claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) (A) Liens of landlords, Liens and rights of set-off
of banks, Liens of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens, in each case to the extent
imposed by law and (B) other consensual Liens of landlords, carriers
and warehousemen and Liens and rights of set-off of banks, in each case
to the extent substantially similar in scope and application to the
Liens and rights of set-off described in clause (A) above; provided,
that each such Lien or right of set off described in clause (A) and (B)
is incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of
any such amounts overdue for a period in excess of 5 days) are being
contested in good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be required
by GAAP shall have been made for any such contested amounts, and (2) in
the case of a Lien with respect to any portion of the Collateral, such
contest proceedings conclusively operate to stay the sale of any
portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of
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social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money), so long as no foreclosure, sale or similar proceedings
have been commenced with respect to any portion of the Collateral on
account thereof;
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) leases or subleases granted to third parties in
accordance with any applicable terms of the Collateral Documents and
not interfering in any material respect with the ordinary conduct of
the business of any Borrower or any Subsidiary of any Borrower or
resulting in a material diminution in the value of any Collateral as
security for the Obligations;
(vi) easements, rights-of-way, restrictions,
encroachments, and other minor defects or irregularities in title, in
each case which do not and will not interfere in any material respect
with the ordinary conduct of the business of any Borrower or any
Subsidiary of any Borrower or result in a material diminution in the
value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor
under any lease not prohibited by this Agreement, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor may
be subject to, or (c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or encumbrance referred
to in the preceding clause (b), so long as the holder of such
restriction or encumbrance agrees to recognize the rights of such
lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases not prohibited by this Agreement;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(x) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the
use of any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary
course of business of Borrowers and their Subsidiaries; and
(xii) licenses of Intellectual Property granted by any
Borrower or any Subsidiary of any Borrower in the ordinary course of
business and not interfering in any
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material respect with the ordinary conduct of the business of such
Borrower or such Subsidiary.
"PERMITTED HOLDERS" means Nortel and its Subsidiaries.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in the Security Agreement and any Foreign Pledge
Agreement.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"POWER DIVISION" means Arris International, Inc.'s network
power division.
"PREFERRED HOLDINGS STOCK" means preferred stock of Holdings
issued in connection with the Mandatory Exchange Event on the terms set forth in
the Preferred Holdings Stock Certificate of Designation.
"PREFERRED HOLDINGS STOCK CERTIFICATE OF DESIGNATIONS" means a
certificate of designations for the Preferred Holdings Stock with the terms set
forth on Exhibit 1 to the Amended and Restated Arris Membership Agreement (or
otherwise described in Section 8.03 thereof), together with such other terms, if
any, that may be agreed to by Holdings and the Arris Class B Member as are in
form and substance satisfactory to Administrative Agent, as amended,
supplemented or otherwise modified from time to time to the extent permitted
under subsection 7.12.
"PRIME RATE" means the rate that CSFB announces from time to
time as its prime lending rate, as in effect from time to time. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. CSFB or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.
"PROCEEDINGS" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration.
"PRO FORMA BASIS" means, as of any date of determination, in
connection with (i) the calculation of Consolidated EBITDA or Consolidated
Capital Expenditures for the Fiscal Quarter ending June 30, 2001 and for that
portion of the Fiscal Quarter ending September 30, 2001 that is prior to the
Closing Date, the Consolidated EBITDA or Consolidated Capital
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Expenditures for such Fiscal Quarter, after giving effect on a pro forma basis
to the Reorganization and (ii) in connection with the compliance of the
Borrowers with the financial covenants set forth in subsection 7.6 as of the
last day of the four Fiscal Quarter period most recently ended prior to such
date of determination for which the relevant financial information is available
(the "COMPLIANCE PERIOD"), after giving effect on a pro forma basis to any
Permitted Acquisitions made during such Compliance Period and any dispositions
made during such Compliance Period, other than sales of inventory in the
ordinary course of business and dispositions of obsolete equipment, in each case
on the following basis:
(i) any Indebtedness incurred or assumed by Holdings or
any of its Subsidiaries in connection with the Reorganization or such
Permitted Acquisitions, as the case may be, and any Indebtedness repaid
in connection with the Reorganization or such Permitted Acquisitions
and/or dispositions, as the case may be, shall be deemed to have been
incurred or repaid, respectively, as of April 1, 2001 in the case of
the Reorganization and as of the first day of the Compliance Period, in
the case of such Permitted Acquisitions;
(ii) if such Indebtedness incurred or assumed by Holdings
or any of its Subsidiaries in connection with the Reorganization or
such Permitted Acquisitions, as the case may be, has a floating or
formula rate, then the rate of interest for such Indebtedness for the
applicable period shall be computed as if the rate in effect for such
Indebtedness on the relevant measurement date had been the applicable
rate for the entire applicable period;
(iii) income statement items (whether positive or negative)
attributable to the property or business acquired or disposed in the
Reorganization or such Permitted Acquisitions and/or dispositions, as
the case may be, shall be included as if such acquisitions took place
on April 1, 2001, in the case of the Reorganization and as of the first
day of the Compliance Period, in the case of such Permitted
Acquisitions and/or dispositions, in each case on a pro forma basis;
and
(iv) any historical extraordinary non-recurring costs or
expenses or other verifiable costs or expenses that will not continue
after the Closing Date, in the case of the Reorganization or after the
acquisition or disposition date, in the case of such Permitted
Acquisitions, may be eliminated and other expenses and cost reductions
may be reflected on a basis consistent with Regulation S-X promulgated
by the Securities and Exchange Commission.
Such pro forma calculations shall be based on the audited or
reviewed financial results to the extent delivered in compliance with
subsection 4.1G or clause (f) of subsection 7.3(vii). All pro forma
adjustments shall be approved by the Administrative Agent.
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"PROJECTIONS" means the financial projections of Holdings and
its Subsidiaries for the period from January 1, 2001 through December 31, 2004
delivered to the Lenders prior to the Closing Date.
"PRO RATA SHARE" means for any Revolving Lender, the
percentage obtained by dividing (x) the Revolving Loan Exposure of that
Revolving Lender by (y) the aggregate Revolving Loan Exposure of all Revolving
Lenders as such percentage may be adjusted by assignments permitted pursuant to
subsection 10.1. The initial Pro Rata Share of each Revolving Lender is set
forth opposite the name of that Revolving Lender in Schedule 2.1 annexed hereto.
"PTO" means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or, in the
opinion of Administrative Agent, desirable in order to create or perfect Liens
on any IP Collateral.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of any
Borrower or any Subsidiary Guarantor incurred in connection with the purchase of
assets or other property for the business of such Borrower or Subsidiary
Guarantor; provided that (x) the recourse of the lenders with respect to such
Indebtedness is limited solely to such Borrower or Subsidiary Guarantor, as the
case may be, (y) the only Lien granted by such Borrower or Subsidiary Guarantor,
as the case may be, securing such Indebtedness is on the assets or other
property so purchased (and the proceeds of such assets or other property) and
(z) such Indebtedness is without recourse to any other Loan Party.
"REAL PROPERTY ASSET" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"REFUNDED SWING LINE LOAN" has the meaning assigned to that
term in subsection 2.1A(ii)(b).
"REGISTER" has the meaning assigned to that term in subsection
2.1D.
"REGISTRATION STATEMENT" means that certain S-4 Form
Registration Statement filed by Holdings with the SEC on May 23, 2001, as
amended by Amendment No. 1 to Registration Statement filed with the SEC on June
8, 2001 and by Amendment No. 2 to Registration Statement filed with the SEC on
July 2, 2001 and as further amended, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REGULATORY SHARES" means, with respect to any Person, shares
of such Person required to be issued as qualifying shares to directors or
persons similarly situated or shares issued to Persons other than Holdings or a
Wholly-Owned Subsidiary of Holdings in response to
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regulatory requirements of foreign jurisdictions pursuant to a resolution of the
Board of Directors of such Person, so long as such shares do not exceed one
percent of the total outstanding shares of equity of such Person and any owners
of such shares irrevocably covenant with Company to remit to Company or waive
any dividends or distributions paid or payable in respect of such shares.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.
"REORGANIZATION" means the transactions contemplated to occur
by the Reorganization Agreement.
"REORGANIZATION AGREEMENT" means that certain Agreement and
Plan of Reorganization dated as of October 18, 2000, by and among Company,
Holdings, Transition, Nortel LLC, Nortel Networks and Arris, as amended as of
April 9, 2001 and as of August 3, 2001 and as further amended, supplemented or
otherwise modified from time to time to the extent permitted under subsection
7.12.
"REORGANIZATION DOCUMENTS" means the Reorganization Agreement,
Amended and Restated Arris Membership Agreement, Registration Statement,
Subordinated Reorganization Guaranty, the Preferred Holdings Stock Certificate
of Designation, any note or other instrument issued in connection with the
Subordinated Holdings Indebtedness and all other instruments or documents
delivered or entered into pursuant to any of the foregoing, as such
Reorganization Documents may be amended, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12.
"REQUEST FOR ISSUANCE" means a request substantially in the
form of Exhibit IV annexed hereto.
"REQUISITE LENDERS" means Revolving Lenders having or holding
more than 50% of the aggregate Revolving Loan Exposure of all Revolving Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of any Borrower or Holdings now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that class,
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of any Borrower or Holdings now or hereafter outstanding, (iii) any
payment made to retire, or to
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obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of any Borrower or Holdings now or
hereafter outstanding, and (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness.
"REVOLVING DISCRETIONARY LOANS" means any Revolving Loans that
are made to repay any Refunded Swing Line Loan that is a Discretionary Loan in
accordance with subsection 2.1A(ii)(b).
"REVOLVING DISCRETIONARY OVERDRAFT LOANS" means Revolving
Discretionary Loans made to repay any Discretionary Overdraft Loan.
"REVOLVING DISCRETIONARY POST-DEFAULT LOANS" means Revolving
Discretionary Loans made to repay any Discretionary Post-Default Loan.
"REVOLVING DISCRETIONARY POST-DEFAULT OVERDRAFT LOANS" means
Revolving Discretionary Loans made to repay any Discretionary Post-Default
Overdraft Loan.
"REVOLVING LENDER" means a Lender that has a Revolving Loan
Commitment and/or that has an outstanding Revolving Loan.
"REVOLVING LOAN COMMITMENT" means the commitment of a
Revolving Lender to make Revolving Loans to Borrowers, on a joint and several
basis, pursuant to subsection 2.1A(i), and "REVOLVING LOAN COMMITMENTS" means
such commitments of all Revolving Lenders in the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means August 3,
2004; provided, however, that if the Indebtedness evidenced by the Convertible
Subordinated Notes has not been fully refinanced or converted into shares of
Holdings common stock prior to December 31, 2002, in each case on terms and
conditions satisfactory to Requisite Lenders in their sole discretion, the
Revolving Loan Commitment Termination Date shall be December 31, 2002.
"REVOLVING LOAN EXPOSURE", with respect to any Revolving
Lender, means, as of any date of determination (i) prior to the termination of
the Revolving Loan Commitments, that Revolving Lender's Revolving Loan
Commitment, and (ii) after the termination of the Revolving Loan Commitments,
the sum of (a) the aggregate outstanding principal amount of the Revolving Loans
of that Revolving Lender plus (b) in the case of Administrative Agent, the
aggregate Letter of Credit Usage in respect of all Letter of Credit Guaranties
(in each case net of any participations purchased by other Revolving Lenders in
such Letter of Credit Guaranties or in any unreimbursed payments thereunder)
plus (c) the aggregate amount of all participations purchased by that Revolving
Lender in any Letter of Credit Guaranties or any unreimbursed payment under any
Letter of Credit Guaranties plus (d) in the case of Swing Line Lender, the
aggregate outstanding principal amount of all Swing Line Loans (net of any
assignments thereof
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purchased by other Revolving Lenders) plus (e) the aggregate amount of all
assignments purchased by that Revolving Lender in any outstanding Swing Line
Loans.
"REVOLVING LOAN INCREASE PERIOD" means the period from (i) the
Closing Date to (ii) the earlier of (x) the second anniversary of the Closing
Date and (y) the Revolving Loan Commitment Termination Date.
"REVOLVING LOANS" means the Loans made by Revolving Lenders to
Borrowers, on a joint and several basis, pursuant to subsection 2.1A(i).
"REVOLVING NOTES" means (i) the promissory notes of Borrowers
issued pursuant to subsection 2.1E on the Closing Date and (ii) any promissory
notes issued by Borrowers pursuant to the second to the last sentence of
subsection 10.1B(i) in connection with assignments of the Revolving Loan
Commitments and Revolving Loans of any Revolving Lenders, in each case
substantially in the form of Exhibit V annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"S&P" means Standard & Poor's Ratings Services.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SECURITY AGREEMENT" means the Security Agreement executed and
delivered on the Closing Date, substantially in the form of Exhibit XIII annexed
hereto, as such Security Agreement may thereafter be amended, supplemented or
otherwise modified from time to time.
"SOLVENT", with respect to any Person, means that as of the
date of determination both (i)(a) the then fair saleable value of the property
of such Person is (1) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (2) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and due considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such Person is
"solvent" within the
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meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) Indebtedness of
any Borrower or of any Subsidiary of any Borrower in respect of industrial
revenue or development bonds or financings, (ii) workers' compensation
liabilities of any Borrower or any Subsidiary of any Borrower, (iii) the
obligations of third party insurers of any Borrower or any Subsidiary of any
Borrower arising by virtue of the laws of any jurisdiction requiring third party
insurers, (iv) obligations with respect to Capital Leases or Operating Leases of
any Borrower or any Subsidiary of any Borrower, and (v) performance, payment,
deposit or surety obligations of any Borrower or any Subsidiary of any Borrower,
in any case if required by law or governmental rule or regulation or in
accordance with custom and practice in the industry.
"STRATEGIS ASSESSMENT" means the assessment of the technology
risk of Holdings and its Subsidiaries conducted by The Strategis Consulting
Group, Inc. and delivered to the Agents prior to the Closing Date, in form and
substance satisfactory to the Agents, as such assessment may be updated by The
Strategis Consulting Group, Inc. or such other independent third party
consultant as selected by Agents in their sole discretion from time to time in
accordance with subsection 6.12.
"SUBORDINATED HOLDINGS GUARANTY" means a guaranty by Holdings
entered into after the Closing Date of the obligations of the Company under the
Convertible Subordinated Note Indenture and Convertible Subordinated Notes, in
form and substance satisfactory to Administrative Agent, as such guaranty is
amended, supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12.
"SUBORDINATED HOLDINGS INDEBTEDNESS" means Indebtedness, if
any, issued by Holdings in connection with the Mandatory Exchange Event
evidenced by a note or notes in the form and with the terms set forth in Exhibit
2 to the Amended and Restated Arris Membership Agreement (or otherwise described
in Section 8.03 thereof) together with such other terms, if any, that may be
agreed to by Holdings and the Arris Class B Member as are in form and substance
satisfactory to Administrative Agent, as amended, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.12.
"SUBORDINATED INDEBTEDNESS" means (i) the Convertible
Subordinated Notes, (ii) any Indebtedness incurred in accordance with subsection
7.1(ix) to refinance the Convertible Subordinated Notes, (iii) any Subordinated
Holdings Indebtedness and (iv) any Indebtedness of any Borrower incurred from
time to time and subordinated in right of payment to the Obligations.
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"SUBORDINATED REORGANIZATION GUARANTY" means that certain
Subordinated Guaranty dated as of the Closing Date, by Holdings issued for the
benefit of Nortel LLC, as amended, supplemented or otherwise modified from time
to time to the extent permitted under subsection 7.12.
"SUBSIDIARY" with respect to any Person, means any
corporation, partnership, trust, limited liability company, association, Joint
Venture or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled (without regard
to the occurrence of any contingency) to vote in the election of the members of
the Governing Body is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"SUBSIDIARY GUARANTOR" means Antec International, Texscan de
Mexico, S.A. de C.V., Keptel de Mexico, S.A. de C.V. and any Domestic Subsidiary
or Mexican Subsidiary of any Borrower that is a Material Subsidiary that
executes and delivers a counterpart of the Subsidiary Guaranty after the Closing
Date pursuant to subsection 6.8 or 6.13.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed
and delivered by the Subsidiary Guarantors on the Closing Date and by any Person
that becomes a Subsidiary Guarantor from time to time after the Closing Date in
accordance with subsection 6.8, substantially in the form of Exhibit XII-A
annexed hereto, as such Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time.
"SUPERMAJORITY REQUISITE LENDERS" means Revolving Lenders
having or holding at least 75% of the aggregate Revolving Loan Exposure of all
Revolving Lenders.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to
that term in subsection 9.1B.
"SWING LINE LENDER" means CIT, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing
Line Lender to make Swing Line Loans to Borrowers, on a joint and several basis,
pursuant to subsection 2.1A(ii).
"SWING LINE LOANS" means the Loans made by Swing Line Lender
to Borrowers, on a joint and several basis, pursuant to subsection 2.1A(ii).
"SWING LINE LOAN REFUND DATE" has the meaning assigned to that
term in subsection 2.1A(ii)(b).
"SWING LINE NOTE" means (i) the promissory note of Borrowers
issued pursuant to subsection 2.1E on the Closing Date and (ii) any promissory
note issued by Borrowers to any successor Administrative Agent and Swing Line
Lender pursuant to the last sentence of
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subsection 9.5B, in each case substantially in the form of Exhibit VI annexed
hereto, as it may be amended, supplemented or otherwise modified from time to
time.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed, including interest, penalties, additions to tax and any
similar liabilities with respect thereto; except that, in the case of a Lender,
there shall be excluded taxes that are imposed on the overall net income or net
profits (including franchise taxes imposed in lieu thereof) by the United States
or by any other Government Authority under the laws of which the Lender is
organized or has its principal office or maintains its applicable lending
office.
"TAX ABATEMENT TRANSACTION" means the revenue bond financing
arrangement entered into by Company and the Development Authority of Fulton
County pursuant to the Tax Abatement Transaction Documents.
"TAX ABATEMENT TRANSACTION DOCUMENTS" means the documents set
forth in Schedule 1.1 and any other documents, instruments or agreements
delivered pursuant to such documents, as amended, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.12.
"TITLE COMPANY" means, collectively, Commonwealth Land Title
Insurance Company and/or one or more other title insurance companies reasonably
satisfactory to Administrative Agent.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans plus (ii) the aggregate principal amount of all
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
"TRANSACTION COSTS" means the fees, costs and expenses payable
by Holdings and its Subsidiaries on or before the Closing Date in connection
with the transactions contemplated hereby and by the Reorganization Agreement.
"TRANSITION" means Broadband Transition Corporation, a
Delaware corporation.
"2001 INTERIM PERIOD" has the meaning assigned to that term in
the Reorganization Agreement.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of any Person,
all of the outstanding capital stock or other ownership interests of which
(other than Regulatory Shares)
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are owned by such Person or by one or more Wholly-Owned Subsidiaries of such
Persons or, collectively, by such Person and one or more of its Wholly-Owned
Subsidiaries.
"YEAR-END 2000 LOAN AMOUNT" has the meaning assigned to that
term in the Reorganization Agreement.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF
CALCULATIONS UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Borrowers to Lenders pursuant to clauses (ii), (iii)
and (xii) of subsection 6.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)) except that interim
financial statements need not include footnotes except to the extent required by
the SEC with respect to interim financial statements filed with it. Calculations
in connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP as in effect on the date of determination, applied
in a manner consistent with that used in preparing the financial statements
referred to in subsection 5.3. If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and Borrowers, Administrative Agent or Requisite Lenders shall so
request, Administrative Agent, Lenders and Borrowers shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of Requisite Lenders),
provided that, until so amended, such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and Borrowers
shall provide to Administrative Agent and Lenders reconciliation statements
provided for in subsection 6.1(v).
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference.
B. References to "Sections" and "subsections" shall be
to Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.
C. The use in any of the Loan Documents of the word
"include" or "including", when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
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SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of
this Agreement and in reliance upon the joint and several representations and
warranties of Borrowers herein set forth, each Revolving Lender hereby severally
agrees to make the Loans as described in subsection 2.1A(i) and Swing Line
Lender hereby agrees to make the Swing Line Loans as described in subsection
2.1A(ii).
(i) Revolving Loans. Each Revolving Lender severally
agrees, subject to the limitations set forth below with respect to the
maximum amount of Revolving Loans permitted to be outstanding from time
to time, to lend to Borrowers, on a joint and several basis, from time
to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate amount of the Revolving
Loan Commitments to be used for the purposes identified in subsection
2.5. The original amount of each Revolving Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate original amount of the Revolving Loan
Commitments is $175,000,000; provided that the Revolving Loan
Commitments of Revolving Lenders shall be adjusted to give effect to
any assignments of the Revolving Loan Commitments pursuant to
subsection 10.1B, shall be increased from time to time by the amount of
any increase thereto pursuant to subsection 2.1A(iii), and shall be
reduced from time to time by the amount of any reductions thereto made
pursuant to subsection 2.4. Each Revolving Lender's Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination
Date and all Revolving Loans and all other amounts owed hereunder with
respect to the Revolving Loans and the Revolving Loan Commitments shall
be paid in full no later than that date; provided that each Revolving
Lender's Revolving Loan Commitment shall expire immediately and without
further action on August 17, 2001 if the initial Revolving Loans are
not made on or before that date. Amounts borrowed under this subsection
2.1A(i) may be repaid and reborrowed to but excluding the Revolving
Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the
Revolving Loan Commitments then in effect.
In addition, no Revolving Loans (other than Revolving
Discretionary Loans) shall be made at any time if the Total Utilization
of Revolving Loan Commitments at any time exceeds the Borrowing Base
then in effect.
(ii) Swing Line Loans.
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(a) General Provisions. Swing Line Lender hereby
agrees, subject to the limitations set forth below with
respect to the maximum amount of Swing Line Loans permitted to
be outstanding from time to time, to make a portion of the
Revolving Loan Commitments available to Borrowers, on a joint
and several basis, from time to time during the period from
the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to
Borrowers in an aggregate amount not exceeding the amount of
the Swing Line Loan Commitment to be used for the purposes
identified in subsection 2.5B, notwithstanding the fact that
such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's
Pro Rata Share of the Letter of Credit Usage then in effect,
may exceed Swing Line Lender's Revolving Loan Commitment. The
original amount of the Swing Line Loan Commitment is
$15,000,000; provided that any reduction of the Revolving Loan
Commitments made pursuant to subsection 2.4 that reduces the
aggregate Revolving Loan Commitments to an amount less than
the then current amount of the Swing Line Loan Commitment
shall result in an automatic corresponding reduction of the
Swing Line Loan Commitment to the amount of the Revolving Loan
Commitments, as so reduced, without any further action on the
part of any Borrower, Administrative Agent or Swing Line
Lender. The Swing Line Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Swing Line
Loans and all other amounts owed hereunder with respect to the
Swing Line Loans shall be paid in full no later than that
date; provided that the Swing Line Loan Commitment shall
expire immediately and without further action on August 17,
2001 if the initial Revolving Loans are not made on or before
that date. Amounts borrowed under this subsection 2.1A(ii) may
be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan
Commitment shall be subject to the limitation, that in no
event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the lesser of (i) the Revolving
Loan Commitments then in effect and (ii) the Borrowing Base
then in effect (other than Discretionary Loans made in
accordance with the following paragraph).
Without limiting any of the foregoing, Borrowers and
Lenders acknowledge and agree that Swing Line Lender may, in
its sole discretion and without any obligation to do so:
(1) make Swing Line Loans from time to time
in an amount sufficient to pay to Administrative
Agent and Lenders any principal, interest, fees and
expenses required to be paid hereunder or under any
other Loan Document by any Loan Party which are not
paid when due; provided that Borrowers shall be
deemed to have submitted an appropriate
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Notice of Borrowing therefor and the proceeds of such
Swing Line Loan shall not be advanced to Borrowers
but shall be applied directly by Administrative Agent
(i) in the case of any interest or fees, in
accordance with the terms of this Agreement and the
other Loan Documents and (ii) in the case of any
expenses, to reimburse any Agent or Lender for any
expenses documented by a written invoice previously
submitted to the Borrowers and Administrative Agent
and in form and substance satisfactory to
Administrative Agent;
(2) at any time that (A) the Total
Utilization of Revolving Loan Commitments exceeds the
Borrowing Base and/or (B) an Event of Default or
Potential Event of Default shall have occurred and be
continuing, upon the request of Borrowers, make Swing
Line Loans (any such Swing Line Loan a "DISCRETIONARY
LOAN"), so long as (i) Requisite Lenders have not
given notice to Swing Line Lender instructing Swing
Line Lender not to make Swing Line Loans hereunder
and (ii) the making of any such Discretionary Loan
would not cause the aggregate outstanding principal
amount of Discretionary Loans and Revolving
Discretionary Loans to exceed the Maximum
Discretionary Amount in effect at such time;
provided, however, that Swing Line Lender shall not
make more than three Swing Line Loans that are
Discretionary Overdraft Loans in any Fiscal Year;
provided, further, that anything contained in this
Agreement to the contrary notwithstanding, the making
of any Swing Line Loans that constitute Discretionary
Loans shall be subject to the limitation that in no
event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the lesser of (i) the
Maximum Discretionary Borrowing Base Amount and (ii)
the Revolving Loan Commitments then in effect.
Anything to the contrary in this Agreement and the other Loan
Documents notwithstanding, Swing Line Loans (including,
without limitation, Discretionary Loans) made pursuant to the
preceding clause (1) or (2) shall constitute Swing Line Loans
for all purposes hereunder, including, without limitation, for
purposes of the making of Refunded Swing Line Loans and the
purchase of participations therein by Lenders in accordance
with the terms hereof.
(b) Swing Line Loan Prepayment with Proceeds of
Revolving Loans. With respect to any Swing Line Loans that
have not been voluntarily prepaid by Borrowers pursuant to
subsection 2.4A(i), Swing Line Lender shall, no later than
12:00 noon (New York city time) on the date that is (5)
Business Days after the date that any Swing Line Loan is made
(the "SWING LINE LOAN REFUND DATE"), direct Administrative
Agent to request Revolving Lenders to make Revolving Loans
that are Base Rate Loans on or prior to such Swing Line Loan
Refund Date in an amount equal to the amount of such Swing
Line Loan (the "REFUNDED SWING LINE LOAN"). Each Borrower
hereby authorizes the giving of any such
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notice and the making of any such Revolving Loans on a joint
and several basis. Anything contained in this Agreement to the
contrary notwithstanding, (1) the proceeds of such Revolving
Loans made by Revolving Lenders other than Swing Line Lender
shall be immediately delivered by Administrative Agent to
Swing Line Lender (and not to Borrowers) and applied to repay
a corresponding portion of the Refunded Swing Line Loan and
(2) on the day such Revolving Loans are made, Swing Line
Lender's Pro Rata Share of the Refunded Swing Line Loan shall
be deemed to be paid with the proceeds of a Revolving Loan
made by Swing Line Lender, and such portion of the Swing Line
Loan deemed to be so paid shall no longer be outstanding as a
Swing Line Loan and shall no longer be due under the Swing
Line Note of Swing Line Lender but shall instead constitute
part of Swing Line Lender's outstanding Revolving Loans and
shall be due under the Revolving Note of Swing Line Lender.
Each Borrower hereby authorizes Administrative Agent and Swing
Line Lender to charge such Borrower's accounts with
Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay
Swing Line Lender the amount of the Refunded Swing Line Loan
to the extent the proceeds of such Revolving Loans made by
Revolving Lenders, including the Revolving Loan deemed to be
made by Swing Line Lender, are not sufficient to repay in full
the Refunded Swing Line Loan. If any portion of any such
amount paid (or deemed to be paid) to Swing Line Lender should
be recovered by or on behalf of any Borrower from Swing Line
Lender in any bankruptcy proceeding, in any assignment for the
benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Revolving Lenders
in the manner contemplated by subsection 10.5.
(c) Swing Line Loan Assignments. If for any reason
(1) Revolving Loans are not made upon the request of Swing
Line Lender as provided in the immediately preceding paragraph
in an amount sufficient to repay any amounts owed to Swing
Line Lender in respect of any outstanding Swing Line Loans or
(2) the Revolving Loan Commitments are terminated at a time
when any Swing Line Loans are outstanding, each Revolving
Lender shall be deemed to, and hereby agrees to, have
purchased an assignment of such outstanding Swing Line Loans
in an amount equal to its Pro Rata Share (calculated, in the
case of the foregoing clause (2), immediately prior to such
termination of the Revolving Loan Commitments) of the unpaid
amount of such Swing Line Loans together with accrued interest
thereon. Upon one Business Day's notice from Swing Line
Lender, each Revolving Lender shall deliver to Swing Line
Lender an amount equal to its respective assignment in same
day funds at the Funding and Payment Office. In order to
further evidence such assignment (and without prejudice to the
effectiveness of the assignment provisions set forth above),
each Revolving Lender agrees to enter into an Assignment
Agreement at the request of Swing Line Lender in form and
substance reasonably satisfactory to Swing Line Lender.
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In the event any Revolving Lender fails to make available to
Swing Line Lender the amount of such Revolving Lender's
assignment as provided in this paragraph, Swing Line Lender
shall be entitled to recover such amount on demand from such
Revolving Lender together with interest thereon at the rate
customarily used by Swing Line Lender for the correction of
errors among banks for three Business Days and thereafter at
the Base Rate. In the event Swing Line Lender receives a
payment of any amount in which other Revolving Lenders have
purchased assignments as provided in this paragraph, Swing
Line Lender shall promptly distribute to each such other
Revolving Lender its Pro Rata Share of such payment.
(d) Revolving Lenders' Obligations. Anything
contained herein to the contrary notwithstanding, each
Revolving Lender's obligation to make Revolving Loans for the
purpose of repaying any Refunded Swing Line Loans pursuant to
subsection 2.1A(ii)(b) and each Revolving Lender's obligation
to purchase an assignment of any unpaid Swing Line Loans
pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any
circumstance, including (1) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Lender
may have against Swing Line Lender, any Borrower or any other
Person for any reason whatsoever; (2) the occurrence or
continuation of an Event of Default or a Potential Event of
Default; (3) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of Holdings, any Borrower or any Subsidiary of any
Borrower; (4) any breach of this Agreement or any other Loan
Document by any party thereto; or (5) any other circumstance,
happening or event whatsoever, whether or not similar to any
of the foregoing; provided that such obligations of each
Revolving Lender are subject to the condition that (x) Swing
Line Lender believed in good faith that all conditions under
Section 4 to the making of the applicable Refunded Swing Line
Loans or other unpaid Swing Line Loans, as the case may be,
were satisfied at the time such Refunded Swing Line Loans or
unpaid Swing Line Loans were made or (y) the satisfaction of
any such condition not satisfied had been waived in accordance
with subsection 10.6 prior to or at the time such Refunded
Swing Line Loans or other unpaid Swing Line Loans were made.
(iii) Increases of the Revolving Loan Commitments. With the
written consent of Syndication Agent and Administrative Agent,
Borrowers may request in writing at any time during the Revolving Loan
Increase Period that the then effective aggregate principal amount of
Revolving Loan Commitments be increased; provided that (1) the
aggregate principal amount of the increase in Revolving Loan
Commitments pursuant to this subsection 2.1A(iii) shall not exceed $25
million, (2) Borrowers may not make more than one request for such
increase in Revolving Loan Commitments, (3) no Event of Default or
Potential Event of Default shall have occurred and be continuing or
shall occur as a result of such increase in Revolving Loan Commitments,
(4) prior to the date
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of such increase, each Lender shall have received written notice from
the Administrative Agent of the aggregate principal amount of such
increase and (5) Borrowers shall, and shall cause their Subsidiaries
to, execute and deliver such documents and instruments and take such
other actions (including, without limitation, obtaining appropriate
endorsements to title insurance policies) as may be reasonably
requested by Syndication Agent in connection with such increase. Any
request under this subsection 2.1A(iii) shall be submitted by Borrowers
to Syndication Agent and Administrative Agent (and Administrative Agent
shall forward copies to Revolving Lenders), specify the proposed
effective date and amount of such increase and be accompanied by an
Officer's Certificate of Company stating that no Event of Default or
Potential Event of Default exists or will occur as a result of such
increase. Borrowers may also specify any fees offered to those
Revolving Lenders (the "INCREASING LENDERS") which agree to increase
the principal amount of their Revolving Loan Commitments, which fees
may be variable based upon the amount by which any such Revolving
Lender is willing to increase the principal amount of its Revolving
Loan Commitment. No Revolving Lender shall have any obligation, express
or implied, to offer to increase the aggregate principal amount of its
Revolving Loan Commitment. Only the consent of each Increasing Lender,
Syndication Agent and Administrative Agent shall be required for an
increase in the aggregate principal amount of Revolving Loan
Commitments pursuant to this subsection 2.1A(iii). No Revolving Lender
which elects not to increase the principal amount of its Revolving Loan
Commitment may be replaced in respect of its existing Revolving Loan
Commitment as a result thereof without such Revolving Lender's consent.
