CREDIT AGREEMENT, dated as of January 13, 1995,
among Standard Microsystems Corporation, a Delaware
corporation (the "Borrower") and the several banks and other
financial institutions from time to time parties to this
Agreement (collectively, the "Lenders" individually, a
"Lender").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"ABR": for any day with respect to any ABR Loan
made by any Lender, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate of such Lender in effect
on such day and (b) the Federal Funds Effective Rate
determined by such Lender as in effect on such day plus
1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced
from time to time by the relevant Lender as its prime
rate in effect at its principal office (the Prime Rate
not being intended to be the lowest rate of interest
charged by such Lender in connection with extensions of
credit to debtors); and "Federal Funds Effective Rate"
shall mean, for any day, 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 on the next
succeeding 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 of such transactions received
by the relevant Lender from three federal funds brokers
of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such
change in the Prime Rate or the Federal Funds Effective
Rate, as the case may be.
"ABR Loans": Loans the rate of interest
applicable to which is based upon the ABR.
"Affiliate": as to any Person, any other Person
(other than a Subsidiary) which, directly or
indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes
of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power
for the election of directors of such Person or (b)
direct or cause the direction of the management and
policies of such Person, whether by contract or
otherwise.
"Agreement": this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Applicable Margin": with respect to any
Eurodollar Loan for each Interest Period with respect
thereto, (a) 0.625% with respect to the portion of such
Eurodollar Loan which when added to the aggregate
amount of all Loans outstanding at the time such
Eurodollar Loan is made (before giving effect to the
making of such Eurodollar Loan) would not exceed
$29,999,999, (b) 0.875% with respect to the portion of
such Eurodollar Loan which when added to the aggregate
amount of all Loans outstanding at the time such
Eurodollar Loan is made (before giving effect to the
making of such Eurodollar Loan) would exceed
$29,999,999 but would not exceed $59,999,999 and (c)
1.00% with respect to the portion of such Eurodollar
Loan which when added to the aggregate amount of all
Loans outstanding at the time such Eurodollar Loan is
made (before giving effect to the making of such
Eurodollar Loan) would exceed $59,999,999.
"Assignee": as defined in subsection 8.6(c).
"Available Commitment": as to any Lender at any
time, an amount equal to the excess, if any, of (a) the
amount of such Lender's Commitment over (b) the
aggregate principal amount of all Loans made by such
Lender then outstanding.
"Board of Governors": the Board of Governors of
the Federal Reserve System or any Governmental
Authority which succeeds to the powers and functions
thereof.
"Borrowing Date": any Business Day specified in a
notice pursuant to subsection 2.2 or 2.7 as a date on
which the Borrower requests the Lenders to make Loans
hereunder.
"Business": as defined in subsection 3.17.
"Business Day": a day other than a Saturday,
Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however
designated) of capital stock of a corporation, any and
all equivalent ownership interests in a Person (other
than a corporation) and any and all warrants or options
to purchase any of the foregoing.
"Chemical": Chemical Bank, a New York banking
corporation.
"Closing Date": the date on which the conditions
precedent set forth in subsection 4.1 shall be
satisfied.
"Code": the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment": as to any Lender, the obligation of
such Lender to make Loans to the Borrower hereunder in
an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite
such Lender's name on Schedule 1.1(a), as such amount
may be reduced from time to time in accordance with the
provisions of this Agreement.
"Commitment Percentage": as to any Lender at any
time, the percentage which such Lender's Commitment
then constitutes of the aggregate Commitments (or, at
any time after the Commitments shall have expired or
terminated, the percentage which the aggregate
principal amount of such Lender's Loans then
outstanding constitutes of the aggregate principal
amount of the Loans then outstanding).
"Commitment Period": the period from and
including the date hereof to but not including the
Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether
or not incorporated, which is under common control with
the Borrower within the meaning of Section 4001 of
ERISA or is part of a group which includes the Borrower
and which is treated as a single employer under Section
414 of the Code.
"Consideration": with respect to any Permitted
Acquisition, collectively, (i) all cash paid by the
Borrower or any of its Subsidiaries in connection with
such Permitted Acquisition, including in respect of
transaction costs, fees and other expenses incurred by
the Borrower or any of its Subsidiaries in connection
with such Permitted Acquisition, (ii) all guarantees
and other contingent obligations created, and all
liabilities assumed, by the Borrower or any of its
Subsidiaries in connection with such Permitted
Acquisition, (iii) the value of all Capital Stock
issued by the Borrower or any of its Subsidiaries in
connection with such Permitted Acquisition and (iv) any
deferred portion of the purchase price or any other
costs paid by the Borrower or any of its Subsidiaries
in connection with such Permitted Acquisition.
"Consolidated Current Liabilities": at any date
of determination, all liabilities of the Borrower and
its Subsidiaries which, in accordance with GAAP, would
be classified on a consolidated balance sheet of the
Borrower and its Subsidiaries as current liabilities.
"Consolidated EBITDA": for any period, the
Consolidated Net Income for such period, plus, to the
extent deducted in determining such Consolidated Net
Income, (i) interest expense, (ii) depreciation, (iii)
amortization, (iv) all Federal, state, local and
foreign income taxes and (v) all other non-cash
expenses, minus, to the extent added in determining
such Consolidated Net Income, any non-cash income or
non-cash gains, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Funded Debt": at any date of
determination thereof, all Indebtedness of the Borrower
and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, which by its terms
matures more than one year after such date of
determination (including the current portion of any
such Indebtedness) and any such Indebtedness maturing
within one year after such date of determination which
is renewable or extendable at the option of the obligor
to a date more than one year from such date of
determination and, including, in any event, the Loans.
"Consolidated Net Income": for any period, the
net income of the Borrower and its Subsidiaries for
such period, determined on a consolidated basis in
accordance with GAAP but excluding from the
determination thereof (without duplication) any
extraordinary gains. If Consolidated Net Income is
less than zero for any period, Consolidated Net Income
may be referred to as a Consolidated Net Loss for such
period.
"Consolidated Net Worth": at any date of
determination thereof, all items which would, in
accordance with GAAP, be included under shareholders'
equity on a consolidated balance sheet of the Borrower
and its Subsidiaries at such date of determination.
"Consolidated Quick Assets": at any date of
determination thereof, all cash, cash equivalents and
accounts receivable of the Borrower and its
Subsidiaries at such date of determination, determined
in accordance with GAAP and set forth on the then most
recent consolidated balance sheet of the Borrower and
its Subsidiaries.
"Consolidated Tangible Net Worth": at any date of
determination thereof, Consolidated Net Worth at such date
of determination, minus (a) any
surplus resulting from the write-up
of assets subsequent to August 31,
1994, (b) goodwill, including any
amounts (however designated on the
balance sheet) representing the
cost of acquisitions of
Subsidiaries in excess of
underlying tangible assets, (c)
patents, trademarks, copyrights,
(d) leasehold improvements not
recoverable at the expiration of a
lease and (e) deferred charges
(including, but not limited to,
unamortized debt discount and
expense, organization expenses and
experimental and development
expenses, but excluding prepaid
expenses).
"Consolidated Total Unsubordinated Liabilities":
at any date of determination thereof, all items which
would, in accordance with GAAP be included on a
consolidated balance sheet of the Borrower and its
Subsidiaries as liabilities, excluding Subordinated
Debt and any minority interests in Subsidiaries owned
by Persons other than the Borrower or any of its
Subsidiaries.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of
any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in
Section 7, whether or not any requirement for the
giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of
the United States of America.
"Domestic Subsidiary": any Subsidiary which is
not a foreign Subsidiary.
"Environmental Laws": any and all foreign,
Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees,
requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of
conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in
effect.
"ERISA": the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Eurocurrency Reserve Requirements": for any day
as applied to a Eurodollar Loan, the aggregate (without
duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental,
marginal and emergency reserves under any regulations
of the Board of Governors or other Governmental
Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board
of Governors) maintained by a member bank of the
Federal Reserve System.
"Eurodollar Base Rate": with respect to each day
during each Interest Period pertaining to a Eurodollar
Loan made by any Lender, the rate per annum equal to
the rate at which such Lender is offered Dollar
deposits at or about 10:00 A.M., New York City time,
two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange
operations in respect of such Lender's Eurodollar Loans
are then being conducted for delivery on the first day
of such Interest Period for the number of days
comprised therein and in an amount comparable to the
amount of such Lender's Eurodollar Loan to be
outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day
during each Interest Period pertaining to a Eurodollar
Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):
Eurodollar Base Rate
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified
in Section 7, provided that any requirement for the
giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Financing Lease": any lease of property, real or
personal, the obligations of the lessee in respect of
which are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee.
"Foreign Subsidiary": any Subsidiary that is
organized or incorporated under the laws of any
jurisdiction outside the United States of America.
"GAAP": generally accepted accounting principles
and practices in the United States of America as in
effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants
acting through the Financial Accounting Standards Board
or through other appropriate boards or committees
thereof or in such other statements by such other
entity as may be in general use by significant segments
of the accounting profession and which are consistently
applied for all periods so as to properly reflect the
financial condition, operations and cash flows of the
Borrower and its Subsidiaries.
"GFC Credit Agreement": the Loan Agreement dated
as of October 15, 1991, between the Borrower and
Greyhound Financial Corporation.
"Governmental Authority": any nation or
government, any state or other political subdivision
thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the
"guaranteeing person"), any obligation of (a) the
guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of
credit) to induce the creation of which the
guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations
(the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1)
for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii)
to purchase property, securities or services primarily
for the purpose of assuring the owner of any such
primary obligation of the ability of the primary
obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed
to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless
such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of
such Guarantee Obligation shall be such guaranteeing
person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good
faith.
"Guarantor": any Person delivering a Guarantee
pursuant to this Agreement.
"Indebtedness": of any Person at any date, (a)
all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services
(other than current trade liabilities and accrued
expenses incurred in the ordinary course of business
and payable in accordance with customary practices),
(b) any other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person in
respect of acceptances issued or created for the
account of such Person and (e) all liabilities secured
by any Lien on any property owned by such Person if
such Person has not assumed or otherwise become liable
for the payment thereof.
"Insolvency": with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within
the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of
Insolvency.
"Interest Payment Date": as to any Loan, the last
Business Day of each month during which such Loan is
outstanding.
"Interest Period": with respect to any Eurodollar
Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending
one, two, three or six months thereafter, as
selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may
be, given with respect thereto; and
(ii) thereafter, each period commencing on
the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one,
two, three or six months thereafter, as selected
by the Borrower by irrevocable notice to the
Lenders no later than 12:00 P.M. Noon, New York
City time, three Business Days prior to the last
day of the then current Interest Period with
respect thereto;
provided that, all of the foregoing provisions relating
to Interest Periods are subject to the following:
(1) if any Interest Period would otherwise
end on a day that is not a Business Day, such
Interest Period shall be extended to the next
succeeding Business Day unless the result of such
extension would be to carry such Interest Period
into another calendar month in which event such
Interest Period shall end on the immediately
preceding Business Day;
(2) any Interest Period that would otherwise
extend beyond the Termination Date shall end on
the Termination Date;
(3) 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 end on the last Business
Day of a calendar month; and
(4) the Borrower shall select Interest
Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an
Interest Period for such Eurodollar Loan.
"Interest Rate Protection Agreements": as to any
Person, all interest rate swaps, caps or collar
agreements or similar arrangements entered into by such
Person providing for protection against fluctuations in
interest rates or currency exchange rates or the
exchange of nominal interest obligations, either
generally or under specific contingencies.
"Inventory Turnover Ratio": at any date of
determination thereof, the ratio of (a) the aggregate
amount of "cost of goods sold" expensed during the then
most recently completed period of four consecutive
fiscal quarters to (b) the aggregate amount of
inventory of the Borrower and its Subsidiaries as set
forth on the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such period.
