NINTH AMENDMENT TO
CREDIT AGREEMENT
This NINTH AMENDMENT TO CREDIT AGREEMENT (this AMENDMENT) is dated as
of March 21, 2003 and entered into by and among ARRIS GROUP, INC., a Delaware
corporation, ARRIS INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"),
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") and THE CIT
GROUP/BUSINESS CREDIT, INC., as administrative agent, collateral agent and
syndication agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT"), and is
made with reference to that certain Credit Agreement dated as of August 3, 2001,
as amended by that certain First Amendment to Credit Agreement dated as of
January 8, 2002, as supplemented by that certain Acknowledgement dated as of
March 21, 2002, as further amended by that certain Second Amendment to Credit
Agreement dated as of April 19, 2002, as further amended by that certain Third
Amendment to Credit Agreement dated as of April 24, 2002, as further amended by
that certain Fourth Amendment to Credit Agreement dated as of May 31, 2002, as
further supplemented by that certain Fifth Amendment dated as of September 30,
2002, as further supplemented by that certain Consent dated as of September 30,
2002, as further amended by that certain Sixth Amendment to Credit Agreement
dated as of November 21, 2002, as further amended by that certain Seventh
Amendment to Credit Agreement dated as of January 2, 2003 and as further amended
by that certain Eight Amendment to Credit Agreement dated as of March 11, 2003
(as so amended, restated, supplemented or otherwise modified as of the date
hereof, the "CREDIT AGREEMENT"), by and among the Borrowers, the financial
institutions listed on the signature pages thereof and Administrative Agent.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Atoga Systems, Inc., a California corporation
("ATOGA") have entered into that certain Asset Purchase Agreement, dated as of
February 26, 2003, pursuant to which Company has agreed to purchase
substantially all of the assets and assume certain liabilities of Atoga; and
WHEREAS, Borrowers and Lenders desire to amend the Credit Agreement to
(i) permit Company to acquire substantially all of the assets and assume
certain liabilities of Atoga and (ii) make certain other amendments as set
forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO DEFINED TERMS
A. Subsection 1.1 of the Credit Agreement is hereby amended by
adding thereto the following definitions, which shall be inserted in proper
alphabetical order:
"ATOGA" means Atoga Systems, Inc., a California corporation.
"ATOGA ACQUISITION" means the purchase by Company of
substantially all of Atoga's assets and certain liabilities of Atoga
on the Ninth Amendment Effective Date, pursuant to the Atoga
Acquisition Documents.
"ATOGA ACQUISITION DOCUMENTS" means the Atoga Asset Purchase
Agreement and all other instruments or documents delivered or entered
into in connection with any of the foregoing, in each case including
all schedules, annexes and exhibits thereto, as such Atoga
Acquisition Documents may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted under
subsection 7.12.
"ATOGA ASSET PURCHASE AGREEMENT" means that certain Asset
Purchase Agreement, dated February 26, 2003 between Company and Atoga,
as may be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.12.
"NINTH AMENDMENT EFFECTIVE DATE" means the date the Ninth
Amendment to this Agreement became affective in accordance with its
terms.
1.2 AMENDMENTS TO SECTION 7: BORROWERS' NEGATIVE COVENANTS
A. Subsection 7.2 of the Credit Agreement is hereby amended by
deleting clause (v) in its entirety and substituting the following therefor:
"(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(vii) and 7.1(xii) in an aggregate amount not
to exceed $10,000,000 at any time outstanding; provided, however, that
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.l(vii); provided, further,
that (i) Holdings and its Subsidiaries may not grant any Liens in
connection with any Indebtedness assumed by Holdings or any of its
Subsidiaries in connection with the Cadant Acquisition or the Atoga
Acquisition and (ii) no assets acquired pursuant to the Cadant
Acquisition or the Atoga Acquisition may be subject to any Liens under
any such assumed Indebtedness except to the extent such Liens evidence
Capital Leases and are otherwise permitted by subsection 7.2(vii);"
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B. Subsection 7.3 of the Credit Agreement is hereby amended by
deleting the "and" at the end of clause (xix), deleting the period at the end
of clause (xviii) and substituting therefor ";and", and inserting the
following clause (xx) at the end of such subsection:
"(xxi) So long as no Event of Default or Potential Event of
Default has occurred and is continuing or would result therefrom,
Company may consummate the Atoga Acquisition, in accordance with (1)
the Atoga Acquisition Documents and (2) the following terms:
(a) the aggregate amount of consideration paid
by Company for the Atoga Acquisition shall not exceed (i) the
assumption by Company of liabilities in an aggregate amount
not to exceed $1,357,938 plus (ii) the payment by Company of
the weekly operating expenses of Atoga from February 6, 2003
until March 18, 2003 in an aggregate amount not to exceed
$800,000 in accordance with the terms of the Atoga Asset
Purchase Agreement;
(b) the aggregate amount of all liabilities
being assumed by Company in connection with the Atoga