Each Revolving Lender that desires to increase its Revolving
Loan Commitment (each a "RESPONDING LENDER") shall as soon as
practicable specify the amount of the proposed increase which it is
willing to assume. If the total amount that Responding Lenders are
willing to increase their Revolving Loan Commitments by exceeds the
amount of the requested increase, Syndication Agent shall allocate the
proposed increase among the Responding Lenders. If the total amount
that the Responding Lenders are willing to increase their Revolving
Commitment by is less than the amount of the proposed increase,
Borrowers may designate new lenders who qualify as Eligible Assignees
and which are reasonably acceptable to Syndication Agent and
Administrative Agent as additional Lenders hereunder in accordance with
this subsection 2.1A(iii) (each such new lender being a "NEW LENDER"),
which New Lender may assume all or a portion of the increase in the
aggregate principal amount of the Revolving Loan Commitments.
Each New Lender designated by Borrowers and reasonably
acceptable to Syndication Agent and Administrative Agent shall become
an additional party hereto as a New Lender concurrently with the
effectiveness of the proposed increase in the aggregate principal
amount of the Revolving Loan Commitment, upon its execution of New
Lender Supplement in the form of Exhibit XVIII (and, in each case,
otherwise in form and substance reasonably satisfactory to Syndication
Agent and Administrative Agent) (THE "NEW LENDER SUPPLEMENT").
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Subject to the foregoing, any increase requested by Borrowers
shall be effective as of the date proposed by Borrowers and shall be in
the principal amount equal to (i) the principal amount which Increasing
Lenders are willing to assume as increases to the principal amount of
their Revolving Loan Commitment, plus (ii) the principal amount offered
by New Lenders with respect to Revolving Loan Commitments. Upon
effectiveness of any such increase, the Pro Rata Share of each
Revolving Lender will be adjusted to give effect to the increase in
Revolving Loan Commitments, Syndication Agent shall distribute to
Lenders a revised Schedule 2.1 reflecting the Revolving Loan Commitment
and Pro Rata Share of each Lender after giving effect to such increase.
To the extent that the adjustment of Pro Rata Shares results in loss or
expenses to any Lender as a result of the prepayment of any Eurodollar
Rate Loan on a date other than the scheduled last day of the applicable
Interest Period, Borrowers shall be jointly and severally responsible
for such loss or expense pursuant to subsection 2.6D.
B. BORROWING MECHANICS. Revolving Loans made on any
Funding Date (other than Swing Line Loans or Revolving Loans made pursuant to
subsection 2.1A(ii) or 3.3B) shall be in an aggregate minimum amount of $250,000
and multiples of $250,000 in excess of that amount; provided that Revolving
Loans made on any Funding Date as Eurodollar Rate Loans with a particular
Interest Period shall be in an aggregate minimum amount of $1,000,000 and
multiples of $500,000 in excess of that amount. There shall be no aggregate
minimum or multiple amount for Swing Line Loans made on any Funding Date.
Whenever any Borrower desires that Revolving Lenders make Revolving Loans it
shall deliver to Administrative Agent a Notice of Borrowing no later than 12:00
Noon (New York City time) at least three Business Days in advance of the
proposed Funding Date (in the case of a Eurodollar Rate Loan) or on the proposed
Funding Date (in the case of a Base Rate Loan). Whenever any Borrower desires
that Swing Line Lender make a Swing Line Loan, it shall deliver to
Administrative Agent a Notice of Borrowing signed by an officer of such Borrower
and the chief financial officer of Company no later than 12:00 Noon (New York
City time) on the proposed Funding Date. Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided
in subsection 2.2D. In lieu of delivering a Notice of Borrowing, any Borrower
may give Administrative Agent telephonic notice by the required time of any
proposed borrowing under this subsection 2.1B; provided that such notice shall
be promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any
liability to any Borrower in acting upon any telephonic notice referred to above
that Administrative Agent believes in good faith to have been given by an
Officer or other person authorized to borrow on behalf of any Borrower or for
otherwise acting in good faith under this subsection 2.1B or under subsection
2.2D, and upon funding of Loans by Lenders, and upon conversion or continuation
of the applicable basis for determining the interest rate with respect to any
Loans pursuant to subsection 2.2D, in each case in accordance with this
Agreement, pursuant to any such telephonic notice of any Borrower shall have
effected Loans or a conversion or continuation, as the case may be, hereunder.
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Company and/or the applicable Borrower shall notify
Administrative Agent prior to the funding of any Loans in the event that any of
the matters to which such Borrower or Company is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by any Borrower of the proceeds of
any Loans shall constitute a re-certification by such Borrower and Company, as
of the applicable Funding Date, as to the matters to which such Borrower and
Company are required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for, or a Notice of Conversion/Continuation for
conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice
in lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrowers shall be bound either to make a borrowing or
to effect a conversion or continuation in accordance therewith or to pay
compensation to the Lenders pursuant to subsection 2.6D.
Notwithstanding the foregoing provisions of this subsection
2.1B, no Eurodollar Rate Loans may be made and no Base Rate Loan may be
converted into a Eurodollar Rate Loan until the earlier of the fourteenth day
after the Closing Date and the date specified by Syndication Agent to Borrowers
on which the primary syndication of the Loans has been completed.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this
Agreement shall be made by Revolving Lenders simultaneously and proportionately
to their respective Pro Rata Shares, it being understood that neither any Agent
nor any Lender shall be responsible for any default by any other Lender in that
other Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender to make the particular type of Loan requested be
increased or decreased as a result of a default by any other Lender in that
other Lender's obligation to make a Loan requested hereunder. Promptly after
receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection
2.1B (or telephonic notice in lieu thereof), Administrative Agent shall notify
each Revolving Lender or Swing Line Lender, as the case may be, of the proposed
borrowing. Each such Revolving Lender shall make the amount of its Revolving
Loan available to Administrative Agent not later than 2:00 P.M. (New York City
time) on the applicable Funding Date, and Swing Line Lender shall make the
amount of its Swing Line Loan available to Administrative Agent not later than
2:00 P.M. (New York City time) on the applicable Funding Date, in each case in
same day funds in Dollars, at the Funding and Payment Office. Except as provided
in (i) subsection 2.1A(ii) or subsection 3.3B with respect to Revolving Loans
used to repay Refunded Swing Line Loans or Swing Line Loans or Revolving Loans
used to reimburse any Administrative Agent for the amount of any payment under
any Letter of Credit Guaranty or (ii) subsection 2.1A(ii)(a) with respect to
Swing Line Loans used to pay interest, fees or other expenses that are due and
payable under this Agreement or any other Loan Documents and have not been paid
by the Borrowers or any other Loan Party, upon satisfaction or waiver of the
conditions precedent specified in subsections 4.1 (in the case of Loans made on
the Closing Date) and 4.2 (in the case of all Loans), Administrative Agent shall
make the proceeds of such Loans available to the applicable
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Borrower on the applicable Funding Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Loans received by Administrative
Agent from Lenders to be credited to the account of the applicable Borrower at
the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any
Lender prior to a Funding Date for any Loans that such Lender does not intend to
make available to Administrative Agent the amount of such Lender's Loan
requested on such Funding Date, Administrative Agent may assume that such Lender
has made such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to the applicable Borrower a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Administrative Agent's demand therefor, Administrative
Agent shall promptly notify Borrowers and Borrowers shall promptly pay such
corresponding amount to Administrative Agent together with interest thereon, for
each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Borrowers may have against any Lender as a result of any default by
such Lender hereunder.
D. THE REGISTER.
Administrative Agent, acting for these purposes solely as an
agent of Borrowers (it being acknowledged that Administrative Agent, in such
capacity, and its officers, directors, employees, agent and affiliates shall
constitute Indemnitees under subsection 10.3), shall maintain (and make
available for inspection by Borrowers and Lenders upon reasonable prior notice
at reasonable times) at its address referred to in subsection 10.9 a register
for the recordation of, and shall record, the names and addresses of Lenders and
the Revolving Loan Commitment, Swing Line Loan Commitment, Revolving Loans and
Swing Line Loans of each Lender from time to time (the "REGISTER"). Borrowers,
Administrative Agent and Lenders shall deem and treat the Persons listed as
Lenders in the Register as the holders and owners of the corresponding
Commitments and Loans listed therein for all purposes hereof; all amounts owed
with respect to any Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof; and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and binding
on any subsequent holder, assignee or transferee of the corresponding
Commitments or Loans. Each Lender shall record on its internal records the
amount of its Loans and Commitments and each payment in respect hereof, and any
such recordation shall be conclusive and binding on Borrowers, absent manifest
error, subject to the entries in the Register, which shall, absent manifest
error, govern in the event of any
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inconsistency with any Lender's records. Failure to make any recordation in the
Register or in any Lender's records, or any error in such recordation, shall not
affect any Loans or Commitments or any Obligations in respect of any Loans.
E. NOTES. Borrowers shall execute and deliver on the
Closing Date (i) to Revolving Lenders (or to Administrative Agent for Revolving
Lenders) a Revolving Note substantially in the form of Exhibit V annexed hereto
to evidence each Revolving Lender's Revolving Loans, in the principal amount of
that Revolving Lender's Revolving Loan Commitment and with other appropriate
insertions, and (ii) to Swing Line Lender (or to Administrative Agent for Swing
Line Lender) a Swing Line Note substantially in the form of Exhibit VI annexed
hereto to evidence Swing Line Lender's Swing Line Loans, in the principal amount
of the Swing Line receipt of such notice) a promissory note or promissory notes
to evidence such Lender's Revolving Loans or Swing Line Loans, substantially in
the form of Exhibit V or Exhibit VI annexed hereto, respectively, with
appropriate insertions.
Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent as provided in subsection 10.1B(ii). Any request, authority
or consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, assignee or transferee of that Note or of
any Note or Notes issued in exchange therefor.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of
subsections 2.6 and 2.7, each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Eurodollar Rate. Subject to the provisions of subsection 2.7, each Swing
Line Loan shall bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Revolving Loan shall be selected by
Company and the applicable Borrower initially at the time a Notice of Borrowing
is given with respect to such Loan pursuant to subsection 2.1B (subject to the
last sentence of subsection 2.1B), and the basis for determining the interest
rate with respect to any Revolving Loan may be changed from time to time
pursuant to subsection 2.2D (subject to the last sentence of subsection 2.1B).
If on any day a Revolving Loan is outstanding with respect to which notice has
not been delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate.
(i) Subject to the provisions of subsections 2.2E, 2.2G
and 2.7, the Loans shall bear interest through maturity as follows:
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(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Base Rate Margin set forth in the table below
opposite the Average Excess Availability for the most recently
ended Fiscal Quarter; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Eurodollar Rate plus the Eurodollar Rate Margin set forth in
the table below opposite the Average Excess Availability for
the most recently ended Fiscal Quarter:
- -------------------------------------------------------------------------------------------------------------------
Average Excess Eurodollar Rate Base
Availability Margin Rate Margin
- -------------------------------------------------------------------------------------------------------------------
Greater than $150,000,000 2.75% 1.50%
or equal to
- -------------------------------------------------------------------------------------------------------------------
Greater than or equal to but $100,000,000 3.00% 1.75%
less than $150,000,000
- -------------------------------------------------------------------------------------------------------------------
Greater than or equal to but $ 50,000,000 3.25% 2.00%
less than $100,000,000
- -------------------------------------------------------------------------------------------------------------------
Less than $ 50,000,000 3.50% 2.25%
- -------------------------------------------------------------------------------------------------------------------
provided that, for the first three months after the Closing Date, the
applicable margin for Revolving Loans that are Eurodollar Rate Loans
shall be 3.25% per annum and for Revolving Loans that are Base Rate
Loans shall be 2.00% per annum; provided, further that the Eurodollar
Margins and Base Rate Margins set forth in this subsection 2.2A(i)
shall be increased by 0.50% for any Discretionary Overdraft Loans or
any Revolving Discretionary Overdraft Loans.
(ii) Upon delivery pursuant to subsection 6.11 of the
Borrowing Base Certificate by Company to Administrative Agent for the
week in which the last day of the Fiscal Quarter falls, the Base Rate
Margin and the Eurodollar Rate Margin shall automatically be adjusted
in accordance with such Borrowing Base Certificate, such adjustment to
become effective on the next succeeding Business Day following the
receipt by Administrative Agent of such Borrowing Base Certificate
(subject to the provisions of the foregoing clause (i)); provided that,
if within two Business Days of the date that the Borrowing Base
Certificate for the week in which the last day of any Fiscal Quarter
falls is required to be delivered pursuant to subsection 6.11, any
Borrowing Base Certificate has not been delivered for such Fiscal
Quarter, from such date until delivery of any such Borrowing Base
Certificates for such Fiscal Quarter, the applicable margins shall be
the maximum percentage amount for the relevant Loan set forth above.
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(iii) Subject to the provisions of subsections 2.2E, 2.2G
and 2.7, the Swing Line Loans shall bear interest through maturity at
the sum of the Base Rate plus the applicable Base Rate Margin for
Revolving Loans minus a rate equal to the commitment fee percentage
then in effect as determined pursuant to subsection 2.3A.
B. INTEREST PERIODS. In connection with each Eurodollar
Rate Loan, Company and the applicable Borrower may, pursuant to the applicable
Notice of Borrowing or Notice of Conversion/Continuation, as the case may be,
select an interest period (each an "INTEREST PERIOD") to be applicable to such
Loan, which Interest Period shall be, at the option of Company and such Borrower
either a one, two, three or six month period or, if deposits in the London
interbank market are generally available for such period (as determined by each
Lender) a nine or twelve month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate
Loan shall commence on the Funding Date in respect of such Loan, in the
case of a Loan initially made as a Eurodollar Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the
case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as such pursuant
to a Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Loan Commitment
Termination Date;
(vi) there shall be no more than six (6) Interest Periods
outstanding at any time; and
(vii) in the event Company and the applicable Borrower
fails to specify an Interest Period for any Eurodollar Rate Loan in the
applicable Notice of Borrowing or Notice of Conversion/Continuation,
Company and such Borrower shall be deemed to have selected an Interest
Period of one month.
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C. INTEREST PAYMENTS. Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in arrears on and to
each Interest Payment Date applicable to that Loan, upon any prepayment of that
Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions
of subsection 2.6, Borrowers shall have the option (i) to convert at any time
all or any part of its outstanding Revolving Loans equal to $5,000,000 and
multiples of $1,000,000 in excess of that amount from Loans bearing interest at
a rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $5,000,000 and multiples of $1,000,000 in excess
of that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar
Rate Loan may only be converted into a Base Rate Loan on the expiration date of
an Interest Period applicable thereto; provided, further, that Revolving
Discretionary Loans may not be converted into Eurodollar Rate Loans.
Company and the Borrower who requested the applicable Loan
shall deliver a Notice of Conversion/Continuation signed by the chief financial
officer of Company and an officer of such Borrower to Administrative Agent no
later than 10:00 A.M. (New York City time) on the proposed conversion date (in
the case of a conversion to a Base Rate Loan) and at least three Business Days
in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). In lieu of
delivering a Notice of Conversion/Continuation, Company and the applicable
Borrower may give Administrative Agent telephonic notice by the required time of
any proposed conversion/continuation under this subsection 2.2D; provided that
such notice shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation signed by the chief financial officer of Company and an
officer of such Borrower to Administrative Agent on or before the proposed
conversion/continuation date. Upon receipt of written or telephonic notice of
any proposed conversion/continuation under this subsection 2.2D, Administrative
Agent shall promptly transmit such notice by telefacsimile or telephone to each
Lender of the Loan subject to the Notice of Conversion/Continuation.
E. DEFAULT RATE. Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of all
Loans and, to the extent permitted by applicable law, any interest payments
thereon not paid when due and any fees and other amounts then due and payable
hereunder, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the
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interest rate otherwise payable under this Agreement for Base Rate Loans.
Payment or acceptance of the increased rates of interest provided for in this
subsection 2.2E is not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall
be computed (i) in the case of Base Rate Loans, on the basis of a 365-day or
366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans,
on the basis of a 360-day year, in each case for the actual number of days
elapsed in the period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if a Loan is repaid
on the same day on which it is made, one day's interest shall be paid on that
Loan.
G. MAXIMUM RATE. Notwithstanding the foregoing
provisions of this subsection 2.2, in no event shall the rate of interest
payable by Borrowers with respect to any Loan exceed the maximum rate of
interest permitted to be charged under applicable law.
2.3 FEES.
A. COMMITMENT FEES. Borrowers, jointly and severally,
agree to pay to Administrative Agent, for distribution to each Revolving Lender
in proportion to that Revolving Lender's Pro Rata Share, commitment fees for the
period from and including the Closing Date to and excluding the Revolving Loan
Commitment Termination Date equal to the average of the daily excess of the
Revolving Loan Commitments over the sum of (i) the aggregate principal amount of
outstanding Revolving Loans (but not any outstanding Swing Line Loans or the
Letter of Credit Usage) plus (ii) the Letter of Credit Usage multiplied by a
rate per annum equal to the percentage set forth in the table below opposite the
Average Facility Usage Percentage for any Fiscal Quarter:
-------------------------------------------------------------------------
Average Facility Usage Percentage Commitment
Fee Percentage
-------------------------------------------------------------------------
less than 25% 0.75%
-------------------------------------------------------------------------
greater than or equal to 25% but less 0.625%
than 50%
-------------------------------------------------------------------------
greater than or equal to 50% 0.500%
-------------------------------------------------------------------------
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such commitment fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable quarterly in arrears on the last
Business Day of each of March, June, September and December of each year,
commencing on the first such date to occur after the Closing Date, and on the
Revolving Loan Commitment Termination Date; provided that for the first three
months after the Closing Date, the applicable commitment fee percentage shall be
0.500% per annum.
B. ADMINISTRATIVE AGENT AND COLLATERAL MONITORING FEE.
Borrowers jointly and severally agree to pay to Administrative Agent, in advance
on the Closing Date and in advance on each anniversary thereafter, an annual
administrative and collateral monitoring fee in the aggregate amount of
$200,000.
C. OTHER FEES. Borrowers, jointly and severally agree,
to pay to Administrative Agent and Lead Arranger such other fees in the amounts
and at the times separately agreed upon between any Borrower and Administrative
Agent or Lead Arranger.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN
COMMITMENTS; GENERAL PROVISIONS REGARDING PAYMENTS;
APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER
GUARANTIES.
A. PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN
COMMITMENTS.
(i) Voluntary Prepayments. Borrowers may, upon written or
telephonic notice to Administrative Agent on or prior to 1:00 P.M. (New
York City time) on the date of prepayment, which notice, if telephonic,
shall be promptly confirmed in writing, at any time and from time to
time prepay any Swing Line Loan on any Business Day in whole or in part
in an aggregate minimum amount of $1,000,000 and multiples of $500,000
in excess of that amount. Borrowers may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 1:00 P.M. (New York City time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender for the Loans to be prepaid), at any time and
from time to time prepay any Revolving Loans on any Business Day in
whole or in part in an aggregate minimum amount of $1,000,000 and
multiples of $500,000 in excess of that amount; provided, however, that
if a Eurodollar Rate Loan is prepaid on a date other than the date that
the Interest Period applicable thereto expires, Borrowers shall
compensate the Lenders in accordance with section 2.6D for any losses,
expenses or liabilities incurred in connection with such prepayment.
Notice of prepayment having been given as aforesaid, the principal
amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein. Any such voluntary
prepayment shall be applied as specified in subsection 2.4A(iv).
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(ii) Voluntary Reductions of Revolving Loan Commitments.
Borrowers may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Revolving
Lender), at any time and from time to time terminate in whole or
permanently reduce in part, without premium or penalty, the Revolving
Loan Commitments in an amount up to the amount by which the Revolving
Loan Commitments exceed the Total Utilization of Revolving Loan
Commitments at the time of such proposed termination or reduction;
provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $1,000,000 and
multiples of $500,000 in excess of that amount. Borrowers' notice to
Administrative Agent shall designate the date (which shall be a
Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving
Loan Commitments shall be effective on the date specified in Borrowers'
notice and shall reduce the Revolving Loan Commitment of each Revolving
Lender proportionately to its Pro Rata Share. Any such voluntary
reduction of the Revolving Loan Commitments shall be applied as
specified in subsection 2.4A(iv).
(iii) Mandatory Prepayments, Mandatory Reductions of
Revolving Loan Commitments and Mandatory Repayment of Discretionary
Loans and Discretionary Revolving Loans. The Loans shall be repaid or
prepaid and/or the Revolving Loan Commitments shall be permanently
reduced in the amounts and under the circumstances set forth below, all
such prepayments and/or reductions to be applied as set forth below or
as more specifically provided in subsection 2.4A(iv):
(a) Prepayments and Reductions From Net Asset
Sale Proceeds. No later than the date of receipt by Holdings
or any of its Subsidiaries of any Net Asset Sale Proceeds in
respect of any Asset Sale, Borrowers shall either (1) prepay
the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to such Net
Asset Sale Proceeds minus any amount of such Net Asset Sale
Proceeds designated as Proposed Asset Sale Reinvestment
Proceeds in accordance with clause (2) below and/or (2) so
long as no Potential Event of Default or Event of Default
shall have occurred and be continuing, deliver to
Administrative Agent an Officer's Certificate of Company
setting forth (x) the portion of such Net Asset Sale Proceeds
(the "PROPOSED ASSET SALE REINVESTMENT PROCEEDS") that the
Borrowers or their Subsidiaries intend to reinvest in
equipment or other productive assets of the general type used
in the business of Borrowers and their Subsidiaries within 270
days of such date of receipt and (y) the proposed use of such
Proposed Asset Sale Reinvestment Proceeds and such other
information with respect to such reinvestment as
Administrative Agent may reasonably request; provided, that
if, within five days of receipt by Holdings or any of its
Subsidiaries of such Proposed Asset Sale Reinvestment
Proceeds, the Borrowers or their Subsidiaries have not
reinvested such Proposed Asset Sale Reinvestment Proceeds,
Borrowers shall prepay the
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Loans (but the Revolving Loan Commitments shall not be
reduced) in an amount equal to the amount of such Proposed
Asset Sale Reinvestment Proceeds; provided, further, that if,
after the prepayment of the Revolving Loans in accordance with
the immediately preceding proviso with any Proposed Asset Sale
Reinvestment Proceeds, (i) an Event of Default shall have
occurred and shall have been continuing for a period of 3 days
at any time prior to the end of the 270 day reinvestment
period with respect to such Asset Sale or (ii) the Borrowers
and their Subsidiaries have not reinvested such Proposed Asset
Sale Reinvestment Proceeds within such 270 day reinvestment
period, the Revolving Loan Commitments shall be permanently
reduced by an amount equal to the amount of all such Proposed
Asset Sale Reinvestment Proceeds that have not been reinvested
in accordance with this subsection 2.4A(iii)(a) and Borrowers
shall immediately make any prepayment of the Loans that may be
required pursuant to subsection 2.4A(iii)(h).
(b) Prepayments and Reductions from Net
Insurance/Condemnation Proceeds. No later than the first
Business Day following the date of receipt by Administrative
Agent or by Holdings or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be
applied to prepay the Loans and/or reduce the Revolving Loan
Commitments pursuant to the provisions of subsection 6.4C,
Borrowers shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate
amount equal to the amount of such Net Insurance/Condemnation
Proceeds.
(c) Prepayments and Reductions Due to Issuance
of Equity Securities. On the date of receipt of the Net
Securities Proceeds from the issuance of any Capital Stock of
Holdings or any Subsidiary of Holdings or from any capital
contribution to Holdings by any holder of Capital Stock
thereof after the Closing Date, Borrowers shall prepay the
Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to fifty
percent (50%) of such Net Securities Proceeds; provided,
however, that no such prepayment or reduction of the Revolving
Loan Commitments shall be required in connection with (i) any
issuances of Capital Stock of Holdings to any employee,
executive, director or officer of Holdings or any of its
Subsidiaries under an incentive compensation plan in an
aggregate amount not to exceed $10,000,000 in any Fiscal Year;
(ii) issuances of Capital Stock of any Subsidiary of Holdings
to directors of such Subsidiary in the extent required by
applicable law; (iii) any issuance of Capital Stock in
connection with the conversion of the Convertible Subordinated
Notes in accordance with the terms of this Agreement; (iv)
issuance of Capital Stock to any Loan Party by one of its
Subsidiaries or the incurrence of any intercompany
Indebtedness permitted to be incurred under subsection 7.1 or
(v) any issuance of common stock of Holdings or Preferred
Holdings Stock in exchange for the Arris New Membership
Interests in connection with the
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Mandatory Exchange Event in accordance with the terms of this
Agreement and the Amended and Restated Arris Membership
Agreement.
(d) Prepayments and Reductions Due to Issuance
of Indebtedness. On the date of receipt of the Net Securities
Proceeds from the issuance of any Indebtedness of Holdings or
any of its Subsidiaries after the Closing Date, other than
Indebtedness permitted pursuant to subsection 7.1, Borrowers
shall prepay the Loans and/or the Revolving Loan Commitments
shall be permanently reduced in an aggregate amount equal to
such Net Securities Proceeds.
(e) Calculations of Net Proceeds Amounts;
Additional Prepayments and Reductions Based on Subsequent
Calculations. Concurrently with any prepayment of the Loans
and/or reduction of the Revolving Loan Commitments pursuant to
subsections 2.4A(iii)(a)-(d), Company shall deliver to
Administrative Agent an Officer's Certificate demonstrating
the calculation of the amount of the applicable Net Asset Sale
Proceeds, Net Insurance/Condemnation Proceeds or Net
Securities Proceeds, as the case may be, that gave rise to
such prepayment and/or reduction. In the event that Borrowers
shall subsequently determine that the actual amount was
greater than the amount set forth in such Officer's
Certificate, Borrowers shall promptly make an additional
prepayment of the Loans (and/or, if applicable, the Revolving
Loan Commitments shall be permanently reduced) in an amount
equal to the amount of such excess, and Borrowers shall
concurrently therewith deliver to Administrative Agent an
Officer's Certificate of Company demonstrating the derivation
of the additional amount resulting in such excess.
(f) Prepayments from Sale of Power Business. No
later than the first Business Day following the date of
receipt by Holdings or any of its Subsidiaries of any cash
proceeds (net of reasonable legal fees and expenses) from the
sale of the Power Division in accordance with subsection
7.7(x), Borrowers shall prepay the Loans in an aggregate
amount equal to the amount of such cash proceeds.
(g) Prepayments from Amounts in Concentration
Accounts. Borrowers shall on each Business Day prepay an
aggregate principal amount of Loans in an amount equal to the
amount of the Cash Balances of the Borrowers outstanding on
such date.
(h) Prepayments Due to Reductions or
Restrictions of Revolving Loan Commitments
(1) Borrowers shall from time to time
prepay first the Swing Line Loans and second the
Revolving Loans to the extent necessary so that the
Total Utilization of Revolving Loan Commitments shall
not at any time exceed the Revolving Loan
Commitments; and
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(2) if at any time (x) the Total
Utilization of Revolving Loan Commitments minus the
aggregate principal amount of outstanding
Discretionary Loans and Revolving Discretionary Loans
exceed (y) the Borrowing Base, Borrowers shall prepay
first the Swing Line Loans (other than any Revolving
Discretionary Loans) and second the Revolving Loans
(other than any Revolving Discretionary Loans) in an
amount equal to such excess.
(i) Repayments of Discretionary Loans and
Revolving Discretionary Loans. No later than the date that is
thirty (30) days after the date that any Discretionary Loan is
made, Borrowers shall repay such Discretionary Loan and any
Revolving Discretionary Loans that were made to repay such
Discretionary Loan.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type
of Loans and Order of Maturity. Any voluntary prepayments
pursuant to subsection 2.4A(i) shall be applied as specified
by Borrowers in the applicable notice of prepayment; provided
that in the event Borrowers fails to specify the Loans to
which any such prepayment shall be applied, such prepayment
shall be applied first to repay any outstanding Discretionary
Post-Default Overdraft Loans to the full extent thereof,
second to repay any outstanding Revolving Discretionary
Post-Default Overdraft Loans to the full extent thereof, third
to repay any remaining outstanding Discretionary Overdraft
Loans to the full extent thereof, fourth, to repay any
remaining outstanding Revolving Discretionary Overdraft Loans
to the full extent thereof, fifth, to repay any remaining
outstanding Discretionary Post-Default Loans to the full
extent thereof, sixth, to repay any remaining outstanding
Revolving Discretionary Post-Default Loans to the full extent
thereof, seventh, to repay any remaining outstanding Swing
Line Loans to the full extent thereof and eighth to repay any
remaining outstanding Revolving Loans to the full extent
thereof.
(b) Application of Mandatory Prepayments by Type
of Loans. Unless an Event of Default has occurred and is
continuing, any amount required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving
Loan Commitments pursuant to subsections 2.4A(iii)(a)-(f)
shall be applied first to repay any outstanding Discretionary
Post-Default Overdraft Loans to the full extent thereof and to
permanently reduce the Revolving Loan Commitments by the
amount of such prepayment, second to repay any outstanding
Revolving Discretionary Post-Default Overdraft Loans to the
full extent thereof and to further
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permanently reduce the Revolving Loan Commitments by the
amount of such prepayment, third to repay any remaining
outstanding Discretionary Overdraft Loans to the full extent
thereof and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, fourth, to repay
any remaining outstanding Revolving Discretionary Overdraft
Loans to the full extent thereof and to further permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment, fifth, to repay any remaining outstanding
Discretionary Post-Default Loans to the full extent thereof
and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, sixth, to repay
any remaining outstanding Revolving Discretionary Post-Default
Loans to the full extent thereof and to further permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment, seventh, to repay any remaining outstanding Swing
Line Loans to the full extent thereof and to further
permanently reduce the Revolving Loan Commitments by the
amount of such prepayment, eighth to repay any remaining
outstanding Revolving Loans to the full extent thereof and to
further permanently reduce the Revolving Loan Commitments by
the amount of such prepayment and ninth, to the extent of any
remaining portion of such amount, to further permanently
reduce the Revolving Loan Commitments to the full extent
thereof; provided, however, that notwithstanding the foregoing
the Revolving Loan Commitments shall not be reduced by any
mandatory prepayment received in connection with subsection
2.4A(iii)(g) and so long as no Event of Default or Potential
Event of Default has occurred and is continuing, subsections
2.4A(iii)(c) and 2.4A(iii)(f). If an Event of Default has
occurred and is continuing, any amount required to be applied
as a mandatory prepayment shall be applied as set forth in
subsection 2.4C.
(c) Application of Prepayments to Base Rate
Loans and Eurodollar Rate Loans. Any prepayment of Revolving
Loans shall be applied first to Base Rate Loans to the full
extent thereof before application to Eurodollar Rate Loans, in
each case in a manner which minimizes the amount of any
payments required to be made by Borrowers pursuant to
subsection 2.6D.