"Investments": as defined in subsection 6.9.
"Lien": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), charge or other security interest
or any preference, priority or other security agreement
or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any
conditional sale or other title retention agreement and
any Financing Lease having substantially the same
economic effect as any of the foregoing).
"Loans": as defined in subsection 2.1.
"Loan Documents": this Agreement, any Notes and
the Subsidiaries Guarantee.
"Loan Parties": the Borrower and each Domestic
Subsidiary.
"Material Adverse Effect": a material adverse
effect on (a) the business, operations, property,
condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this or any of
the other Loan Documents or the rights or remedies of
any Lender hereunder or thereunder.
"Materials of Environmental Concern": any
gasoline or petroleum (including crude oil or any
fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any
Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-
formaldehyde insulation.
"Material Subsidiary": at any time, any
Subsidiary (a) the Total Assets of which exceed 5% of
the Total Assets of the Borrower and its Subsidiaries
at such time and (b) the Total Revenues of which for
the then most recently completed fiscal quarter exceed
5% of the Total Revenues of the Borrower and its
Subsidiaries for such fiscal quarter.
"Multiemployer Plan": a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"NatWest": National Westminster Bank N.A., a
national banking association.
"Non-Excluded Taxes": as defined in subsection
2.14(a).
"Notes": as defined in subsection 2.5(d).
"Participant": as defined in subsection 8.6(b).
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of
ERISA.
"Permitted Acquisition": as to any Person, the
acquisition of all or substantially all of the Capital
Stock or assets of another Person, provided that (y)
(i) the aggregate Consideration for all such
acquisitions subsequent to the Closing Date shall not
exceed $30,000,000, (ii) such other Person (or the
assets being acquired) must be in (or be used in, in
the case of acquired assets) a comparable business to
the business in which the Borrower is engaged as of the
Closing Date, (iii) such acquisition transaction shall
be "non-hostile" and shall be consummated with the
consent of the Board of Directors of such other Person
and (iv) no Default or Event of Default shall have then
occurred and be continuing or would result therefrom.
"Permitted Investments": (a) securities issued or
directly and fully guaranteed or insured by the United
States Government or any agency or instrumentality
thereof having maturities of not more than one year
from the date of acquisition, (b) Dollar denominated
time deposits and certificates of deposit, having
maturities of not more than one year from the date of
acquisition thereof, of any Lender or of any domestic
commercial bank which has a capital and surplus of at
least $1,000,000,000, (c) commercial paper rated at
least A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or P-1 or the equivalent thereof
by Moody's Investors Service, Inc. and in either case
maturing within one year after the date of acquisition,
(d) securities issued by money-market funds with assets
of $2,500,000,000 or more, (e) tax-exempt debt
securities, having maturities of not more than one year
from the date of acquisition thereof, issued by any
Person organized under the laws of any State of the
United States or of the District of Columbia, which
securities are rated A or better by Standard and Poor's
Ratings Group or a or better by Moody's Investors
Service, Inc, (f) preferred stock, having maturities of
not more than one year from the date of acquisition
thereof, issued by closed end municipal bond funds
which are rated AAA by Standard & Poor's Ratings Group
and Aaa by Moody's Investors Services, Inc., (g)
repurchase obligations with a term of not more than
seven days for underlying securities of the type
described in clause (a), (h) equity securities issued
by any Person organized under the laws of any State of
the United States or of the District of Columbia with
an aggregate purchase price not to exceed $1,000,000 at
any time, which equity securities have been registered
under the Securities Act of 1933 or the Securities
Exchange Act of 1934 and are traded on a stock exchange
or the National Association of Securities Dealers, Inc.
National Market System and (i) equity securities of
Mosaid Limited owned by the Borrower on the date
hereof.
"Person": an individual, partnership,
corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity
of whatever nature.
"Plan": at a particular time, any employee
benefit plan which is covered by ERISA and in respect
of which the Borrower or a Commonly Controlled Entity
is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Properties": as defined in subsection 3.17.
"Regulation U": Regulation U of the Board of
Governors as in effect from time to time.
"Reorganization": with respect to any
Multiemployer Plan, the condition that such plan is in
reorganization within the meaning of Section 4241 of
ERISA.
"Reportable Event": any of the events set forth
in Section 4043(b) of ERISA, other than those events as
to which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
(Section Mark) 2615.
"Required Lenders": at any time, Lenders the
Commitment Percentages of which aggregate more than
75%.
"Requirement of Law": as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person,
and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive
officer and the president of the Borrower or, with
respect to financial matters, the chief financial
officer of the Borrower.
"Sanwa Credit Agreement": the Loan and Security
Agreement dated as of October 15, 1991, between the
Borrower and Sanwa Business Credit Corporation.
"Single Employer Plan": any Plan which is covered
by Title IV of ERISA, but which is not a Multiemployer
Plan.
"Subordinated Debt": any unsecured Indebtedness
of the Borrower or any of its Subsidiaries: no part of
the principal of which is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to January 13,
1998; the payment of the principal of and interest on
which and other obligations of the Borrower in respect
thereof are subordinated to the prior payment in full
of the principal of and interest (including
post-petition interest) on the Loans and all other
obligations and liabilities of the Borrower to and the
Lenders hereunder on terms and conditions approved in
writing by the Required Lenders; and all other terms
and conditions of which are satisfactory in form and
substance to the Required Lenders (as evidenced by
their prior written approval thereof).
"Subsidiary": as to any Person, a corporation,
partnership or other entity of which shares of stock or
other ownership interests having ordinary voting power
(other than stock or such other ownership interests
having such power only by reason of the happening of a
contingency) to elect a majority of the board of
directors or other managers of such corporation,
partnership or other entity are at the time owned, or
the management of which is otherwise controlled,
directly or indirectly through one or more
intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Subsidiaries Guarantee": the Guarantee to be
executed by all the Domestic Subsidiaries,
substantially in the form of Exhibit A, as the same may
be amended, supplemented or otherwise modified from
time to time.
"Supplier Contract": collectively, (a) the
Consignment Agreement, dated as of September 15, 1994
(SMC Contract No. 165-GWH), between the Borrower and
AT&T Corp. and (b) the Integrated Circuit Supply
Agreement (SMC Contract No. 166-GWH), dated September
15, 1994, between the Borrower and AT&T Corp.
"Termination Date": the third anniversary of the
Closing Date.
"Total Assets": as to any Person at any date of
determination, the total assets of such Person and its
Subsidiaries at such date of determination as
determined on a consolidated basis in accordance with
GAAP, excluding assets attributable to any minority
interests in Subsidiaries owned by Persons other than
such Person or any of its Subsidiaries.
"Total Revenues": as to any Person for any
period, the total revenues of such Person and its
Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP excluding
revenues attributable to any minority interests in
Subsidiaries owned by Persons other than such Person or
any of its Subsidiaries.
"Transferee": as defined in subsection 8.6(d).
"Type": as to any Loan, its nature as an ABR Loan
or a Eurodollar Loan.
1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any
Loan Document or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Loan Document, and
any certificate or other document made or delivered pursuant
hereto, accounting terms relating to the Borrower and its
Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them
under GAAP.
(c) The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein
shall be equally applicable to both the singular and plural
forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make
revolving credit loans ("Loans") to the Borrower from time
to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed
the amount of such Lender's Commitment. During the
Commitment Period, the Borrower may use the Commitments by
borrowing, prepaying the Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions
hereof.
(b) The Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination
thereof, as determined by the Borrower and notified to each
Lender in accordance with subsections 2.2 and 2.7, provided
that no Loan shall be made as a Eurodollar Loan after the
day that is one month prior to the Termination Date.
2.2 Procedure for Borrowing. The Borrower may
borrow under the Commitments during the Commitment Period on
any Business Day, provided that the Borrower shall give each
Lender irrevocable telephonic notice (which notice must be
received by each Lender prior to 12:00 P.M. Noon, New York
City time and must be promptly confirmed in writing), (a)
three Business Days prior to the requested Borrowing Date,
if all or any part of the requested Loans are to be
initially Eurodollar Loans or (b) on such Business Day,
otherwise, specifying (i) the amount to be borrowed, (ii)
the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, ABR Loans or a combination
thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amount of each such
Eurodollar Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing from each Lender
under the Commitments shall be in an amount equal to
$500,000 or a whole multiple thereof. Each Lender will make
the amount of its pro rata share of each borrowing available
to the Borrower by crediting the account of the Borrower
maintained by the Borrower with such Lender.
2.3 Commitment Fee. The Borrower agrees to pay
to each Lender a commitment fee for the period from and
including the first day of the Commitment Period to the
Termination Date, computed at the rate of 1/4 of 1% per
annum on the average daily amount of the unused Commitment
of such Lender during the period for which payment is made,
payable monthly in arrears on the last Business Day of each
month and on the Termination Date or such earlier date as
the Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the
date hereof.
2.4 Termination or Reduction of Commitments. The
Borrower shall have the right, upon not less than three
Business Days' prior written notice to each Lender, to
terminate the Commitments or, from time to time, to reduce
the amount of the Commitments. Any such reduction shall be
in a minimum amount of at least $2,000,000 or a whole
multiple of $500,000 in excess thereof and shall reduce
permanently the Commitments then in effect.
2.5 Repayment of Loans; Evidence of Debt. (a)
The Borrower hereby unconditionally promises to pay to each
Lender the then unpaid principal amount of each Loan made by
such Lender on the Termination Date (or such earlier date on
which the Loans become due and payable pursuant to Section
7). The Borrower hereby further agrees to pay interest on
the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth
in subsection 2.8.
(b) Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from
each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.
(c) The entries made in the accounts of each
Lender maintained pursuant to subsection 2.5(b) shall, to
the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations of
the Borrower therein recorded; provided, however, that the
failure of any Lender to maintain or any such account, or
any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable
interest) the Loans made to such Borrower by such Lender in
accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request of
any Lender, the Borrower will execute and deliver to such
Lender a promissory note of the Borrower evidencing the
Loans made by such Lender, substantially in the form of
Exhibit B (a "Note"), dated the Closing Date and payable to
the order of such Lender and in a principal amount equal to
the lesser of (a) the amount of the then Commitment of such
Lender or (b) the aggregate unpaid principal amount of all
Loans made by such Lender. Each Lender is hereby authorized
to record the date, Type and amount of each Loan made by
such Lender and the date and amount of each payment or
prepayment of principal with respect thereto, each
conversion of all or a portion thereof to another Type, each
continuation of all or a portion thereof as the same Type
and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on
the schedule annexed to and constituting a part of its Note
or any continuation thereof, and any such recordation shall,
to the extent permitted by applicable law, constitute prima
facie evidence of the accuracy of the information so
recorded, provided that the failure to make any such
recordation or any error therein shall not affect the
obligation of the Borrower to repay (with applicable
interest) the Loans made to the Borrower in accordance with
the terms of this Agreement.
2.6 Optional Prepayments. The Borrower may on
any Business Day prepay the Loans, in whole or in part in
multiples of $500,000, without premium or penalty (subject
to the next succeeding sentence), upon irrevocable notice to
each Lender on the date of such prepayment, specifying the
date and amount of prepayment and whether the prepayment is
of Eurodollar Loans, ABR Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to
each. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to
subsection 2.15.
2.7 Conversion and Continuation Options. (a) The
Borrower may elect from time to time to convert Eurodollar
Loans to ABR Loans by giving each Lender at least two
Business Days' prior irrevocable telephonic notice of such
election (which must be promptly confirmed in writing),
provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time
to convert ABR Loans to Eurodollar Loans by giving each
Lender at least three Business Days' prior irrevocable
notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial
Interest Period or Interest Periods therefor. All or any
part of outstanding Eurodollar Loans and ABR Loans may be
converted as provided herein, provided that (i) no Loan may
be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing and the Required
Lenders have determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a
Eurodollar Loan after the date that is one month prior to
the Termination Date.