Acquisition, including any Indebtedness and Capital Leases,
shall not exceed $1,357,938 plus the payment of up to
$800,000 of weekly operating expenses from February 6, 2003
until March 18, 2003;
(c) concurrently with the consummation of the
Atoga Acquisition, Borrowers shall have fully complied with
the requirements of subsections 6.8 and 6.9 of this Agreement
and Section 5 of the Security Agreement, with respect to the
Atoga Acquisition;
(e) Company shall have delivered to
Administrative Agent (i) the results of recent searches, by a
Person or Persons satisfactory to Administrative Agent, of all
effective UCC financing statements and all judgment and tax
lien filings which may have been made with respect to any
personal or mixed property acquired in the Atoga Acquisition,
together with copies of all such filings disclosed by such
search, (ii) 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 disclosed in such search, (iii) to the extent
requested by Administrative Agent, recent searches, by Person
or Persons satisfactory to Administrative Agent of all
effective filings with the PTO or United States Copyright
Office which may have been made with respect to any patents,
trademarks of copyrights being acquired in the Atoga
Acquisition and (iv) and all other documents or instruments
necessary to release all Liens on any personal or mixed
property acquired in the Atoga Acquisition, in each case in
form and substance satisfactory to Administrative Agent; and
(f) Company shall have delivered an Officer's
Certificate, in form and substance satisfactory to
Administrative Agent certifying that no Potential Event of
Default or Event of Default shall then exist or shall occur
after giving effect to the Atoga Acquisition."
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C. Subsection 7.12 of the Credit Agreement is hereby amended by
deleting subsection 7.12A in its entirety and substituting therefor the
following:
"A. AMENDMENTS OR WAIVERS OF CERTAIN AGREEMENTS. Neither
Holdings, any Borrower nor any their respective Subsidiaries will
agree to any amendment to, or waive any of its rights under (i) any
Reorganization Document (other than the Amended and Restated Arris
Membership Agreement which is otherwise subject to clause (y) below),
Mexican Intercompany Security Document or Tax Abatement Transaction
Document after the Closing Date; (ii) any Cadant Acquisition Document
after the First Amendment Effective Date; (iii) any Keptel Sale
Document after the closing of the Third Amendment to this Agreement;
(iv) any Actives Division Sale Document after the closing of the Sixth
Amendment to this Agreement; (v) after the Eighth Amendment Effective
Date, (x) any Holdings Common Stock Redemption Document, the Nortel
Letter Agreement, the Option Agreement, the Settlement and Release
Agreement, and the Arris Intercompany Note and, (y) only to the extent
such amendment or waiver of rights adversely affects the rights of the
Lenders, the Amended and Restated Arris Membership Agreement; or (vi)
after the Ninth Amendment Effective Date, any Atoga Acquisition
Document, without, in each case, obtaining the prior written consent
of Requisite Lenders to such amendment or waiver."
Section 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "NINTH
AMENDMENT EFFECTIVE DATE"):
A. Lenders shall have received from Administrative Agent a
completed audit of the Accounts to be acquired in the Atoga Acquisition and
Administrative Agent shall have determined the extent to which such Accounts
and Inventory shall be included as Eligible Accounts immediately after the
consummation of the Atoga Acquisition.
B. On the Ninth Amendment Effective Date, all conditions to the
consummation of the Atoga Acquisition (other than payment of the purchase price
therefor and the conveyance of assets resulting therefrom) shall have been
satisfied or waived with the consent of Administrative Agent and the Requisite
Lenders and Administrative Agent shall have received (i) a fully executed or
conformed copy of each Atoga Acquisition Document to be entered into on or
prior to the Ninth Amendment Effective Date, in form and substance reasonably
satisfactory to the Administrative Agent and Requisite Leaders, and each such
Atoga Acquisition Document shall be in full force and effect and no provision
thereof shall have been modified or waived without the consent of
Administrative Agent and Requisite Lenders, and the parties to the Atoga
Acquisition Documents shall not have failed in any material respect to perform
any material obligation or covenant required by the Atoga Asset Purchase
Agreement, respectively, to be performed or complied with by any of them on or
before the Ninth Amendment Effective Date, and (ii) an Officer's Certificate of
Company (1) to the effect set forth in clause (i) and (2) stating that Company
and Atoga will proceed to consummate the Atoga Acquisition contemporaneously
with the effectiveness of this Amendment.
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SECTION 3. BORROWERS' AND HOLDINGS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Holdings and Borrowers
represent and warrant to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. Holdings and each Borrower
have all requisite corporate power and authority to enter into this Amendment,
and perform its obligations under, the Credit Agreement as amended by this
Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of Holdings and each
Borrower.