(d) Cash Collateral. If (x) the aggregate amount
of any voluntary prepayment to be made in accordance with
subsection 2.4A(i) or any mandatory prepayments required to be
made in accordance with subsections 2.4A(iii)(a), (b), (c),
(d), (e) or (f) of the Loans exceeds (y) the aggregate amount
of outstanding (A) Base Rate Loans and (B) Eurodollar Rate
Loans with Interest Periods ending on or prior to the date of
such voluntary or mandatory prepayment (such excess, the
"DEFICIT AMOUNT"), so long as no Event of Default or Potential
Event of Default has occurred and is continuing, the Borrower
may deliver a written notice to the Administrative Agent prior
to the date of such prepayment directing that such Deficit
Amount be deposited into the Collateral Account for
application to the Loans in accordance with this subsection
2.4 upon (1) the borrowing of any additional Base Rate Loans
and/or (2) the expiration of any Interest Period with respect
to any Eurodollar Rate Loans, until such Deficit Amount has
been fully applied to the repayment of the Loans in accordance
with this subsection 2.4;
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provided, however, that any Deficit Amounts held in the
Collateral Account shall be immediately applied to the payment
of the Loans in accordance with this subsection 2.4 upon the
earlier of (i) the occurrence of an Event of Default or (ii)
the date that is thirty (30) days after the date that the
prepayment giving rise to such Deficit Amount would have been
applied to repay the Loans, and/or reduce the Revolving Loan
Commitments but for the operation of this subsection 2.4A(iv),
provided, further, that the aggregate amount of all Deficit
Amounts held in the Collateral Account shall not exceed
$5,000,000 at any time.
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Borrowers
of principal, interest, fees and other Obligations hereunder shall be
made in Dollars in same day funds, without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 1:00 p.m. (New York City time) on
the date due at the Funding and Payment Office for the account of
Lenders; funds received by Administrative Agent after that time on such
due date shall be deemed to have been paid by Borrowers on the next
succeeding Business Day.
(ii) Application of Payments to Principal and Interest.
All payments in respect of the principal amount of any Loan (other than
payments made pursuant to subsection 2.4A(iii)(f)) shall include
payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the payment of
interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments in respect of Revolving Loans shall be apportioned
among all outstanding Revolving Loans to which such payments relate, in
each case proportionately to Revolving Lenders' respective Pro Rata
Shares. Administrative Agent shall promptly distribute to each
Revolving Lender, at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as such
Revolving Lender may request, its Pro Rata Share of all such payments
received by Administrative Agent and the commitment fees of such
Revolving Lender, if any, when received by Administrative Agent
pursuant to subsection 2.3. Notwithstanding the foregoing provisions of
this subsection 2.4B(iii), if, pursuant to the provisions of subsection
2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
of its Pro Rata Share of any Eurodollar Rate Loans, Administrative
Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be
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included in the computation of the payment of interest hereunder or of
the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of Borrowers hereunder or under
such Note with respect to any Loan or any payments of principal or
interest on such Note.
C. APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS
AFTER EVENT OF DEFAULT.
Upon the occurrence and during the continuation of an Event of
Default, (a) all payments received on account of the Obligations, whether from
Company, from any other Borrower, from any Guarantor or otherwise, shall be
applied by Administrative Agent against the Obligations and (b) all proceeds
received by Administrative Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral under any Collateral
Document may, in the discretion of Administrative Agent, be held by
Administrative Agent as Collateral for, and/or (then or at any time thereafter)
applied in full or in part by Administrative Agent against, the applicable
Secured Obligations (as defined in such Collateral Document), in each case in
the following order of priority:
(i) to the payment of all costs and expenses of such
sale, collection or other realization, all other expenses, liabilities
and advances made or incurred by Administrative Agent in connection
therewith, and all amounts for which Administrative Agent is entitled
to compensation (including the fees described in subsection 2.3),
reimbursement and indemnification under any Loan Document and all
advances made by Administrative Agent thereunder for the account of the
applicable Loan Party, and to the payment of all costs and expenses
paid or incurred by Administrative Agent in connection with the Loan
Documents, all in accordance with subsections 9.4, 10.2 and 10.3 and
the other terms of this Agreement and the Loan Documents;
(ii) thereafter, to the extent of any excess such
proceeds, to the payment of all other Obligations for the ratable
benefit of the holders thereof (subject to the provisions of subsection
2.4B(ii) hereof); and
(iii) thereafter, to the extent of any excess such
proceeds, to the payment to or upon the order of such Loan Party or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
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Notwithstanding the foregoing, to the extent an Event of Default has
occurred and is continuing and the Obligations have not been accelerated in
accordance with Section 8, all payments received on account of the Obligations,
whether from Company, from any other Borrower, from any Guarantor or otherwise,
shall be applied by Administrative Agent first to repay any outstanding
Discretionary Post-Default Overdraft Loans to the full extent thereof, second to
repay any outstanding Revolving Discretionary Post-Default Overdraft Loans to
the full extent thereof, third to repay any remaining outstanding Discretionary
Overdraft Loans to the full extent thereof, fourth, to repay any remaining
outstanding Revolving Discretionary Overdraft Loans to the full extent thereof,
fifth, to repay any remaining outstanding Discretionary Post-Default Loans to
the full extent thereof, sixth, to repay any remaining outstanding Revolving
Discretionary Post-Default Loans to the full extent thereof, seventh, as
provided in clause (i) above, eighth, as provided in clause (ii) above and
ninth, as provided in clause (iii) above.
2.5 USE OF PROCEEDS.
A. REVOLVING LOANS MADE ON THE CLOSING DATE. The
proceeds of Revolving Loans made to Borrowers on the Closing Date in aggregate
principal amount not to exceed $15,000,000 shall be applied to repay the
obligations outstanding under the Existing Company Credit Agreement.
B. REVOLVING LOANS; SWING LINE LOANS. The proceeds of
any Revolving Loans (other than Revolving Loans referenced in subsection 2.5A)
and any Swing Line Loans (including any Discretionary Loans) shall be applied by
Borrowers for working capital and other general corporate purposes, which may
include the making of intercompany loans to any Wholly-Owned Subsidiary of any
Borrower, in accordance with subsection 7.1(iv), for their own general corporate
purposes.
C. MARGIN REGULATIONS. No portion of the proceeds of any
borrowing under this Agreement shall be used by any Borrower or any Subsidiary
of any Borrower in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation U, Regulation T or Regulation X of the
Board of Governors of the Federal Reserve System or any other regulation of such
Board or to violate the Exchange Act, in each case as in effect on the date or
dates of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. On each
Interest Rate Determination Date, Administrative Agent shall determine (which
determination shall, absent manifest error, be conclusive and binding upon all
parties) the interest rate that shall apply to the
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Eurodollar Rate Loans for which an interest rate is then being determined for
the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Borrowers and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In
the event that Administrative Agent shall have determined (which determination
shall be conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date that by reason of circumstances affecting the London
interbank market adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided for in the
definition of Eurodollar Rate, Administrative Agent shall on such date give
notice (by telefacsimile or by telephone confirmed in writing) to Borrowers and
each Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Administrative Agent
notifies Borrowers and Lenders that the circumstances giving rise to such notice
no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by any Borrower with respect to the Loans in
respect of which such determination was made shall be deemed to be for a Base
Rate Loan.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE
LOANS. In the event that on any date any Lender shall have determined (which
determination shall be conclusive and binding upon all parties hereto but shall
be made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the London interbank market or
the position of such Lender in that market, then, and in any such event, such
Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Borrowers and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by any Borrower pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall
make such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan then being requested
by any Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, any Borrower shall have the option, subject to the
provisions of
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subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF
INTEREST PERIODS. Borrowers shall compensate each Lender, upon written request
by that Lender pursuant to subsection 2.8, for all reasonable losses, expenses
and liabilities (including any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds, but excluding the loss of the Eurodollar Rate
Margin) which that Lender may sustain: (i) if for any reason (other than a
default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur
on a date specified therefor in a Notice of Borrowing or a telephonic request
therefor, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request therefor, (ii) if any prepayment (including any prepayment
or conversion occasioned by the circumstances described in subsection 2.6C) or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date specified in a notice of prepayment given by any Borrower, or (iv) as a
consequence of any other default by Borrowers in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any
of its branch offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE
LOANS. Calculation of all amounts payable to a Lender under this subsection 2.6
and under subsection 2.7A shall be made as though that Lender had funded each of
its Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan
and having a maturity comparable to the relevant Interest Period, whether or not
its Eurodollar Rate Loans had been funded in such manner.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the
occurrence of and during the continuation of a Potential Event of Default or an
Event of Default, (i) Borrowers may not elect to have a Loan be made or
maintained as, or converted to, a Eurodollar Rate Loan after the expiration of
any Interest Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Notice of Borrowing or Notice of
Conversion/Continuation
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given by any Borrower with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be for a
Base Rate Loan or, if the conditions to making a Loan set forth in subsection
4.2 cannot then be satisfied, to be rescinded by such Borrower.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender (including any Lender
that is an Issuing Bank) shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or other Government
Authority, in each case that becomes effective after the date hereof, or
compliance by such Lender with any guideline, request or directive issued or
made after the date hereof by any central bank or other Government Authority
(whether or not having the force of law):
(i) subjects such Lender to any additional Tax with
respect to this Agreement or any of its obligations hereunder
(including with respect to issuing or maintaining any Letters of Credit
or purchasing or maintaining any participations therein or maintaining
any Commitment hereunder) or any payments to such Lender of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve,
special deposit, compulsory loan, insurance charge or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such
Lender (other than any such reserve or other requirements with respect
to Eurodollar Rate Loans that are reflected in the definition of
Eurodollar Rate); or
(iii) imposes any other condition (other than with respect
to taxes) on or affecting such Lender or its obligations hereunder or
the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loans or Commitments or agreeing to
issue, issuing or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Lender with respect thereto; then, in any such
case, Borrowers shall promptly pay to such Lender, upon receipt of the statement
referred to in subsection 2.8A, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in
amounts received or receivable hereunder.
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B. TAXES.
(i) Payments to Be Free and Clear. All sums payable by
Borrowers under this Agreement and the other Loan Documents shall be
paid free and clear of, and without any deduction or withholding on
account of, any Tax imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in
or of the United States of America or any other jurisdiction from or to
which a payment is made by or on behalf of Borrowers or by any
federation or organization of which the United States of America or any
such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If any Borrower or any other
Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by any Borrower to
Administrative Agent or any Lender under any of the Loan Documents:
(a) such Borrower any shall notify
Administrative Agent of any such requirement or any change in
any such requirement as soon as such Borrower any becomes
aware of it;
(b) such Borrower any shall pay any such Tax
when such Tax is due, such payment to be made (if the
liability to pay is imposed on such Borrower) for its own
account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by such Borrower in respect
of which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or
payment, Administrative Agent or such Lender, as the case may
be, receives on the due date a net sum equal to what it would
have received had no such deduction, withholding or payment
been required or made; and
(d) within 30 days after paying any sum from
which it is required by law to make any deduction or
withholding, and within 30 days after the due date of payment
of any Tax which it is required by clause (b) above to pay,
Company shall deliver to Administrative Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the
relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date on which such Lender became a Lender in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
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effect on the date on which such Lender became a Lender, in respect of payments
to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws
of any jurisdiction other than the United States or any state
or other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "NON-US LENDER") shall deliver to
Administrative Agent and to Company, on or prior to the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in
the case of each other Lender), and at such other times as may
be necessary in the determination of Company or Administrative
Agent (each in the reasonable exercise of its discretion), two
original copies of Internal Revenue Service Form W-8BEN or
W-8ECI (or any successor forms) properly completed and duly
executed by such Lender, or, in the case of a Non-US Lender
claiming exemption from United States federal withholding tax
under Section 871(h) or 881(c) of the Internal Revenue Code
with respect to payments of "portfolio interest", a form
W-8BEN, and, in the case of a Lender that has certified in
writing to Administrative Agent that it is not a "bank" (as
defined in Section 881(c)(3)(A) of the Internal Revenue Code),
a certificate of such Lender certifying that such Lender is
not (i) a "bank" for purposes of Section 881(c) of the
Internal Revenue Code, (ii) a ten-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of Holdings or (iii) a controlled foreign corporation
related to Holdings (within the meaning of Section 864(d)(4)
of the Internal Revenue Code) in each case together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to United States
withholding tax with respect to any payments to such Lender of
interest payable under any of the Loan Documents.
(b) Each Non-US Lender, to the extent it does
not act or ceases to act for its own account with respect to
any portion of any sums paid or payable to such Lender under
any of the Loan Documents (for example, in the case of a
typical participation by such Lender), shall deliver to
Administrative Agent and to Company, on or prior to the
Closing Date (in the case of each Lender listed on the
signatures pages hereof), on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in
the case of each other Lender), or on such later date when
such Lender ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such
other times as may be necessary in the determination of
Company or Administrative Agent (each in the reasonable
exercise of its discretion), (1) two original copies of the
forms or statements required to be provided by such Lender
under subsection 2.7B(iii)(a), properly completed and duly
executed by such Lender, to establish the portion of
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any such sums paid or payable with respect to which such
Lender acts for its own account that is not subject to United
States withholding tax, and (2) two original copies of
Internal Revenue Service Form W-8IMY (or any successor forms)
properly completed and duly executed by such Lender, together
with any information, if any, such Lender chooses to transmit
with such form, and any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder, to establish that such Lender
is not acting for its own account with respect to a portion of
any such sums payable to such Lender.
(c) Each Non-US Lender hereby agrees, from time
to time after the initial delivery by such Lender of such
forms, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence so
delivered obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent
and to Company two original copies of renewals, amendments or
additional or successor forms, properly completed and duly
executed by such Lender, together with any other certificate
or statement of exemption required in order to confirm or
establish that such Lender is not subject to United States
withholding tax with respect to payments to such Lender under
the Loan Documents and, if applicable, that such Lender does
not act for its own account with respect to any portion of
such payment, or (2) notify Administrative Agent and Company
of its inability to deliver any such forms, certificates or
other evidence.
(d) Borrowers shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of clause (a), (b) or (c)(1) of this
subsection 2.7B(iii); provided that if such Lender shall have
satisfied the requirements of subsection 2.7B(iii)(a) on the
date such Lender became a Lender, nothing in this subsection
2.7B(iii)(d) shall relieve Borrowers of their obligation to
pay any amounts pursuant to subsection 2.7B(ii)(c) in the
event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after the
date hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any Government Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such Government Authority, has or would have the
effect of reducing the rate of return on the
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capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which such
Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
subsection 2.8A, Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction.
2.8 STATEMENT OF LENDERS; OBLIGATION OF LENDERS TO MITIGATE.
A. STATEMENTS. Each Lender claiming compensation or
reimbursement pursuant to subsection 2.6D, 2.7 or 2.8B shall deliver to
Borrowers (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such compensation or
reimbursement, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
B. MITIGATION. Each Lender and each Lender that is an
Issuing Bank agrees that, as promptly as practicable after the officer of such
Lender or Issuing Bank responsible for administering the Loans or Letters of
Credit of such Lender or Issuing Bank, as the case may be, becomes aware of the
occurrence of an event or the existence of a condition that would cause such
Lender to become an Affected Lender or that would entitle such Lender or Issuing
Bank to receive payments under subsection 2.7, use reasonable effort to make,
issue, fund or maintain the Commitments of such Lender or the Affected Loans or
Letters of Credit of such Lender or Issuing Bank through another lending or
letter of credit office of such Lender or Issuing Bank, if (i) as a result
thereof the circumstances which would cause such Lender to be an Affected Lender
would cease to exist or the additional amounts which would otherwise be required
to be paid to such Lender or Issuing Bank pursuant to subsection 2.7 would be
materially reduced and (ii) as determined by such Lender or Issuing Bank in its
sole discretion, such action would not otherwise be disadvantageous to such
Lender or Issuing Bank; provided that such Lender or Issuing Bank will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8B unless Company on behalf of all Borrowers agrees to pay all
incremental expenses incurred by such Lender or Issuing Bank as a result of
utilizing such other lending or letter of credit office as described above.
2.9 REPLACEMENT OF A LENDER.
If Borrowers receive a statement of amounts due pursuant to
subsection 2.8A from a Lender, a Revolving Lender defaults in its obligations to
fund a Revolving Loan pursuant to this Agreement, a Lender (a "NON-CONSENTING
LENDER") refuses to consent to an amendment, modification or waiver of this
Agreement that, pursuant to subsection 10.6, requires consent of 100% of the
Lenders or 100% of the Lenders with Obligations directly affected or a Lender
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becomes an Affected Lender (any such Lender, a "SUBJECT LENDER"), so long as (i)
no Potential Event of Default or Event of Default shall have occurred and be
continuing and Borrowers have obtained a commitment from another Lender or an
Eligible Assignee to purchase at par the Subject Lender's Loans and assume the
Subject Lender's Commitments and all other obligations of the Subject Lender
hereunder, (ii) such Lender is not Administrative Agent if any Letters of Credit
are outstanding (unless all such Letters of Credit are terminated or a successor
Administrative Agent has agreed to issue a replacement Letter of Credit Guaranty
for all outstanding Letters of Credit in accordance with subsection 9.5) and
(iii), if applicable, the Subject Lender is unwilling to withdraw the notice
delivered to Borrowers pursuant to subsection 2.8 and/or is unwilling to remedy
its default upon 5 Business Days prior written notice to the Borrowers and
Administrative Agent, Borrowers may require the Subject Lender to assign all of
its Loans and Commitments to such other Lender, Lenders, Eligible Assignee or
Eligible Assignees pursuant to the provisions of subsection 10.1B; provided
that, prior to or concurrently with such replacement, (1) the Subject Lender
shall have received payment in full of all principal, interest, fees and other
amounts (including all amounts under subsections 2.6D, 2.7 and/or 2.8B (if
applicable)) through such date of replacement and a release from its obligations
under the Loan Documents, (2) all of the requirements for such assignment
contained in subsection 10.1B, including, without limitation, the consent of
Administrative Agent (if required) and the receipt by Administrative Agent of an
executed Assignment Agreement and other supporting documents, have been
fulfilled, and (3) in the event such Subject Lender is a Non-Consenting Lender,
each assignee shall consent, at the time of such assignment, to each matter in
respect of which such Subject Lender was a Non-Consenting Lender and Company
also requires each other Subject Lender that is a Non-Consenting Lender to
assign its Loans and Commitments.
2.10 JOINT AND SEVERAL LIABILITY; PAYMENT INDEMNIFICATIONS.
All Obligations of Borrowers under the Loan Documents shall be
the joint and several Obligations of the Borrowers and, in addition, shall be
guaranteed by each Borrower under the Borrowers' Guaranty. The Obligations of
and the Liens granted by any such Borrowers under the Loan Documents shall not
be impaired or released by any action or inaction on the part of any Agent or
any Lender with respect to any Loan Party, including any action or inaction
which would otherwise release a surety. The Obligations of each Borrower shall
be limited in amount to an amount not to exceed the maximum amount of
obligations that can be made or assumed by such Borrower without rendering such
obligation made or assumed, as it relates to such Borrower, void or voidable
under applicable laws relating to fraudulent conveyance, fraudulent transfer or
other similar laws affecting the rights of creditors generally.
In order to provide for just and equitable contribution among
the Borrowers if any payment is made by any of the Borrowers (a "FUNDING
BORROWER") in discharging any of the Obligations, such Funding Borrower shall be
entitled to a contribution from each other Borrower for all payments, damages
and expenses incurred by such Funding Borrower in discharging the Obligations,
in the manner and to the extent required to allocate liabilities in an equitable
manner among the Borrowers on the basis of the relative benefits received by the
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Borrowers. If and to the extent that a Funding Borrower makes any payment to any
Lender or any other Person in respect of the Obligations, any claim which said
Funding Borrower may have against any other Borrower by reason thereof shall be
subject and subordinate to the prior cash payment in full of the Obligations.
The parties hereto acknowledge that the right to contribution hereunder shall
constitute an asset of the party to which such contribution is owing.
Notwithstanding any of the foregoing to the contrary, such contribution
arrangements shall not limit in any manner the joint and several nature of the
Obligations, limit, release or otherwise impair any rights of any Agent or any
Lender under the Loan Documents, or alter, limit or impair the obligation of
each Borrower, which is absolute and unconditional and joint and several with
the other Borrowers, to repay the Obligations.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF
PARTICIPATIONS THEREIN.
In order to assist the Borrowers in establishing or opening Letters of
Credit with an Issuing Bank, the Borrowers have requested the Administrative
Agent, on behalf of the Lenders, to join in the applications for such Letters of
Credit, and/or guarantee payment or performance of such Letters of Credit and
any drafts or acceptances thereunder through the issuance of Letters of Credit
Guaranties, thereby lending the Administrative Agent's credit to the Borrowers
and the Administrative Agent has agreed to do so. These arrangements shall be
handled by the Administrative Agent subject to the terms and conditions set
forth in this Section 3.
A. LETTERS OF CREDIT. In addition to Borrowers
requesting that Revolving Lenders make Revolving Loans pursuant to subsection
2.1A(i) and that Swing Line Lender make Swing Line Loans pursuant to subsection
2.1A(ii), Borrowers may request, on a joint and several basis, in accordance
with the provisions of this subsection 3.1, from time to time during the period
from the Closing Date to but excluding the 30th day prior to the Revolving Loan
Commitment Termination Date, that Administrative Agent assist Borrowers in
obtaining one or more Letters of Credit payable on a sight basis for the account
of Borrowers for the purposes specified in the definitions of Commercial Letters
of Credit and Standby Letters of Credit. Borrowers shall not request the
assistance of Administrative Agent in obtaining the issuance of (and
Administrative Agent shall not enter into any Letter of Credit Guaranty in
connection with):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Borrowing Base then in effect;
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(iii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $35,000,000;
(iv) any Standby Letter of Credit having an expiration
date later than the earlier of (a) ten days prior to (i) if the
Convertible Subordinated Indebtedness has not been fully refinanced or
converted into shares of Holdings common stock, in each case on terms
and conditions satisfactory to Requisite Lenders in their sole
discretion, December 31, 2002 or (ii) if the Convertible Subordinated
Indebtedness has been so refinanced, the Revolving Loan Commitment
Termination Date and (b) the date which is one year from the date of
issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent, with the consent of
Administrative Agent, the issuance of a Standby Letter of Credit that
will automatically be extended for one or more successive periods not
to exceed one year each unless Administrative Agent does not consent to
the extension for any such additional period; and provided, further
that Administrative Agent shall not consent to the extension of any
such Standby Letter of Credit if it has knowledge that an Event of
Default has occurred and is continuing (and has not been waived in
accordance with subsection 10.6) at the time Administrative Agent must
elect whether or not to allow such extension;
(v) any Standby Letter of Credit issued for the purpose
of supporting (a) trade payables or (b) any Indebtedness constituting
"antecedent debt" (as that term is used in Section 547 of the
Bankruptcy Code);
(vi) any Commercial Letter of Credit having an expiration
date (a) later than the earlier of thirty days prior to (1) (i) if the
Convertible Subordinated Indebtedness has not been fully refinanced or
converted into shares of Holdings common stock, in each case on terms
and conditions satisfactory to Requisite Lenders in their sole
discretion, December 31, 2002 or (ii) if the Convertible Subordinated
Indebtedness has been so refinanced, the Revolving Loan Commitment
Termination Date and (2) the date which is 180 days from the date of
issuance of such Commercial Letter of Credit or (b) that is otherwise
unacceptable to the Administrative Agent in its reasonable discretion;
or
(vii) any Letter of Credit denominated in a currency other
than Dollars.
B. MECHANICS OF ISSUANCE.
(i) Request for Issuance. Whenever any Borrower desires
the issuance of a Letter of Credit, it shall deliver to Administrative
Agent a Request for Issuance signed by the chief financial officer of
Company and an officer of such Borrower no later than 12:00 Noon (New
York City time) at least three Business Days (in the case of Standby
Letters of Credit) or five Business Days (in the case of Commercial
Letters of Credit), or in each case such shorter period as may be
agreed to by the Administrative Agent in any particular instance, in
advance of the proposed date of issuance. The Borrower requesting the
issuance of such Letter of Credit shall comply with any changes in the
text
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of the proposed Letter of Credit or any documents described in or
attached to the Request for Issuance requested by the Administrative
Agent or the Issuing Bank selected by Administrative Agent. No Letter
of Credit shall require payment against a conforming demand for payment
to be made thereunder on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Bank to which such
demand for payment is required to be presented is located) that such
demand for payment is presented if such presentation is made after
10:00 A.M. (in the time zone of such office of the Issuing Bank) on
such business day.
Company or the applicable Borrower shall notify the
Administrative Agent prior to the issuance of any Letter of Credit or
the entering into by Administrative Agent of any related Letter of
Credit Guaranty in the event that any of the matters to which Company
or such Borrower is required to certify in the applicable Request for
Issuance is no longer true and correct as of the proposed date of
issuance of such Letter of Credit, and upon the issuance of any Letter
of Credit, Company and such Borrower shall be deemed to have
re-certified, as of the date of such issuance, as to the matters to
which Company and such Borrower are required to certify in the
applicable Request for Issuance.
(ii) Issuance of Letter of Credit. Each Letter of Credit,
all other Letter of Credit Documents delivered or
entered into in connection with such Letter of Credit and any
amendments, modifications or extensions of the foregoing, shall, in
each case, be in form and substance satisfactory to each of
Administrative Agent, Company, the Borrower requesting such Letter of
Credit and the Issuing Bank and shall comply in all respects with this
Section 3. Upon satisfaction or waiver (in accordance with subsection
10.6) of the conditions set forth in subsection 4.3, the Issuing Bank
shall issue the requested Letter of Credit in accordance with the
Issuing Bank's standard operating procedures and Administrative shall
deliver to such Issuing Bank a Letter of Credit Guaranty for such
Letter of Credit.
(iii) Notification to Revolving Lenders. Upon the issuance
of or amendment to any Letter of Credit the Administrative Agent shall
promptly notify in writing each Lender, Company and the Borrower that
requested such Letter of Credit or amendment of such issuance or
amendment in writing and such notice shall be accompanied by a copy of
such Letter of Credit or amendment. Together with such notice,
Administrative Agent shall notify each Revolving Lender in writing of
such issuance or amendment and the amount of such Revolving Lender's
respective participation in any Letter of Credit Guaranty entered into
by Administrative Agent in connection with such Letter of Credit or
amendment, and, if so requested by a Revolving Lender, Administrative
Agent shall provide such Lender with a copy of such Letter of Credit
Guaranty, Letter of Credit and/or amendment.
C. REVOLVING LENDERS' PURCHASE OF PARTICIPATIONS IN
LETTER OF CREDIT GUARANTIES. Immediately upon the execution and delivery by
Administrative Agent of each
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Letter of Credit Guaranty, each Revolving Lender shall be deemed to, and hereby
agrees to, have irrevocably purchased from the Administrative Agent a
participation in such Letter of Credit Guaranty and any payments made thereunder
by Administrative Agent in an amount equal to such Revolving Lender's Pro Rata
Share of the maximum amount which is or at any time may be payable by
Administrative Agent thereunder.
3.2 LETTER OF CREDIT FEES.
Borrowers agree to pay the following amounts with respect to
Letters of Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a
fronting fee, payable to the Administrative Agent for its own account,
equal to the greater of (X) $500 and (Y) 0.50% per annum of the daily
amount available to be drawn under such Standby Letter of Credit and
(b) a letter of credit fee, payable to Administrative Agent for the
account of Revolving Lenders, equal to the applicable Letter of Credit
Fee Percentage set forth in the table below opposite the Average Excess
Availability Amount for the last Fiscal Quarter prior to the date of
issuance of such Standby Letter of Credit multiplied by the daily
amount available to be drawn under such Standby Letter of Credit, each
such fronting fee or letter of credit fee to be payable in arrears on
and to (but excluding) the last Business Day of each March, June,
September and December of each year and computed on the basis of a
360-day year for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a)
a fronting fee, payable to the Administrative Agent for its own
account, equal to the amount of the fronting fee charged to
Administrative Agent by the Issuing Bank for such Commercial Letter of
Credit and (b) a letter of credit fee, payable to Administrative Agent
for the account of Revolving Lenders, equal to the applicable Letter of
Credit Fee Percentage set forth in the table below opposite the Average
Excess Availability Amount for the last Fiscal Quarter prior to the
date of issuance of such Commercial Letter of Credit multiplied by the
daily amount available to be drawn under such Commercial Letter of
Credit, each such fronting fee or letter of credit fee to be payable in
arrears on and to (but excluding) the last Business Day of each March,
June, September and December of each year and computed on the basis of
a 360-day year for the actual number of days elapsed:
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---------------------------------------------------------------------------------------
Average Excess Letter of Credit Fee
Availability Percentage
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Greater than
or equal to $150,000,000 2.25%
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Greater than or equal to but $100,000,000 2.50%
less than $150,000,000
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Greater than or equal to but $ 50,000,000 2.75%
less than $100,000,000
---------------------------------------------------------------------------------------
Less than $ 50,000,000 3.00%
---------------------------------------------------------------------------------------
provided that, for the first three months after the Closing Date, the
Letter of Credit Fee Percentage shall be 2.75% per annum;
(iii) with respect to the issuance, amendment or transfer
of each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clauses (i) and (ii)
above), documentary and processing charges payable directly to the
applicable Issuing Bank for its own account in accordance with such
Issuing Bank's standard schedule for such charges in effect at the time
of such issuance, amendment, transfer or payment, as the case may be.
(iv) For purposes of calculating any fees payable under
clauses (i) and (ii) of this subsection 3.2, the daily amount available
to be drawn under any Letter of Credit shall be determined as of the
close of business on any date of determination. Promptly upon receipt
by Administrative Agent of any amount described in clause (i)(b) or
(ii)(b) of this subsection 3.2, Administrative Agent shall distribute
to each Revolving Lender its Pro Rata Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF
CREDIT.
A. [INTENTIONALLY OMITTED]
B. REIMBURSEMENT BY BORROWERS OF AMOUNTS PAID UNDER
LETTER OF CREDIT GUARANTIES. In the event Administrative Agent pays any amounts
under any Letter of Credit Guaranty, Administrative Agent shall immediately
notify Company, and Borrowers shall reimburse Administrative Agent on or before
the Business Day immediately following the date on which such payment is made
(the "REIMBURSEMENT DATE") in an amount in Dollars and in same day funds equal
to the amount of such payment; provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent prior to 12:00 Noon (New York City time) on the
date such payment is made that Borrowers intend to reimburse Administrative
Agent for the amount of such payment with funds other than the proceeds of
Revolving Loans or Swing Line Loans, Borrowers shall be
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deemed to have given a timely Notice of Borrowing to Administrative Agent
requesting, at the sole discretion of Administrative Agent, either (a) Swing
Line Loans to the extent Swing Line Loans are available in accordance with
subsection 2.1A(ii) or (b) Revolving Lenders to make Revolving Loans that are
Base Rate Loans, in either case, on the Reimbursement Date in an amount in
Dollars equal to the amount of such payment and (ii) subject to the satisfaction
or waiver of the conditions specified in subsection 4.2B, Revolving Lenders or
Swing Line Lender, as applicable, shall, on the Reimbursement Date, make Swing
Line Loans or Revolving Loans that are Base Rate Loans in the amount of such
payment, the proceeds of which shall be applied directly by Administrative Agent
to reimburse Administrative Agent for the amount of such payment; and provided,
further that if for any reason proceeds of Swing Line Loans or Revolving Loans,
as applicable, are not received by Administrative Agent on the Reimbursement
Date in an amount equal to the amount of such payment, Borrowers shall reimburse
Administrative Agent, on demand, in an amount in same day funds equal to the
excess of the amount of such payment over the aggregate amount of such Swing
Line Loans or Revolving Loans, if any, which are so received.
C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER
LETTER OF CREDIT GUARANTIES.