(b) Any Eurodollar Loan may be continued as such
upon the expiration of the then current Interest Period with
respect thereto by the Borrower giving notice to each
Lender, in accordance with the applicable provisions of the
term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such
Eurodollar Loan, provided that no Eurodollar Loan may be
continued as such (i) when any Event of Default has occurred
and is continuing and the Required Lenders have determined
that such a continuation is not appropriate or (ii) after
the date that is one month prior to the Termination Date and
provided, further, that if the Borrower shall fail to give
such notice or if such continuation is not permitted such
Loans shall be automatically converted to ABR Loans on the
last day of such then expiring Interest Period.
2.8 Interest Rates and Payment Dates. (a) Each
Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum
equal to the Eurodollar Rate determined for such day plus
the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate
per annum equal to the ABR.
(c) If all or a portion of (i) the principal
amount of any Loan, (ii) any interest payable thereon or
(iii) any commitment fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum which is equal to the ABR
plus 2%, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each
Interest Payment Date and on the Termination Date and,
(i) in the case of a Eurodollar Loan, the last day of each
Interest Period for such Eurodollar Loan, and (ii) in the
case of an ABR Loan, the date of conversion of such ABR Loan
into a Eurodollar Loan pursuant to subsection 2.7, provided
that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
(e) The Applicable Margin for each Eurodollar
Loan shall be determined on the first day of each Interest
Period with respect thereto.
2.9 Computation of Interest and Fees. Commitment
fees and interest shall be calculated on the basis of a 360-
day year for the actual days elapsed. Any change in the
interest rate on a Loan resulting from a change in the ABR
or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which
such change becomes effective.
2.10 Inability to Determine Interest Rate. If
prior to the first day of any Interest Period:
(a) any Lender shall have determined (which
determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do
not exist for ascertaining such Lender's Eurodollar
Rate for such Interest Period, or
(b) any Lender shall have determined that such
Lender's Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly
reflect the cost to such Lender (as conclusively
certified by such Lender) of making or maintaining its
affected Loans during such Interest Period,
such Lender shall give telecopy or telephonic notice thereof
to the Borrower as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made
as ABR Loans, (y) any Loans that were to have been converted
on the first day of such Interest Period to Eurodollar Loans
shall be converted to or continued as ABR Loans and (z) any
outstanding Eurodollar Loans shall be converted, on the
first day of such Interest Period, to ABR Loans. Until such
notice has been withdrawn by such Lender, no further
Eurodollar Loans shall be made or continued as such by such
Lender, nor shall the Borrower have the right to convert
Loans made by such Lender to Eurodollar Loans.
2.11 Pro Rata Treatment and Payments. (a) Each
borrowing by the Borrower from the Lenders hereunder, each
conversion or continuation of Loans by the Borrower, each
payment by the Borrower on account of any commitment fee
hereunder and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective
Commitment Percentages of the Lenders. Each payment
(including each prepayment) by the Borrower on account of
principal of and interest on the Loans shall be made pro
rata according to the respective outstanding principal
amounts of the Loans then held by the Lenders. All payments
(including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees
or otherwise, shall be made without set off or counterclaim
and shall be made prior to 2:00 P.M., New York City time, on
the due date thereof to each Lender in immediately available
funds. If any payment hereunder becomes due and payable on
a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
2.12 Illegality. Notwithstanding any other
provision herein, if the adoption of or any change in any
Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or
maintain Eurodollar Loans as contemplated by this Agreement,
(a) the commitment of such Lender hereunder to make
Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar Loans shall forthwith be
cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically
to ABR Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last
day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts,
if any, as may be required pursuant to subsection 2.15.
2.13 Requirements of Law. (a) If the adoption
of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any
Lender with any request or directive (whether or not having
the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any
kind whatsoever with respect to this Agreement, any
Note or any Eurodollar Loan made by it, or change the
basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by
subsection 2.14 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender
which is not otherwise included in the determination of
the Eurodollar Rate; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the
cost to such Lender, by an amount which such Lender deems to
be material, of making, converting into, continuing or
maintaining Eurodollar Loans or to reduce any amount
receivable hereunder in respect thereof, then, in any such
case, the Borrower shall promptly pay such Lender such
additional amount or amounts as will compensate such Lender
for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the
adoption of or any change in any Requirement of Law
regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or
directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of
reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption,
change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, the Borrower shall
promptly pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall
promptly notify the Borrower of the event by reason of which
it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection
submitted by such Lender to the Borrower shall be conclusive
in the absence of manifest error. The Borrower shall not be
obligated to compensate any Lender pursuant to
subsection 2.13(b) for amounts accruing prior to the date
which is 180 days before such Lender notifies the Borrower
of its obligation to compensate such Lender for such
amounts. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
2.14 Taxes. (a) All payments made by the
Borrower under this Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on any Lender
as a result of a present or former connection between such
Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection
arising solely from such Lender having executed, delivered
or performed its obligations or received a payment under, or
enforced, this Agreement or any Note). If any such non-
excluded taxes, levies, imposts, duties, charges, fees
deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to any
Lender hereunder or under any Note, the amounts so payable
to such Lender shall be increased to the extent necessary to
yield to such Lender (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrower shall not be required
to increase any such amounts payable to any Lender that is
not organized under the laws of the United States of America
or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection. Whenever
any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to
such Lender a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to any Lender
the required receipts or other required documentary
evidence, the Borrower shall indemnify each Lender for any
incremental taxes, interest or penalties that may become
payable by such Lender as a result of any such failure. The
agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(b) Each Lender that is not incorporated under
the laws of the United States of America or a state thereof
shall:
(i) deliver to the Borrower (A) two duly
completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable
form, as the case may be, and (B) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii) deliver to the Borrower two further copies
of any such form or certification on or before the date
that any such form or certification expires or becomes
obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing
and complete such forms or certifications as may
reasonably be requested by the Borrower;
unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it
and such Lender so advises the Borrower. Such Lender shall
certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or
a Participant pursuant to subsection 8.6 shall, upon the
effectiveness of the related transfer, be required to
provide all of the forms and statements required pursuant to
this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and
statements to the Lender from which the related
participation shall have been purchased.
2.15 Indemnity. The Borrower agrees to indemnify
each Lender and to hold each Lender harmless from any loss
or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement,
(b) default by the Borrower in making any prepayment after
the Borrower has given a notice thereof in accordance with
the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the
last day of an Interest Period with respect thereto. This
covenant shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable
hereunder.
2.16 Change of Lending Office. Each Lender
agrees that if it makes any demand for payment under
subsection 2.13 or 2.14(a), or if any adoption or change of
the type described in subsection 2.12 shall occur with
respect to it, it will use reasonable efforts (consistent
with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion)
to designate a different lending office if the making of
such a designation would reduce or obviate the need for the
Borrower to make payments under subsection 2.13 or 2.14(a),
or would eliminate or reduce the effect of any adoption or
change described in subsection 2.12.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement
and to make the Loans, the Borrower hereby represents and
warrants to each Lender that:
3.1 Financial Condition. The consolidated
balance sheet of the Borrower and its consolidated
Subsidiaries as at February 28, 1994 and the related
consolidated statements of income and of cash flows for the
fiscal year ended on such date, reported on by Arthur
Andersen & Co., copies of which have heretofore been
furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date,
and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The
consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at February 28, 1994 and the
related consolidating statements of income and of cash flows
for the fiscal year ended on such date, certified by a
Responsible Officer, copies of which have heretofore been
furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date,
and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at August 31, 1994 and November
30, 1994 and the related unaudited consolidated statements
of income and of cash flows for the six-month and nine-month
periods, respectively, ended on such dates, certified by a
Responsible Officer, copies of which have heretofore been
furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such dates,
and the consolidated results of their operations and their
consolidated cash flows for the six-month and nine-month
periods then ended (subject to normal year-end audit
adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed
therein). Except as set forth on Schedule 3.1(a), neither
the Borrower nor any of its consolidated Subsidiaries had,
at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or
unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto. Except as set
forth on Schedule 3.1(a), during the period from February
28, 1994 to and including the date hereof there has been no
sale, transfer or other disposition by the Borrower or any
of its consolidated Subsidiaries of any material part of its
business or property and no purchase or other acquisition of
any business or property (including any capital stock of any
other Person) material in relation to the consolidated
financial condition of the Borrower and its consolidated
Subsidiaries at February 28, 1994.
3.2 No Change. (a) Since February 28, 1994 or,
if later, the date of the most recent audited financial
statements delivered to the Lenders pursuant to subsection
5.1(a), there has been no development or event which has had
or could reasonably be expected to have a Material Adverse
Effect and (b) during the period from February 28, 1994 to
and including the date hereof, no dividends or other
distributions have been declared, paid or made upon the
Capital Stock of the Borrower nor has any of the Capital
Stock of the Borrower been redeemed, retired, purchased or
otherwise acquired for value by the Borrower or any of its
Subsidiaries.
3.3 Corporate Existence; Compliance with Law.
Each of the Borrower and its Subsidiaries (a) is duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own
and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable
Obligations. The Borrower has the corporate power and
authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and to borrow
hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this
Agreement and any Notes and to authorize the execution,
delivery and performance of the Loan Documents to which it
is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with
the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan
Documents to which the Borrower is a party. This Agreement
has been, and each other Loan Document to which it is a
party will be, duly executed and delivered on behalf of the
Borrower. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered
will constitute, a legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance
with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in
equity or at law).
3.5 No Legal Bar. The execution, delivery and
performance of the Loan Documents to which the Borrower is a
party, the borrowings hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or
Contractual Obligation of the Borrower or of any of its
Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as set forth
on Schedule 3.6, no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of the Borrower, threatened by
or against the Borrower or any of its Subsidiaries or
against any of its or their respective properties or
revenues (a) with respect to any of the Loan Documents or
any of the transactions contemplated hereby or thereby or
(b) which could reasonably be expected to have a Material
Adverse Effect.
3.7 No Default. Neither the Borrower nor any of
its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which could
reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is
continuing.
3.8 Ownership of Property; Liens. Each of the
Borrower and its Subsidiaries has good record and marketable
title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of
such property is subject to any Lien except as permitted by
subsection 6.3.
3.9 Intellectual Property. The Borrower and each
of its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, technology, know-how and
processes necessary for the conduct of its business as
currently conducted except for those the failure to own or
license which could not reasonably be expected to have a
Material Adverse Effect (the "Intellectual Property"). 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 the Borrower know of any
valid basis for any such claim, except to the extent such
claims, individually or collectively, could not reasonably
be expected to have a Material Adverse Effect. The use of
such Intellectual Property by the Borrower 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 have a
Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement
of Law or Contractual Obligation of the Borrower or any of
its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its
Subsidiaries has filed or caused to be filed all tax returns
which, to the knowledge of the Borrower, are required to be
filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of
its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which
are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity
with GAAP have been provided on the books of the Borrower or
its Subsidiaries, as the case may be); no tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax, fee or other
charge.
3.12 Federal Regulations. No part of the
proceeds of any Loans will be used for "purchasing" or
"carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation G or Regulation
U of the Board of Governors as now and from time to time
hereafter in effect. If requested by any Lender, the
Borrower will furnish to each Lender a statement to the
foregoing effect in conformity with the requirements of FR
Form G-1 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
3.13 ERISA. Neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on
which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period. The present value of
all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of
the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither the Borrower nor any
Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
3.14 Investment Company Act; Other Regulations.
The Borrower is not an "investment company", or a company
"controlled" by an "investment company", within the meaning
of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or
State statute or regulation (other than Regulation X of the
Board of Governors) which limits its ability to incur
Indebtedness.
3.15 Subsidiaries. Schedule 3.15 sets forth a
complete list of all Subsidiaries of the Borrower as of the
date hereof.