C. NO CONFLICT. The execution and delivery by Holdings and
Borrowers of this Amendment and the performance by Holdings and Borrowers of
the Amended Agreement do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to Holdings, any Borrower or
any of their respective Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws or Certificate of Formation or Operating Agreement, as
applicable, of Holdings or any Borrower or any of their respective Subsidiaries
or any order, judgment or decree of any court or other agency of government
binding on Holdings, any Borrower or any of their respective 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, any
Borrower or my of their Subsidiaries, (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of Holdings, any
Borrower or any of their Subsidiaries (other than 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, any Borrower or any of
their respective Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Holdings
and each Borrower of this Amendment and the performance by Holdings and the
Borrowers of the Amended Agreement and the transactions contemplated by this
Amendment do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state or
other governmental authority or regulatory body.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement
have been duly executed and delivered by Holdings and each Borrower and is the
legally valid and binding obligations of such Persons, enforceable against
Holdings and the Borrowers in accordance with their 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.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement
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are and will be true, correct and complete in all material respects on and as
of the Ninth Amendment Effective 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 they were true., correct
and complete in all material respects on and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Defeult or a Potential Event of
Default
SECTION 4. ACKNOWLEDGEMENT AND CONSENT
Holdings, each Borrower and each Subsidiary Guarantor hereby
acknowledges that such Loan Party has read this Amendment and consents to the
terms hereof and further hereby confirms and agrees that, notwithstanding the
effectiveness of this Amendment, the obligations of such Loan Party under each
of the Loan Documents to which such Loan Party is a party shall not be impaired
and each of the Loan Documents to which such Loan Party is a party are, and
shall continue to be, in full force and effect and are hereby confirmed and
ratified in all respects,
Holdings and each Subsidiary Guarantor acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Loan Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the
consent of such Loan Party to any future amendments to the Credit Agreement.
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Ninth Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall mean
and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of
Administrative Agent or any Lender under, the Credit Agreement or any of the
other Loan Documents.
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B. FEES AND EXPENSES. Company acknowledges that all costs, fees
and expenses as described in subsection 10.2 of the Credit Agreement incurred
by Agents and their counsel with respect to this Amendment and the documents
and transactions contemplated hereby shall be for the account of Borrowers.
C. HEADINGS. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose or be given any substantive
effect.
D. APPLICABLE LAW. THIS AMENDMENT 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 WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment 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 Amendment shall become
effective upon (i) the execution of a counterpart hereof by each of the
Borrowers, each of the Subsidiary Guarantors, Holdings and Requisite Lenders and
receipt by Company and Administrative Agent of written or telephone notification
of such execution and authorization of delivery thereof and (ii) the
satisfaction of the conditions precedent contained in Section 2 hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HOLDINGS: ARRIS GROUP, INC.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Vice President, Chief
Financial Officer & Secretary
COMPANY: ARRIS INTERNATIONAL INC.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Executive Vice President,
Chief Financial Officer &
Secretary
ARRIS: ARRIS INTERACTIVE, L.L.C.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Executive Vice President
SUBSIDIARIES OF COMPANY: ANTEC ASSET MANAGEMENT COMPANY
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: President
ANTEC LICENSING COMPANY
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: President
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TEXSCAN CORPORATION
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Chairman of the Board
ELECTRONIC CONNECTOR CORPORATION OF
ILLINOIS
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
POWER GUARD, INC.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
ELECTRONIC SYSTEM PRODUCTS INC.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
KEPTEL, INC.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Vice President
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SUBSIDIARY GUARANTORS, for
purposes of Section 4 only, TEXSCAN DE MEXICO, S.A. DE C.V.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Chairman
KEPTEL DE MEXICO S.A. DE C.V.
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Chairman
ANTEC INTERNATIONAL CORPORATION
By: /s/ Lawrence A. Margolis
------------------------------------
Name: Lawrence A. Margolis
Title: Director
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LENDERS: THE CIT GROUP/BUSINESS CREDIT, INC.,
individually and as Administrative
Agent, Syndication Agent and Collateral
Agent
By: /s/ John F. Bohan
------------------------------------
Name: John F. Bohan
Title: Vice President
BANK ONE, NA, as successor in interest
of American National Bank and Trust
Company of Chicago
By: /s/ Diane M. Zurick
------------------------------------
Name: Diane M. Zurick
Title: Associate Director
CONGRESS FINANCIAL CORPORATION
(SOUTHEREN)
By: /s/ Gary S. Silvers
------------------------------------
Name: Gary S. Silvers
Title: Vice President
FLEET CAPITAL CORPORATION
By: /s/ Douglas Strange
------------------------------------
Name:
Title: Vice President
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