(i) Payment by Revolving Lenders. In the event that
Borrowers shall fail for any reason to reimburse Administrative Agent
as provided in subsection 3.3B in an amount equal to the amount of any
payment by Administrative Agent under a Letter of Credit Guaranty,
Administrative Agent shall promptly notify each Revolving Lender of the
unreimbursed amount of such payment and of such other Revolving
Lender's respective participation therein based on such Revolving
Lender's Pro Rata Share. Each Revolving Lender shall make available to
Administrative Agent an amount equal to its respective participation,
in Dollars and in same day funds, at the Funding and Payment Office,
not later than 12:00 Noon (New York City time) on the first Business
Day after the date notified by Administrative Agent. In the event that
any Revolving Lender fails to make available to Administrative Agent on
such business day the amount of such Revolving Lender's participation
in such payment as provided in this subsection 3.3C, Administrative
Agent shall be entitled to recover such amount on demand from such
Revolving Lender together with interest thereon at the rate customarily
used by Administrative Agent for the correction of errors among banks
for three Business Days and thereafter at the Base Rate. Nothing in
this subsection 3.3C shall be deemed to prejudice the right of any
Revolving Lender to recover from Administrative Agent any amounts made
available by such Revolving Lender to Administrative Agent pursuant to
this subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit Guaranty by Administrative Agent in
respect of which payment was made by such Revolving Lender constituted
gross negligence or willful misconduct on the part of the
Administrative Agent.
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(ii) Distribution to Lenders of Reimbursements Received
From Borrowers. In the event Administrative Agent shall have been
reimbursed by other Revolving Lenders pursuant to subsection 3.3C(i)
for all or any portion of any payment by Administrative Agent under a
Letter of Credit Guaranty, Administrative Agent shall distribute to
each Revolving Lender that has paid all amounts payable by it under
subsection 3.3C(i) with respect to such payment such other Revolving
Lender's Pro Rata Share of all payments subsequently received by
Administrative Agent from Borrowers in reimbursement of such payment
under the Letter of Credit Guaranty when such payments are received.
Any such distribution shall be made to a Revolving Lender at its
primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Revolving Lender may
request.
D. INTEREST ON AMOUNTS PAID UNDER LETTER OF CREDIT
GUARANTIES.
(i) Payment of Interest by Borrowers. Borrowers agree to
pay to Administrative Agent, with respect to payments under any Letter
of Credit Guaranty, interest on the amount paid by Administrative Agent
in respect of each such payment from the date a payment is made to but
excluding the date such amount is reimbursed by Borrowers (including
any such reimbursement out of the proceeds of Swing Line Loans or
Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for
the period from the date such payment is made to but excluding the
Reimbursement Date, the rate then in effect under this Agreement with
respect to Revolving Loans that are Base Rate Loans and (b) thereafter,
a rate which is 2% per annum in excess of the rate of interest
otherwise payable under this Agreement with respect to Revolving Loans
that are Base Rate Loans. Interest payable pursuant to this subsection
3.3D(i) shall be computed on the basis of a 365-day or 366-day year, as
the case may be, for the actual number of days elapsed in the period
during which it accrues and shall be payable on demand or, if no demand
is made, on the date on which the related payment under a Letter of
Credit Guaranty is reimbursed in full.
(ii) Distribution of Interest Payments by Administrative
Agent. Promptly upon receipt by Administrative Agent of any payment of
interest pursuant to subsection 3.3D(i) with respect to a payment under
any Letter of Credit Guaranty, (a) Administrative Agent shall
distribute to each Revolving Lender, out of the interest received by
Administrative Agent in respect of the period from the date such
payment was made to but excluding the date on which Administrative
Agent was reimbursed for the amount of such payment (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B), the amount that such other Revolving Lender would
have been entitled to receive in respect of the letter of credit fee
that would have been payable in respect of the applicable Letter of
Credit for such period pursuant to subsection 3.2 if no drawing had
been honored under such Letter of Credit and no payment had been
subsequently made under the related Letter of Credit Guaranty, and (b)
in the event Administrative Agent shall have been reimbursed by
Revolving Lenders pursuant to subsection 3.3C(i) for all or any portion
of such payment, Administrative
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Agent shall distribute to each Revolving Lender that has paid all
amounts payable by it under subsection 3.3C(i) with respect to such
payment such other Revolving Lender's Pro Rata Share of any interest
received by Administrative Agent in respect of that portion of such
payment so reimbursed by Revolving Lenders for the period from the date
on which Administrative Agent was so reimbursed by Revolving Lenders to
but excluding the date on which such portion of such payment is
reimbursed by Borrowers. Any such distribution shall be made to a
Revolving Lender at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such
Revolving Lender may request.
3.4 RIGHTS OF ADMINISTRATIVE AGENT IN CONNECTION WITH LETTERS OF
CREDIT.
The Borrowers agree that any action taken by the Administrative Agent
and/or the Lenders, if taken in good faith, or any action taken by any Issuing
Bank, under or in connection with the Letters of Credit, the other Letter of
Credit Documents, the Letter of Credit Guaranties, the drafts or acceptances,
shall be binding on the Borrowers and shall not result in any liability
whatsoever of Administrative Agent or the Lenders to the Borrowers. In
furtherance thereof, the Administrative Agent shall have the full right and
authority in connection with any Letter of Credit to: (a) clear and resolve any
questions of non-compliance of documents; (b) give any instructions as to
acceptance or rejection of any documents or goods; (c) execute any and all
steamship or airways guaranties (and applications therefore), indemnities or
delivery orders; (d) grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances, or documents; and (e)
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances or any other Letter of Credit Document;
all in the Administrative Agent's sole name. Any Issuing Bank shall be entitled
to comply with and honor any and all such documents or instruments executed by
or received solely from the Administrative Agent, all without any notice to or
any consent from the Borrowers. Notwithstanding any prior course of conduct or
dealing with respect to the foregoing including amendments and non-compliance
with documents and/or any Borrower's instructions with respect thereto, the
Administrative Agent may exercise its rights hereunder in its sole and
reasonable judgment. In addition, without the Administrative Agent's express
consent and endorsement in writing, each Borrower agrees in connection with any
Letter of Credit: (a) not to execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders; to grant any extensions of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances or other Letter of
Credit Documents; and (b) if an Event of Default has occurred and is continuing,
not to (i) clear and resolve any questions of non-compliance of documents, or
(ii) give any instructions as to acceptances or rejection of any documents or
goods.
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3.5 OBLIGATIONS ABSOLUTE.
The obligation of Borrowers to reimburse Administrative Agent
for payments under any Letter of Credit Guaranty and to repay any Revolving
Loans made by Revolving Lenders or Swing Line Loans made by Swing Line Lender
pursuant to subsection 3.3B and the obligations of Revolving Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit or Letter of Credit Guaranty;
(ii) the existence of any claim, set-off, defense or other
right which any Borrower or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), Administrative Agent, any
Issuing Bank or Revolving Lender or any other Person or, in the case of
a Revolving Lender, against any Borrower, whether in connection with
this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between any Borrower
or any Subsidiary of any Borrower and the beneficiary for which any
Letter of Credit was procured);
(iii) any draft or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the applicable Issuing Bank under any
Letter of Credit against presentation of a draft or other document
which does not substantially comply with the terms of such Letter of
Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
any Borrower or any Subsidiary of any Borrower;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential
Event of Default shall have occurred and be continuing;
provided, in each case, that payment by the Administrative Agent under the
applicable Letter of Credit Guaranty shall not have constituted gross negligence
or willful misconduct of
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Administrative Agent under the circumstances in question (as determined by a
final judgment of a court of competent jurisdiction).
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of
Letters of Credit hereunder are subject to the satisfaction of the following
conditions.
4.1 CONDITIONS TO INITIAL REVOLVING LOANS AND SWING LINE LOANS.
The obligations of Lenders to make any Revolving Loans and
Swing Line Loans to be made on the Closing Date are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date,
Borrowers shall, and shall cause each other Loan Party to, deliver to Lenders
(or to Administrative Agent with sufficient originally executed copies, where
appropriate, for each Lender) the following with respect to such Borrower or
such Loan Party, as the case may be, each, unless otherwise noted, dated the
Closing Date:
(i) Copies of the Organizational Documents of such
Person, certified by the Secretary of State of its jurisdiction of
organization or, if such document is of a type that may not be so
certified, certified by the secretary or similar officer of the
applicable Loan Party, together with a good standing certificate from
the Secretary of State of its jurisdiction of organization and each
other state in which such Person is qualified to do business and, to
the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes
from the appropriate taxing authority of each of such jurisdictions,
each dated a recent date prior to the Closing Date;
(ii) Resolutions of the Governing Body of such Person
approving and authorizing the execution, delivery and performance of
the Reorganization Documents to be entered into on or before the
Closing Date and the Loan Documents to which it is a party, certified
as of the Closing Date by the secretary or similar officer of such
Person as being in full force and effect without modification or
amendment;
(iii) Signature and incumbency certificates of the officers
of such Person executing the Loan Documents to which it is a party;
(iv) Executed originals of the Loan Documents to which
such Person is a party; and
(v) Such other documents as Administrative Agent may
reasonably request.
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B. REORGANIZATION DOCUMENTS. Administrative Agent shall
have received (i) a fully executed or conformed copy of each Reorganization
Document to be entered into on or prior to the Closing Date and all principal
documents executed in connection therewith, and each such Reorganization
Document shall be in full force and effect and no provision thereof shall have
been modified or waived without the consent of Agents, and the parties to the
Reorganization Agreement shall not have failed in any material respect to
perform any material obligation or covenant required by the Reorganization
Agreement, respectively, to be performed or complied with by any of them on or
before the Closing Date, and (ii) an Officer's Certificate from Company to the
effect set forth in clause (i), and each such Reorganization Document shall be
reasonably satisfactory in form and substance to Agents.
C. CONSUMMATION OF REORGANIZATION.
(i) All conditions to the Reorganization set forth in the
Reorganization Agreement shall have been satisfied or the fulfillment
of any such conditions shall have been waived with the consent of
Agents;
(ii) Transaction Costs shall not exceed approximately
$11,800,000;
(iii) Company shall have provided evidence satisfactory to
Administrative Agent that after giving effect to the Reorganization,
(a) Nortel LLC has exchanged all of its Capital Stock in Arris (other
than the Arris New Membership Interest) for 37 million shares of
Holdings common stock and (b) Holdings and the Company own all of the
Capital Stock of Arris, other than the Arris New Membership Interest
that has an aggregate capital account of no greater than $100,000,000,
plus accrued and unpaid return thereon;
(iv) Company shall have provided evidence satisfactory to
Agents that any outstanding Nortel 2001 Obligations as of the Closing
Date and the Nortel Trade Obligations have been exchanged in full for
the Arris New Membership Interest;
(v) Company shall have provided evidence satisfactory to
the Agents that all obligations owed by Arris to Nortel and its
Subsidiaries as of the Closing Date with respect to purchases of
inventory (other than any outstanding Nortel 2001 Obligations and
Nortel Trade Obligations) have been exchanged for the Nortel Trade
Payable and Arris shall have delivered to Administrative Agent all
documents or instruments necessary to release all Liens securing such
obligations.
(vi) Company shall have provided evidence satisfactory to
Agents that the Nortel Interest Amount was contributed to the capital
of Arris prior to or concurrently with the issuance of the Arris New
Membership Interest.
(vii) the Company Merger shall have become effective in
accordance with the terms of the Reorganization Agreement, the
Certificate of Merger and the laws of the State of Delaware;
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(viii) Agents shall have received evidence in form and
substance reasonably satisfactory to Agents that (a) pursuant to the
Reorganization Agreement and Certificate of Merger, all shares of
Capital Stock of the Company have become mandatorily exchangeable for
common stock of Holdings and (b) the Company is a Wholly-Owned
Subsidiary of Holdings; and
(ix) Administrative Agent shall have received an Officer's
Certificate of Company to the effect set forth in clauses (i)-(vii)
above and stating that Company will proceed to consummate the
Reorganization and the Company Merger contemporaneously with the making
of the initial Loans; and Administrative Agent shall have received such
other evidence as it may reasonably require with respect to the
consummation of the Reorganization and the Company Merger.
D. FEES. Borrowers shall have paid to Administrative
Agent and Lead Arranger the fees payable on the Closing Date referred to in
subsection 2.3.
E. CORPORATE, TAX, MANAGEMENT AND CAPITAL STRUCTURE, AND
OWNERSHIP.
(i) Corporate Structure. The corporate organizational
structure of Holdings and its Subsidiaries after giving effect to the
Reorganization shall be as set forth on Schedule 4.1C annexed hereto.
(ii) Capital, Tax and Management Structure and Ownership.
The capital, tax and management structure and ownership of Holdings,
Company, Arris and their Subsidiaries after giving effect to the
Reorganization shall be reasonably satisfactory to Agents.
F. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
AGREEMENTS. Company shall have delivered to Administrative Agent an Officer's
Certificate, in form and substance satisfactory to Administrative Agent, to the
effect that the representations and warranties in Section 5 are true, correct
and complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Borrowers shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by Borrowers on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent.
G. FINANCIAL STATEMENTS; PRO FORMA FINANCIAL STATEMENTS;
FINANCIAL PLAN. On or before the Closing Date, Lenders shall have received from
Company (i) audited and unaudited financial statements of Holdings and its
Subsidiaries as set forth in Schedule 4.1G, (ii) pro forma financial statements,
giving effect to the Reorganization as set forth in Schedule 4.1G,
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which pro forma financial statements shall be in form and substance satisfactory
to Agents, and (iii) a Financial Plan complying with the requirement of
subsection 6.1(xii).
H. COLLATERAL AUDIT; INVENTORY LIQUIDATION ANALYSIS;
TECHNOLOGY RISK ASSESSMENT. The Lenders shall have received the results of (a)
the Collateral Audit, (b) the Emerald Appraisal and (c) the Strategis
Assessment, in each case in form and substance reasonably satisfactory to the
Agents.
I. BORROWING BASE CERTIFICATE; EXCESS AVAILABILITY. On
the Closing Date, Administrative Agent shall have received a Borrowing Base
Certificate from Company dated the Closing Date, substantially in the form of
Exhibit II annexed hereto and with appropriate attachments, certifying the
Borrowing Base as of such date and demonstrating, after giving effect to the
consummation of the transactions contemplated by the Loan Documents, that (i)
the Total Utilization of Revolving Loan Commitments does not exceed the
Borrowing Base as of such date and (ii) Excess Availability as of the Closing
Date shall, after giving effect to the Loans made and the Letters of Credit
issued on the Closing Date, be at least $50 million.
J. CLOSING DATE LETTERS OF CREDIT. After giving effect
to any Letters of Credit to be issued on the Closing Date, the maximum aggregate
amount that is or may become available under all outstanding Letters of Credit
as of the Closing Date shall not exceed approximately $26,500,000.
K. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders shall
have received originally executed copies of one or more favorable written
opinions of Troutman Sanders LLP, counsel for Loan Parties, in form and
substance reasonably satisfactory to Administrative Agent and its counsel, dated
as of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit VIII annexed hereto and as to such other matters
as Administrative Agent acting on behalf of Lenders may reasonably request (this
Credit Agreement constituting a written request by Company to such counsel to
deliver such opinions to Lenders).
L. OPINIONS OF ADMINISTRATIVE AGENT'S COUNSEL. To the
extent requested by Administrative Agent, Administrative Agent shall have
received originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Administrative Agent, dated as of the Closing
Date, substantially in the form of Exhibit IX annexed hereto.
M. RELIANCE LETTER FOR OPINIONS DELIVERED IN CONNECTION
WITH THE TRANSACTION. Administrative Agent and Lenders shall have received
reliance letters addressed to the Agents and each of the Lenders dated the
Closing Date with respect to all legal opinions delivered in connection with the
Reorganization, which reliance letters shall be in form and substance reasonably
satisfactory to Agents.
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N. SOLVENCY ASSURANCES. On the Closing Date,
Administrative Agent and Lenders shall have received an Officer's Certificate of
Company dated the Closing Date, substantially in the form of Exhibit XI annexed
hereto and with appropriate attachments, in each case demonstrating that, after
giving effect to the consummation of the Reorganization, the Company Merger and
the transactions contemplated by the Loan Documents, Holdings and each of its
Subsidiary will be Solvent.
O. EVIDENCE OF INSURANCE. Administrative Agent shall
have received a certificate from Company's insurance broker or other evidence
satisfactory to it that all insurance required to be maintained pursuant to
subsection 6.4 is in full force and effect and that Administrative Agent on
behalf of Lenders has been named as additional insured and/or loss payee
thereunder to the extent required under subsection 6.4.
P. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS;
EXPIRATION OF WAITING PERIODS, ETC. Holdings and its Subsidiaries shall have
obtained all Governmental Authorizations and all consents of other Persons, in
each case that are necessary or advisable in connection with the transactions
contemplated by the Loan Documents and the continued operation of the business
conducted by Holdings and its Subsidiaries in substantially the same manner as
conducted prior to the Closing Date including, without limitation, all necessary
consents under the Convertible Subordinated Note Indenture. Each such
Governmental Authorization or consent shall be in full force and effect, except
in a case where the failure to obtain or maintain a Governmental Authorization
or consent, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. All applicable waiting periods
shall have expired without any action being taken or threatened by any competent
authority that would restrain, prevent or otherwise impose adverse conditions on
the Reorganization, the Company Merger or the transactions contemplated by the
Loan Documents or the financing thereof. No action, request for stay, petition
for review or rehearing, reconsideration, or appeal with respect to any of the
foregoing shall be pending, and the time for any applicable Government Authority
to take action to set aside its consent on its own motion shall have expired.
Q. ENVIRONMENTAL REPORTS. Administrative Agent shall
have received reports and other information, in form, scope and substance
satisfactory to Administrative Agent, regarding environmental matters relating
to the Facilities listed on Schedule 4.1Q, which reports shall include (i) a
Phase I environmental assessment for each of the Facilities listed on Schedule
4.1Q which (a) conforms to the ASTM Standard Practice for Environmental Site
Assessments: Phase I Environmental Site Assessment Process, E 1527, (b) was
conducted no more than six months prior to the Closing Date by one or more
environmental consulting firms reasonably satisfactory to Administrative Agent,
(c) includes an assessment of asbestos-containing materials at such Facilities,
and (d) includes an estimate of the reasonable worst-case cost of investigating
and remediating any Hazardous Materials Activity identified in such Phase I
environmental assessments as a recognized environmental condition which is
likely to give rise to an actual or potential violation of any Environmental Law
applicable to such Facilities or presents a material risk of giving rise to a
material Environmental Claim, and (ii) to the extent
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requested by Administrative Agent, a current compliance audit setting forth an
assessment of such Facilities' current and past compliance with Environmental
Laws applicable to such Facilities and an estimate of the cost of rectifying any
non-compliance with current Environmental Laws applicable to such Facilities
identified therein and the cost of compliance with reasonably anticipated future
Environmental Laws applicable to such Facilities identified therein.
R. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. To
the extent not otherwise satisfied pursuant to subsection 4.1S, Administrative
Agent shall have received evidence reasonably satisfactory to it that Holdings,
Company, Arris, the other Borrowers and Subsidiary Guarantors shall have taken
or caused to be taken all such actions, executed and delivered or caused to be
executed and delivered all such agreements, documents and instruments, and made
or caused to be made all such filings and recordings (other than the filing or
recording of items described in clauses (ii), (iii) and (iv) below) that may be
necessary or, in the opinion of Administrative Agent, desirable in order to
create in favor of Administrative Agent, for the benefit of Lenders, a valid and
(upon such filing and recording) perfected First Priority security interest in
the entire personal and mixed property Collateral, to the extent contemplated by
the Collateral Documents. Such actions shall include the following:
(i) Stock Certificates and Instruments. Delivery to
Administrative Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank
and otherwise satisfactory in form and substance to Administrative
Agent) representing all Capital Stock pledged pursuant the Security
Agreement and any Foreign Pledge Agreement and (b) all promissory notes
or other instruments (duly endorsed, where appropriate, in a manner
satisfactory to Administrative Agent) evidencing any Collateral, in
each case to the extent required by the Security Agreement or such
Foreign Pledge Agreement;
(ii) Lien Searches and UCC Termination Statements.
Delivery to Administrative Agent of (a) the results of a recent search,
by a Person satisfactory to Administrative Agent, of all effective UCC
financing statements and fixture filings and all judgment and tax lien
filings which may have been made with respect to any personal or mixed
property of any Loan Party, together with copies of all such filings
disclosed by such search, and (b) UCC termination statements duly
executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC
financing statements or fixture filings disclosed in such search (other
than any such financing statements or fixture filings in respect of
Liens permitted to remain outstanding pursuant to the terms of this
Agreement).
(iii) UCC Financing Statements and Fixture Filings.
Delivery to Administrative Agent of UCC financing statements and, where
appropriate, fixture filings, with respect to all personal and mixed
property Collateral of such Loan Party, for filing in all jurisdictions
as may be necessary or, in the opinion of Administrative Agent,
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desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents;
(iv) PTO Cover Sheets, Etc. Delivery to Administrative
Agent of all cover sheets or other documents or instruments required to
be filed with the PTO in order to create or perfect Liens in respect of
any IP Collateral;
(v) Foreign Pledge Agreements. Execution and delivery to
Administrative Agent of Foreign Pledge Agreements with respect to 100%
of the Capital Stock owned by any Borrower or Subsidiary of any
Borrower of all Material Subsidiaries organized in Mexico, and the
taking of all such other actions under the laws of such jurisdictions
as Administrative Agent may deem necessary or advisable to perfect or
otherwise protect such Liens; and
(vi) Mexican Security Documents. Execution and delivery to
Administrative Agent of the Mexican Security Documents and the taking
of all such other actions under the laws of Mexico that may be
necessary or, in the opinion of Administrative Agent, desirable in
order to create in favor of Administrative Agent, for the benefit of
Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal property Collateral
of the Borrowers located in Mexico, to the extent contemplated by the
Mexican Security Documents; and
(vii) Opinions of Local Counsel. To the extent requested by
Administrative Agent, delivery to Administrative Agent of opinions of
counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) under the laws of each jurisdiction in the United
States and Mexico in which any Loan Party or any personal or mixed
property Collateral is located with respect to the creation and
perfection of the security interests in favor of Administrative Agent
in such Collateral and such other matters governed by the laws of such
jurisdiction regarding such security interests as Administrative Agent
may reasonably request, in each case in form and substance reasonably
satisfactory to Administrative Agent.
S. CLOSING DATE MORTGAGES; CLOSING DATE MORTGAGE
POLICIES; ETC. Administrative Agent shall have received from each applicable
Borrower and each applicable Subsidiary Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized
Mortgages (each a "CLOSING DATE MORTGAGE" and, collectively, the
"CLOSING DATE MORTGAGES"), in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering each
Real Property Asset listed in Schedule 4.1S annexed hereto (each a
"CLOSING DATE MORTGAGED PROPERTY" and, collectively, the "CLOSING DATE
MORTGAGED PROPERTIES");
(ii) Opinions of Local Counsel. An opinion of counsel
(which counsel shall be reasonably satisfactory to Administrative
Agent) in each state in which a Closing Date
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Mortgaged Property is located with respect to the enforceability of the
form(s) of Closing Date Mortgages to be recorded in such state and such
other matters as Administrative Agent may reasonably request, in each
case in form and substance reasonably satisfactory to Administrative
Agent;
(iii) [Intentionally Omitted]
(iv) Title Insurance. (a) ALTA mortgagee title insurance
policies or unconditional commitments therefor (the "CLOSING DATE
MORTGAGE POLICIES") issued by the Title Company with respect to the
Closing Date Mortgaged Properties listed in Part A of Schedule 4.1S
annexed hereto, in amounts not less than the respective amounts
designated therein with respect to any particular Closing Date
Mortgaged Properties, insuring fee simple title to each such Closing
Date Mortgaged Property vested in such Loan Party and assuring
Administrative Agent that the applicable Closing Date Mortgages create
valid and enforceable First Priority mortgage Liens on the respective
Closing Date Mortgaged Properties encumbered thereby, subject only to a
standard survey exception, which Closing Date Mortgage Policies (1)
shall include an endorsement for mechanics' liens, for future advances
under this Agreement and for any other matters reasonably requested by
Administrative Agent and (2) shall provide for affirmative insurance
and such reinsurance as Administrative Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to
Administrative Agent; and (b) evidence satisfactory to Administrative
Agent that such Loan Party has (i) delivered to the Title Company all
certificates and affidavits required by the Title Company in connection
with the issuance of the Closing Date Mortgage Policies and (ii) paid
to the Title Company or to the appropriate governmental authorities all
expenses and premiums of the Title Company in connection with the
issuance of the Closing Date Mortgage Policies and all recording and
stamp taxes (including mortgage recording and intangible taxes) payable
in connection with recording the Closing Date Mortgages in the
appropriate real estate records;
(v) Title Reports. With respect to each Closing Date
Mortgaged Property listed in Part B of Schedule 4.1S annexed hereto, a
title report issued by the Title Company with respect thereto, dated
not more than 30 days prior to the Closing Date and satisfactory in
form and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions.
Copies of all recorded documents listed as exceptions to title or
otherwise referred to in the Closing Date Mortgage Policies or in the
title reports delivered pursuant to subsection 4.1S(v);
(vii) Matters Relating to Flood Hazard Properties. (a)
Evidence, which may be in the form of a letter from an insurance broker
or a municipal engineer, as to whether (1) any Closing Date Mortgaged
Property is a Flood Hazard Property and (2) the community in which any
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if there are any such Flood Hazard
Properties,
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such Loan Party's written acknowledgement of receipt of written
notification from Administrative Agent (1) as to the existence of each
such Flood Hazard Property and (2) as to whether the community in which
each such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and (c) in the event any such Flood
Hazard Property is located in a community that participates in the
National Flood Insurance Program, evidence that the applicable Loan
Party has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System; and
(viii) Environmental Indemnity. If requested by
Administrative Agent, an environmental indemnity agreement,
satisfactory in form and substance to Administrative Agent and its
counsel, with respect to the indemnification of Administrative Agent
and Lenders for any liabilities that may be imposed on or incurred by
any of them as a result of any Hazardous Materials Activity.
(ix) Collateral Access Agreements. In the case of each
Leasehold Property of any Loan Party located in the United States to
the extent obtainable through the commercially reasonable efforts of
the Loan Parties, a Collateral Access Agreement with respect thereto
and in the event that any landlord party to a Collateral Access
Agreement requests an estoppel certificate regarding such Leasehold
Property, Company or the applicable Subsidiary Guarantor will include a
description of such Collateral Access Agreement in such estoppel
certificate.
T. MATTERS RELATING TO EXISTING INDEBTEDNESS OF HOLDINGS
AND ITS SUBSIDIARIES.
(i) Termination of Existing Credit Agreements and Related
Liens; Existing Letters of Credit. On the Closing Date, (a) Company and
its Subsidiaries shall have repaid in full all Indebtedness outstanding
under Existing Company Credit Agreement, the aggregate principal amount
of which Indebtedness shall not exceed $79,000,000, (b) Company and its
Subsidiaries shall have terminated any commitments to lend or make
other extensions of credit under the Existing Company Credit Agreement,
(c) at least $129,100,000 of the principal amount of Indebtedness
outstanding under the Existing Arris Credit Agreement shall have been
contributed to the capital of Arris and any Indebtedness outstanding
under the Existing Arris Credit Agreement that is not so contributed
shall have been repaid by Arris (the total aggregate amount of such
Indebtedness so contributed or repaid shall not exceed $153,200,000),
(d) Arris and its Subsidiaries shall have terminated any commitments of
Nortel LLC or Company to lend or make other extensions of credit under
the Existing Arris Credit Agreement, (e) Holdings and its Subsidiaries
shall have delivered to Administrative Agent all documents or
instruments necessary to release all Liens securing Indebtedness or
other obligations of Company and its Subsidiaries and Arris and its
Subsidiaries under the Existing Company Credit Agreement and the
Existing Arris Credit Agreement, and (f) Company shall have made
arrangements reasonably satisfactory to Administrative Agent with
respect to the
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cancellation of any letters of credit outstanding under the Existing
Company Credit Agreement or the issuance of Letters of Credit to
support the obligations of Company and its Subsidiaries with respect
thereto.
(ii) Existing Indebtedness to Remain Outstanding.
Administrative Agent shall have received an Officer's Certificate of
Company stating that, after giving effect to the transactions described
in this subsection 4.1T, the Indebtedness of Loan Parties (other than
Indebtedness under the Loan Documents) shall only consist of (a)
approximately $115,000,000 in aggregate principal amount of outstanding
Indebtedness with respect to the Convertible Subordinated Notes, (b)
the Nortel Trade Payable and (c) other Indebtedness listed on Schedule
7.1, the aggregate principal amount of which shall not exceed
$5,000,000. The terms and conditions of all such Indebtedness shall be
in form and in substance satisfactory to Administrative Agent.
(iii) Termination of Liens on Inventory. Administrative
Agent shall have received all documents or instruments necessary to
release all Liens in favor of Nortel LLC and/or its Affiliates with
respect to any inventory purchased by Arris from Nortel LLC and/or its
Affiliates prior to the Closing Date.
(iv) Convertible Subordinated Note Documents.
Administrative Agent shall have received (a) a fully executed or
conformed copy of a supplement to the Convertible Subordinated Note
Indenture and all principal documents executed in connection therewith
and (b) evidence satisfactory to Administrative Agent that the
Obligations have been designated "Designated Senior Debt" and
"Designated Senior Indebtedness" by the Company in accordance with the
terms of the Convertible Subordinated Note Indenture, in each case in
form and substance satisfactory to Agents.
U. COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by the Reorganization Documents and hereby and all documents
incidental thereto not previously found acceptable by Agents, acting on behalf
of Lenders, and its counsel shall be satisfactory in form and substance to
Agents and such counsel, and Agents and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agents may
reasonably request.
4.2 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date
are subject to the following further conditions precedent:
A. Administrative Agent shall have received before that
Funding Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by a duly
authorized Officer of Company.
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B. As of that Funding Date:
(i) The representations and warranties contained herein
and in the other Loan Documents shall be true, correct and complete in
all material respects on and as of that Funding Date to the same extent
as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier
date; provided, however, that this clause shall not apply to any
Discretionary Post-Default Loan to the extent waived by the
Administrative Agent in its sole discretion in connection with such
Discretionary Post-Default Loan.
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
such Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default; provided, however, that this clause (ii)
shall not apply to any Discretionary Post-Default Loan to the extent
waived by the Administrative Agent in its sole discretion in connection
with such Discretionary Post-Default Loan.
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
that Funding Date; provided, however, that this clause (iii) shall not
apply to any Discretionary Post-Default Loan to the extent waived by
the Administrative Agent in its sole discretion in connection with such
Discretionary Post-Default Loan.
(iv) After giving effect to the Loans requested on the
Funding Date, the Total Utilization of Revolving Loan Commitments will
not exceed the Revolving Loan Commitments then in effect;
(v) After giving effect to the Loans requested on the
Funding Date, the Total Utilization of Revolving Loan Commitments will
not exceed the Borrowing Base currently in effect; provided, however,
that this clause shall not apply to the borrowing of any Swing Line
Loan that is a Discretionary Overdraft Loan or any Revolving Loans that
are Revolving Discretionary Overdraft Loans;
(vi) In the case of any Swing Line Loan that is a
Discretionary Loan:
(a) after giving effect to the Loans requested on the
Funding Date, the Total Utilization of Revolving Loan
Commitments will not exceed the Maximum Discretionary
Borrowing Base Amount currently in effect;
(b) after giving effect to the Loans requested on the
Funding Date, the aggregate outstanding principal amount of
Discretionary Loans and Revolving
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Discretionary Loans will not exceed the Maximum Discretionary
Amount currently in effect;
(c) the chief financial officer of the Company shall
have provided a certificate describing the use of proceeds for
such Discretionary Loans and certifying that such use shall
not violate subsection 2.5 hereof; and
(d) each Loan Party shall have complied with all
other conditions to the borrowing of such Swing Line Loans
that Administrative Agent has deemed necessary in its sole
discretion; and
(vii) Borrowers shall have delivered such other
certificates or documents that Administrative Agent shall reasonably
request, in form and substance satisfactory to Administrative Agent.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not
the Administrative Agent is obligated to obtain the issuance of such Letter of
Credit) is subject to the following conditions precedent:
A. On or before the date of issuance of the initial
Letter of Credit pursuant to this Agreement, the initial Loans shall have been
made.