3.16 Purpose of Loans. The proceeds of the Loans
will be used to (a) finance Permitted Acquisitions (as
hereinafter defined) and (b) finance capital expenditures
and the ongoing working capital requirements of the Borrower
and its Subsidiaries.
3.17 Environmental Matters. Except as set forth
on Schedule 3.17:
(a) The facilities and properties owned, leased
or operated by the Borrower or any of its Subsidiaries
(the "Properties") do not contain, and have not
previously contained, any Materials of Environmental
Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could
reasonably be expected to give rise to liability under,
any Environmental Law except in either case insofar as
such violation or liability, or any aggregation
thereof, is not reasonably likely to result in a
Material Adverse Effect.
(b) The Properties and all operations at the
Properties are in compliance, and have in the last 5
years been in compliance, in all material respects with
all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or
violation of any Environmental Law with respect to the
Properties or the business operated by the Borrower or
any of its Subsidiaries (the "Business") which could
materially interfere with the continued operation of
the Properties or materially impair the fair saleable
value thereof.
(c) Neither the Borrower nor any of its
Subsidiaries has received any notice of violation,
alleged violation, non-compliance, liability or
potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any
of the Properties or the Business, nor does the
Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened
except insofar as such notice or threatened notice, or
any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in a
Material Adverse Effect.
(d) Materials of Environmental Concern have not
been transported or disposed of from the Properties in
violation of, or in a manner or to a location which
could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be
expected to give rise to liability under, any
applicable Environmental Law except insofar as any such
violation or liability referred to in this paragraph,
or any aggregation thereof, is not reasonably likely to
result in a Material Adverse Effect.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge
of the Borrower, threatened, under any Environmental
Law to which the Borrower or any Subsidiary is or will
be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial
requirements outstanding under any Environmental Law
with respect to the Properties or the Business except
insofar as such proceeding, action, decree, order or
other requirement, or any aggregation thereof, is not
reasonably likely to result in a Material Adverse
Effect.
(f) There has been no release or threat of
release of Materials of Environmental Concern at or
from the Properties, or arising from or related to the
operations of the Borrower or any Subsidiary in
connection with the Properties or otherwise in
connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise
to liability under Environmental Laws except insofar as
any such violation or liability referred to in this
paragraph, or any aggregation thereof, is not
reasonably likely to result in a Material Adverse
Effect.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The agreement
of each Lender to make the initial Loan requested to be made
by it is subject to the satisfaction, immediately prior to
or concurrently with the making of such Loan, of the
following conditions precedent:
(a) Loan Documents. Each Lender shall have
received (i) this Agreement, executed and delivered by
a duly authorized officer of the Borrower, (ii) if
requested by such Lender, a Note executed and delivered
by a duly authorized officer of the Borrower and (iii)
the Subsidiaries Guarantee, executed and delivered by a
duly authorized officer of each Domestic Subsidiary.
(b) Refinancing. Each Lender shall have received
evidence reasonably satisfactory to the Lenders that
the Sanwa Credit Agreement and the GFC Credit Agreement
shall be terminated prior to or concurrently with
making of the initial Loans under this Agreement,
together with executed copies of all payout or
assignment letters, lien releases or assignments,
termination or assignment statements, satisfactions,
agreements, certificates and other documents entered
into in connection with such termination, all of which
payout letters, lien releases or assignments,
termination or assignment statements, satisfactions,
agreements, certificates and other documents shall be
in form and substance reasonably satisfactory to each
Lender.
(c) Borrowing Certificate. Each Lender shall
have received, with a counterpart for each Lender, a
certificate of the Borrower, dated the Closing Date,
substantially in the form of Exhibit C, with
appropriate insertions and attachments, satisfactory in
form and substance to such Lender, executed by the
President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.
(d) Corporate Proceedings of the Borrower. Each
Lender shall have received a copy of the resolutions,
in form and substance satisfactory to such Lender, of
the Board of Directors of the Borrower authorizing (i)
the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a
party and (ii) the borrowings contemplated hereunder,
certified by the Secretary or an Assistant Secretary of
the Borrower as of the Closing Date, which certificate
shall be in form and substance satisfactory to each
Lender and shall state that the resolutions thereby
certified have not been amended, modified, revoked or
rescinded.
(e) Borrower Incumbency Certificate. Each Lender
shall have received a Certificate of the Borrower,
dated the Closing Date, as to the incumbency and
signature of the officers of the Borrower executing any
Loan Document, satisfactory in form and substance to
such Lender, executed by the President or any Vice
President and the Secretary or any Assistant Secretary
of the Borrower.
(f) Corporate Proceedings of Subsidiaries. Each
Lender shall have received a copy of the resolutions,
in form and substance satisfactory to such Lender, of
the Board of Directors of each Domestic Subsidiary of
the Borrower which is a party to a Loan Document
authorizing the execution, delivery and performance of
the Loan Documents to which it is a party, certified by
the Secretary or an Assistant Secretary of each such
Domestic Subsidiary as of the Closing Date, which
certificate shall be in form and substance satisfactory
to such Lender and shall state that the resolutions
thereby certified have not been amended, modified,
revoked or rescinded.
(g) Subsidiary Incumbency Certificates. Each
Lender shall have received a certificate of each
Domestic Subsidiary of the Borrower, dated the Closing
Date, as to the incumbency and signature of the
officers of such Subsidiaries executing any Loan
Document, satisfactory in form and substance to such
Lender, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of each
such Domestic Subsidiary.
(h) Corporate Documents. Each Lender shall
have received true and complete copies of the
certificate of incorporation and by-laws of the
Borrower and each of its Subsidiaries certified as of
the Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of the
Borrower and each of its Subsidiaries.
(i) Fees. Each Lender shall have received the
fees to be received on the Closing Date pursuant to the
Fee Letter dated as of January 13, 1995, from the
Borrower to Chemical and NatWest.
(j) Legal Opinions. Each Lender shall have
received the executed legal opinion of Loeb and Loeb,
counsel to the Borrower, substantially in the form of
Exhibit D. Such legal opinion shall cover such other
matters incident to the transactions contemplated by
this Agreement as any Lender may reasonably require.
(k) Lien Searches. Each Lender shall have
received the results of a recent search by a Person
satisfactory to such Lender, of the Uniform Commercial
Code, judgement and tax lien filings which may have
been filed with respect to personal property of the
Borrower, and the results of such search shall be
satisfactory to such Lender.
(l) Supplier Contract. Each Lender shall have
received a certified copy of the Supplier Contract
which shall be satisfactory in form and substance to
such Lender.
4.2 Conditions to Each Loan. The agreement of
each Lender to make any Loan requested to be made by it on
any date (including, without limitation, its initial Loan)
is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower and
its Subsidiaries in or pursuant to the Loan Documents
shall be true and correct in all material respects on
and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default
shall have occurred and be continuing on such date or
after giving effect to the Loans requested to be made
on such date.
(c) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other
legal matters in connection with the transactions
contemplated by this Agreement and the other Loan
Documents shall be satisfactory in form and substance
to such Lender, and such Lender shall have received
such other documents and legal opinions in respect of
any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably
request.
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date
thereof that the conditions contained in this subsection
have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect or any amount is owing to any
Lender hereunder or under any other Loan Document, the
Borrower shall and (except in the case of delivery of
financial information, reports and notices and subsection
5.10) shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each
Lender:
(a) as soon as available, but in any event within
90 days after the end of each fiscal year of the
Borrower, a copy of (i) the consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at
the end of such year and the related consolidated
statements of income and retained earnings and of cash
flows for such year, setting forth in each case in
comparative form the figures for the previous year,
reported on without qualification by Arthur Andersen &
Co. or other independent certified public accountants
of nationally recognized standing satisfactory to the
Required Lenders and (ii) the consolidating balance
sheet of the Borrower and its consolidated Subsidiaries
as at the end of such year and the related
consolidating statements of income and retained
earnings and of cash flows for such year, setting forth
in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as
being fairly stated in all material respects; and
(b) as soon as available, but in any event not
later than 45 days after the end of each of the first
three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited
consolidated statements of income and retained earnings
and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer
as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct
in all material respects and shall be prepared in reasonable
detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer,
as the case may be, and disclosed therein).
5.2 Certificates; Other Information. Furnish to
each Lender:
(a) concurrently with the delivery of the
financial statements referred to in subsection 5.1(a),
a certificate of the independent certified public
accountants reporting on such financial statements
stating that in making the examination necessary
therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the
financial statements referred to in subsections 5.1(a)
and (b), a certificate of a Responsible Officer (i)
stating that, to the best of such Officer's knowledge,
the Borrower and its Subsidiaries during such period
have observed or performed all of their respective
covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other
Loan Documents to be observed, performed or satisfied
by them, and that such Responsible Officer has obtained
no knowledge of any Default or Event of Default except
as specified in such certificate and (ii) setting forth
the calculations required to determine compliance with
subsections 6.1 and 6.8;
(c) within 90 days after the beginning of each
fiscal year of the Borrower, a copy of the projections
by the Borrower of the balance sheet, income statement
and cash flow budget of the Borrower and its
Subsidiaries for such fiscal year and the subsequent
three fiscal years, such projections to be accompanied
by a certificate of the Chief Financial Officer of the
Borrower to the effect that such projections have been
prepared in good faith on the basis of sound financial
planning practice and reasonable assumptions;
(d) within five days after the same are sent,
copies of all financial statements and reports which
the Borrower sends to its stockholders, and within five
days after the same are filed, copies of all financial
statements and reports which the Borrower may make to,
or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority;
(e) promptly, a copy of each management letter,
if any, prepared by the accountants which audited the
financial statements delivered pursuant to subsection
5.1(a); and
(f) promptly, such additional financial and other
information as any Lender may from time to time
reasonably request.
5.3 Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its material
obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of
Existence. Continue to engage in business of the same
general type as now conducted by it and preserve, renew and
keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted
pursuant to subsection 6.5; comply with all Contractual
Obligations and Requirements of Law except to the extent
that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse
Effect.
5.5 Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good
working order and condition; maintain with financially sound
and reputable insurance companies insurance on all its
property in at least such amounts and against at least such
risks (but including in any event public liability, product
liability and business interruption) as are usually insured
against in the same general area by companies engaged in the
same or a similar business; and furnish to each Lender, upon
written request, full information as to the insurance
carried.
5.6 Inspection of Property; Books and Records;
Discussions. Keep proper books of records and account in
which full, true and correct entries in conformity with GAAP
and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities;
and permit representatives of any Lender to visit and
inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and
as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers
and employees of the Borrower and its Subsidiaries and with
its independent certified public accountants.
5.7 Notices. Promptly give notice to each Lender
of:
(a) the occurrence of any Default or Event of
Default;
(b) any (i) default or event of default under any
Contractual Obligation of the Borrower or any of its
Subsidiaries or (ii) litigation, investigation or
proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any
Governmental Authority, which in either case, if not
cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse
Effect;
(c) any litigation or proceeding affecting the
Borrower or any of its Subsidiaries in which the amount
involved is $1,000,000 or more and not covered by
insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and
in any event within 30 days after the Borrower knows or
has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or
the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan; and
(e) any development or event which could
reasonably be expected to have a Material Adverse
Effect.
Each notice pursuant to this subsection shall be accompanied
by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating
what action the Borrower proposes to take with respect
thereto.
5.8 Environmental Laws. (a) Comply with, and
ensure compliance by all tenants and subtenants, if any,
with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and
ensure that all tenants and subtenants obtain and comply in
all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws.
(b) Conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly
comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect.
5.9 Additional Guarantors. Promptly inform each
of the Lenders of the creation or acquisition of each new
Domestic Subsidiary after the Closing Date and cause each
such new Domestic Subsidiary of the Borrower to execute
promptly after creation or acquisition thereof a Supplement
in the form attached to the Subsidiaries Guarantee as
Exhibit A pursuant to which such new Domestic Subsidiary
shall become a party to the Subsidiaries Guarantee as a
guarantor thereunder.