B. On or before the date of issuance of such Letter of
Credit, Administrative Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Request for Issuance
(or a facsimile copy thereof) in each case signed by the chief financial officer
of Company and a duly authorized Officer of the Borrower requesting the
issuance, together with all other information specified in subsection 3.1B(i)
and such other documents or information as the applicable Issuing Bank may
reasonably require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to the same
extent as if the issuance of such Letter of Credit were the making of a Loan and
the date of issuance of such Letter of Credit were a Funding Date.
SECTION 5. BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Administrative Agent to enter into any Letter of
Credit Guaranty and to induce Revolving Lenders to purchase participations
therein, Borrowers, jointly and severally, represent and warrant to each Lender
that the following statements are true, correct and complete:
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5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS
AND SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a
corporation, partnership, trust or limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization as specified in Schedule 5.1 annexed hereto. Each Loan Party has
all requisite power and authority to own and operate its properties, to carry on
its business as now conducted and as proposed to be conducted, to enter into the
Loan Documents to which it is a party and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had and could not reasonably be expected to result in a
Material Adverse Effect.
C. CONDUCT OF BUSINESS. Holdings and its Subsidiaries
are engaged only in the businesses permitted to be engaged in pursuant to
subsections 7.11 and 8.13.
D. SUBSIDIARIES. All of the Subsidiaries of Holdings and
their jurisdictions of organization are identified in Schedule 5.1 annexed
hereto, as said Schedule 5.1 may be supplemented from time to time pursuant to
the provisions of subsection 6.1(xv). The Capital Stock of each of the
Subsidiaries of Holdings identified in Schedule 5.1 annexed hereto (as so
supplemented) is duly authorized, validly issued, fully paid and nonassessable
and none of such Capital Stock constitutes Margin Stock. Each of the
Subsidiaries of Holdings identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation, partnership, trust or limited liability company
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization set forth therein, has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such power and authority has not had and could not reasonably be expected to
result in a Material Adverse Effect. Schedule 5.1 annexed hereto (as so
supplemented) correctly sets forth the ownership interest of Holdings and each
of its Subsidiaries in each of the Subsidiaries of Holdings identified therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery
and performance of the Loan Documents have been duly authorized by all necessary
action on the part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance
by Loan Parties of the Loan Documents to which they are parties and the
consummation of the transactions
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contemplated by the Loan Documents do not and will not (i) violate any provision
of any law or any governmental rule or regulation applicable to Holdings or any
of its Subsidiaries, the Organizational Documents of Holdings or any of its
Subsidiaries or any order, judgment or decree of any court or other Government
Authority binding on Holdings or any of its Subsidiaries, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of Holdings or any of its Subsidiaries,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Holdings or any of its Subsidiaries (other than any
Liens created under any of the Loan Documents in favor of Administrative Agent
on behalf of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Holdings
or any of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Closing Date and disclosed in writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and
performance by Loan Parties of the Loan Documents to which they are parties and
the consummation of the transactions contemplated by the Loan Documents, in each
case do not and will not require any Governmental Authorization, except for
filing required in connection with the perfection of the security interests or
the exercise of the rights granted pursuant to the Collateral Documents.
D. BINDING OBLIGATION. Each of the Loan Documents has
been duly executed and delivered by each Loan Party that is a party thereto and
is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. HOLDINGS COMMON STOCK AND ARRIS NEW MEMBERSHIP
INTEREST. The Holdings common stock to be issued on or before the Closing Date
(or thereafter upon the exchange of stock therefor) pursuant to the Certificate
of Merger in exchange for all of the issued and outstanding Capital Stock of the
Company and the Arris New Membership Interest to be issued on Closing Date, when
issued and delivered, will be duly and validly issued, fully paid and
nonassessable. No member of Arris will have any preemptive rights to subscribe
for any additional equity Securities of Arris. The issuance and sale of such
Holdings common stock and Arris New Membership Interest, upon such issuance and
sale, will either (a) have been registered or qualified under applicable federal
and state securities laws or (b) be exempt therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders'
request, the financial statements and information set forth in Schedule 4.1G.
All such statements other than pro forma financial statements were prepared in
conformity with GAAP and fairly present, in all material respects, the financial
position (on a consolidated and, where applicable, consolidating basis) of the
entities described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a consolidated and,
where applicable, consolidating
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basis) of the entities described therein for each of the periods then ended,
subject, in the case of any such unaudited financial statements, to changes
resulting from audit and normal year-end adjustments. No Loan Party has (and
will not have following the funding of the initial Loans) any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that, as of the Closing Date, is not
reflected in the foregoing financial statements or the notes thereto and, as of
any Funding Date subsequent to the Closing Date, is not reflected in the most
recent financial statements delivered to Lenders pursuant to subsection 6.1 or
the notes thereto and that, in any such case, is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Holdings or any of its Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Except as reflected in the Projections, since December 31,
2000, no event or change has occurred that has resulted in or evidences, either
in any case or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 5.4, neither Holdings nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so except as permitted by
subsection 7.5.
5.5 TITLE TO PROPERTIES; LIENS; REAL PROPERTY; INTELLECTUAL
PROPERTY.
A. TITLE TO PROPERTIES; LIENS. Holdings and its
Subsidiaries have (i) good, sufficient and legal title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets reflected in the financial statements referred to in subsection 5.3 or in
the most recent financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 7.7. Except as permitted by this Agreement, all such properties and
assets are free and clear of Liens.
B. REAL PROPERTY. As of the Closing Date, Schedule 5.5
annexed hereto contains a true, accurate and complete list of (i) all fee
interests in any Real Property Assets and (ii) all leasehold interests in any
Real Property Asset. Except as specified in Schedule 5.5 annexed hereto, each
lease, subleases or assignments of leases affecting each Real Property Asset is
in full force and effect and each Borrower does not have knowledge of any
material default that has occurred and is continuing thereunder, and each such
agreement constitutes the legally valid and binding obligation of each
applicable Loan Party, enforceable against such Loan Party in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles.
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C. INTELLECTUAL PROPERTY. As of the Closing Date,
Holdings and its Subsidiaries own or have the right to use, all Intellectual
Property used in the conduct of their business, except where the failure to own
or have such right to use in the aggregate could not reasonably be expected to
result in a Material Adverse Effect. No claim has been asserted and is pending
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property, nor
does any Borrower know of any valid basis for any such claim except for such
claims that in the aggregate could not reasonably be expected to result in a
Material Adverse Effect. The use of such Intellectual Property by Holdings and
its Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. All federal and state and all
foreign registrations of and applications for Intellectual Property, and all
unregistered Intellectual Property, that are owned or licensed by Holdings or
any of its Subsidiaries on the Closing Date are described on Schedule 5.5
annexed hereto.
5.6 LITIGATION; ADVERSE FACTS.
Schedule 5.6 sets forth certain Proceedings. No Proceedings
set forth on Schedule 5.6 and no other Proceedings (whether or not purportedly
on behalf of Holdings or any of its Subsidiaries) at law or in equity, or before
or by any court or other Government Authority (including any Environmental
Claims) that are pending or, to the knowledge of any Borrower, threatened
against or affecting Holdings or any of its Subsidiaries or any property of such
Holdings or any of its Subsidiaries individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither Holdings
nor any of its Subsidiaries (i) is in violation of any applicable laws
(including applicable Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (ii) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or other Government
Authority, that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all tax
returns and reports of Holdings and its Subsidiaries required to be filed by any
of them have been timely filed, and all taxes shown on such tax returns to be
due and payable and all material assessments, fees and other governmental
charges upon Holdings and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises that are due and payable have been
paid when due and payable. Each Borrower knows of no material proposed tax
assessment against Holdings or any of its Subsidiaries that is not being
actively contested by Holdings or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
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5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS;
MATERIAL CONTRACTS.
A. Neither Holdings nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Material Contract, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, could not reasonably be expected to result in
a Material Adverse Effect.
B. Neither Holdings nor any of its Subsidiaries is a
party to or is otherwise subject to any agreements or instruments or any charter
or other internal restrictions which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete
list of all the Material Contracts in effect on the Closing Date. Except as
described on Schedule 5.8, all such Material Contracts are in full force and
effect and no material defaults currently exist thereunder.
5.9 GOVERNMENTAL REGULATION.
Neither Holdings nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
A. Neither Holdings nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan,
not more than 25% of the value of the assets (either of Holdings or any Borrower
or of Holdings and its Subsidiaries on a consolidated basis) subject to the
provisions of subsection 7.2 or 7.7 or subject to any restriction contained in
any agreement or instrument, between Holdings and any Lender or any Affiliate of
any Lender, relating to Indebtedness and within the scope of subsection 8.2,
will be Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Holdings, each of its Subsidiaries, each of its ERISA
Affiliates and each Borrower is in compliance with all applicable material
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee
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Benefit Plan, and has performed all their material obligations under each
Employee Benefit Plan. Each Employee Benefit Plan that is intended to qualify
under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected
to occur.
C. Except to the extent required under Section 4980B of
the Internal Revenue Code or Section 601 of ERISA, no Employee Benefit Plan
provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), does not exceed $1,000,000.
E. Neither Holdings, any of its respective Subsidiaries,
any of its respective ERISA Affiliates, nor any Borrower contributes, or has any
obligation to contribute, or has any outstanding liability to a Multiemployer
Plan.
5.12 CERTAIN FEES.
No broker's or finder's fee or commission (other than any
fees, if any, payable by (i) Holdings or its Subsidiaries to Lead Arranger or
its Affiliates or Administrative Agent or (ii) Lead Arranger or Administrative
Agent to other Lenders in connection with the syndication of the Commitments and
Loans) will be payable with respect to this Agreement or any of the transactions
contemplated hereby, and each Borrower hereby indemnifies Lenders against, and
agrees that it will hold Lenders harmless from, any claim, demand or liability
for any such broker's or finder's fees incurred or alleged to have been incurred
in connection herewith or therewith and any expenses (including reasonable fees,
expenses and disbursements of counsel) arising in connection with any such
claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.13 annexed hereto:
(i) neither Holdings nor any of its Subsidiaries nor any
of their respective operations or current Facilities are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any applicable Environmental Law, (b) any
Environmental Claim, or (c) any Hazardous Materials Activity;
(ii) Neither Holdings nor any of its Subsidiaries have
received any written notification that any of the Facilities not
currently owned, leased, occupied, operated or used by Holdings or any
of its Subsidiaries is subject to any outstanding written order,
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consent decree or settlement agreement with any Person relating to (a)
any applicable Environmental Law, (b) any Environmental Claim, or (c)
any Hazardous Materials Activity, which in each case would,
individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect;
(iii) neither Holdings nor any of its Subsidiaries has
received any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. ss. 9604) or any comparable state law;
(iv) there are and, to each Borrower's knowledge, have
been no conditions, occurrences, or Hazardous Materials Activities that
could reasonably be expected to form the basis of a material
Environmental Claim against such Borrower or any of its Subsidiaries;
(v) compliance with all current or reasonably foreseeable
future requirements pursuant to or under applicable Environmental Laws
would not, individually or in the aggregate, be reasonably expected to
result in a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Holdings or any of its Subsidiaries that could reasonably be expected
to result in a Material Adverse Effect.
5.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations
by such Loan Party on any date on which this representation is made, will be,
Solvent.
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The
execution and delivery of the Collateral Documents by Loan Parties, together
with (i) the actions taken on or prior to the date hereof pursuant to
subsections 4.1R, 4.1S, 6.8 and 6.9 and (ii) the delivery to Administrative
Agent of any Pledged Collateral not delivered to Administrative Agent at the
time of execution and delivery of the applicable Collateral Document (all of
which Pledged Collateral has been so delivered) are effective to create in favor
of Administrative Agent for the benefit of Lenders, as security for the
respective Secured Obligations (as defined in the applicable Collateral Document
in respect of any Collateral), a valid First Priority Lien on all of the
Collateral, to the extent contemplated by the Collateral Documents, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet
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filed) and the periodic filing of UCC continuation statements in respect of UCC
financing statements filed by or on behalf of Administrative Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization,
approval or other action by, and no notice to or filing with, any Government
Authority is required for either (i) the pledge or grant by any Loan Party of
the Liens purported to be created in favor of Administrative Agent pursuant to
any of the Collateral Documents or (ii) the exercise by Administrative Agent of
any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A and except as may be required in connection with (i) the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities or (ii) the exercise of the rights granted pursuant to
the Collateral Documents.
C. ABSENCE OF THIRD-PARTY FILINGS. Except as described
on Schedule 5.16C and except such as may have been filed in favor of
Administrative Agent as contemplated by subsection 5.16A and to evidence
permitted lease obligations and other Liens permitted pursuant to subsection
7.2, (i) no effective UCC financing statement, fixture filing or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office and (ii) no effective filing covering all
or any part of the IP Collateral is on file in the PTO.
D. MARGIN REGULATIONS. The pledge of the Pledged
Collateral pursuant to the Collateral Documents does not violate Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information
supplied to Administrative Agent by or on behalf of any Loan Party with respect
to any of the Collateral (in each case taken as a whole with respect to any
particular Collateral) is accurate and complete in all material respects.
F. MEXICAN INTERCOMPANY SECURITY DOCUMENTS. To the
extent the Mexican Intercompany Security Documents were required to be delivered
in accordance with subsection 6.13, the Mexican Intercompany Security Documents
and the actions taken by the Mexican Subsidiaries and the Company in accordance
with the Mexican Intercompany Security Documents are effective to create in
favor of the Company, as security for the Mexican Intercompany Indebtedness, a
valid First Priority Lien on all of the personal property of the Mexican
Subsidiaries that are Material Subsidiaries to the extent contemplated by the
Mexican Intercompany Loan Documents, and all filings and other actions necessary
or desirable to perfect and maintain the perfection and First Priority status of
such Liens have been duly made or taken and remain in full force and effect, to
the extent required by the Mexican Intercompany Security Documents.
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5.17 DISCLOSURE.
No representation or warranty of Holdings or any of its
Subsidiaries contained in any Loan Document or in any other document,
certificate or written statement furnished to Lenders by or on behalf of
Holdings or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to any Borrower, in the case of any
document not furnished by it such Borrower) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by each Borrower to be reasonable at the time
made, it being recognized by Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There are no facts known (or which should upon the reasonable exercise of
diligence be known) to any Borrower (other than matters of a general economic
nature) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect and that have not been disclosed herein or
in such other documents, certificates and statements furnished to Lenders for
use in connection with the transactions contemplated hereby.
5.18 SUBORDINATED INDEBTEDNESS.
The Obligations constitute senior indebtedness that is
entitled to the benefits of the subordination provisions contained in the
Subordinated Indebtedness of Holdings and its Subsidiaries.
5.19 REORGANIZATION DOCUMENTS.
A. DELIVERY OF REORGANIZATION DOCUMENTS. Company has
delivered to Agents complete and correct copies of each Reorganization Document
that has been entered into by Holdings or any of its Subsidiaries and of all
exhibits and schedules thereto.
B. NORTEL'S WARRANTIES. Except to the extent otherwise
set forth herein or in the schedules hereto, to Holdings', Arris' and Company's
knowledge each of the representations and warranties given by Nortel Networks or
Nortel LLC to Holdings, Company or Arris in any Reorganization Document is true
and correct in all material respects as of the date hereof (or as of any earlier
date to which such representation and warranty specifically relates) and will be
true and correct in all material respects as of the Closing Date (or as of such
earlier date, as the case may be), in each case subject to the qualifications
set forth in the schedules to the applicable Reorganization Document.
C. WARRANTIES OF HOLDINGS, COMPANY AND ARRIS. Subject to
the qualifications and the schedules set forth therein, each of the
representations and warranties given by Holdings, Company or Arris to Nortel
Networks or Nortel LLC in any Reorganization Document is true and correct in all
material respects as of the date of such Reorganization
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Document thereof and to the extent entered into on or prior to the Closing Date
was true and correct in all material respects as of the Closing Date.
D. SURVIVAL. Notwithstanding anything in any
Reorganization Document to the contrary, the representations and warranties of
Company set forth in subsections 5.19B and 5.19C shall, solely for purposes of
this Agreement, survive the Closing Date for the benefit of Agents and Lenders.
5.20 INVENTORY AND ACCOUNTS.
Except as disclosed in the written information provided to
Administrative Agent and Lenders by Borrowers under subsection 6.11 (which
disclosure, in form and with detail satisfactory to Administrative Agent, may be
made on the Borrowing Base Certificates delivered pursuant to subsection 6.11)
or otherwise disclosed to Administrative Agent in writing, with respect to all
Inventory and Accounts:
(i) Administrative Agent may rely upon all statements,
warranties, or representations made in any Borrowing Base Certificate
or other written report regarding Inventory and Accounts delivered
hereunder by Company in determining which items of Inventory or
Accounts are to be deemed Eligible Inventory or Eligible Accounts, as
the case may be;
(ii) No Inventory or Account is subject to any Lien
whatsoever, except for Liens of Lenders under the Collateral Documents
and other Liens permitted hereunder;
(iii) No such Inventory has been consigned to any Person;
(iv) All Inventory has been produced in accordance with
all applicable requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders related thereto;
(v) All Inventory has been and shall be used in the
business of Holdings and its Subsidiaries and not for personal, family,
household or farming use;
(vi) Each Account represents a valid and legally
enforceable indebtedness based upon an actual and bona fide sale and
delivery of goods or rendition of services in the ordinary course of
business of Borrowers which has been finally accepted by the Account
Debtor and for which the Account Debtor is unconditionally liable to
make payment of the amount stated in each invoice, document or
instrument evidencing the Account in accordance with the terms thereof,
without offset, defense or counterclaim and will be paid in full at
maturity;
(vii) All statements made and all unpaid balances appearing
in the invoices, documents and instruments evidencing each Account are
true and correct in all material respects and are in all material
respects what they purport to be and, to the best of each
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Borrower's knowledge, all signatures and endorsements that appear
thereon are genuine and all signatories and endorsers have full
capacity to contract and to the best knowledge of Holdings and its
Subsidiaries as of the date of the issuance of the invoice relating to
such Account, each Account Debtor is solvent and financially able to
pay in full the Account when it matures;
(viii) None of the transactions underlying or giving rise to
any Account violate any state or federal laws or regulations, and all
documents relating to the Accounts are legally sufficient under such
laws or regulations and are legally enforceable in accordance with
their terms and all recording, filing and other requirements of giving
public notice under any applicable law have been duly complied with;
and
(ix) All sales, excise and similar taxes relating to
Accounts of Holdings and its Subsidiaries have been paid when due.
5.21 REPRESENTATIONS CONCERNING CASH MANAGEMENT SYSTEM.
The summary of the Cash Management System set forth in
Schedule 6.10 is accurate and complete in all material respects as of the
Closing Date and does not omit to state any material fact necessary to make the
statements set forth therein not misleading. Neither Holdings or any of its
Domestic Subsidiaries owns any Deposit Account which is not subject to the liens
granted under the Security Agreement. There has been no material change to the
Cash Management System since the Closing Date except such changes as have been
disclosed to and approved by the Administrative Agent in writing.
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS
Borrowers, jointly and severally, covenant and agree that, so
long as any of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the cancellation
or expiration of all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, such Borrower shall perform, and shall cause each of
its Subsidiaries to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Each Borrower will maintain, and cause each of its
Subsidiaries to maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP. Borrowers will deliver to Administrative
Agent for distribution to the Lenders:
(i) Events of Default, etc.: promptly upon any Officer of
any Borrower obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a
claimed Event of Default or Potential Event of Default, (b) that any
Person has given any notice
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to any Borrower or any Subsidiary of any Borrower or taken any other
action with respect to a claimed default or event or condition of the
type referred to in subsection 8.2, (c) of any condition or event that
would be required to be disclosed in a current report filed by any
Borrower with the SEC on Form 8-K if such Borrower were required to
file such reports under the Exchange Act, or (d) of the occurrence of
any event or change that has caused or evidences, either in any case or
in the aggregate, a Material Adverse Effect, an Officer's Certificate
specifying the nature and period of existence of such condition, event
or change, or specifying the notice given or action taken by any such
Person and the nature of such claimed Event of Default, Potential Event
of Default, default, event or condition, and what action Borrowers have
taken, are taking and propose to take with respect thereto;
(ii) Monthly and Quarterly Financials: as soon as
available and in any event within 30 days after the end of each month
and within 45 days after the end of each of the first three Fiscal
Quarters, (a) the consolidated and consolidating balance sheets of
Holdings and its Subsidiaries as at the end of such fiscal period and
the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Holdings and its Subsidiaries
for such fiscal period and for the period from the beginning of the
then current Fiscal Year to the end of such fiscal period, setting
forth in each case in comparative form the corresponding figures for
the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal
Year, to the extent prepared for such fiscal period, all in reasonable
detail and certified by the chief financial officer of Company that
they fairly present, in all material respects, the financial condition
of Holdings and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Holdings and its Subsidiaries in the form prepared for presentation to
senior management for such fiscal period and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal
period;
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated and consolidating balance sheets of Holdings and its
Subsidiaries as at the end of such Fiscal Year and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of Holdings and its Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures from
the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present, in all material
respects, the financial condition of Holdings and its Subsidiaries as
at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (b) a narrative report describing
the operations of Holdings and its Subsidiaries in the form prepared
for presentation to senior management for such Fiscal Year, and (c) in
the case of such consolidated financial statements, a report thereon of
Ernst & Young LLP or other independent
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certified public accountants of recognized national standing selected
by Borrowers and reasonably satisfactory to Administrative Agent, which
report shall be unqualified, shall express no doubts about the ability
of Holdings and its Subsidiaries to continue as a going concern, and
shall state that such consolidated financial statements fairly present,
in all material respects, the consolidated financial position of
Holdings and its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that
the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Compliance Certificates: together with each delivery
of financial statements of Holdings and its Subsidiaries pursuant to
subdivisions (ii) and (iii) above, (a) an Officer's Certificate of
Company stating that the signers have reviewed the terms of this
Agreement and have made, or caused to be made under their supervision,
a review in reasonable detail of the transactions and condition of
Holdings and its Subsidiaries during the accounting period covered by
such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the
signers do not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event that constitutes an
Event of Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period
of existence thereof and what action Borrowers have taken, are taking
and propose to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at
the end of the applicable accounting periods with the restrictions
contained in Section 7, in each case to the extent compliance with such
restrictions is required to be tested at the end of the applicable
accounting period;
(v) Reconciliation Statements: if, as a result of any
change in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Holdings and
its Subsidiaries delivered pursuant to subdivisions (ii), (iii) or
(xii) of this subsection 6.1 will differ in any material respect from
the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xii) of this subsection 6.1 following such change, consolidated
financial statements of Holdings and its Subsidiaries for (y) the
current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which
such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together
with each delivery of financial statements pursuant to subdivision
(ii), (iii) or (xii) of this subsection 6.1 following such change, if
required pursuant to subsection 1.2, a written statement of the chief
accounting officer or chief financial officer of Company setting forth
the differences (including any differences that
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would affect any calculations relating to the financial covenants set
forth in subsection 7.6) which would have resulted if such financial
statements had been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each
delivery of consolidated financial statements of Holdings and its
Subsidiaries pursuant to subdivision (iii) above, a written statement
by the independent certified public accountants giving the report
thereon (a) stating that their audit examination has included a review
of the terms of this Agreement and the other Loan Documents as they
relate to accounting matters, (b) stating whether, in connection with
their audit examination, any condition or event that constitutes an
Event of Default or Potential Event of Default has come to their
attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their
audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to
believe either or both that the information contained in the
certificates delivered therewith pursuant to subdivision (iv) above is
not correct or that the matters set forth in the Compliance
Certificates delivered therewith pursuant to clause (b) of subdivision
(iv) above for the applicable Fiscal Year are not stated in accordance
with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
reports submitted to Holdings and its Subsidiaries by independent
certified public accountants in connection with each annual, interim or
special audit of the financial statements of Holdings and its
Subsidiaries made by such accountants, including any comment letter
submitted by such accountants to management in connection with their
annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Holdings to its security holders (in their capacity as security
holders) or by any Subsidiary of Holdings to its security holders (in
their capacity as security holders) other than Holdings or another
Subsidiary of Holdings, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Holdings or any of its Subsidiaries with
any securities exchange or with the SEC or any governmental or private
regulatory authority, and (c) all press releases and other statements
made available generally by Holdings or any of its Subsidiaries to the
public concerning material developments in the business of Holdings or
any of its Subsidiaries;
(ix) Litigation or Other Proceedings: (a) promptly upon
any officer of any Borrower obtaining knowledge of (1) the institution
of, or non-frivolous threat of, any Proceeding or Proceedings against
or affecting Holdings or any of its Subsidiaries or any
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property of Holdings or any of its Subsidiaries not previously
disclosed in writing by Borrowers to Lenders, involving alleged
liability of, or claims equal to or greater than $2,000,000 in the
aggregate or (2) any material development in any Proceeding that, in
any case:
(x) if adversely determined, has a
reasonable possibility of giving rise to a Material
Adverse Effect; or
(y) seeks to enjoin or otherwise
prevent the consummation of, or to recover any
damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to any Borrower to enable Lenders and their
counsel to evaluate such matters; and (b) within forty-five days after
the end of each Fiscal Quarter, a schedule of all Proceedings involving
an alleged liability of, or claims against or affecting, Holdings or
any of its Subsidiaries equal to or greater than $2,000,000, and
promptly after request by any Agent such other information as may be
reasonably requested by any Agent to enable such Agent and its counsel
to evaluate any of such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Holdings, any
Subsidiary of Holdings or any of their respective ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness, copies of
all documents or governmental reports or filings relating to any
Employee Benefit Plan maintained by Holdings, any Borrower or any of
their respective Subsidiaries, as Administrative Agent shall reasonably
request;
(xii) Financial Plans: as soon as practicable at the end of
each Fiscal Quarter and in any event no later than the date of the
delivery of the financial statements required to be delivered at the
end of any Fiscal Quarter in accordance with subsection 6.1(ii), a
consolidated and consolidating plan and financial forecast for the next
succeeding four Fiscal Quarters (the "FINANCIAL PLAN" for such period),
including (a) forecasted consolidated and consolidating balance sheets
and forecasted consolidated and consolidating statements of income and
cash flows of Holdings and its Subsidiaries for each Fiscal Quarter in
such period, together with a pro forma Compliance Certificate for each
such period and an explanation of the assumptions on which such
forecasts are based, (b) forecasted Excess Availability for each Fiscal
Quarter in such period; and (c) such other information and projections
as any Lender may reasonably request;
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(xiii) Insurance: as soon as practicable after any material
change in insurance coverage maintained by Holdings and its
Subsidiaries notice thereof to Administrative Agent specifying the
changes and reasons therefor;
(xiv) Governing Body: with reasonable promptness, written
notice of any change in the Governing Body of Holdings;
(xv) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company or Arris, a written notice setting forth with
respect to such Person (a) the date on which such Person became a
Subsidiary of Holdings and (b) all of the data required to be set forth
in Schedule 5.1 annexed hereto with respect to all Subsidiaries of
Holdings (it being understood that such written notice shall be deemed
to supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement);
(xvi) Material Contracts: promptly, and in any event within
ten Business Days after any Material Contract of Holdings or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Holdings or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;
(xvii) Other Information: with reasonable promptness, such
other information and data with respect to Holdings or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 EXISTENCE, ETC.
Except as permitted under subsection 7.7, each Borrower will,
and will cause each of its Subsidiaries to, at all times preserve and keep in
full force and effect its existence and all rights and franchises material to
its business; provided, however that neither any Borrower nor any Subsidiary of
any Borrower shall be required to preserve any such right or franchise if the
Governing Body or management of such Borrower or such Subsidiary shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of such Borrower or such Subsidiary, as the case may be, and that the
loss thereof is not disadvantageous in any material respect to such Borrower,
such Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX .
A. Holdings and each Borrower will, and will cause each
of its Subsidiaries to, pay all taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or in respect of any
of its income, businesses or franchises before any material penalty accrues
thereon, and all claims (including claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
lien is imposed or any other material penalty or fine shall be incurred with
respect thereto; provided that no such charge or
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claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (i) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (ii) in the case of a
charge or claim which has or may become a Lien against any of the Collateral,
such proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.
B. Holdings and each Borrower will not, nor will it
permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than Holdings or any of
its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET
INSURANCE/ CONDEMNATION PROCEEDS.
A. MAINTENANCE OF PROPERTIES. Each Borrower will, and
will cause each of its Subsidiaries to, maintain or cause to be maintained in
good repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of each Borrower and its
Subsidiaries (including all Intellectual Property) and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof.
B. INSURANCE. Borrowers will maintain or cause to be
maintained, with financially sound and reputable insurers, such public liability
insurance, third party property damage insurance, business interruption
insurance and casualty insurance with respect to liabilities, losses or damage
in respect of the assets, properties and businesses of Borrowers and their
respective Subsidiaries as may customarily be carried or maintained under
similar circumstances by corporations of established reputation engaged in
similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Borrowers will maintain or cause to be maintained (i) flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in compliance
with any applicable regulations of the Board of Governors of the Federal Reserve
System, and (ii) replacement value casualty insurance on the Collateral under
such policies of insurance, with such insurance companies, in such amounts, with
such deductibles, and covering such risks as are at all times satisfactory to
Administrative Agent in its commercially reasonable judgment. Each such policy
of insurance shall (a) name Administrative Agent for the benefit of Lenders as
an additional insured thereunder as its interests may appear and (b) in the case
of each business interruption and casualty insurance policy, contain a loss
payable clause or endorsement, satisfactory in form and substance to
Administrative Agent, that names Administrative Agent for the benefit of Lenders
as the loss payee thereunder for any individual covered loss in excess of
$1,500,000 and for all losses under any such policy after an aggregate of
$2,000,000 has been paid under such policy and provides for at least 30 days
prior written notice to Administrative Agent of any modification or cancellation
of such policy.
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C. APPLICATION OF NET INSURANCE/CONDEMNATION PROCEEDS.
(i) Business Interruption Insurance. Upon receipt by any
Borrower or any of its Subsidiaries of any business interruption
insurance proceeds constituting Net Insurance/Condemnation Proceeds,
(a) so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, such Borrower or such Subsidiary may
retain and apply such Net Insurance/Condemnation Proceeds for working
capital purposes, and (b) if an Event of Default or Potential Event of
Default shall have occurred and be continuing, Borrowers shall apply an
amount equal to such Net Insurance/Condemnation Proceeds to prepay the
Loans (and/or the Revolving Loan Commitments shall be reduced) in the
manner provided in subsection 2.4B;
(ii) Net Insurance/Condemnation Proceeds Received by
Borrowers. Upon receipt by any Borrower or any of its Subsidiaries of
any Net Insurance/Condemnation Proceeds other than from business
interruption insurance, (a) so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing, such Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing the assets in
respect of which such Net Insurance/Condemnation Proceeds were received
or, to the extent not so applied, to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
2.4B, and (b) if an Event of Default or Potential Event of Default
shall have occurred and be continuing, Borrowers shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans
(and/or the Revolving Loan Commitments shall be reduced) in the manner
provided in subsection 2.4B.
(iii) Net Insurance/Condemnation Proceeds Received by
Administrative Agent. Upon receipt by Administrative Agent of any Net
Insurance/Condemnation Proceeds as loss payee, (a) to the extent
Borrowers would have been required to apply such Net
Insurance/Condemnation Proceeds (if it had received them directly) to
prepay the Loans and/or reduce the Revolving Loan Commitments,
Administrative Agent shall, and Borrowers hereby authorize
Administrative Agent to, apply such Net Insurance/Condemnation Proceeds
to prepay the Loans (and/or the Revolving Loan Commitments shall be
reduced) as provided in subsection 2.4B, and (b) to the extent the
foregoing clause (a) does not apply and (1) the aggregate amount of
such Net Insurance/Condemnation Proceeds received (and reasonably
expected to be received) by Administrative Agent in respect of any
covered loss does not exceed $5,000,000, Administrative Agent shall
deliver such Net Insurance/Condemnation Proceeds to Company on behalf
of Borrowers, and Borrowers shall, or shall cause one or more of their
Subsidiaries to, promptly apply such Net Insurance/Condemnation
Proceeds to the costs of repairing, restoring, or replacing the assets
in respect of which such Net Insurance/Condemnation Proceeds were
received, and (2) if the aggregate amount of Net Insurance/Condemnation
Proceeds received (and reasonably expected to be received) by
Administrative Agent in respect of any covered loss exceeds $5,000,000,
Administrative
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Agent shall hold such Net Insurance/Condemnation Proceeds in the
Collateral Account and, so long as any Borrower or any of their
respective Subsidiaries proceeds diligently to repair, restore or
replace the assets of such Borrower or such Subsidiary in respect of
which such Net Insurance/Condemnation Proceeds were received,
Administrative Agent shall from time to time disburse to such Borrowers
or such Subsidiary from the Collateral Account, to the extent of any
such Net Insurance/Condemnation Proceeds remaining therein in respect
of the applicable covered loss, amounts necessary to pay the cost of
such repair, restoration or replacement after the receipt by
Administrative Agent of invoices or other documentation reasonably
satisfactory to Administrative Agent relating to the amount of costs so
incurred and the work performed (including, if required by
Administrative Agent, lien releases and architects' certificates);
provided, however that if at any time Administrative Agent reasonably
determines (A) that such Borrower or such Subsidiary is not proceeding
diligently with such repair, restoration or replacement or (B) that
such repair, restoration or replacement cannot be completed with the
Net Insurance/Condemnation Proceeds then held by Administrative Agent
for such purpose, together with funds otherwise available to Borrowers
for such purpose, or that such repair, restoration or replacement
cannot be completed within 270 days after the receipt by Administrative
Agent of such Net Insurance/Condemnation Proceeds, Administrative Agent
shall, and Borrowers hereby authorize Administrative Agent to, apply
such Net Insurance/ Condemnation Proceeds to prepay the Loans (and/or
the Revolving Loan Commitments shall be reduced) in the manner provided
in subsection 2.4B.
6.5 INSPECTION RIGHTS; LENDER MEETING.
A. INSPECTION RIGHTS. Each Borrower shall, and shall
cause each of its Subsidiaries to, permit any authorized representatives
designated by any Lender to visit and inspect any of the properties of such
Borrower or of any of its Subsidiaries, to inspect, copy and take extracts from
its and their financial and accounting records, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants (provided that Company may, if it so chooses, be present at
or participate in any such discussion), at any time if an Event of Default or
Potential Event of Default has occurred and is continuing and at all other times
upon reasonable notice and at such reasonable times during normal business hours
and as often as may reasonably be requested.
B. LENDER MEETING. Company and/or Arris will, upon the
request of Administrative Agent or Requisite Lenders, participate in a meeting
of Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's principal offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Each Borrower shall comply, and shall cause each of its
Subsidiaries and all other Persons on or occupying any Facilities to comply,
with the requirements of all applicable laws,
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rules, regulations and orders of any Government Authority (including all
Environmental Laws applicable to such Facilities), noncompliance with which
could reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect.
6.7 ENVIRONMENTAL MATTERS.
A. ENVIRONMENTAL DISCLOSURE. Company will deliver to
Administrative Agent and Lenders:
(i) Environmental Audits and Reports. As soon as
practicable following receipt thereof, copies of all environmental
audits, investigations, material analyses and reports of any kind or
character, whether prepared by personnel of any Borrower or any
Subsidiary of any Borrower or by independent consultants, Governmental
Authorities or any other Persons, with respect to significant
environmental matters at any Facility or with respect to any
Environmental Claims;
(ii) Notice of Certain Releases, Remedial Actions, Etc.
Promptly upon the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported to any
Governmental Authority under any applicable Environmental Laws, (b) any
remedial action taken by any Borrower or any other Person in response
to (1) any Hazardous Materials Activities the existence of which could
reasonably be expected to result in one or more Environmental Claims
having, individually or in the aggregate, a Material Adverse Effect, or
(2) any Environmental Claims that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect,
and (c) any Borrower's discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Facility that could
cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws applicable to such Facility.
(iii) Written Communications Regarding Environmental
Claims, Releases, Etc. As soon as practicable following the sending or
receipt thereof by any Borrower or any of its Subsidiaries, a copy of
any and all written communications with respect to (a) any
Environmental Claims that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, (b) any
Release required to be reported to any Governmental Authority under any
applicable Environmental Laws, and (c) any request for information from
any governmental agency that suggests such agency is investigating
whether any Borrower or any of its Subsidiaries may be potentially
responsible for any Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having
Environmental Impact. Prompt written notice describing in reasonable
detail (a) any proposed acquisition of stock, assets, or property by
any Borrower or any of its Subsidiaries that could reasonably be
expected to (1) expose any Borrower or any of its Subsidiaries to, or
result
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in, Environmental Claims that could reasonably be expected to result
in, individually or in the aggregate, a Material Adverse Effect or (2)
affect the ability of any Borrower or any of its Subsidiaries to
maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their
respective operations and (b) any proposed action to be taken by any
Borrower or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject any Borrower or any
of its Subsidiaries to any material additional obligations or
requirements under any Environmental Laws.
B. BORROWERS' ACTIONS REGARDING HAZARDOUS MATERIALS
ACTIVITIES, ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS.
(i) Remedial Actions Relating to Hazardous Materials
Activities. Each Borrower shall, in compliance with all applicable
Environmental Laws, promptly undertake, and shall cause each of its
Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, abatement, cleanup, removal, remediation or
other response actions necessary to remove, remediate, clean up or
abate any Hazardous Materials Activity on, under or about any Facility
that is in violation of any applicable Environmental Laws or that
presents a material risk of giving rise to an Environmental Claim
(ii) Actions with Respect to Environmental Claims and
Violations of Environmental Laws. Each Borrower shall promptly take,
and shall cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any material violation of applicable
Environmental Laws by such Borrower or its Subsidiaries and (ii) make
an appropriate response to any Environmental Claim against such
Borrower or any of its Subsidiaries and discharge any obligations it
may have to any Person thereunder.
6.8 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY
COLLATERAL DOCUMENTS AFTER THE CLOSING DATE.
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL
PROPERTY COLLATERAL DOCUMENTS. In the event that any Person becomes a Domestic
Subsidiary of any Borrower and qualifies as a Material Subsidiary after the date
hereof, Borrowers will promptly notify Administrative Agent of that fact and
cause such Material Subsidiary to execute and deliver to Administrative Agent a
counterpart of the Subsidiary Guaranty and Security Agreement and to take all
such further actions and execute all such further documents and instruments
(including actions, documents and instruments comparable to those described in
subsection 4.1R) as may be necessary or, in the opinion of Administrative Agent,
desirable to create in favor of Administrative Agent, for the benefit of
Lenders, a valid and perfected First Priority Lien on all of the personal and
mixed property assets of such Material Subsidiary described in the applicable
forms of Collateral Documents.
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B. FOREIGN SUBSIDIARIES.
(i) In the event that any Person becomes a Foreign
Subsidiary of any Borrowers (other than a Mexican Subsidiary) and
qualifies as a Material Subsidiary after the date hereof, Company will
promptly notify Administrative Agent of that fact and, if such Material
Subsidiary is directly owned by a Borrower or any Domestic Subsidiary
of any Borrower, cause such Material Subsidiary to execute and deliver
to Administrative Agent such documents and instruments and take such
further actions (including actions, documents and instruments
comparable to those described in subsection 4.1R) as may be necessary,
or in the reasonable opinion of Administrative Agent, desirable to
create in favor of Administrative Agent, for the benefit of Lenders, a
valid and perfected First Priority Lien on 65% of the capital stock of
such Foreign Subsidiary.
(ii) In the event that any Mexican Subsidiary that is a
Material Subsidiary becomes a Subsidiary Guarantor, Company will
promptly cause such Material Subsidiary to execute and deliver to
Administrative Agent such documents and instruments and take such
further actions (including actions, documents and instruments
comparable to those described in subsection 4.1R) as may be necessary,
or in the reasonable opinion of Administrative Agent, desirable to
create in favor of Administrative Agent, for the benefit of Lenders, a
valid and perfected First Priority Lien on 100% of the capital stock of
such Foreign Subsidiary.
C. SUBSIDIARY ORGANIZATIONAL DOCUMENTS, LEGAL OPINIONS,
ETC. Company shall deliver to Administrative Agent, together with such Loan
Documents, (i) certified copies of such Subsidiary's Organizational Documents,
together with if such Subsidiary is a Domestic Subsidiary, a good standing
certificate from the Secretary of State of the jurisdiction of its organization
and each other state in which such Person is qualified to do business and, to
the extent generally available, a certificate or other evidence of good standing
as to payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each to be dated a recent date
prior to their delivery to Administrative Agent, (ii) a certificate executed by
the secretary or similar officer of such Subsidiary as to (a) the fact that the
attached resolutions of the Governing Body of such Subsidiary approving and
authorizing the execution, delivery and performance of such Loan Documents are
in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such Loan
Documents, and (iii) upon the request of Administrative Agent, a favorable
opinion of counsel to such Subsidiary, in form and substance satisfactory to
Administrative Agent and its counsel, as to (a) the due organization and good
standing of such Subsidiary, (b) the due authorization, execution and delivery
by such Subsidiary of such Loan Documents, (c) the enforceability of such Loan
Documents against such Subsidiary and (d) such other matters (including matters
relating to the creation and perfection of Liens in any Collateral pursuant to
such Loan Documents) as Administrative Agent may reasonably request, all of the
foregoing to be satisfactory in form and substance to Administrative Agent and
its counsel.
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6.9 MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL.
A. COLLATERAL ACCESS AGREEMENT. From and after the
Closing Date, in the event that any Borrower or any Subsidiary of any Borrower
acquires a Leasehold Property in which any Collateral is located, Company shall
inform Administrative Agent and, upon Administrative Agent's request, shall, use
reasonable best efforts to promptly deliver to Administrative Agent a Collateral
Access Agreement for such Leasehold Property.
B. ADDITIONAL MORTGAGES, ETC. From and after the Closing
Date, in the event that (i) any Borrower or any Subsidiary Guarantor acquires
any fee interest in real property or (ii) at the time any Person becomes a
Subsidiary Guarantor, such Person owns or holds any fee interest in real
property, in the case of clause (ii) above excluding any such Real Property
Asset the encumbrancing of which requires the consent (in the case of clause
(ii) above) of the then-existing senior lienholder, where Borrowers and their
Subsidiaries have attempted in good faith, but are unable, to obtain such senior
lienholder's consent (any such non-excluded Real Property Asset described in the
foregoing clause (i) or (ii) being an "ADDITIONAL MORTGAGED PROPERTY"), such
Borrower or such Subsidiary Guarantor shall deliver to Administrative Agent, as
soon as practicable after such Person acquires such Additional Mortgaged
Property or becomes a Subsidiary Guarantor, as the case may be, a fully executed
and notarized Mortgage (an "ADDITIONAL MORTGAGE"), in proper form for recording
in all appropriate places in all applicable jurisdictions, encumbering the
interest of such Loan Party in such Additional Mortgaged Property; and such
opinions, appraisal, documents, title insurance, environmental reports that
would have been delivered on the Closing Date if such Additional Mortgaged
Property were a Closing Date Mortgaged Property or that may be reasonably
required by Administrative Agent.
C. REAL ESTATE APPRAISALS. Each Borrower shall, and
shall cause each of its Subsidiaries to, permit an independent real estate
appraiser satisfactory to Administrative Agent, upon reasonable notice, to visit
and inspect any Additional Mortgaged Property for the purpose of preparing an
appraisal of such Additional Mortgaged Property satisfying the requirements of
any applicable laws and regulations (in each case to the extent required under
such laws and regulations as determined by Administrative Agent in its
discretion).
6.10 DEPOSIT ACCOUNTS AND CASH MANAGEMENT SYSTEMS.
Holdings and its Subsidiaries shall maintain the Cash
Management System (including through timely compliance with their obligations to
pay returned items and other Obligations arising in the ordinary course of
operation of the Cash Management System). Holdings and each Borrower shall, and
shall cause each of its Subsidiaries to, use and maintain its Deposit Accounts
and cash management systems in a manner satisfactory to Administrative Agent.
Holdings and the Borrowers shall not permit the aggregate amount of money or
currency held by their Foreign Subsidiaries in a Deposit Account or otherwise at
any time to exceed the equivalent of $2,000,000.
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6.11 BORROWING BASE AND INVENTORY REPORTS.
(I) Borrowing Base Certificates. Company shall deliver a
Borrowing Base Certificate to Administrative Agent two days in advance
of the Closing Date, certifying the Borrowing Base as of such date, to
permit Administrative Agent to determine the Borrowing Base to be in
effect on the Closing Date. Thereafter Company shall deliver Borrowing
Base Certificates on a weekly basis on or before the third Business Day
after the end of each week with each such Borrowing Base Certificate
dated and certifying the Borrowing Base as of the immediately previous
week. Promptly following receipt of each such Borrowing Base
Certificate, Administrative Agent shall determine or, as the case may
be, redetermine the Borrowing Base in accordance with the definition
thereof, using the information contained in such Borrowing Base
Certificate, and shall notify Borrowers of the Borrowing Base so
determined and so redetermined. Each such Borrowing Base so determined
or redetermined by Administrative Agent shall remain in effect until
notice of a redetermined Borrowing Base shall have been given by
Administrative Agent in accordance with the provisions of this
subsection 6.11.
(II) Inventory Reports.
(a) Each Borrower and its Subsidiaries shall at
all times hereafter maintain a perpetual inventory, keeping
correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, the cost
therefor and daily withdrawals therefrom and additions
thereto, all of which records shall be available during usual
business hours upon reasonable prior request of Administrative
Agent.
(b) Within 150 days of the Closing Date and at
such other times as Administrative Agent may reasonably
request, the Borrowers and their Subsidiaries shall conduct a
physical count of the Inventory for which a statistical
sampling will be sufficient, provided that such statistical
sampling is consistent with prior practice of the Borrower and
their Subsidiaries and performed in accordance with generally
accepted auditing standards, and promptly following such
physical Inventory shall supply Administrative Agent with a
report in a form and with such specificity as may be
reasonably satisfactory to Administrative Agent concerning
such physical count of the Inventory, which report shall
include the amount of Inventory in each location where any
Inventory is maintained; provided however, that if the
Administrative Agent requests a physical count of the
Inventory at a time other than when the Borrowers are
conducting a physical count of the Inventory in connection
with the closing of the Fiscal Year, such physical count shall
be limited to the type of Inventory included in the Emerald
Appraisal.
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(iii) Accounts
(a) Company shall describe on each Borrowing
Base Certificate any Account Claim that exceeds $1,000,000, in
form and detail satisfactory to Administrative Agent;
provided, however, that if any Borrower shall obtain knowledge
that (x) Account Claims relating to Accounts owed by any
single Account Debtor exceed $2,500,000 or (y) the aggregate
amount of all Account Claims at any time exceed $5,000,000,
such Borrower shall promptly report such information to
Administrative Agent.
(b) Borrowers and their Subsidiaries shall pay
all material sales, excise or similar taxes relating to
Accounts when due, except where such taxes are being contested
in good faith by appropriate proceedings promptly instituted
and diligently conducted, so long as (i) such reserve or other
appropriate provision, if any, as shall be required in
conformity with GAAP shall be made therefore and (ii) in the
case of a charge or claim which has or may become a Lien
against any such Account or any other Collateral, such
proceedings conclusively operate to stay the sale of any
portion of the Collateral to satisfy such charge or claim.
6.12 EMERALD APPRAISAL/STRATEGIS ASSESSMENT/COLLATERAL AUDIT.
(i) Holdings shall and shall cause its Subsidiaries to
fully cooperate in the preparation once per Fiscal Quarter of a
mandatory update of the Emerald Appraisal; provided, however, that so
long as no Event of Default or Potential Event of Default has occurred
and is continuing, the Administrative Agent may only have such updates
conducted by Emerald once per Fiscal Quarter; provided, however, that
in the case of any Fiscal Quarter ending after December 31, 2002, if
Average Excess Availability for the previous Fiscal Quarter was greater
than $80,000,000, the Emerald Appraisal shall only be required to be
updated upon the request of Administrative Agent; provided, further,
that if an Event of Default or Potential Event of Default has occurred
and is continuing, Holdings shall and shall cause its Subsidiaries to
fully cooperate in the preparation of updates to the Emerald Appraisal
as often as the Administrative Agent shall request in its discretion.
(ii) Holdings shall and shall cause its Subsidiaries to
fully cooperate in the preparation of any updates of the Collateral
Audit; provided, that so long as no Event of Default or Potential Event
of Default has occurred and is continuing, the Administrative Agent may
only conduct such updates once per Fiscal Quarter.
(iii) Holdings shall and shall cause its Subsidiaries to
fully cooperate in the preparation of any updates of the Strategis
Assessment; provided, that so long as no Event of Default or Potential
Event of Default has occurred and is continuing, the Administrative
Agent may only conduct such updates once per Fiscal Quarter.
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6.13 MEXICAN INTERCOMPANY SECURITY DOCUMENTS/SUBSIDIARY GUARANTY.
(i) If at any time the aggregate fair market value of the
personal property owned by the Mexican Subsidiaries that are both
Material Subsidiaries and Subsidiary Guarantors exceeds $10,000,000,
(A) the Company shall and the Borrowers shall cause such Mexican
Subsidiaries and any other Mexican Subsidiary that at any time becomes
both a Material Subsidiary and a Subsidiary Guarantor to enter into the
Mexican Intercompany Security Documents and take all such other actions
under the laws of Mexico that may be necessary or, in the opinion of
Administrative Agent, desirable in order to create a valid and
perfected First Priority security interest in substantially all of the
personal property of such Mexican Subsidiaries that secures the Mexican
Intercompany Indebtedness and (B) the Company shall grant a security
interest in any Mexican Intercompany Security Documents entered into by
the Company from time to time in accordance with the foregoing clause
(A) to the Administrative Agent in accordance with the terms of the
Security Agreement and shall deliver such executed Mexican Intercompany
Security Documents to the Administrative Agent;
(ii) Borrowers shall cause any Mexican Subsidiary that is
a Material Subsidiary to execute the Subsidiary Guaranty prior to such
Mexican Subsidiary becoming liable for any Indebtedness permitted under
clause (z) of subsection 7.1(iv).
6.14 MANDATORY EXCHANGE EVENT.
Holdings and its Subsidiaries shall cause the Mandatory
Exchange Event to be consummated in accordance with the terms of the Amended and
Restated Arris Membership Agreement if (x) Holdings, Company or any of their
Affiliates enter into and consummate an agreement to sell or otherwise transfer
all or any portion of their membership interests in Arris to any Person who is
not an Affiliate of Holdings, (y) if there is any foreclosure on any of the
membership interests of Arris held by Company or Holdings or a sale or other
transfer in lieu of foreclosure or any other exercise of the rights or remedies
of a secured party by the Administrative Agent with respect to such membership
interests, in each case in accordance with the terms of the Loan Documents or
(z) if an Event of Default has occurred and is continuing either (A) the Arris
Class B Member has provided written notice to Arris, Company, Holdings and the
Administrative Agent or (B) the Administrative Agent at the direction of
Requisite Lenders has provided notice to the Arris Class B Member and Arris,
requesting the consummation of the Mandatory Exchange Event.
6.15 POST-CLOSING DELIVERIES.
Holdings and each Borrower shall cause (i) any actions set
forth on Schedule 6.15 annexed hereto to be taken and (ii) each document,
certificate or other item set forth on such Schedule 6.15 to be delivered, in
each case within the time period specified on such Schedule 6.15 (subject to any
extension as provided in Schedule 6.15) and in form and substance reasonably
satisfactory to Administrative Agent and Arranger/Syndication Agent.
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SECTION 7. BORROWERS' NEGATIVE COVENANTS
Holdings and each Borrower covenants and agrees that, so long
as any of the Commitments hereunder shall remain in effect and until payment in
full of all of the Loans and other Obligations and the cancellation or
expiration of all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, it shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Holdings and Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, create, incur, assume
or guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) Borrowers may become and remain liable with respect
to the Obligations;
(ii) Each Borrower may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon
any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Borrowers may become and remain liable with respect
to (x) Purchase Money Indebtedness and (y) Indebtedness in respect of
Capital Leases entered into after the Closing Date and incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Borrowers and their Subsidiaries; provided that the
outstanding principal amount of such Purchase Money Indebtedness and
Indebtedness incurred in respect of such Capital Leases, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Borrowers, does not in the
aggregate exceed at any time $15,000,000;
(iv) (x) Each Borrower may become and remain liable with
respect to Indebtedness to any other Borrower, (y) except as prohibited
by subsection 7.15, any Wholly-Owned Subsidiary of any Borrower that is
not a Borrower (other than a Mexican Subsidiary that is both a Material
Subsidiary and a Subsidiary Guarantor) may become and remain liable
with respect to Indebtedness to any Borrower or any other Wholly-Owned
Subsidiary of any Borrower and (z) any Wholly-Owned Mexican Subsidiary
that is both a Material Subsidiary and a Subsidiary Guarantor may
become and remain liable with respect to Indebtedness (any such
Indebtedness, the "MEXICAN INTERCOMPANY INDEBTEDNESS") to the Company;
provided that (a) all such intercompany Indebtedness shall be evidenced
by promissory notes, in form and substance satisfactory to
Administrative Agent, (b) all such intercompany Indebtedness shall be
subordinated in right of payment to the payment in full of the
Obligations pursuant to the terms of the
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applicable promissory notes, (c) any payment by any Subsidiary of any
Borrower under any guaranty of the Obligations shall result in a pro
tanto reduction of the amount of any intercompany Indebtedness owed by
such Subsidiary to any Borrower or to any of its Subsidiaries for whose
benefit such payment is made, (d) each Wholly-Owned Foreign Subsidiary
may only become and remain liable with respect to Indebtedness
permitted by this clause (iv) to fund the operating expenses and
capital expenditures incurred by such Wholly-Owned Foreign Subsidiary
in the ordinary course of business and consistent with the past
practices of the Borrowers and their Subsidiaries and (e) the aggregate
principal amount of all outstanding Indebtedness that all Wholly-Owned
Foreign Subsidiaries (other than Indebtedness incurred by any Mexican
Subsidiary that is both a Material Subsidiary and a Subsidiary
Guarantor from the Company) may owe to the Borrowers and all
Wholly-Owned Domestic Subsidiaries and all Mexican Subsidiaries that
are both Material Subsidiaries and Subsidiary Guarantors together with
the aggregate amount of any Investments made by the Borrowers and their
Wholly-Owned Domestic Subsidiaries in such Foreign Subsidiaries as
permitted by subsection 7.3(viii) shall not exceed $5,000,000 at any
time;
(v) Borrowers and their Subsidiaries, as applicable, may
remain liable with respect to Indebtedness and Indebtedness in respect
of Capital Leases, in each case, existing as of the Closing Date and
described in Schedule 7.1 annexed hereto;
(vi) (a) Any Borrower may become and remain liable with
respect to Indebtedness of any Person assumed in connection with any
acquisition of such Person permitted under subsection 7.3 and (b) a
Person that becomes a direct or indirect Wholly-Owned Domestic
Subsidiary of any Borrower as a result of any acquisition permitted
under subsection 7.3 may remain liable with respect to Indebtedness
existing on the date of such acquisition; provided that such
Indebtedness is not created in anticipation of such acquisition;
provided, further, the aggregate outstanding principal amount of all
Indebtedness under this clause (vi) shall not at any time exceed
$10,000,000;
(vii) Foreign Subsidiaries of Borrowers may become and
remain liable with respect to Indebtedness other than the Indebtedness
permitted by clause (iv) above in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding;
(viii) Company may remain liable with respect to
Indebtedness evidenced by the Convertible Subordinated Notes, in an
aggregate principal amount not to exceed $115 million; provided, that
such Indebtedness shall be refinanced or converted into shares of
Holdings common stock prior to December 31, 2002, in each case pursuant
to documentation in form and substance satisfactory to Requisite
Lenders;
(ix) Holdings and Company may become and remain liable
with respect to Indebtedness which refinances the Convertible
Subordinated Notes, pursuant to documentation in form and substance
satisfactory to Agents; provided that (v) such Indebtedness shall be
subordinated to the Obligations on terms and conditions and
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pursuant to documentation in form and substance satisfactory to Agents,
(w) the maturity date of such refinancing Indebtedness shall be no
earlier than six months after the Revolving Loan Commitment Termination
Date; (x) the terms of such Indebtedness shall not require any
scheduled repayment of principal prior to the Revolving Loan Commitment
Termination Date; (y) the Company shall have provided projections to
the Administrative Agent, in form and substance satisfactory to
Administrative Agent, demonstrating that after giving effect to the
incurrence of such Indebtedness the Loan Parties shall be in compliance
on a pro forma basis with all of the covenants set forth in Section 7
during the four-Fiscal Quarter period following the incurrence of such
Indebtedness, and (z) the aggregate principal amount of such
Indebtedness shall be no greater than the aggregate principal amount of
Convertible Subordinated Notes as of the date of such refinancing plus
all reasonable costs, fees and expenses related to such refinancing;
(x) From the Closing Date until 364 days after the
Closing Date, Arris may remain liable with respect to no more than $14
million of unsecured Indebtedness to Nortel LLC and/or its Affiliates
incurred on the Closing Date with respect to purchases of inventory by
Arris from Nortel LLC and/or its Affiliates, pursuant to documentation
in form and substance satisfactory to Agents in their reasonable
discretion (such Indebtedness, the "NORTEL TRADE PAYABLE");
(xi) After the occurrence of the Mandatory Exchange Event,
Holdings may become and remain liable with respect to Subordinated
Holdings Indebtedness; provided, however, that at the time of the
exchange of the Arris New Membership Interests made in connection with
such Mandatory Exchange Event, (A) the aggregate value of (x) such
Subordinated Holdings Indebtedness, (y) any Preferred Holdings Stock
issued in connection with such Mandatory Exchange Event and (z) any
common stock of Holdings issued in connection with such Mandatory
Exchange Event (in each case determined in accordance with the terms of
the Amended and Restated Arris Membership Agreement (including the
exhibits thereto)), shall not exceed (B) (x) the value of the
unredeemed portion of the Arris New Membership Interest plus (y) any
accrued and unpaid return on such unredeemed portion of the Arris New
Membership Interest, as each such value is calculated in accordance
with the terms of the Amended and Restated Arris Membership Agreement;
provided, further, that after giving effect to such exchange, all Arris
New Membership Interests shall be extinguished and no former Class B
Member shall have any rights or claims with respect to any Arris New
Membership Interests (in each case determined in accordance with the
terms of the Amended and Restated Arris Membership Agreement (including
the exhibits thereto)) ;
(xii) Borrowers may become and remain liable with respect
to other Indebtedness; provided, that the aggregate outstanding
principal amount of such Indebtedness outstanding at any time together
with any Contingent Obligations incurred pursuant to subsection 7.4(ix)
shall not exceed $20,000,000; and
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(xiii) Borrowers and their Subsidiaries, as applicable, may
become and remain liable with respect to Indebtedness which refinances
the Indebtedness described in clause (v) of this subsection 7.1 (other
than any such Indebtedness relating to any obligation owed for all or
any part of the deferred purchase price of property or services which
was due more than six months before the Closing Date), pursuant to
documentation in form and substance reasonably satisfactory to Agents;
provided that (x) such refinancing Indebtedness shall be incurred by
the Borrower or the applicable Subsidiary, as the case may be, that
incurred the Indebtedness described in clause (v) of this subsection
7.1 that is being refinanced, (y) the maturity date of such refinancing
Indebtedness shall be later than the maturity date of the Indebtedness
described in clause (v) of this subsection 7.1 that is being refinanced
and (z) the aggregate principal amount of such refinancing Indebtedness
shall be less than the sum of the aggregate principal amount of
Indebtedness being refinanced as of the date of such refinancing plus
all reasonable costs, fees and expenses related to such refinancing and
any reasonable prepayment penalty required to be paid pursuant to the
terms of the Indebtedness being refinanced.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Holdings and Borrowers shall
not, and shall not permit any of their respective Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist any Lien on or with respect
to any property or asset of any kind (including any document or instrument in
respect of goods or accounts receivable) of Holdings or Borrowers or any such
Subsidiary whether now owned or hereafter acquired, or any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
valid financing statement or other similar notice of any Lien with respect to
any such property, asset, income or profits under the UCC or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Liens on the Excluded Stock;
(v) Liens (other than Liens on any (x) Accounts or
Inventory of Holdings, any Borrower or any Domestic Subsidiary or
Mexican Subsidiary of any Borrower or (y) Capital Stock) granted by
Borrowers and their Subsidiaries securing Indebtedness permitted by
subsections 7.1(vi), 7.1(vii) and 7.1(xii) in an aggregate amount not
to exceed $10,000,000 at any time outstanding; provided, however, that
(a) Borrowers and their Domestic Subsidiaries shall not grant such
Liens in connection with any Indebtedness of any Foreign Subsidiary of
any Borrower incurred pursuant to subsection 7.1(vii) and (b) Liens
related to Indebtedness incurred in connection with a
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Permitted Acquisition, may only attach to the assets acquired in such
Permitted Acquisition.
(vi) Liens securing Indebtedness permitted by subsection
7.1(xiii), solely to the extent such Liens (a) replace Liens set forth
on Schedule 7.2 annexed hereto with respect to the Indebtedness that is
being refinanced, (b) are on the same assets as the replaced Liens and
(c) are of the same scope and priority as the replaced Liens; and
(vii) Liens securing Purchase Money Indebtedness and
evidencing Capital Leases, in each case as permitted by subsection
7.1(iii); provided, that any such Liens shall only attach to the assets
being acquired with such Indebtedness.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Holdings, any
Borrower or any of their respective Subsidiaries shall create or assume any Lien
upon any of its properties or assets, whether now owned or hereafter acquired,
other than Liens excepted by the provisions of subsection 7.2A, it shall make or
cause to be made effective provision whereby the Obligations will be secured by
such Lien equally and ratably with any and all other Indebtedness secured
thereby as long as any such Indebtedness shall be so secured; provided that,
notwithstanding the foregoing, this covenant shall not be construed as a consent
by Requisite Lenders to the creation or assumption of any such Lien not
permitted by the provisions of subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Neither Holdings nor any
of its Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien granted to secure the Obligations or any refinancing of
the Obligations upon any of its properties or assets, whether now owned or
hereafter acquired, except with respect to specific property encumbered to
secure payment of particular Indebtedness or to be sold pursuant to an executed
agreement with respect to an Asset Sale.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO
BORROWERS OR OTHER SUBSIDIARIES. Holdings and Borrowers will not, and will not
permit any of their respective Subsidiaries to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such Subsidiary to (i) pay dividends or make any
other distributions on any of such Subsidiary's Capital Stock owned by any
Borrower or any Subsidiary of any Borrower, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to any Borrower or any Subsidiary of any
Borrower, (iii) make loans or advances to any Borrower or any Subsidiary of any
Borrower, or (iv) transfer any of its property or assets to any Borrower or any
Subsidiary of any Borrower, except (a) as provided in this Agreement, (b) as may
be provided in an agreement with respect to an Asset Sale, (c) subject to
compliance with subsections 4.1S and 6.9, customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of a
Borrower or a Subsidiary of a Borrower, (d) customary provisions restricting
assignment of any agreement entered into by a Borrower or a Subsidiary of a
Borrower in the ordinary course of business (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-406 of the Uniform
Commercial Code or any other applicable law (including the Bankruptcy Code) or
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principles of equity), (e) to the extent any holder of a Permitted Encumbrance
may restrict the transfer of the asset or assets subject thereto and (f)
restrictions contained in any agreement establishing a Joint Venture requiring
the consent of an equity holder of such Joint Venture to the payment of
dividends, the payment of any Indebtedness, the making of any loan or advance or
the transfer of assets by such Joint Venture.