5.10 Assets. (a) Own at least 90% of the Total
Assets of the Borrower and its Subsidiaries (other than the
assets owned by Toyo Microsystems Corporation on the date
hereof) at all times and (b) cause at least 90% of the Total
Assets of the Borrower to be located in the United States of
America at all times.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect or any amount is owing to any
Lender hereunder or under any other Loan Document, the
Borrower shall not, and (except with respect to subsections
6.1) shall not permit any of its Subsidiaries to, directly
or indirectly:
6.1 Financial Condition Covenants.
eL Maintenance of Net Worth. Permit
Consolidated Net Worth at any time (i) on or prior to
February 27, 1995, to be less than $150,000,000, (ii)
at any time during the period from and including
February 28, 1995 to and including February 27, 1996,
to be less than $157,500,000, (iii) at any time during
the period from and including February 28, 1996 to and
including February 27, 1997, to be less than the
greater of (A) $165,000,000 or (B) an amount equal to
the actual Consolidated Net Worth at February 28, 1995
plus $7,500,000 or (iv) at any time thereafter, to be
less than the greater of (A) $172,500,000 or (B) an
amount equal to the actual Consolidated Net Worth at
February 28, 1996 plus $7,500,000.
(b) Consolidated Net Income. Permit (i)
Consolidated Net Income to be less than $7,500,000 for
any fiscal year ending after the Closing Date or (ii) a
Consolidated Net Loss to occur in three or more
consecutive fiscal quarters during any period of four
consecutive fiscal quarters ending after the Closing
Date.
(c) Maintenance of Quick Asset Ratio. Permit the
ratio of Consolidated Quick Assets to Consolidated
Current Liabilities to be less than 1.25 to 1.00 at any
time.
(d) Ratio of Total Unsubordinated Liabilities to
Consolidated Tangible Net Worth. Permit the ratio of
Consolidated Total Unsubordinated Liabilities to
Consolidated Tangible Net Worth at any time to be
greater than 1.25 to 1.00.
(e) Ratio of Consolidated Funded Debt to
Consolidated EBITDA. Permit the ratio of Consolidated
Funded Debt at any time to Consolidated EBITDA for the
most recently completed period of four consecutive
fiscal quarters then ended to be greater than 1.75 to
1.00.
(f) Maintenance of Inventory Turnover. Permit
the Inventory Turnover Ratio to be less than 3.50 to
1.00 at any time.
6.2 Limitation on Indebtedness. Create, incur,
assume or suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this
Agreement;
(b) Indebtedness of the Borrower to any
Subsidiary and of any Subsidiary to the Borrower or any
other Subsidiary, provided that the maximum amount of
any such Indebtedness of the Foreign Subsidiaries to
the Borrower shall not exceed $1,000,000 in the
aggregate at any time outstanding;
(c) Indebtedness of the Borrower and any of its
Subsidiaries incurred to finance the acquisition of
fixed or capital assets to the extent permitted under
subsection 6.8 (whether pursuant to a loan, a Financing
Lease or otherwise) in an aggregate principal amount
not exceeding in the aggregate $3,000,000 at any time
outstanding;
(d) Subordinated Debt of the Borrower or any of
its Subsidiaries;
(e) Indebtedness outstanding on the date hereof
and listed on Schedule 6.2(e); and
(f) Indebtedness of a corporation which becomes a
Subsidiary after the date hereof, provided that (i)
such indebtedness existed at the time such corporation
became a Subsidiary and was not created in anticipation
thereof and (ii) immediately after giving effect to the
acquisition of such corporation by the Borrower no
Default or Event of Default shall have occurred and be
continuing or would result therefrom.
6.3 Limitation on Liens. Create, incur, assume
or suffer to exist any Lien upon any of its property, assets
or revenues, whether now owned or hereafter acquired, except
for:
(a) Liens for taxes not yet due or which are
being contested in good faith by appropriate
proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising
in the ordinary course of business which are not
overdue for a period of more than 60 days or which are
being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with
workers' compensation, unemployment insurance and other
social security legislation and deposits securing
liability to insurance carriers under insurance or
self-insurance arrangements;
(d) deposits to secure the performance of bids,
trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not
substantial in amount and which do not in any case
materially detract from the value of the property
subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or
such Subsidiary;
(f) Liens in existence on the date hereof listed
on Schedule 6.3(f), provided that no such Lien is
spread to cover any additional property after the
Closing Date and that the amount of Indebtedness
secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower
and its Subsidiaries permitted by subsection 6.2(c)
incurred to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of
such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property
financed by such Indebtedness, (iii) the amount of
Indebtedness secured thereby is not increased and (iv)
the principal amount of Indebtedness secured by any
such Lien shall at no time exceed 100% of the original
purchase price of such property at the time it was
acquired; and
(h) Liens on the property or assets of a
corporation which becomes a Subsidiary after the date
hereof securing Indebtedness permitted by subsection
6.2(f), provided that (i) such Liens existed at the
time such corporation became a Subsidiary and were not
created in anticipation thereof, (ii) any such Lien is
limited to the property and assets subject to such Lien
at the time such corporation becomes a Subsidiary and
is not spread to cover any property or assets of such
corporation after the time such corporation becomes a
Subsidiary (including, without limitation, pursuant to
after-acquired property or similar clause) and (iii)
the amount of Indebtedness secured thereby is not
increased.
6.4 Limitation on Guarantee Obligations. Create,
incur, assume or suffer to exist any Guarantee Obligation
except:
(a) Guarantee Obligations in existence on the
date hereof and listed on Schedule 6.4(a);
(b) Guarantee Obligations of the Borrower and its
Subsidiaries created after the date hereof in an
aggregate amount not to exceed $250,000 in the
aggregate at any one time outstanding;
(c) Guarantee Obligations of the Borrower in
respect of operating leases entered into by any
Subsidiary in the ordinary course of business; and
(d) the Guarantees.
6.5 Limitation on Fundamental Changes. Enter
into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all
of its property, business or assets, or make any material
change in its present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged
or consolidated with or into the Borrower (provided
that the Borrower shall be the continuing or surviving
corporation) or with or into any one or more wholly
owned Domestic Subsidiaries of the Borrower (provided
that the wholly owned Domestic Subsidiary or Domestic
Subsidiaries shall be the continuing or surviving
corporation);
(b) any wholly owned Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the
Borrower or any wholly owned Domestic Subsidiary of the
Borrower; and
(c) as permitted under subsection 6.9.
6.6 Limitation on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation,
receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue
or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Borrower or any wholly owned
Subsidiary, except:
(a) the sale or other disposition of obsolete or
worn out property in the ordinary course of business;
(b) the sale of inventory in the ordinary course
of business;
(c) the sale or discount without recourse of
accounts receivable in the ordinary course of business
in connection with the compromise or collection
thereof;
(d) the sale of equipment to AT&T Corp. pursuant
to the terms of the Supplier Contract as in effect on
the date hereof;
(e) the sale of equipment with an aggregate net
book value not exceeding $500,000 in any fiscal year;
and
(f) as permitted by subsection 6.5(b).
6.7 Limitation on Dividends. Declare or pay any
dividend (other than dividends payable solely in common
stock of the Borrower) on, or make any payment on account
of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement
or other acquisition of, any shares of any class of Capital
Stock of the Borrower or any Domestic Subsidiary which is
not wholly owned by the Borrower or any warrants or options
to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or
property or in obligations of the Borrower or any
Subsidiary, except for (i) repurchases of its common stock
in an amount not to exceed $5,000,000 in the aggregate after
the Closing Date, (ii) dividends in respect of the Capital
Stock of any Domestic Subsidiary which is not wholly owned
by the Borrower which is paid on a ratable basis to all
holders of such Capital Stock and (iii) dividends and/or
purchases of common stock of the Borrower in respect of
employee benefit plans of the Borrower as in effect on the
date hereof not exceeding $500,000 in the aggregate in any
year.
6.8 Limitation on Capital Expenditures. Make or
commit to make (by way of the acquisition of securities of a
Person or otherwise) any expenditure in respect of the
purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal
replacement and maintenance programs properly charged to
current operations and any such expenditure resulting from a
Permitted Acquisition) except for expenditures in the
ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries during any of the
fiscal years of the Borrower set forth below, the amount set
forth opposite such fiscal year below:
Fiscal Year Amount
1995 $8,000,000
1996 $35,000,000
1997 $30,000,000
1998 $30,000,000
; provided that Capital Expenditures with respect to the
1995 Fiscal Year shall be calculated with respect to the
period beginning on the Closing Date and ending on February
28, 1995.
6.9 Limitation on Investments, Loans and
Advances. Make any advance, loan, extension of credit or
capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets
constituting a business unit of, or make any other
investment in, any Person ("Investments"), except :
(a) extensions of trade credit in the ordinary
course of business;
(b) Permitted Investments;
(c) Investments by the Borrower in its
Subsidiaries as of the Closing Date listed in Schedule
3.15 hereto and additional equity Investments
(including, without limitation, by virtue of a
transaction permitted under subsection 6.5) in
Subsidiaries, provided that the aggregate amount of
such Investments in Foreign Subsidiaries shall not
exceed $1,000,000 in the aggregate subsequent to the
Closing Date; and
(d) Permitted Acquisitions by the Borrower.
6.10 Limitation on Optional Payments and
Modifications of Debt Instruments. (a) Make any optional
payment or prepayment on or redemption or purchase of any
Subordinated Debt, (b) amend, modify or change, or consent
or agree to any amendment, modification or change to any of
the terms of any such Subordinated Debt (other than any such
amendment, modification or change which would extend the
maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date
for payment of interest thereon), or (c) amend the
subordination provisions of the Subordinated Debt.
6.11 Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate unless such
transaction is (a) otherwise permitted under this Agreement,
(b) in the ordinary course of the Borrower's or such
Subsidiary's business and (c) upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate,
except for contracts with directors and executive officers
of the Borrower and its Subsidiaries entered into in the
ordinary course of business with respect to services
rendered to the Borrower and its Subsidiaries.
6.12 Limitation on Sales and Leasebacks. Enter
into any arrangement with any Person providing for the
leasing by the Borrower or any Subsidiary of real or
personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such
Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such
property or rental obligations of the Borrower or such
Subsidiary.
6.13 Limitation on Changes in Fiscal Year;
Accounting Changes. (a) Permit the fiscal year of the
Borrower to end on a day other than the last day of February
or (b) change any accounting treatments or reporting
practices used in connection with the preparation of the
consolidated financial statements of the Borrower and its
Subsidiaries as of the date hereof except as required or
permitted by GAAP.
6.14 Limitation on Negative Pledge Clauses.
Enter into with any Person any agreement, other than (a)
this Agreement or (b) any industrial revenue bonds, purchase
money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation
shall only be effective against the assets financed
thereby), which prohibits or limits the ability of the
Borrower or any of its Subsidiaries to create, incur, assume
or suffer to exist any Lien upon any of its property, assets
or revenues, whether now owned or hereafter acquired.
6.15 Limitation on Lines of Business. Enter into
any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its
Subsidiaries are engaged on the date of this Agreement and
those businesses acquired pursuant to Permitted
Acquisitions.