7.3 INVESTMENTS; ACQUISITIONS.
Holdings and Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, including any Joint Venture, or acquire, by purchase
or otherwise, all or substantially all the business, property or fixed assets
of, or Capital Stock or other ownership interest of any Person, or any division
or line of business of any Person except:
(i) Borrowers and their Domestic Subsidiaries may make
and own Investments in Cash Equivalents;
(ii) So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Foreign Subsidiaries of the
Borrowers may make and own Investments in Cash Equivalents in an
aggregate principal amount not to exceed $2,000,000 at any time
outstanding;
(iii) Holdings, each Borrower and each Wholly-Owned
Domestic Subsidiary of a Borrower may make and own additional equity
Investments in their respective Wholly-Owned Domestic Subsidiaries and
Company may make additional equity Investments in Arris;
(iv) Each Borrower and its Subsidiaries may make
intercompany loans to the extent permitted under subsection 7.1(iv);
(v) Each Borrower and its Subsidiaries may make
Consolidated Capital Expenditures permitted by subsection 7.8;
(vi) Each Borrower and its Subsidiaries may continue to
own the Investments owned by them and described in Schedule 7.3 annexed
hereto;
(vii) So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Borrowers may consummate
Permitted Acquisitions; provided that each of the following conditions
is satisfied:
(a) the Acquired Business is engaged in a line of
business that the Borrower and their Subsidiaries are
permitted to engage in under subsection 7.11
(b) the Acquired Business becomes a Subsidiary
Guarantor or is acquired by a Borrower or a Subsidiary
Guarantor in such Permitted Acquisition;
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(c) the aggregate amount of consideration paid by the
Borrowers for all Permitted Acquisitions (i) in any Fiscal
Year shall not exceed $10,000,000 and (ii) during the term of
this Agreement shall not exceed $25,000,000;
(d) concurrently with the consummation of such
Permitted Acquisition, Company shall, and shall cause its
Subsidiaries to, comply with the requirements of subsections
6.8 and 6.9 with respect to such Permitted Acquisition;
(e) the Administrative Agent shall have completed an
audit of the Inventory and Accounts to be acquired as part of
such Acquired Business and shall have determined the extent to
which such Account and Inventory shall be included as Eligible
Accounts and Eligible Inventory immediately after the
consummation of such Permitted Acquisition;
(f) Company shall deliver to Administrative Agent an
Officer's Certificate, in form and substance satisfactory to
Administrative Agent, (1) certifying that no Potential Event
of Default or Event of Default shall then exist or shall occur
as a result of such Permitted Acquisition, (2) demonstrating
that after giving effect to such Permitted Acquisition and to
all Indebtedness to be incurred or assumed or repaid in
connection with or as consideration for such Permitted
Acquisition, the Borrowers will be in compliance with the
financial covenants set forth in subsection 7.6, calculated on
a Pro Forma Basis, as of the last day of the four Fiscal
Quarter period most recently ended prior to the date of the
proposed Permitted Acquisition for which the relevant
financial information is available and (3) demonstrating that
after giving effect to such Permitted Acquisition, Excess
Availability immediately after the consummation of such
Permitted Acquisition shall be at least $25 million; provided,
however, that in determining such Excess Availability,
Accounts and Inventory acquired in such Permitted Acquisition
shall only be included in determining such Excess Availability
to the extent that Administrative Agent has determined,
pursuant to the audit described in clause (e) above, that such
Accounts will qualify as Eligible Accounts or Eligible
Inventory;
(g) prior to the consummation of any Permitted
Acquisition, Borrowers shall deliver to Administrative Agent
to the extent available from the applicable Seller of the
Acquired Business a copy of (i) financial statements of the
Person or business so acquired for the immediately preceding
four consecutive Fiscal Quarter period corresponding to the
calculation period for the financial covenants in the
immediately preceding clause and (ii) audited or reviewed
financial statements of the Person or business to be so
acquired for the fiscal year ended within such period of such
Person;
(viii) Borrowers and their Wholly-Owned Domestic
Subsidiaries may make additional Investments in their respective
Wholly-Owned Foreign Subsidiaries (other
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than any Mexican Subsidiary that is both a Material Subsidiary and a
Subsidiary Guarantor); provided that the aggregate amount of all such
Investments made in all Foreign Subsidiaries and the aggregate
principal amount of all Indebtedness owed by all of the Foreign
Subsidiaries (other than the Mexican Subsidiaries) of the Borrowers
pursuant to subsection 7.1(iv) shall not exceed $5,000,000 at any time;
(ix) So long as no Default or Potential Event of Default
has occurred and is continuing, Borrowers may make and own other
Investments in an aggregate amount not to exceed at any time
$10,000,000 plus any cash interest or dividends received in connection
with any such Investment; and
(x) Company may acquire and hold obligations of one or
more of its officers or other employees in connection with such
officers' or employees' acquisition of shares of Holdings' common
stock, so long as no cash is actually advanced by Holdings or any of
its Subsidiaries to such officers or employees in connection with the
acquisition of any such obligations.
(xi) Borrowers may receive and hold Investments received
in the ordinary course of business in settlement of Indebtedness of
third parties created in the ordinary course of business;
(xii) Borrowers and their Subsidiaries may make Investments
consisting of non-cash consideration received in connection with sales
of assets permitted pursuant to subsection 7.7(v) in an aggregate
outstanding amount not to exceed $5,000,000 at any time;
(xiii) Borrowers and their Subsidiaries may make Investments
consisting of non-cash consideration received in connection with sales
of assets pursuant to subsection 7.7(vi) to the extent permitted by
such subsection;
(xiv) Company may make Investments consisting of non-cash
consideration received in connection with sales of assets pursuant to
subsection 7.7(x) to the extent permitted by such subsection;.
(xv) Holdings and its Subsidiaries may make investments
consisting of deposit accounts maintained by Holdings and its
Subsidiaries as permitted by subsection 6.10; and
(xvi) So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Company may make and own
Investments in Indebtedness of the Development Authority of Fulton
County incurred pursuant to the Tax Abatement Transaction Documents in
an aggregate principal amount not to exceed $60,000,000 at any time.
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7.4 CONTINGENT OBLIGATIONS.
Holdings and Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, create or become or
remain liable with respect to any Contingent Obligation, except:
(i) Loan Parties may become and remain liable with
respect to Contingent Obligations under their respective Guaranties;
and
(ii) [Intentionally Omitted];
(iii) Borrowers may become and remain, jointly and
severally, liable with respect to Contingent Obligations in respect of
Letters of Credit;
(iv) Borrowers may become and remain, jointly and
severally, liable with respect to Contingent Obligations under Hedge
Agreements incurred in the ordinary course of business of the Borrowers
and their Subsidiaries;
(v) Borrowers and their respective Subsidiaries may
become and remain liable with respect to Contingent Obligations in
respect of customary indemnification and purchase price adjustment
obligations incurred in connection with Asset Sales or other sales of
assets;
(vi) Borrowers and their respective Subsidiaries may
become and remain liable with respect to Contingent Obligations under
guarantees in the ordinary course of business of the obligations of
suppliers, customers, franchisees and licensees of Borrowers and their
respective Domestic Subsidiaries in an aggregate amount for all
Borrowers and their Subsidiaries not to exceed at any time $1,000,000;
(vii) Borrowers and any Domestic Subsidiary of any Borrower
may become and remain liable with respect to Contingent Obligations in
respect of any Indebtedness of any other Borrower or other Domestic
Subsidiary of any Borrower that is permitted by subsection 7.1(xii) in
an aggregate amount not to exceed the amount of such Indebtedness;
(viii) Any Foreign Subsidiary of any Borrower may become and
remain liable with respect to Contingent Obligations in respect of any
Indebtedness of any other Foreign Subsidiary of Borrower that is
permitted by subsection 7.1(vii) in an aggregate amount not to exceed
the amount of such Indebtedness;
(ix) Borrowers and any Domestic Subsidiary of any Borrower
may become and remain liable with respect to Contingent Obligations in
respect of any Indebtedness of any Foreign Subsidiary of any Borrower
that is permitted by subsection 7.1(xii); provided, that the aggregate
amount of any such Contingent Obligations together with
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the aggregate outstanding principal amount of any Indebtedness incurred
pursuant to subsection 7.1(xii) shall not exceed $20,000,000;
(x) Holdings and Company may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness
incurred pursuant to subsection 7.1(ix);
(xi) Each Borrower and its Subsidiaries, as applicable,
may remain liable with respect to Contingent Obligations described in
Schedule 7.4 annexed hereto;
(xii) Holdings may become and remain liable with respect to
Contingent Obligations arising under the Subordinated Holdings
Guaranty;
(xiii) Foreign Subsidiaries of the Borrowers may incur
Contingent Obligations in respect of letters of credit issued for their
account in an aggregate amount not to exceed $2,000,000 (or the foreign
currency equivalent thereof) at any one time outstanding;
(xiv) Arris may remain liable with respect to the
redemption obligation with respect to the Arris New Membership
Interests, in accordance with the terms of the Amended and Restated
Arris Membership Agreement; and
(xv) Holdings may remain liable with respect to (i)
Contingent Obligations arising under the Subordinated Reorganization
Guaranty until the earlier of (A) the Mandatory Exchange Event or (B)
the redemption of the Arris New Membership Interest, in each case in
accordance with the terms of the Amended and Restated Arris Membership
Agreement and (ii) its obligations under the Amended and Restated Arris
Membership Agreement to issue common stock or Preferred Holdings Stock
or to incur Holdings Subordinated Indebtedness in connection with the
Mandatory Exchange Event, to the extent permitted by this Agreement and
the Reorganization Documents.
7.5 RESTRICTED JUNIOR PAYMENTS.
Holdings and Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Junior Payment; provided that:
(i) Company and Arris may make Restricted Junior Payments
to Holdings to the extent necessary to permit Holdings to discharge the
consolidated tax liabilities of Holdings and its Subsidiaries, so long
as Holdings applies the amount of any such Restricted Junior Payment
for such purpose;
(ii) So long as no Event of Default or Potential Event of
Default shall have occurred and is continuing, Company and Arris may
make Restricted Junior Payments to Holdings to the extent necessary to
permit Holdings to pay accounting or legal or
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administrative expenses or reimbursements or franchise, or similar
taxes and governmental charges incurred by Holdings and relating to the
business, operations or finances of the Borrowers and their
Subsidiaries in an aggregate amount not to exceed $500,000 in any
Fiscal Year, so long as Holdings applies the amount of any such
Restricted Junior Payment for such purpose;
(iii) So long as (i) no Event of Default has occurred and
is continuing, (ii) the Mandatory Exchange Event has occurred and (iii)
Arris would have been permitted to make Restricted Junior Payment
pursuant to clause (vii) below if the Mandatory Exchange Event had not
occurred, Company and Arris may make Restricted Junior Payments to
Holdings to the extent necessary to permit Holdings to make the
payments permitted by subsection 7.5(viii), so long as Holdings applies
the amount of any such Restricted Junior Payment for such purpose;
(iv) So long as (i) no Event of Default has occurred and
is continuing pursuant to subsection 8.1, 8.6 or 8.7, or (ii) no
blockage notice has been delivered in accordance with the terms of the
Convertible Subordinated Note Indenture, Company and Arris may make
Restricted Junior Payments to Holdings to the extent necessary to
permit Holdings to make scheduled cash interest payments on any
Indebtedness incurred by Holdings in accordance with subsection
7.1(ix), so long as Holdings applies the amount of any such Restricted
Junior Payment for such purpose;
(v) So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Company, Arris, or their
Subsidiaries may make Restricted Junior Payments to Holdings to permit
Holdings to purchase, redeem, retire or otherwise acquire Capital Stock
of Holdings, or options or warrants to purchase such Capital Stock,
held by officers, directors, or employees of Holding, Company, Arris or
any Subsidiary thereof pursuant to a compensation plan or arrangement
in connection with the death, disability or termination of employment
of any such officer, director or employee in an aggregate amount for
all such transactions not exceeding the sum of $1,000,000 in any Fiscal
Year or $3,000,000 during the term of this Agreement, so long as
Holdings applies the amount of any such Restricted Junior Payment for
such purpose;
(vi) So long as (i) no Event of Default has occurred and
is continuing pursuant to subsection 8.1, 8.6 or 8.7, or (ii) no
blockage notice has been delivered in accordance with the terms of the
Convertible Subordinated Note Indenture, Company may make scheduled
cash interest payments on the Convertible Subordinated Notes to the
extent required by the Convertible Subordinated Notes and the
Convertible Subordinated Note Indenture;
(vii) Arris may make cash redemptions of the Arris New
Membership Interest in accordance with the terms of the Amended and
Restated Arris Membership Agreement after the six month anniversary of
the Closing Date once during each Fiscal Quarter ending after such six
month anniversary, in an aggregate amount not to exceed
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$33,000,000 in any such Fiscal Quarter, so long as (a) prior to the
date on which such cash redemption is made, Borrowers have delivered to
the Agents and Lenders all financial statements, compliance
certificates and other documents required to be delivered in connection
with the immediately preceding Fiscal Quarter pursuant to this
Agreement, (b) immediately before and after giving pro forma effect to
such cash redemption, no Event of Default shall have occurred and be
continuing, (c) immediately before and after giving pro forma effect to
such cash redemption, the Borrowers shall have Excess Availability of
at least $75 million and (d) the Borrowers shall have delivered an
officer's certificate of Company signed by the chief financial officer
of Company certifying as to the foregoing clauses (a)-(c) and attaching
a Borrowing Base Certificate demonstrating such Excess Availability, in
each case in form and substance satisfactory to Administrative Agent;
provided that, with respect to the fourth Fiscal Quarter of any Fiscal
Year, Borrowers shall be deemed to have satisfied the that part of the
condition contained in clause (a) above requiring the delivery of
financial statements upon delivery of unaudited financial statements in
lieu of audited financial statements and a certificate signed by the
chief financial officer of Company certifying that, when delivered, the
audited financial statements shall not contain any material differences
from the unaudited financial statements; and
(viii) If Holdings has issued any Preferred Holdings Stock
or Subordinated Holdings Indebtedness in connection with the Mandatory
Exchange Event, Holdings may make cash redemptions on such Preferred
Holdings Stock and/or payments on such Subordinated Holdings
Indebtedness equal to the amounts that Arris would have been permitted
to pay as cash redemptions under clause (vii) above if such Mandatory
Exchange Event had not occurred, so long as in the case of any proposed
redemption or other payment (A) Arris would have been permitted to make
such cash redemptions pursuant to clause (vii) above, (B) Company
and/or Arris have made a Restricted Junior Payment in accordance with
clause (iii) above to allow Holdings to make such cash redemption or
other payment and (C) all of the requirements set forth in subclauses
(a)-(d) of clause (vii) above have been satisfied; provided, however,
that if in addition to issuing Preferred Holdings Stock and/or
Subordinated Holdings Indebtedness in connection with such Mandatory
Exchange Event, Holdings issues common stock in exchange for some
portion of the Arris New Membership Interests, the amount permitted to
be paid pursuant to this clause (viii) shall be reduced pro rata to
reflect such issuance of common stock.
7.6 FINANCIAL COVENANTS.
A. MINIMUM CONSOLIDATED FIXED CHARGE COVERAGE RATIO.
Holdings and Borrowers shall not permit the Consolidated Fixed Charge Coverage
Ratio for any four-Fiscal Quarter period ending during any of the periods set
forth below to be less than the correlative ratio indicated:
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MINIMUM FIXED
PERIOD CHARGE COVERAGE RATIO
------ ---------------------
Closing Date through December 31, 2001 1.10:1.00
January 1, 2002 through June 30, 2002 1.25:1.00
July 1, 2002 and thereafter 1.50:1.00
B. MAXIMUM CONSOLIDATED SENIOR LEVERAGE RATIO. Holdings
and Borrowers shall not permit the Consolidated Senior Leverage Ratio,
calculated on a Pro Forma Basis, as of the last day of the most recently ended
Fiscal Quarter ending during any of the periods set forth below to exceed the
correlative ratio indicated:
MAXIMUM CONSOLIDATED SENIOR LEVERAGE
PERIOD RATIO
------ -------------------------------------
Closing Date through September 30, 2001 2.85:1.00
October 1, 2001 through December 31, 2001 2.50:1.00
January 1, 2002 through March 31, 2002 2.00:1.00
April 1, 2002 through September 30, 2002 1.50:1.00
October 1, 2002 and thereafter 1.25:1.00
C. MINIMUM CONSOLIDATED NET WORTH. Holdings and
Borrowers shall not permit Consolidated Net Worth at any time to be less than
the sum of (i) $368.9 million ("Base Amount") plus (ii) (a) the sum of
Consolidated Net Income for each Fiscal Quarter ending after the Closing Date
and ending on or before such date of determination in which Consolidated Net
Income was positive multiplied by (b) 75%; provided that for purposes of
calculating Consolidated Net Income for the Fiscal Quarter ending on September
30, 2001, such Fiscal Quarter shall be deemed to commence on the first day after
the Closing Date and end on September 30, 2001.
D. MINIMUM CONSOLIDATED INVENTORY TURNS RATIO. Holdings
and Borrowers shall not permit the Consolidated Inventory Turns Ratio,
calculated on a Pro Forma Basis, as of the last day of the most recently ended
Fiscal Quarter ending during any of the periods set forth below to be less than
the correlative ratio indicated:
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PERIOD MINIMUM CONSOLIDATED INVENTORY TURNS RATIO
- ------ ------------------------------------------
Closing Date through June 30, 2002 1.85:1.00
July 1, 2002 through December 31, 2002 2.00:1.00
January 1, 2003 through September 30, 2003 2.30:1.00
October 1, 2003 and thereafter 2.40:1.00
E. MINIMUM BORROWING BASE AVAILABILITY. Holdings and
Borrowers shall not at any time permit the Borrowing Base Availability to be
less than $10,000,000 in any thirty (30) day period for more than two
consecutive Business Days; provided, however, that the Borrowing Base
Availability shall not be less than $10,000,000 for two or more non-consecutive
Business Days in any thirty (30) day period; provided, further, that if the
Minimum Borrowing Base is less than $10,000,000 on any date, it shall
automatically constitute a Potential Event of Default.
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES.
Holdings and Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, alter the corporate, capital or legal
structure of Holdings, any Borrower or any Subsidiary of any Borrower (other
than the filing of the Preferred Holdings Stock Certificate of Designations and
the issuance of any Preferred Holdings Stock or Holdings Common Stock, in each
case, in connection with the Mandatory Exchange Event), or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, property or assets
(including its notes or receivables and Capital Stock of a Subsidiary, whether
newly issued or outstanding), whether now owned or hereafter acquired, except:
(i) any Borrower (other than Company or Arris) may be
merged with or into any other Borrower (including Company or Arris) or
be liquidated, wound up or dissolved, or all or any part of its
business, property or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a series of
transactions, to any other Borrower (including Company or Arris);
(ii) any Wholly-Owned Domestic Subsidiary of any Borrower
that is not itself a Borrower may be merged with or into any Borrower
or any other Wholly-Owned Domestic Subsidiary of any Borrower that is
not itself a Borrower or be liquidated, wound up or dissolved, or all
or any part of its business, property or assets may be
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conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to any Borrower or any other
Wholly-Owned Domestic Subsidiary of any Borrower; provided, that in any
merger involving a Borrower and a wholly-owned Domestic Subsidiary that
is not a Borrower, the Borrower shall be the continuing or surviving
Person;
(iii) any Wholly-Owned Foreign Subsidiary of any Borrower
may be merged with or into any other Wholly-Owned Foreign Subsidiary of
any Borrower or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to any other Wholly-Owned Foreign Subsidiary of any
Borrower;
(iv) Borrowers and their Subsidiaries may sell or
otherwise dispose of assets in transactions that do not constitute
Asset Sales (including, without limitation, the sale or other disposal
of the Excluded Stock); provided that the consideration received for
such assets shall be in an amount at least equal to the fair market
value thereof;
(v) Borrowers and their Subsidiaries may dispose of
obsolete, worn out or surplus property in the ordinary course of
business;
(vi) So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Borrowers and their
Subsidiaries may make Asset Sales of assets (other than Inventory and
Accounts) having a fair market value not in excess of $5,000,000 in any
Fiscal Year and $15,000,000 in the aggregate for all such Asset Sales
during the term of this Agreement; provided (a) the consideration
received for such assets shall be in an amount at least equal to the
fair market value thereof; (b) at least seventy-five percent (75%) of
the consideration received shall be cash; and (c) the cash proceeds of
such Asset Sales shall be applied as required by subsection 2.4A(iv)(b)
or subsection 2.4C; provided, further, that no such Asset Sale may
include the Capital Stock of Company or Arris;
(vii) Any Borrower or a Subsidiary of any Borrower may sell
or dispose of shares of Capital Stock of any of its Subsidiaries in
order to qualify members of the Governing Body of the Subsidiary if
required by applicable law;
(viii) Any Person may be merged with or into any Borrower if
the acquisition of the Capital Stock of such Person by such Borrower or
such Subsidiary would have been permitted pursuant to subsection 7.3;
provided that such Borrower shall be the continuing or surviving Person
and (b) no Potential Event of Default or Event of Default shall have
occurred or be continuing after giving effect thereto;
(ix) Any Person may be merged with or into any
Wholly-Owned Subsidiary of any Borrower if the acquisition of the
Capital Stock of such Person by such Borrower or such Subsidiary would
have been permitted pursuant to subsection 7.3; provided that (a)
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the surviving Person after such merger is a Wholly-Owned Subsidiary of
a Borrower, (b) the Borrowers have or have caused such Subsidiary to
take all actions required by subsection 6.8 and (c) no Potential Event
of Default or Event of Default shall have occurred or be continuing
after giving effect thereto; and
(x) So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Company may sell the Power
Division; provided that (a) the Board of Directors or management of
Company determine that the consideration received for such assets is at
least equal to the fair market value thereof, (b) that at least fifty
percent (50%) of the consideration received shall be cash; and (c)
concurrently with such sale Company shall have delivered to
Administrative Agent (1) an Officer's Certificate (A) certifying that
no Potential Event of Default or Event of Default shall then exist or
shall occur as a result of such sale and (B) demonstrating that after
giving effect to such sale, Company would have been in compliance with
the financial covenants set forth in subsection 7.6, as of the last day
of the four Fiscal Quarter period most recently ended prior to the date
of such sale on a Pro Forma Basis and (2) a Borrowing Base Certificate
detailing what the Borrowing Base will be immediately after giving
effect to such sale.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Holdings and Borrowers shall not, and shall not permit their
respective Subsidiaries to, make or incur Consolidated Capital Expenditures, in
any Fiscal Year indicated below, in an aggregate amount in excess of the
corresponding amount (the "MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES AMOUNT")
set forth below opposite such Fiscal Year; provided that the Maximum
Consolidated Capital Expenditures Amount for any Fiscal Year shall be increased
by an amount equal to the excess, if any, of the Maximum Consolidated Capital
Expenditures Amount for the previous Fiscal Year (without giving effect to any
increase in the Maximum Consolidated Capital Expenditures Amount for such
previous Fiscal Year made in accordance with this proviso) over the actual
amount of Consolidated Capital Expenditures made during such previous Fiscal
Year; provided, further that in no event shall the amount of such increase
exceed 50% of the Maximum Consolidated Capital Expenditures Amount for such
previous Fiscal Year (prior to any adjustment in accordance with this proviso):
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
----------- --------------------
2001 $25,000,000
2002 $30,000,000
2003 $30,000,000
2004 $30,000,000
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7.9 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Holdings and Borrowers shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Holdings or with any Affiliate of Holdings or of
any such holder, on terms that are less favorable to Holdings or that
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that the foregoing
restriction shall not apply to (i) any transaction between Holding and any of
its Wholly-Owned Subsidiaries or between any of its Wholly-Owned Subsidiaries;
(ii) reasonable fees and other compensation paid to members of the Governing
Bodies of Holding and its Subsidiaries; (iii) transactions pursuant to the
Reorganization Documents consummated or entered into on or prior to the Closing
Date or pursuant to the Ancillary Agreements (as defined in the Reorganization
Agreement); (iv) stock options held by AT&T or one of its Affiliates as of the
Closing Date and as further described on Schedule 7.9; (v) registration rights
held by AT&T or one of its Affiliates as of the Closing Date and as further
described on Schedule 7.9; and (vi) transactions with Nortel Networks and its
Affiliates and AT&T entered into in the ordinary course of business of Holdings
and its Subsidiaries.
7.10 SALES AND LEASE-BACKS
Each Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as
a guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) that any Borrower or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than any Borrower or any Subsidiaries of any Borrower) or (ii)
that any Borrower or any of its Subsidiaries intends to use for substantially
the same purpose as any other property that has been or is to be sold or
transferred by any Borrower or any of its Subsidiaries to any Person (other than
any Borrower or any of its Subsidiaries) in connection with such lease; provided
that any Borrower and Subsidiaries of any Borrower may become and remain liable
as lessee, guarantor or other surety with respect to any such lease (a) in
connection with the Tax Abatement Transaction and (b) if and to the extent that
such Borrower or such Subsidiaries would be permitted to enter into, and remain
liable under, such lease to the extent that the transaction would be permitted
under subsection 7.1, assuming the sale and lease back transaction constituted
Indebtedness in a principal amount equal to the gross proceeds of the sale.
7.11 CONDUCT OF BUSINESS.
From and after the Closing Date, each Borrower shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
(i) the businesses engaged in by Borrowers and their Subsidiaries on the Closing
Date and similar or related businesses and (ii) such other lines of business as
may be consented to by Requisite Lenders; provided, however,
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that any Borrower and any Subsidiary of any Borrower may continue to engage in
any business acquired pursuant to subsection 7.3(vii), that would not be
permitted by this subsection 7.11 so long as such business is an immaterial part
of the operations of the Borrowers and their Subsidiaries.
7.12 AMENDMENTS OR WAIVERS OF CERTAIN AGREEMENTS; AMENDMENTS OF
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
A. AMENDMENTS OR WAIVERS OF CERTAIN AGREEMENTS. Neither
any Borrower nor any of its Subsidiaries will agree to any amendment to, or
waive any of its rights under, any Reorganization Document, Mexican Intercompany
Security Document or Tax Abatement Transaction Document after the Closing Date,
without in each case obtaining the prior written consent of Requisite Lenders to
such amendment or waiver.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED
INDEBTEDNESS. Except as permitted by subsection 7.1(viii) or 7.1(ix), each
Borrower shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to any
Borrower or Lenders.
7.13 FISCAL YEAR.
Borrowers shall not change their Fiscal Year-end from December
31st.
7.14 SALE OR DISCOUNT OF RECEIVABLES.
Each Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its Notes or
Accounts.
7.15 NON-MATERIAL FOREIGN SUBSIDIARIES.
Each Borrower shall not permit any of the Foreign Subsidiaries
listed on Schedule 7.15 to (a) own or acquire (i) any assets with an aggregate
fair market value (without
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netting such fair market value against any liability of such Subsidiary)
exceeding $100,000 or (ii) any material patent, trademark, tradename, copyright,
technology, software, know-how or processes or (b) incur any Indebtedness in an
aggregate outstanding principal amount exceeding, for each such Foreign
Subsidiary, $10,000 from Holdings or any of its Subsidiaries unless the
provision of subsection 6.8B have been complied with in respect to such Foreign
Subsidiary.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF
DEFAULT") shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Borrowers to pay any installment of principal of
any Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Borrowers
any to pay when due any amount payable to an Issuing Bank in reimbursement of
any drawing under a Letter of Credit; or failure by Borrowers to pay any
interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Holdings or any of its Subsidiaries to pay
when due any principal of or interest on or any other amount payable in
respect of one or more items of Indebtedness (other than Indebtedness
referred to in subsection 8.1) or Contingent Obligations in an
aggregate principal amount of $5,000,000 or more, in each case beyond
the end of any grace period provided therefor; or
(ii) a breach or default by Holdings or any of its
Subsidiaries under (a) the Subordination Agreement, the Subordinated
Holdings Guaranty or any term of the Amended and Restated Arris
Membership Agreement relating to the mandatory exchange or redemption
obligation with respect to the Arris New Membership Interest and (b)
after the Mandatory Exchange Event, any note or other instrument
evidencing the Subordinated Holdings Indebtedness or any term of the
Preferred Holding Stock Certificate of Designation relating to the
mandatory exchange or redemption obligation of the Preferred Holdings
Stock;
(iii) breach or default by Holdings or any of its
Subsidiaries with respect to any other material term of (a) one or more
items of Indebtedness or Contingent Obligations in the individual or
aggregate principal amounts referred to in clause (i) above or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of
such breach or default is to cause, or to permit the holder or holders
of that Indebtedness or Contingent Obligation(s) (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior
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to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice,
lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of any Borrower to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or 6.14 or 6.15 or Section 7 of
this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement
made by Holdings, any Borrower or any Subsidiary of any Borrower in any Loan
Document or in any statement or certificate at any time given by Holdings, any
Borrower or any Subsidiary of any Borrower in writing pursuant hereto or thereto
or in connection herewith or therewith shall be false in any material respect on
the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within (i)
two (2) Business Days, in the case of subsection 6.11 or (ii) thirty (30) days,
in all other cases, after the earlier of (i) an Officer of Company, Arris or
such Loan Party becoming aware of such default or (ii) receipt by Company, Arris
and such Loan Party of notice from Administrative Agent or any Lender of such
default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of Holdings or any of its
Subsidiaries in an involuntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal or state
law; or
(ii) an involuntary case shall be commenced against
Holdings or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Holdings or any of its Subsidiaries, or over all or
a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Holdings or any of its Subsidiaries for
all or a substantial part of its property; or a warrant of attachment,
execution or similar process shall have been issued against any
substantial part of the property of Holdings or any of its
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Subsidiaries, and any such event described in this clause (ii) shall
continue for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC..
(i) Holdings or any of its Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary
case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Holdings or any of its
Subsidiaries shall make any assignment for the benefit of creditors; or
(ii) Holdings or any of its Subsidiaries shall be unable,
or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the Governing Body of
Holdings or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any
of the actions referred to in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar
process involving in any individual case or in the aggregate at any time an
amount in excess of $2,000,000 (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Holdings or any of
their Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against
Holdings or any of its Subsidiaries decreeing the dissolution or split up of
Holdings or that Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually
or in the aggregate results in or could reasonably be expected to result in
liability of Holdings any of its Subsidiaries or any of their respective ERISA
Affiliates in excess of $2,000,000 during the term of this Agreement; or there
shall exist an amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), which exceeds $2,000,000; or
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8.11 CHANGE IN CONTROL.
A Change in Control shall have occurred; or
8.12 INVALIDITY OF GUARANTIES; FAILURE OF SECURITY; REPUDIATION OF
OBLIGATIONS.
At any time after the execution and delivery thereof, (i) any
Guaranty for any reason, other than the satisfaction in full of all Obligations,
shall cease to be in full force and effect (other than in accordance with its
terms) or shall be declared to be null and void, (ii) any Collateral Document
shall cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or Administrative Agent shall not have or shall cease to
have a valid and perfected First Priority Lien in any Collateral purported to be
covered thereby, in each case for any reason other than the failure of
Administrative Agent or any Lender to take any action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability,
including with respect to future advances by Lenders, under any Loan Document to
which it is a party; or
8.13 CONDUCT OF BUSINESS BY HOLDINGS.
Holdings shall (i) engage in any business other than (a) the
ownership of the Capital Stock of the Company and Arris, the payment of taxes
and the provision of administrative services to the Company, Arris and their
respective Subsidiaries in the ordinary course of business and of the type
typical for holding companies similar to Holdings and (b) entering into and
performing its obligations under and in accordance with the Loan Documents and
Reorganization Documents to which it is a party, or (ii) own any assets other
than (a) the capital stock of Company and (b) membership interests of Arris:
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by each Borrower, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to obtain the issuance of any Letter of
Credit and enter into any Letter of Credit Guaranty shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Borrowers, declare
all or any portion of the amounts described in clauses (a) through (c) above to
be, and the same shall forthwith become, immediately due and
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payable, and the obligation of each Lender to make any Loan, the obligation of
Administrative Agent to obtain the issuance of any Letter of Credit and enter
into any Letter of Credit Guaranty shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of Revolving Lenders under
subsection 3.3C(i) or the obligations of Revolving Lenders to purchase
assignments of any unpaid Swing Line Loans as provided in subsection 2.1A(ii).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Security Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to clause (ii) of such paragraph Borrowers shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Loans, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by
written notice to Borrowers, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders and
are not intended, directly or indirectly, to benefit Borrowers, and such
provisions shall not at any time be construed so as to grant Borrowers the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Loan Documents, even if the conditions set
forth in this paragraph are met.