6.16 Limitation on Interest Rate Protection
Agreements. Enter into any Interest Rate Protection
Agreements other than Interest Rate Protection Agreements
with respect to the Loans, provided that (i) the aggregate
notional amount of all such Interest Rate Protection
Agreements shall not exceed the Commitments and (ii) such
Interest Rate Protection Agreements shall be unsecured.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be
continuing:
(a) The Borrower shall fail to pay any principal
of any Loan when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay
any interest on any Loan, or any other amount payable
hereunder, within five days after any such interest or
other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed
made by the Borrower or any other Loan Party herein or
in any other Loan Document or which is contained in any
certificate, document or financial or other statement
furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall
prove to have been incorrect in any material respect on
or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall
default in the observance or performance of any
agreement contained in Section 6; or
(d) The Borrower or any other Loan Party shall
default in the observance or performance of any other
agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a)
through (c) of this Section), and in the case of any
such default under Section 5 (other than subsection
5.1, 5.2(a), 5.2(b), 5.4, 5.5, 5.6 or 5.7), such
default shall continue unremedied for a period of 20
days; or
(e) The Borrower or any of its Subsidiaries shall
(i) default in any payment of principal of or interest
of any Indebtedness (other than the Loans) or in the
payment of any Guarantee Obligation, beyond the period
of grace (not to exceed 30 days), if any, provided in
the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, if
the aggregate amount of the Indebtedness and/or
Guarantee Obligations in respect of which such default
or defaults shall have occurred is at least $100,000;
or (ii) default in the observance or performance of any
other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in
any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or
condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder
or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving
of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee
Obligation to become payable; or
(f) (i) The Borrower or any of its Material
Subsidiaries shall commence any case, proceeding or
other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its
Material Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall
be commenced against the Borrower or any of its
Material Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of
30 days; or (iii) there shall be commenced against the
Borrower or any of its Material Subsidiaries any case,
proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar
process against all or any substantial part of its
assets which results in the entry of an order for any
such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within
30 days from the entry thereof; or (iv) the Borrower or
any of its Material Subsidiaries shall take any action
in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Material Subsidiaries shall
generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become
due; or
(g) (i) Any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of
a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV
of ERISA, (v) the Borrower or any Commonly Controlled
Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together
with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse
Effect; or
(h) One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries
involving in the aggregate a liability (not paid or
fully covered by insurance) of $250,000 or more, and
all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) Any Guarantee shall cease, for any reason, to
be in full force and effect with respect to any
Material Subsidiary or any Guarantor shall so assert;
or
(j) (i) Any Person or "group" (within the meaning
of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended) (A) shall have acquired
beneficial ownership of 20% or more of any outstanding
class of Capital Stock having ordinary voting power in
the election of directors of the Borrower or (B) shall
obtain the power (whether or not exercised) to elect a
majority of the Borrower's directors or (ii) the Board
of Directors of the Borrower shall not consist of a
majority of Continuing Directors; "Continuing
Directors" shall mean the directors of the Borrower on
the Closing Date and each other director, if such other
director's nomination for election to the Board of
Directors of the Borrower is recommended by a majority
of the then Continuing Directors;
then, and in any such event, (A) if such event is an Event
of Default specified in clause (i) or (ii) of paragraph (f)
of this Section with respect to the Borrower, automatically
the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement shall immediately become
due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be
taken: (i) the Required Lenders may, by notice to the
Borrower declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and
(ii) the Required Lenders may, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement to be due
and payable forthwith, whereupon the same shall immediately
become due and payable. Except as expressly provided above
in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this
Agreement nor any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except
in accordance with the provisions of this subsection. The
Required Lenders may from time to time (a) enter into with
the Borrower written amendments, supplements or
modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or
(b) waive, on such terms and conditions as the Required
Lenders may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents
or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the
amount or extend the scheduled date of maturity of any Loan
or of any installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount
or extend the expiration date of any Lender's Commitments,
in each case without the consent of each Lender affected
thereby, or (ii) amend, modify or waive any provision of
this subsection or reduce the percentage specified in the
definition of Required Lenders, or consent to the assignment
or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan
Documents or the release of any Guarantor under the
Subsidiaries Guarantee, in each case without the written
consent of all the Lenders. Any such waiver and any such
amendment, supplement or modification shall apply equally to
each of the Lenders and shall be binding upon the Borrower,
the Lenders and all future holders of the Loans. In the
case of any waiver, the Borrower and the Lenders shall be
restored to their former positions and rights hereunder and
under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right
consequent thereon.
8.2 Notices. All notices, requests and demands
to or upon the respective parties hereto to be effective
shall be in writing (including by facsimile transmission),
and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered, or
five days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received,
addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:
The Borrower: Standard Microsystems Corporation
80 Arkay Drive
Hauppauge, New York 11788
Attention: Anthony D'Agostino
Telecopy: (516) 273-5550
The Lenders: Chemical Bank
Middle Market Group
7600 Jericho Turnpike
Woodbury, New York 11797
Attention: Account Officer
Standard Microsystems
Corporation
Telecopy: (516) 364-3307
National Westminster Bank N.A.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Christine Dekajlo
Standard Microsystems
Corporation
Telecopy: (516) 349-2098
provided that any notice, request or demand to or upon the
Lenders pursuant to subsection 2.2, 2.4, 2.7 or 2.11 shall
not be effective until received.
8.3 No Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of any
Lender, any right, remedy, power or privilege hereunder or
under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
8.4 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the
other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.
8.5 Payment of Expenses and Taxes. The Borrower
agrees (a) to pay or reimburse Chemical and NatWest for all
their out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and
the consummation and administration of the transactions
contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of counsel
to Chemical and NatWest, (b) to pay or reimburse each Lender
for all its costs and expenses incurred in connection with
the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and
disbursements of counsel to each Lender, (c) to pay,
indemnify, and hold each Lender harmless from, any and all
recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution
and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent
under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay,
indemnify, and hold each Lender harmless from and against
any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents
and any such other documents, including, without limitation,
any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in
this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no
obligation hereunder to any Lender with respect to
indemnified liabilities arising from (i) the gross
negligence or willful misconduct of any such Lender or (ii)
legal proceedings commenced against any such Lender by any
security holder or creditor thereof arising out of and based
upon rights afforded any such security holder or creditor
solely in its capacity as such. The agreements in this
subsection shall survive repayment of the Loans and all
other amounts payable hereunder.
8.6 Successors and Assigns; Participations and
Assignments. (a) This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Lenders and their
respective successors and assigns, except that the Borrower
may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of
each Lender.
(b) Any Lender may, in the ordinary course of its
commercial banking business and in accordance with
applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in
any Loan owing to such Lender, any Commitment of such Lender
or any other interest of such Lender hereunder and under the
other Loan Documents. In the event of any such sale by a
Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the
other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall
have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant
shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in
subsection 8.7(a) as fully as if it were a Lender hereunder.
The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.12, 2.13 and 2.14
with respect to its participation in the Commitments and the
Loans outstanding from time to time as if it was a Lender;
provided that, in the case of subsection 2.14 such
Participant shall have complied with the requirements of
said subsection and, provided, further, that no Participant
shall be entitled to receive any greater amount pursuant to
any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its
commercial banking business and in accordance with
applicable law, at any time and from time to time assign to
any Lender or any affiliate thereof or, with the consent of
the Borrower (which shall not be unreasonably withheld), to
an additional bank or financial institution ("an Assignee")
all or any part of its rights and obligations under this
Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of
Exhibit E, executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender
or an affiliate thereof, by the Borrower), provided that,
(i) notwithstanding the foregoing, the consent of the
Borrower shall not be required in the case of any such
assignment to an additional bank or financial institution by
Chemical or NatWest unless the sum of the aggregate
principal amount of the Loans and the aggregate amount of
the unused Commitment being assigned is greater than 49% of
the Commitment of Chemical or NatWest, as the case may be,
at such time (provided that Chemical or NatWest, as the case
may be, shall provide ten days notice to the Borrower prior
to making any assignment pursuant to this clause (i)) and
(ii) in the case of any such assignment to an additional
bank or financial institution, the sum of the aggregate
principal amount of the Loans and the aggregate amount of
the unused Commitment being assigned and, if such assignment
is of less than all of the rights and obligations of the
assigning Lender, the sum of the aggregate principal amount
of the Loans and the aggregate amount of the unused
Commitment remaining with the assigning Lender are each not
less than $10,000,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x)
the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a
Commitment as set forth therein, and (y) the assigning
Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party
hereto). Notwithstanding any provision of this paragraph
(c) and paragraph (e) of this subsection, the consent of the
Borrower shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be
required to be executed and delivered by the Borrower, for
any assignment which occurs at any time when any of the
events described in Section 7(a) or 7(f) shall have occurred
and be continuing.
(d) The Borrower authorizes each Lender to
disclose to any Participant or Assignee (each, a
"Transferee") and any prospective Transferee, subject to the
provisions of subsection 8.15, any and all financial
information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or
on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower and its Affiliates prior
to becoming a party to this Agreement.
(e) For avoidance of doubt, the parties to this
Agreement acknowledge that the provisions of this subsection
concerning assignments of Loans and Notes relate only to
absolute assignments and that such provisions do not
prohibit assignments creating security interests, including,
without limitation, any pledge or assignment by a Lender of
any Loan or Note to any Federal Reserve Bank in accordance
with applicable law.
8.7 Adjustments; Set-off. (a) If any Lender (a
"Benefitted Lender") shall at any time receive any payment
of all or part of its Loans, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings
of the nature referred to in Section 7(f), or otherwise), in
a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such
other Lender's Loans, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery,
but without interest.
(b) In addition to any rights and remedies of the
Lenders provided by law, each Lender shall have the right,
without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by
the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof
to or for the credit or the account of the Borrower. Each
Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender, provided that
the failure to give such notice shall not affect the
validity of such set-off and application.
8.8 Counterparts. This Agreement may be executed
by one or more of the parties to this Agreement on any
number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
8.9 Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision
in any other jurisdiction.
8.10 Integration. This Agreement and the other
Loan Documents represent the agreement of the Borrower and
the Lenders with respect to the subject matter hereof, and
there are no promises, undertakings, representations or
warranties by any Lender relative to subject matter hereof
not expressly set forth or referred to herein or in the
other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. The
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any
legal action or proceeding relating to this Agreement
and the other Loan Documents to which it is a party, or
for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the
Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding
may be brought in such courts and waives any objection
that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such
action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid,
to the Borrower at its address set forth in subsection
8.2 or at such other address of which each Lender shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any
other jurisdiction; and
(e) waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in
any legal action or proceeding referred to in this
subsection any special, exemplary, punitive or
consequential damages.
8.13 Acknowledgements. The Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement
and the other Loan Documents;
(b) no Lender has any fiduciary relationship with
or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents,
and the relationship between the Lenders, on one hand,
and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Lenders
or among the Borrower and the Lenders.
8.14 WAIVERS OF JURY TRIAL. THE BORROWER AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
8.15 Confidentiality. Each Lender agrees to keep
confidential all non-public information provided to it by
the Borrower pursuant to this Agreement that is designated
by the Borrower in writing as confidential; provided that
nothing herein shall prevent any Lender from disclosing any
such information (i) to any other Lender, (ii) to any
Transferee which receives such information and which agrees
to keep such information confidential on substantially the
same terms as those set forth in this subsection 8.15, (iii)
to its employees, directors, agents, attorneys, accountants
and other professional advisors, (iv) upon the request or
demand of any Governmental Authority having jurisdiction
over such Lender, (v) in response to any order of any court
or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (vi) which has
been publicly disclosed other than in breach of this
Agreement or (vii) in connection with the exercise of any
remedy hereunder.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year
first above written.
STANDARD MICROSYSTEMS CORPORATION
By:
Title:
CHEMICAL BANK
By:
Title:
NATIONAL WESTMINSTER BANK N.A.
By:
Title: [EXECUTION COPY]
STANDARD MICROSYSTEMS CORPORATION,
______________________________________________________
$80,000,000
CREDIT AGREEMENT
Dated as of January 13, 1995
______________________________________________________
CHEMICAL BANK
NATIONAL WESTMINSTER BANK N.A.
as Lenders
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . . . 12
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . . . . 12
2.1 Commitments. . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Procedure for Borrowing. . . . . . . . . . . . . . . . . 13
2.4 Termination or Reduction of Commitments. . . . . . . . . 13
2.5 Repayment of Loans; Evidence of Debt . . . . . . . . . . 13
2.6 Optional Prepayments . . . . . . . . . . . . . . . . . . 14
2.7 Conversion and Continuation Options. . . . . . . . . . . 14
2.8 Interest Rates and Payment Dates . . . . . . . . . . . . 15
2.9 Computation of Interest and Fees . . . . . . . . . . . . 15
2.10 Inability to Determine Interest Rate. . . . . . . . . . 15
2.11 Pro Rata Treatment and Payments . . . . . . . . . . . . 16
2.12 Illegality. . . . . . . . . . . . . . . . . . . . . . . 16
2.13 Requirements of Law . . . . . . . . . . . . . . . . . . 17
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.15 Indemnity . . . . . . . . . . . . . . . . . . . . . . . 19
2.16 Change of Lending Office. . . . . . . . . . . . . . . . 19
SECTION 3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 19
3.1 Financial Condition. . . . . . . . . . . . . . . . . . . 19
3.2 No Change. . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Corporate Existence; Compliance with Law . . . . . . . . 20
3.4 Corporate Power; Authorization; Enforceable
Obligations. . . . . . . . . . . . . . . . . . . . . . 21
3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . 21
3.6 No Material Litigation . . . . . . . . . . . . . . . . . 21
3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 Ownership of Property; Liens . . . . . . . . . . . . . . 21
3.9 Intellectual Property. . . . . . . . . . . . . . . . . . 22
3.10 No Burdensome Restrictions. . . . . . . . . . . . . . . 22
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Federal Regulations . . . . . . . . . . . . . . . . . . 22
3.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14 Investment Company Act; Other Regulations . . . . . . . 23
3.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 23
3.16 Purpose of Loans. . . . . . . . . . . . . . . . . . . . 23
3.17 Environmental Matters . . . . . . . . . . . . . . . . . 23
SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 24
4.1 Conditions to Initial Loans. . . . . . . . . . . . . . . 24
4.2 Conditions to Each Loan. . . . . . . . . . . . . . . . . 26
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 27
5.1 Financial Statements . . . . . . . . . . . . . . . . . . 27
5.2 Certificates; Other Information. . . . . . . . . . . . . 27
5.3 Payment of Obligations . . . . . . . . . . . . . . . . . 28
5.4 Conduct of Business and Maintenance of
Existence. . . . . . . . . . . . . . . . . . . . . . . 28
5.5 Maintenance of Property; Insurance . . . . . . . . . . . 29
5.6 Inspection of Property; Books and Records;
Discussions. . . . . . . . . . . . . . . . . . . . . . 29
5.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8 Environmental Laws . . . . . . . . . . . . . . . . . . . 30
5.9 Additional Guarantors. . . . . . . . . . . . . . . . . . 30
5.10 Assets. . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 30
6.1 Financial Condition Covenants. . . . . . . . . . . . . . 31
6.2 Limitation on Indebtedness . . . . . . . . . . . . . . . 31
6.3 Limitation on Liens. . . . . . . . . . . . . . . . . . . 32
6.4 Limitation on Guarantee Obligations. . . . . . . . . . . 33
6.5 Limitation on Fundamental Changes. . . . . . . . . . . . 33
6.6 Limitation on Sale of Assets . . . . . . . . . . . . . . 34
6.7 Limitation on Dividends. . . . . . . . . . . . . . . . . 34
6.8 Limitation on Capital Expenditures . . . . . . . . . . . 34
6.9 Limitation on Investments, Loans and Advances. . . . . . 35
6.10 Limitation on Optional Payments and
Modifications of Debt Instruments. . . . . . . . . . . 35
6.11 Limitation on Transactions with Affiliates. . . . . . . 35
6.12 Limitation on Sales and Leasebacks. . . . . . . . . . . 36
6.13 Limitation on Changes in Fiscal Year;
Accounting Changes . . . . . . . . . . . . . . . . . . 36
6.14 Limitation on Negative Pledge Clauses . . . . . . . . . 36
6.15 Limitation on Lines of Business . . . . . . . . . . . . 36
6.16 Limitation on Interest Rate Protection
Agreements . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 36
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 39
8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . 39
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 40
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 40
8.4 Survival of Representations and Warranties . . . . . . . 40
8.5 Payment of Expenses and Taxes. . . . . . . . . . . . . . 41
8.6 Successors and Assigns; Participations and
Assignments. . . . . . . . . . . . . . . . . . . . . . 41
8.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . 43
8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 44
8.9 Severability . . . . . . . . . . . . . . . . . . . . . . 44
8.10 Integration . . . . . . . . . . . . . . . . . . . . . . 44
8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 44
8.12 Submission To Jurisdiction; Waivers . . . . . . . . . . 44
8.13 Acknowledgements. . . . . . . . . . . . . . . . . . . . 45
8.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . 45
8.15 Confidentiality . . . . . . . . . . . . . . . . . . . . 45
SCHEDULES
Schedule 1.1(a) Commitments
Schedule 3.1(a) Off-Balance Sheet Obligations
Schedule 3.6 Litigation
Schedule 3.15 Subsidiaries
Schedule 3.17 Environmental Matters
Schedule 6.2(e) Existing Indebtedness
Schedule 6.3(f) Existing Liens
Schedule 6.4(a) Existing Guarantee Obligations
EXHIBITS
Exhibit A Form of Subsidiaries Guarantee
Exhibit B Form of Note
Exhibit C Form of Closing Certificate
Exhibit D Form of Opinion of Counsel to Borrower
Exhibit E Form of Assignment and Acceptance
GUARANTEE, dated as of January 13, 1995, made by
each of the corporations that are signatories hereto
(collectively, the "Guarantors"; individually, a
"Guarantor"), in favor of the several banks and other
financial institutions (collectively, the "Lenders";
individually, a "Lender") parties to the Credit Agreement,
dated as of January 13, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Credit
Agreement"), among Standard Microsystems Corporation, a
Delaware corporation (the "Borrower"), and the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the
Lenders have severally agreed to make Loans to the Borrower
upon the terms and subject to the conditions set forth
therein;
WHEREAS, the Borrower owns directly or indirectly
all of the issued and outstanding stock of each Guarantor;
WHEREAS, the proceeds of the Loans will be used in
part to enable the Borrower to make valuable transfers to
each of the Guarantors in connection with the operation of
its business;
WHEREAS, the Borrower and the Guarantors are
engaged in related businesses, and each Guarantor will
derive substantial direct and indirect benefit from the
making of the Loans; and
WHEREAS, it is a condition precedent to the
obligation of the Lenders to make their respective Loans to
the Borrower under the Credit Agreement that the Guarantors
shall have executed and delivered this Guarantee to each
Lender.
NOW, THEREFORE, in consideration of the premises
and to induce the Lenders to enter into the Credit Agreement
and to make their respective Loans to the Borrower under the
Credit Agreement, each Guarantor hereby agree with the
Lenders, as follows:
I.. Defined Terms. A. Unless otherwise defined
herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit
Agreement. [For purposes of this Guarantee, the term
"Lender" shall include any Affiliate of any Lender which has
entered into an Interest Rate Protection Agreement with the
Borrower.]
B. As used herein, "Obligations" means the
collective reference to the unpaid principal of and interest
on the Loans and all other obligations and liabilities of
the Borrower to the Lenders (including, without limitation,
interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and
interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, any Notes,
the other Loan Documents [, any Interest Rate Protection
Agreement entered into by the Borrower with any Lender] or
any other document made, delivered or given in connection
therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Lenders that are
required to be paid by the Borrower or any Guarantor
pursuant to the terms of the Credit Agreement or this
Guarantee or any other Loan Document).
C. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Guarantee
shall refer to this Guarantee as a whole and not to any
particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise
specified.
D. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural
forms of such terms.
II.. Guarantee A. Subject to the provisions of
Section 2(b), each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to
the Lenders and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
B. Anything herein or in any other Loan Document
to the contrary notwithstanding, the maximum liability of
each Guarantor hereunder and under the other Loan Documents
shall in no event exceed the maximum aggregate amount equal
to the largest amount that would not render its obligations
hereunder and thereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title
11 of the United States Code or any applicable provisions of
comparable state law.
C. Each Guarantor further agrees to pay any and
all expenses (including, without limitation, all fees and
disbursements of counsel) which may be paid or incurred by
any Lender in enforcing, or obtaining advice of counsel in
respect of, any rights with respect to, or collecting, any
or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, such Guarantor under this
Guarantee. This Guarantee shall remain in full force and
effect until the Obligations are paid in full and the
Commitments are terminated, notwithstanding that from time
to time prior thereto the Borrower may be free from any
Obligations.
D. Each Guarantor agrees that the Obligations may
at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing this
Guarantee or affecting the rights and remedies of or any
Lender hereunder.
E. No payment or payments made by the Borrower,
any of the Guarantors, any other guarantor or any other
Person or received or collected by or any Lender from the
Borrower, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the
Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Guarantor hereunder
which shall, notwithstanding any such payment or payments
other than payments made by such Guarantor in respect of the
Obligations or payments received or collected from such
Guarantor in respect of the Obligations, remain liable for
the Obligations up to the maximum liability of such
Guarantor hereunder until the Obligations are paid in full
and the Commitments are terminated.
F. Each Guarantor agrees that whenever, at any
time, or from time to time, it shall make any payment to any
Lender on account of its liability hereunder, it will notify
the Lender in writing that such payment is made under this
Guarantee for such purpose.
III.. Right of Contribution. Each Guarantor
hereby agrees that to the extent that a Guarantor shall have
paid more than its proportionate share of any payment made
hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such
payment. Each Guarantor's right of contribution shall be
subject to the terms and conditions of Section 5 hereof.
The provisions of this Section shall in no respect limit the
obligations and liabilities of any Guarantor to the Lenders,
and each Guarantor shall remain liable to the Lenders for
the full amount guaranteed by such Guarantor hereunder.
IV.. Right of Set-off. Upon the occurrence of
any Event of Default, each Guarantor hereby irrevocably
authorizes each Lender at any time and from time to time
without notice to such Guarantor or any other Guarantor, any
such notice being expressly waived by each Guarantor, to
set-off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final),
in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender to or for the credit
or the account of such Guarantor, or any part thereof in
such amounts as such Lender may elect, against and on
account of the obligations and liabilities of such Guarantor
to such Lender hereunder and claims of every nature and
description of such Lender against such Guarantor, in any
currency, whether arising hereunder, under the Credit
Agreement, any Note, any other Loan Document [, any Interest
Rate Protection Agreement entered into by the Borrower with
any Lender] or otherwise, as such Lender may elect, whether
or not or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be
contingent or unmatured. Each Lender shall notify such
Guarantor promptly of any such set-off and the application
made by such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section
are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such
Lender may have.
V.. No Subrogation. Notwithstanding any payment
or payments made by any of the Guarantors hereunder or any
set-off or application of funds of any of the Guarantors by
any Lender, no Guarantor shall be entitled to be subrogated
to any of the rights of any Lender against the Borrower or
any other Guarantor or any collateral security or guarantee
or right of offset held by any Lender for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to
seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to Lenders by
the Borrower on account of the Obligations are paid in full
and the Commitments are terminated. If any amount shall be
paid to any Guarantor on account of such subrogation rights
at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Guarantor in
trust for the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Lenders exact form received
by such Guarantor (duly indorsed by such Guarantor to the
Lenders, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as
the Lenders may determine.