SECTION 9. AGENTS
9.1 APPOINTMENT.
A. APPOINTMENT OF AGENTS. CIT Group/Business Credit,
Inc. is hereby appointed Administrative Agent hereunder and under the other Loan
Documents and the Arris Subordination Agreement and Credit Suisse First Boston
is hereby appointed Syndication Agent hereunder and each Lender hereby
authorizes (i) Administrative Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents and (ii) authorizes
Syndication Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents and the Arris Subordination Agreement.
Each Agent agrees to act upon the express conditions contained in this Agreement
and the other Loan Documents and the Arris Subordination Agreement, as
applicable. The provisions of this Section 9 are solely for the benefit of
Agents and Lenders and neither any Loan Party nor any of its Subsidiaries shall
have any rights as a third party beneficiary of any of the provisions thereof
(other than with respect to the right to consent to a substitute Administrative
Agent pursuant to subsection 9.5). In
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performing its functions and duties under this Agreement, each Agent (other than
Administrative Agent as provided in subsection 2.1(D) shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any Loan Party
or any of its Subsidiaries.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is
the purpose of this Agreement and the other Loan Documents that there shall be
no violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case Administrative Agent deems
that by reason of any present or future law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
"SUPPLEMENTAL COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL
Agents").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from any Borrower or any
other Loan Party be required by any Supplemental Collateral Agent so appointed
by Administrative Agent for more fully and certainly vesting in and confirming
to him or it such rights, powers, privileges and duties, such Borrower shall, or
shall cause such Loan Party to, execute, acknowledge and deliver any and all
such instruments promptly upon request by Administrative Agent. In case any
Supplemental Collateral Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Collateral Agent, to the extent permitted by
law, shall vest in and be exercised by Administrative Agent until the
appointment of a new Supplemental Collateral Agent.
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9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably
authorizes Agents to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents
and the Arris Subordination Agreement as are specifically delegated or granted
to Agents by the terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. In addition, Administrative Agent
is hereby appoint to serve as attorney-in-fact on behalf of each Lender for
purposes of the Mexican Security Documents. Agents shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan Documents and the Arris Subordination Agreement. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. Agent shall have, by reason of this Agreement or any of
the other Loan Documents or the Arris Subordination Agreement, a fiduciary
relationship in respect of any Lender or any Borrower; and nothing in this
Agreement or any of the other Loan Documents or the Arris Subordination
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon any Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall
be responsible to any Lender for the execution, effectiveness, authenticity,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or the Arris Subordination Agreement or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made by
such Agent to Lenders or by or on behalf of Borrowers to such Agent or any
Lender in connection with the Loan Documents or the Arris Subordination
Agreement and the transactions contemplated thereby or for the financial
condition or business affairs of Borrowers or any other Person liable for the
payment of any Obligations, nor shall such Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or
the Arris Subordination Agreement or as to the use of the proceeds of the Loans
or the use of the Letters of Credit or as to the existence or possible existence
of any Event of Default or Potential Event of Default. Anything contained in
this Agreement to the contrary notwithstanding, Administrative Agent shall not
have any liability arising from confirmations of the amount of outstanding Loans
or the Letter of Credit Usage or the component amounts thereof.
C. EXCULPATORY PROVISIONS. No Agent or any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by such Agent under or in connection with any of the
Loan Documents or the Arris Subordination Agreement except to the extent caused
by such Agent's gross negligence or willful misconduct. An Agent shall be
entitled to refrain from any act or the taking of any action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents or the Arris Subordination Agreement or from the exercise of any
power, discretion or authority vested in it
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hereunder or thereunder unless and until such Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under subsection 10.6) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), such Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. Without prejudice to the generality of the
foregoing, (i) each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any communication, instrument or document believed by
it to be genuine and correct and to have been signed or sent by the proper
person or persons, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for
Borrowers and their Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against an Agent as a result of such Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other Loan
Documents or the Arris Subordination Agreement in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D. AGENTS ENTITLED TO ACT AS LENDER. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, an Agent in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the Letters
of Credit, an Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include each
Agent in its individual capacity. An Agent and its Affiliates may accept
deposits from, lend money to, acquire equity interests in and generally engage
in any kind of commercial banking, investment banking, trust, financial advisory
or other business with any Borrower or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from any Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 INDEPENDENT INVESTIGATION BY LENDERS; NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS.
Each Lender agrees that it has made its own independent
investigation of the financial condition and affairs of Holdings and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Holdings and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
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9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Agents and the officers, directors, employees, agents,
attorneys, professional advisors and affiliates of each of them to the extent
that any such Person shall not have been reimbursed by Borrowers, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements and fees and disbursements of any financial advisor engaged by
Agents) or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against an Agent or other such Persons in exercising
the powers, rights and remedies of an Agent or performing duties of an Agent
hereunder or under the other Loan Documents or under the Arris Subordination
Agreement or otherwise in its capacity as Agent in any way relating to or
arising out of this Agreement or the other Loan Documents or the Arris
Subordination Agreement; provided that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from an Agent's
gross negligence or willful misconduct. If any indemnity furnished to an Agent
or any other such Person for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, such Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished.
9.5 SUCCESSOR ADMINISTRATIVE AGENT AND SWING LINE LENDER.
A. SUCCESSOR ADMINISTRATIVE AGENT. Any Agent may resign
at any time by giving 30 days' prior written notice thereof to Lenders and
Borrowers, and Administrative Agent may be removed at any time with or without
cause by an instrument or concurrent instruments in writing delivered to
Borrowers and Administrative Agent and signed by Supermajority Requisite
Lenders. Upon any such notice of resignation or any such removal, Requisite
Lenders shall have the right, upon five Business Days' notice to Borrowers, to
appoint a successor Administrative Agent. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Administrative Agent and the retiring or removed Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Agent's resignation or removal hereunder as an Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was an Agent under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation or
removal of Administrative Agent pursuant to subsection 9.5A shall also
constitute the resignation or removal of CIT or its successor as Swing Line
Lender, and any successor Administrative Agent appointed pursuant to subsection
9.5A shall, upon its acceptance of such appointment, become the successor Swing
Line Lender for all purposes hereunder. In such event (i) Borrower shall prepay
any outstanding Swing Line Loans made by the retiring or removed Administrative
Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the
retiring or removed
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Administrative Agent and Swing Line Lender shall surrender the Swing Line Note
held by it to Borrower for cancellation, and (iii) Borrowers shall issue a new
Swing Line Note to the successor Administrative Agent and Swing Line Lender
substantially in the form of Exhibit VI annexed hereto, in the principal amount
of the Swing Line Loan Commitment then in effect and with other appropriate
insertions.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
Each Lender hereby further authorizes Administrative Agent, on
behalf of and for the benefit of Lenders, to enter into each Collateral Document
as secured party and to be the agent for and representative of Lenders under
each Guaranty, and each Lender agrees to be bound by the terms of each
Collateral Document and Guaranty; provided that Administrative Agent shall not
(i) enter into or consent to any material amendment, modification, termination
or waiver of any provision contained in any Collateral Document or Guaranty or
(ii) release any Collateral (except as otherwise expressly permitted or required
pursuant to the terms of this Agreement or the applicable Collateral Document),
in each case without the prior consent of Requisite Lenders (or, if required
pursuant to subsection 10.6, all Lenders); provided further, however, that,
without further written consent or authorization from Lenders, Administrative
Agent may execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented, (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the Capital Stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Borrowers) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders have
otherwise consented, (c) release any Borrower (other than Company or Arris) from
the Borrowers' Guaranty if all of the Capital Stock of such Borrowers is sold to
any Person (other than an Affiliate of Borrowers) pursuant to a sale or other
disposition permitted hereunder or to which Requisite Lenders have otherwise
consented or (d) subordinate the Liens of Administrative Agent, on behalf of
Lenders, to any Liens permitted by subsection 7.2. Anything contained in any of
the Loan Documents to the contrary notwithstanding, Borrowers, Administrative
Agent and each Lender hereby agree that (1) no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce any Guaranty, it being understood and agreed that all powers,
rights and remedies under the Collateral Documents and the Guaranties may be
exercised solely by Administrative Agent for the benefit of Lenders in
accordance with the terms thereof, and (2) in the event of a foreclosure by
Administrative Agent on any of the Collateral pursuant to a public or private
sale, Administrative Agent or any Lender may be the purchaser of any or all of
such Collateral at any such sale and Administrative Agent, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing) shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any collateral payable by Administrative Agent
at such sale.
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9.7 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to Holdings, or any of its Subsidiaries,
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Administrative Agent shall have made any demand on
Borrowers) shall be entitled and empowered, by intervention in such proceeding
or otherwise
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Loans and any
other Obligations that are owing and unpaid and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of Lenders and Agents (including any claim for the
reasonable compensation, expenses, disbursements and advances of
Lenders and Agents and their agents and counsel and all other amounts
due Lenders and Agents under subsections 2.3 and 10.2) allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Administrative Agent and, in the event that
Administrative Agent shall consent to the making of such payments directly to
Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Agents and their agents
and counsel, and any other amounts due Agents under subsections 2.3 and 10.2.
Nothing herein contained shall be deemed to authorize
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lenders or to authorize
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding; it being understood that, except as expressly provided in this
Section 9.7 each Lender shall have the right to take any action with respect to
such a proceeding as such Lender may deem necessary or advisable for the
enforcement of its rights or interests hereunder.
SECTION 10. MISCELLANEOUS
10.1 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS IN
LOANS AND LETTERS OF CREDIT.
A. GENERAL. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns of Lenders (it
being understood that Lenders' rights of assignment are subject to the further
provisions of this subsection 10.1). Neither Company's or Arris' rights or
obligations hereunder nor any interest therein may be assigned or delegated by
Company or
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Arris without the prior written consent of all Lenders (and any attempted
assignment or transfer by Company or Arris without such consent shall be null
and void). No sale, assignment, participation or transfer of any participation
in any Letter of Credit Guaranty may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Revolving Lender effecting such sale,
assignment, transfer or participation. Administrative Agent may not sell,
assign, transfer or participate (other than participations to Revolving Lenders
pursuant to subsection 3.1C) any Letter of Credit Guaranty. Anything contained
herein to the contrary notwithstanding, except as provided in subsection
2.1A(ii) and subsection 10.5, the Swing Line Loan Commitment and the Swing Line
Loans of Swing Line Lender may not be sold, assigned or transferred as described
in clause (i) above to any Person other than a successor Administrative Agent
and Swing Line Lender to the extent contemplated by subsection 9.5. Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the
Affiliates of each of Administrative Agent and Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Any Lender may
assign to one or more Eligible Assignees all or any portion of its
rights and obligations under this Agreement; provided that (a), except
(1) in the case of an assignment of the entire remaining amount of the
assigning Lender's rights and obligations under this Agreement or (2)
in the case of an assignment to a Lender or an Affiliate of a Lender or
an Approved Fund of a Lender, the aggregate amount of the Revolving
Loan Exposure of the assigning Lender and the assignee subject to each
such assignment shall not be less than $5,000,000 unless Syndication
Agent otherwise consents (such consent not to be unreasonably withheld
or delayed), (b) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the Loan or the
Commitment assigned, (c) the parties to each assignment shall execute
and deliver to Administrative Agent an Assignment Agreement, and the
Eligible Assignee, if it shall not be a Lender, shall deliver to
Administrative Agent information reasonably requested by Administrative
Agent, including such forms, certificates or other evidence, if any,
with respect to United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be required to deliver
to Administrative Agent pursuant to subsection 2.7B(iii) and (d) except
in the case of an assignment to another Lender, an Affiliate of a
Lender or an Approved Fund of a Lender, (x) Syndication Agent and
Administrative Agent shall have consented thereto (such consents not to
be unreasonably withheld) and (y) unless an Event of Default has
occurred and is continuing, Company shall have consented thereto (such
consent not to be unreasonably withheld). Upon such execution, delivery
and consent, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment
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Agreement, shall have the rights and obligations of a Lender hereunder
and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to
such Assignment Agreement, relinquish its rights (other than any rights
which survive the termination of this Agreement under subsection
10.10B) and be released from its obligations under this Agreement (and,
in the case of an Assignment Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto. The assigning
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its Notes, if any, to
Administrative Agent for cancellation, and thereupon new Notes shall be
issued to the assignee and/or to the assigning Lender, substantially in
the form of Exhibit V or Exhibit VI annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Revolving Loans, as the case may be, of the assignee and/or
the assigning Lender. Other than as provided in subsection 2.1A(ii) and
subsection 10.5, any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this
subsection 10.1B shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations
in accordance with subsection 10.1C.
(ii) Acceptance by Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together any forms, certificates or other evidence with
respect to United States federal income tax withholding matters that
such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii), Administrative Agent shall, if
Syndication Agent has consented to the assignment evidenced thereby (in
each case to the extent such consent is required pursuant to subsection
10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such
assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to
and accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. Any Lender may, without the consent
of, or notice to, any Borrower, Syndication Agent or Administrative Agent, sell
participations to one or more banks or other entities in all or a portion of
such Lender's rights and/or obligations under this Agreement; provided that (i)
such Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) Borrowers, Administrative Agent and
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not,
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without the consent of the Participant, agree to any amendment, modification or
waiver directly affecting (i) the extension of the scheduled final maturity date
of any Loan allocated to such participation or (ii) a reduction of the principal
amount of or the rate of interest payable on any Loan allocated to such
participation. Subject to the further provisions of this subsection 10.1C, each
Borrower agrees that each Participant shall be entitled to the benefits of
subsections 2.6D and 2.7 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to subsection 10.1B. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
subsection 10.4 as though it were a Lender, provided such Participant agrees to
be subject to subsection 10.5 as though it were a Lender. A Participant shall
not be entitled to receive any greater payment under subsections 2.6D and 2.7
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant unless the sale of the participation
to such Participant is made with Company's prior written consent. A Participant
that would be a Non-US Lender if it were a Lender shall not be entitled to the
benefits of subsection 2.7 unless Company is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of Company, to
comply with subsection 2.7B(iii) as though it were a Lender.
D. PLEDGES AND ASSIGNMENTS. Any Lender may at any time
pledge or assign a security interest in all or any portion of its Loans, and the
other Obligations owed to such Lender, to secure obligations of such Lender,
including without limitation any pledge or assignment to secure obligations to
any Federal Reserve Bank; provided that (i) no Lender shall be relieved of any
of its obligations hereunder as a result of any such assignment or pledge and
(ii) in no event shall any assignee or pledgee be considered to be a "Lender" or
be entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. INFORMATION. Each Lender may furnish any information
concerning Holdings and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to subsection 10.20.
F. AGREEMENTS OF LENDERS. Each Lender listed on the
signature pages hereof hereby agrees (i) that it is an Eligible Assignee
described in clause (ii) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the agreements of such
Lender contained in Section 2(c) of such Assignment Agreement are incorporated
herein by this reference.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Borrowers agree to pay promptly (i) all the actual and reasonable
costs and expenses of
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negotiation, preparation and execution of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Borrowers (including any opinions
requested by Agents or Lenders as to any legal matters arising hereunder) and of
Borrowers' performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Administrative Agent and Lead Arranger
(including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Borrowers; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Administrative
Agent on behalf of Lenders pursuant to any Collateral Document, including filing
and recording fees, expenses and taxes, stamp or documentary taxes, search fees,
title insurance premiums, and reasonable fees, expenses and disbursements of
counsel to Administrative Agent and of counsel providing any opinions that
Administrative Agent or Requisite Lenders may request in respect of the
Collateral Documents or the Liens created pursuant thereto; (v) all the actual
costs and reasonable expenses (including the reasonable fees, expenses and
disbursements of any auditors, accountants or appraisers and any environmental
or other consultants, advisors and agents employed or retained by Administrative
Agent or its counsel) of obtaining and reviewing the Emerald Appraisal,
Strategis Assessment and the Collateral Audit and any environmental appraisals,
audits or reports provided for under subsection 4.1Q or 6.9B; (vi) the costs
incurred by Administrative Agent in connection with the custody or preservation
of any of the Collateral; (vii) all other actual and reasonable costs and
expenses incurred by Administrative Agent or Lead Arranger in connection with
the syndication of the Commitments; and (viii) all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Administrative Agent and Lenders in enforcing
any Obligations of or in collecting any payments due from any Loan Party
hereunder or under the other Loan Documents (including in connection with the
sale of, collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranties) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection
10.2, whether or not the transactions contemplated hereby shall be consummated,
each Borrower agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Lead Arranger, Agents and Lenders, and the
officers, directors, employees, agents and affiliates of Lead Arranger, Agents
and Lenders (collectively called the "INDEMNITEES"), from and against any and
all Indemnified Liabilities (as hereinafter defined); provided that each
Borrower shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
solely from the gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent jurisdiction.
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As used herein, "INDEMNIFIED LIABILITIES" means, collectively,
any and all liabilities, obligations, losses, damages (including natural
resource damages), penalties, actions, judgments, suits, claims (including
Environmental Claims), costs (including the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranties)), (ii) the statements contained in the commitment
letter delivered by any Lender to any Borrower with respect thereto, or (iii)
any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Borrowers or any of their Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in this subsection 10.3 may be unenforceable in
whole or in part because they are violative of any law or public policy,
Borrowers shall contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of any Event of Default each Lender is
hereby authorized by each Borrower at any time or from time to time, without
notice to such Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by that Lender or any Affiliate
of such Lender to or for the credit or the account of any Borrower and each
other Loan Party against and on account of the obligations and liabilities of
any Borrower or any other Loan Party to that Lender (or any Affiliate of such
Lender) or to any other Lender (or any Affiliate of any other Lender) under this
Agreement, the Letters of Credit and participations therein and the other Loan
Documents, including all claims of any nature or
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description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Each Borrower hereby further grants
to Administrative Agent and each Lender a security interest in all deposits and
accounts maintained with an Agent or such Lender as security for the
Obligations.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by realization
upon security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) that is greater than the proportion received by any
other Lender in respect of the Aggregate Amounts Due to such other Lender, then
the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase assignments (which it shall be
deemed to have purchased from each seller of an assignment simultaneously upon
the receipt by such seller of its portion of such payment) of the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company, Arris or any other
Borrower or otherwise, those purchases shall be rescinded and the purchase
prices paid for such assignments shall be returned to such purchasing Lender
ratably to the extent of such recovery, but without interest. Each Borrower
expressly consents to the foregoing arrangement and agrees that any purchaser of
an assignment so purchased may exercise any and all rights of a Lender as to
such assignment as fully as if that Lender had complied with the provisions of
subsection 10.1B with respect to such assignment. In order to further evidence
such assignment (and without prejudice to the effectiveness of the assignment
provisions set forth above), each purchasing Lender and each selling Lender
agree to enter into an Assignment Agreement at the request of a selling Lender
or a purchasing Lender, as the case may be, in form and substance reasonably
satisfactory to each such Lender.
10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, and no consent to any departure by
Borrowers therefrom, shall in
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any event be effective without the written concurrence of Requisite Lenders;
provided that no such amendment, modification, termination, waiver or consent
shall, without the consent of (a) each Lender with Obligations directly affected
(whose consent shall be required for any such amendment, modification,
termination or waiver in addition to that of Requisite Lenders) (1) reduce the
principal amount of any Loan, (2) increase the Lender's Commitments (it being
understood that a waiver of any condition, precedent, covenants, Events of
Default or Potential Events of Default or of a mandatory prepayment or
Commitment reduction shall not constitute an increase in the Commitment of any
Lender and that an increase in the available portion of any Commitment of any
Lender shall not constitute an increase in the Commitment of such Lender), (3)
increase the maximum aggregate amount of Letters of Credit or of Standby Letters
of Credit or Commercial Letters of Credit, (4) postpone the scheduled final
maturity date of any Loan, (5) postpone the date on which any interest or any
fees are payable, (6) decrease the interest rate borne by any Loan (other than
any waiver of any increase in the interest rate applicable to any of the Loans
pursuant to subsection 2.2E) or decrease the amount of any fees payable
hereunder, (7) reduce the amount or postpone the due date of any amount payable
in respect of any Letter of Credit or any Letter of Credit Guaranty, (8) extend
the expiration date of any Letter of Credit beyond the Revolving Loan Commitment
Termination Date or (9) change in any manner the obligations of Revolving
Lenders relating to the purchase of participations in Letters of Credit, (b)
each Lender, (1) change in any manner the definition of "Pro Rata Share" or the
definition of "Requisite Lenders" (except for an increase in the percentage
contained in "Requisite Lenders" and any changes resulting solely from an
increase in Commitments approved by Requisite Lenders it also being understood
that, with the consent of Requisite Lenders additional extensions of credit and
commitments may be made pursuant to this Agreement and included in the
calculation and determination of Requisite Lenders and Pro Rata Shares on the
same basis that the existing Commitments are included in such calculation and
determination) or the definitions of "Maximum Discretionary Amount" or "Maximum
Discretionary Borrowing Base Amount", (2) change in any manner any provision of
this Agreement that, by its terms, expressly requires the approval or
concurrence of all Lenders, (3) increase the maximum duration of Interest
Periods permitted hereunder, (4) release any Lien granted in favor of
Administrative Agent with respect to all or substantially all of the Collateral
or release any Borrower from its obligations under the Borrowers' Guaranty or
release Holdings from its obligations under the Holdings Guaranty or release any
Subsidiary Guarantors from its obligations under the Subsidiary Guaranty, in
each case other than in accordance with the terms of the Loan Documents, (5)
change in any manner or waive the provisions contained in subsection 8.1 or this
subsection 10.6 or (6) change in any manner the definitions of "Accounts",
"Account Debtor", "Borrowing Base", "Eligible Inventory", "Eligible Accounts",
"Eligible Canadian Accounts", "Eligible Foreign Accounts", "Inventory" , "Net
Amount of Eligible Accounts" or "Net Amount of Foreign Eligible Accounts". In
addition, (i) any amendment, modification, termination or waiver of any of the
provisions contained in Section 4 shall be effective only if evidenced by a
writing signed by or on behalf of Administrative Agent and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termination or waiver
of any provision of subsection 2.1A(ii) or of
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any other provision of this Agreement relating to the Swing Line Loan Commitment
or the Swing Line Loans shall be effective without the written concurrence of
Swing Line Lender, (iv) no amendment, modification, termination or waiver of any
provision of Section 3 shall be effective without the written concurrence of
Administrative Agent, and (v) no amendment, modification, termination or waiver
of any provision of Section 9 or of any other provision of this Agreement which,
by its terms, expressly requires the approval or concurrence of Agents shall be
effective without the written concurrence of Agents. Administrative Agent may,
but shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on Borrowers in
any case shall entitle Borrowers to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 10.6 shall be binding
upon each Lender at the time outstanding, each future Lender and, if signed by
Borrowers, on Borrowers.
10.7 OBLIGATIONS DESIGNATED SENIOR DEBT.
Company hereby acknowledges and agrees that the Obligations
are and designates the Obligations as Designated Senior Debt (as such term is
defined in the Convertible Subordinated Note Indenture) and Designated Senior
Indebtedness (as such term is used in the Convertible Subordinated Note
Indenture).
10.8 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
10.9 NOTICES; EFFECTIVENESS OF SIGNATURES.
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile in complete and legible
form, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to Administrative
Agent shall not be effective until received. For the purposes hereof, the
address of each party hereto shall be as set forth under such party's name on
the signature pages hereof or (i) as to each Borrower and Administrative Agent,
such other address as shall be designated by such Person in a written notice
delivered to the other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a written notice delivered
to Administrative Agent. Electronic mail may be used to distribute routine
communications, such as financial statements
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and other information; provided, however, that no signature with respect to any
notice, request, agreement, waiver, amendment or other document or any notice
that is intended to have binding effect may be sent by electronic mail.
Loan Documents and notices under the Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable law, have the same force and effect
as an original copy with manual signatures and shall be binding on all Loan
Parties, Agents and Lenders. Administrative Agent may also require that any such
documents and signature be confirmed by a manually-signed copy thereof;
provided, however, that the failure to request or deliver any such
manually-signed copy shall not affect the effectiveness of any facsimile
document or signature.
10.10 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement and the making
of the Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied
by law to the contrary, the agreements of the Borrowers set forth in subsections
2.6D, 2.7, 3.5, 10.2, 10.3, 10.4, 10.18 and 10.19 and the agreements of Lenders
set forth in subsections 9.2C, 9.4, 10.5 and 10.19 shall survive the payment of
the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, and the termination of this
Agreement.
10.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of an Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.12 MARSHALLING; PAYMENTS SET ASIDE.
Neither any Agent nor any Lender shall be under any obligation
to marshal any assets in favor of any Borrower or any other party or against or
in payment of any or all of the Obligations. To the extent that any Borrower
makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Agents or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common
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law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.13 SEVERABILITY.
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.14 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders, or Lenders and the Borrowers, as a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights arising out of this Agreement and
it shall not be necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
10.15 HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.16 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.
10.17 CONSTRUCTION OF AGREEMENT; NATURE OF RELATIONSHIP.
Each of the parties hereto acknowledges that (i) it has been
represented by counsel in the negotiation and documentation of the terms of this
Agreement, (ii) it has had full and fair opportunity to review and revise the
terms of this Agreement, (iii) this Agreement has been drafted jointly by all of
the parties hereto, and (iv) neither Administrative Agent nor any
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Lender or other Agent has any fiduciary relationship with or duty to any
Borrower arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between Administrative Agent, the other
Agents and Lenders, on one hand, and each Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor.
Accordingly, each of the parties hereto acknowledges and agrees that the terms
of this Agreement shall not be construed against or in favor of another party.
10.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY BORROWER ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING
AND DELIVERING THIS AGREEMENT, EACH BORROWER FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SUCH BORROWER AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SUBSECTION 10.9;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH BORROWER IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
SUCH BORROWER IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.18
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
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10.19 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement,
and that each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 10.19 AND EXECUTED BY EACH OF THE PARTIES HERETO),
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.
10.20 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained
pursuant to the requirements of this Agreement that has been identified in
writing as confidential by Company in accordance with such Lender's customary
procedures for handling confidential information of this nature it being
understood and agreed by each Borrower that in any event a Lender may make
disclosures (a) to its and its Affiliates' directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
information confidential), (b) to the extent requested by any Government
Authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this subsection 10.20, to (i) any Eligible
Assignee of or participant in, or any prospective Eligible Assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any direct or indirect contractual counterparty or prospective counterparty (or
such contractual counterparty's or prospective counterparty's professional
advisor) to any credit derivative transaction relating to obligations of each
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Borrower, (g) with the consent of Company, (h) to the extent such information
(i) becomes publicly available other than as a result of a breach of this
subsection 10.20 or (ii) becomes available to Administrative Agent or any
Lender on a nonconfidential basis from a source other than any Borrower or (i)
to the National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires access to
information about a Lender's or its Affiliates' investment portfolio in
connection with ratings issued with respect to such Lender or its Affiliates
and that no written or oral communications from counsel to an Agent and no
information that is or is designated as privileged or as attorney work product
may be disclosed to any Person unless such Person is a Lender or a participant
hereunder; provided that, unless specifically prohibited by applicable law or
court order, each Lender shall notify Company of any request by any Government
Authority or representative thereof (other than any such request in connection
with any examination of the financial condition of such Lender by such
Government Authority) for disclosure of any such non-public information prior
to disclosure of such information; and provided, further that in no event shall
any Lender be obligated or required to return any materials furnished by any
Borrower or any of its Subsidiaries.
10.21 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY: ARRIS INTERNATIONAL, INC.
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: Executive Vice President,
Chief Financial Officer & Secretary
Notice Address:
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
ARRIS INTERACTIVE: ARRIS INTERACTIVE L.L.C.
By: /s/ David Potts
----------------------------------------
Name: David Potts
Title: Executive Vice President &
Chief Financial Officer
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: David Potts
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SUBSIDIARIES OF COMPANY: ANTEC ASSET MANAGEMENT COMPANY
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: President
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
ANTEC LICENSING COMPANY
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: President
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
TEXSCAN CORPORATION
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: Chairman of the Board
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
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ELECTRONIC CONNECTOR
CORPORATION OF ILLINOIS
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
POWER GUARD, INC.
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
ELECTRONIC SYSTEM PRODUCTS INC.
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
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KEPTEL, INC.
By: /s/ Lawrence A. Margolis
----------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
Notice Address:
c/o Arris International, Inc.
11450 Technology Circle
Duluth, GA 30097
Telecopy: (678) 473-8470
Attention: Larry A. Margolis
With a copy to for each of the above
Borrowers:
Troutman Sanders LLP
Bank of America Plaza
600 Peachtree Street, N.E.
Atlanta, GA 30308
Telecopy: (404) 962-6544
Attention: Hazen Dempster, Esq.
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LENDERS: THE CIT GROUP/BUSINESS CREDIT, INC.
individually and as Administrative Agent
and Collateral Agent
By: /s/ John F. Bohan
----------------------------------------
Name: John F. Bohan
Title: Vice President
Notice Address:
1200 Ashwood Parkway, Suite 150
Atlanta, Georgia 30338
Telecopy: (770) 522-7673
Attention: Regional Credit Manager
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CREDIT SUISSE FIRST BOSTON,
individually and as Syndication Agent
By: /s/ Joseph Adipietro
----------------------------------------
Name: Joseph Adipietro
Title: Vice President
By: /s/ David Sawyer
----------------------------------------
Name: David Sawyer
Title: Vice President
Notice Address:
11 Madison Avenue, 10th Floor
New York, New York 10010
Telecopy: (212) 325-8314
Attention: David Sawyer
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AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: /s/ M. Martha Gaskin
----------------------------------------
Name: M. Martha Gaskin
Title: First Vice President
Notice Address:
120 South LaSalle Street, 8th Floor
Chicago, Illinois 60603
Telecopy: (312) 661-6929
Attention: Thomas R. Watts
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COMERICA BANK
By: /s/ David E. Seiden
----------------------------------------
Name: David E. Seiden
Title: Vice President
Notice Address:
210 Interstate North Parkway, Suite 700
Atlanta, Georgia 30339
Telecopy: (770) 980-6693
Attention: David E. Seiden
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CONGRESS FINANCIAL CORPORATION (SOUTHERN)
By: /s/ Richard A. Cini, Jr.
----------------------------------------
Name: Richard A. Cini, Jr.
Title: Vice President
Notice Address:
200 Galleria Parkway, Suite 1500
Atlanta, Georgia 30339
Telecopy: (770) 956-8120
Attention: Morris Holloway
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FLEET CAPITAL CORPORATION
By: /s/ Douglas Strange
----------------------------------------
Name: Douglas Strange
Title: Assistant Vice President
Notice Address:
300 Galleria Parkway, NW, Suite 800
Atlanta, Georgia 30339
Telecopy: (770) 857-2947
Attention: Douglas Strange
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GMAC COMMERCIAL CREDIT LLC
By: /s/ Frank Imperato
----------------------------------------
Name: Frank Imperato
Title: Senior Vice President
Notice Address:
1290 Avenue of the Americas
New York, New York 10104
Telecopy: (212) 884-7399
Attention: David Duffy
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IBM CREDIT CORPORATION
By: /s/ Stephen Santini
----------------------------------------
Name: Stephen Santini
Title:
Notice Address:
North Castle Drive
Armonk, New York 10504
Telecopy: (914) 765-6271
Attention: Stephen Santini
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PNC BANK, NATIONAL ASSOCIATION
By: /s/ Wallace G. Clements
----------------------------------------
Name: Wallace G. Clements
Title: Vice President
By: /s/ Eric S. Huff
----------------------------------------
Name: Eric S. Huff
Title: Assistant Vice President
Notice Address:
Two PNC Plaza, 18th Floor
620 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Telecopy: (412) 768-4369
Attention: Eric S. Huff
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