VI.. Amendments, etc. with respect to the
Obligations; Waiver of Rights. Each Guarantor shall remain
obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, any demand for
payment of any of the Obligations made by the Required
Lenders or any Lender may be rescinded by the Required
Lenders or such Lender and any of the Obligations continued,
and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto,
may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Required Lenders or
any Lender, and the Credit Agreement, any Notes, any other
Loan Document [, any Interest Rate Protection Agreement
entered into by the Borrower with any Lender] and any other
documents executed and delivered in connection therewith may
be amended, modified, supplemented or terminated, in whole
or in part, as the Required Lenders or such Lender may deem
advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by any Lender
for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. No Lender shall have any
obligation to protect, secure, perfect or insure any Lien at
any time held by it as security for the Obligations or for
this Guarantee or any property subject thereto. When making
any demand hereunder against any of the Guarantors, the
Required Lenders may, but shall be under no obligation to,
make a similar demand on the Borrower or any other Guarantor
or guarantor, and any failure by the Required Lenders to
make any such demand or to collect any payments from the
Borrower or any such other Guarantor or guarantor or any
release of the Borrower or such other Guarantor or guarantor
shall not relieve any of the Guarantors in respect of which
a demand or collection is not made or any of the Guarantors
not so released of their several obligations or liabilities
hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of any
Lender against any of the Guarantors. For the purposes
hereof "demand" shall include the commencement and
continuance of any legal proceedings.
VII.. Guarantee Absolute and Unconditional. Each
Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and
notice of or proof of reliance by any Lender upon this
Guarantee or acceptance of this Guarantee, the Obligations,
and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guarantee; and all
dealings between the Borrower and any of the Guarantors, on
the one hand, and the Lenders, on the other hand, likewise
shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. Each Guarantor
waives diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon the Borrower
or any of the Guarantors with respect to the Obligations.
Each Guarantor understands and agrees that this Guarantee
shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the
validity, regularity or enforceability of the Credit
Agreement, any Note, any other Loan Document, [, any
Interest Rate Protection Agreement entered into by the
Borrower with any Lender,] any of the Obligations or any
other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time
held by any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may
at any time be available to or be asserted by the Borrower
against any Lender or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or
such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower
for the Obligations, or of such Guarantor under this
Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against any
Guarantor, the Required Lenders or any Lender may, but shall
be under no obligation to, pursue such rights and remedies
as they or it may have against the Borrower or any other
Person or against any collateral security or guarantee for
the Obligations or any right of offset with respect thereto,
and any failure by the Required Lenders or such Lender to
pursue such other rights or remedies or to collect any
payments from the Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the
Borrower or any such other Person or any such collateral
security, guarantee or right of offset, shall not relieve
such Guarantor of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Required
Lenders or such Lender against such Guarantor. This
Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms
upon each Guarantor and the successors and assigns thereof,
and shall inure to the benefit of the Lenders, and their
respective successors, indorsees, transferees and assigns,
until all the Obligations and the obligations of each
Guarantor under this Guarantee shall have been satisfied by
payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of
the Credit Agreement the Borrower may be free from any
Obligations.
VIII.. Reinstatement. This Guarantee shall
continue to be effective, or be reinstated, as the case may
be, if at any time payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be restored
or returned by any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower
or any Guarantor, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as
though such payments had not been made.
IX.. Payments. Each Guarantor hereby guarantees
that payments hereunder will be paid to each Lender without
set-off or counterclaim in U.S. Dollars at the office of
such Lender [set forth in subsection 8.2 of the Credit
Agreement].
X.. Representations and Warranties Each
Guarantor hereby represents and warrants that:
A. it is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate
power and authority and the legal right to own and
operate its property, to lease the property it operates
and to conduct the business in which it is currently
engaged;
B. it has the corporate power and authority and
the legal right to execute and deliver, and to perform
its obligations under, this Guarantee, and has taken
all necessary corporate action to authorize its
execution, delivery and performance of this Guarantee;
C. this Guarantee constitutes a legal, valid and
binding obligation of such Guarantor enforceable in
accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors'
rights generally, general equitable principles and an
implied covenant of good faith and fair dealing;
D. the execution, delivery and performance of
this Guarantee will not violate any provision of any
Requirement of Law or Contractual Obligation of such
Guarantor and will not result in or require the
creation or imposition of any Lien on any of the
properties or revenues of such Guarantor pursuant to
any Requirement of Law or Contractual Obligation of the
Guarantor;
E. no consent or authorization of, filing with,
or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder
or creditor of such Guarantor) is required in
connection with the execution, delivery, performance,
validity or enforceability of this Guarantee;
F. no litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is
pending or, to the knowledge of such Guarantor,
threatened by or against such Guarantor or against any
of its properties or revenues 1. with respect to this
Guarantee or any of the transactions contemplated
hereby or 2. which could have a material adverse effect
on the business, operations, property or financial or
other condition of such Guarantor;
G. to the extent that the representations and
warranties set forth in subsection 3.8 through and
including subsection 3.17 of the Credit Agreement apply
to such Guarantor, each such representation and
warranty is true and correct; and
H. if such Guarantor is not incorporated under
the laws of the United States of America or a state
thereof, (1) such Guarantor is not subject to any
exchange controls which would affect its ability to
make payments under this Guarantee, (2) any payments
made by such Guarantor under this Guarantee will not be
subject to any withholding tax or other similar
obligations of any Governmental Authority outside the
United States of America and (3) the obligations of
such Guarantor under this Guarantee will be pari passu
with all other unsecured obligations of such Guarantor.
Each Guarantor agrees that the foregoing
representations and warranties shall be deemed to have been
made by such Guarantor on the date of each borrowing by the
Borrower under the Credit Agreement on and as of such date
of borrowing as though made hereunder on and as of such
date.
XI.. Covenants. Each Guarantor hereby covenants
and agrees with each Lender that, from and after the date of
this Guarantee until the Obligations are paid in full and
the Commitments are terminated, such Guarantor will comply
with provisions of Sections 5 and 6 of the Credit Agreement
to the extent such provisions apply to such Guarantor. [To
be expanded with respect to foreign subsidiaries.]
XII.. Notices. All notices, requests and demands
to or upon the respective parties hereto to be effective
shall be in writing (including by facsimile transmission),
and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered, or
five days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received,
addressed as follows:
A. if to any Lender, at its address or
transmission number for notices provided in subsection
8.2 of the Credit Agreement; and
B. if to any Guarantor, at its address or
transmission number for notices set forth under its
signature below.
Each Lender and each Guarantor may change its
address and transmission numbers for notices by notice in
the manner provided in this Section.
XIII.. Counterparts. This Guarantee may be
executed by one or more of the Guarantors on any number of
separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Guarantee
signed by all the Guarantors shall be delivered to each
Lender.
XIV.. Severability. Any provision of this
Guarantee which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision
in any other jurisdiction.
XV.. Integration. This Guarantee represents the
agreement of each Guarantor with respect to the subject
matter hereof and there are no promises or representations
by any Lender relative to the subject matter hereof not
reflected herein.
XVI.. Amendments in Writing; No Waiver;
Cumulative Remedies. A. None of the terms or provisions of
this Guarantee may be waived, amended, supplemented or
otherwise modified except by a written instrument executed
by each Guarantor provided that any provision of this
Guarantee may be waived by the Lenders in a letter or
agreement by facsimile transmission.
B. No Lender shall by any act (except by a
written instrument pursuant to paragraph 16(a) hereof),
delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced
in any Default or Event of Default or in any breach of any
of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Lender, any
right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. A waiver by any Lender of any right or
remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which such Lender would
otherwise have on any future occasion.
C. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by
law.
XVII.. Section Headings. The Section headings
used in this Guarantee are for convenience of reference only
and are not to affect the construction hereof or be taken
into consideration in the interpretation hereof.
XVIII.. Successors and Assigns. This Guarantee
shall be binding upon the successors and assigns of each
Guarantor and shall inure to the benefit of the Lenders and
their successors and assigns.
XIX.. GOVERNING LAW. THIS GUARANTEE SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
XX.. Submission To Jurisdiction; Waivers. Each
Guarantor hereby irrevocably and unconditionally:
A. submits for itself and its property in any
legal action or proceeding relating to this Guarantee
and the other Loan Documents to which it is a party, or
for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York,
the courts of the United States of America for the
Southern District of New York, and appellate courts
from any thereof;
B. consents that any such action or proceeding
may be brought in such courts and waives any objection
that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the
same;
C. agrees that service of process in any such
action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid,
to such Guarantor at its address set forth under its
signature below or at such other address of which the
Lenders shall have been notified pursuant Section 12;
D. agrees that nothing herein shall affect the
right to effect service or process in any other manner
permitted by law or shall limit the right to sue in any
other jurisdiction; and
E. waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in
any legal action or proceeding referred to in this
subsection any special, exemplary, consequential or
punitive damages.
XXI.. WAIVERS OF JURY TRIAL. EACH GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE
OR ANY OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY AND FOR
ANY COUNTERCLAIM THEREIN.
XXII.. Addition of Guarantors. Subsection
5.10(c) of the Credit Agreement requires that any Subsidiary
(other than a Foreign Subsidiary) of the Borrower created or
acquired after the Closing Date become a Guarantor hereunder
by executing and delivering a Supplement to this Guarantee
in the form attached hereto as Exhibit A. From and after
the date any such Subsidiary executes and delivers a
Supplement to this Guarantee in the form attached hereto as
Exhibit A to each Lender, such Subsidiary shall be deemed to
be a Guarantor for all purposes under this Guarantee.
IN WITNESS WHEREOF, each of the undersigned has
caused this Guarantee to be duly executed and delivered by
its duly authorized officer as of the day and year first
above written.
STANDARD MICROSYSTEMS
CORPORATION (ASIA)
By
Title
Address for Notices:
Fax:
SMC FRANCE, INC.
By
Title
Address for Notices:
Fax:
SMC AUSTRALIA, INC.
By
Title
Address for Notices:
Fax:
SMC INTERNATIONAL, INC.
By
Title
Address for Notices:
Fax:
SMC MASSACHUSETTS INC.
By
Title
Address for Notices:
Fax:
SMC SALES, INC.
By
Title
Address for Notices:
Fax:
EXHIBIT A TO
SUBSIDIARIES GUARANTEE
[FORM OF ADDITIONAL SUBSIDIARIES SUPPLEMENT]
SUPPLEMENT, dated _______________ to the
Subsidiaries Guarantee, dated as of January __, 1995 (as
amended, supplemented or otherwise modified, the
"Subsidiaries Guarantee"), made by certain subsidiaries of
Standard Microsystems Corporation, a Delaware corporation
(the "Borrower"), from time to time parties thereto
(collectively, the "Guarantors").
W I T N E S S E T H :
WHEREAS, the Subsidiaries Guarantee provides that
any Subsidiary of the Borrower, although not a Guarantor
thereunder at the time of the initial execution thereof, may
become a Guarantor under the Subsidiaries Guarantee upon the
delivery to the Lenders of a supplement in substantially the
form of this Supplement; and
WHEREAS, the undersigned was not a Subsidiary on
the Closing Date and, therefore, was not a party to the
Subsidiaries Guarantee but is required by the Credit
Agreement and now desires to become a Guarantor thereunder;
NOW, THEREFORE, the undersigned hereby agrees as
follows:
The undersigned agrees to be bound by all of the
provisions of the Subsidiaries Guarantee applicable to
a Guarantor thereunder and agrees that it shall, on the
date this Supplement is delivered to the Lenders,
become a Guarantor, for all purposes of the
Subsidiaries Guarantee to the same extent as if
originally a party thereto with the representations and
warranties contained therein being deemed to be made by
the undersigned as of the date hereof.
Terms defined in the Subsidiaries Guarantee shall
have their defined meanings when used herein.
IN WITNESS WHEREOF, the undersigned has caused
this Supplement to be executed and delivered by a duly
authorized officer on the date first above written.
[NAME OF SUBSIDIARY GUARANTOR]
By
Title
Address for Notices:
Fax: