TENTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT
THIS TENTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT (the "Amendment")
is made and entered into as of this 20th day of August, 2003, by and among
ARRIS INTERNATIONAL, INC., a Delaware corporation (the "Company"), ARRIS
INTERACTIVE L.L.C., a Delaware limited liability company ("Arris LLC"), certain
Subsidiaries of the Company listed on the signature pages hereof (together with
the Company and Arris LLC, the "Borrowers"), the financial institutions listed
on the signature pages hereof as lenders (the "Lenders"), and THE CIT
GROUP/BUSINESS CREDIT, as administrative agent, collateral agent and
syndication agent for the Lenders ("Collateral Agent").
WHEREAS, Borrowers, Lenders, and Agent entered into that certain
Credit Agreement, dated as of August 3, 2001, pursuant to which the Lenders
agreed to make certain loans to the Borrowers (as amended, modified,
supplemented and restated from time to time, the "Credit Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement; and
WHEREAS, in connection with the Credit Agreement, Arris Group, Inc., a
Delaware corporation ("Holdings," sometimes also referred to herein as
"Seller"), Borrowers, certain other direct and indirect subsidiaries of
Company, and Collateral Agent entered into that certain Security Agreement,
dated as of August 3, 2001 (the "Security Agreement"), whereby Collateral Agent
holds security interests and liens (collectively, the "Liens"), for the benefit
of itself and the Lenders, in and to certain assets owned by Holdings and the
Borrowers, including the capital stock of Electronic System Products, Inc.
("ESP"), a Borrower, as collateral for the loans made by the Lenders to the
Borrowers; and
WHEREAS, pursuant to Section 7.7 of the Credit Agreement, Holdings and
Borrowers are restricted from transferring or otherwise disposing of all or any
part of their business, property or assets (including the Capital Stock of a
Subsidiary), except as otherwise permitted therein or except as otherwise
consented to by the Requisite Lenders in writing; and
WHEREAS, pursuant to Section 7.9 of the Credit Agreement, Holdings and
Borrowers are prohibited from entering into certain transactions with
shareholders and affiliates, except as otherwise permitted therein or except as
otherwise consented to by the Requisite Lenders in writing; and
WHEREAS, Seller desires to sell one hundred percent of the stock of
ESP (the "Stock") to Rare Medium Group, Inc., a Delaware corporation (the
"Purchaser") for a purchase price of one dollar ($1.00), under the terms of
that certain Stock Purchase Agreement, dated as of August 18, 2003 (the
"Purchase Agreement"), by and between Seller and Purchaser, a copy of which is
attached hereto as EXHIBIT A (consummation of the transactions described in,
and in a manner not materially inconsistent with the terms and conditions of,
the Purchase Agreement is referred to herein as the "Sale"), and Borrowers have
requested that the Lenders consent to the Sale and agree release ESP as a
Borrower under the Credit Agreement following the consummation of the Sale; and
WHEREAS, in connection with that certain Digital BTSC Encoding
Agreement, effective on or about November 25, 2002, by and between ESP and THAT
Corporation ("THAT Corp."), Company desires to assign certain patents to THAT
Corp., and Borrowers have requested that the Lenders consent to such assignment
and to the release of Collateral Agent's Liens on such patents.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. Amendments to Credit Agreement. Upon the consummation of the
Sale in accordance with the terms and conditions contained herein, the
introduction to the Credit Agreement shall be amended by deleting the following
text "EACH OF COMPANY'S SUBSIDIARIES LISTED ON THE SIGNATURE PAGES HEREOF" in
its entirety, and inserting in lieu thereof the following text: "EACH OF
COMPANY'S SUBSIDIARIES LISTED ON EXHIBIT B TO THE TENTH AMENDMENT".
(b) Section 1.1 to the Credit Agreement shall be amended by
adding the following definition, which shall be inserted in the proper
alphabetical order:
"Tenth Amendment" shall mean and refer to that certain "Tenth
Amendment to Credit Agreement and Consent" by and among the Borrowers, Lenders,
and Agent, as identified therein, dated as of August 20, 2003.
2. Consents.
(a) Pursuant to the terms and conditions of the Credit Agreement,
the Security Agreement and the other Loan Documents, and upon satisfaction of
the terms and conditions contained herein, the Lenders hereby consent to the
Sale, which includes the following inter-company transactions to be entered
into by Seller and ESP:
(i) a capital contribution to be made by Seller to ESP
immediately prior to the Closing (as defined in the Purchase Agreement, the
"Closing") equal to the positive amount by which $545,000 exceeds the amount of
the Qualified Receivables (as such term is defined in the Purchase Agreement);
(ii) the sale by Seller to ESP, not later than
immediately prior to the Closing, of the fixed assets identified in Exhibit
5(i) to the Purchase Agreement;
(iii) the assignment by ESP to Seller, prior to the
Closing, without recourse or representation or warranty, of all of ESP's right,
title and interest in and to the notes receivable set forth on Exhibit 5(j) to
the Purchase Agreement;
(iv) the assignment by ESP to Seller, prior to the
Closing, without any representation, warranty or covenant, of its equity
interests in CoaXmedia Corporation and Evolve Communications, Inc.;
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(v) the entering into a consulting arrangement, pursuant
to a consulting agreement to be executed immediately prior to Closing, between
Seller and ESP whereby ESP will be permitted to utilize up to three members of
Seller's technical staff on projects at cost for a period of up to six months
following the Closing;
(vi) the transfer between ESP and Seller, prior to the
Closing, of certain intellectual property pursuant to the Intellectual Property
Transfer and License Agreement (as defined in the Purchase Agreement); and
(vii) the entering into a sublease arrangement between
Seller and ESP, pursuant to which ESP shall be entitled to remain in its
current location and shall not be obligated to pay any rent until the period
commencing July 15, 2004.
(b) In connection with the Lenders' consent to the Sale, the
Borrowers agree that:
(i) The Sale shall be consummated pursuant to the terms
and conditions of the Purchase Agreement, in substantially the form
set forth therein, to the satisfaction of the Collateral Agent in its
reasonable discretion.
(ii) Promptly after the Closing, Seller shall deliver to
Collateral Agent duly executed copies of the Purchase Agreement, the
related schedules and related agreements, instruments and documents.
Any failure of Borrowers or Seller to comply with either of the
foregoing clauses (i) or (ii) shall be deemed an Event of Default pursuant to
the terms of the Credit Agreement and other Loan Documents.
(c) Pursuant to the terms and conditions of the Credit Agreement,
the Security Agreement and the other Loan Documents, the Lenders hereby consent
to the assignment by Company to THAT Corp. (the "Assignment") of the following
patents (collectively, the "Assigned Patents") and to the release of Collateral
Agent's Liens in and to the Assigned Patents:
(i) US Patent No. 6,037,993
(ii) US Patent No. 6,259,482
(iii) US Patent No., 6,192,086
3. Release of Collateral.
(a) Upon the consummation of the Sale, pursuant to the terms and
conditions contained herein, Collateral Agent will (i) release its Liens on the
Stock and any of the assets of ESP subject of the Sale (the "Assets"), which
Assets include without limitation the intellectual property described on
EXHIBIT C hereto (the "Transferred IP"), (ii) promptly deliver the original
stock certificate(s) for ESP to Borrowers at the address to be indicated by the
Borrowers, (iii) promptly file any Lien release documentation with the United
States Patent and Trademark Office (the "PTO") necessary to record the release
of Liens on the Transferred IP, (iv) be deemed to have authorized hereby the
filing of any UCC termination statements required to
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release the Liens on the Stock and any of the Assets, and (iv) provide such
other Lien release documentation with respect to the Stock and the Assets as
Borrowers may reasonably request.
(b) Upon consummation of the Assignment, pursuant to the terms
and conditions contained herein, Collateral Agent will (i) release its Liens on
the Assigned Patents, (ii) promptly record the release of such Liens with the
PTO, (iii) be deemed to have authorized hereby the filing of any UCC
termination statements required to release the Liens on the Assigned Patents,
and (iv) provide such other Lien release documentation with respect to the
Assigned Patents as Borrowers may reasonably request.
4. Release of ESP as Borrower. Upon the consummation of the
Sale, pursuant to the terms and conditions contained herein, all of ESP's
Obligations under the Credit Agreement and the other Loan Documents, including
without limitation ESP's obligations and duties to the other Borrowers pursuant
to Section 2.10 of the Credit Agreement and the Borrowers' Guaranty, shall be
deemed to be released and discharged without any notice to, or further action
by, any other Person, (b) ESP shall cease to be a Borrower under the Credit
Agreement and shall thereafter be deemed removed as a party to any of the other
Loan Documents; and (c) the Obligations of the remaining Borrowers under the
Credit Agreement, and their corresponding obligations under the other Loan
Documents, shall continue in full force and effect, and shall remain binding
upon the remaining Borrowers notwithstanding the release of ESP.
5. Consent Fee. Borrowers shall pay to Collateral Agent, for the
benefit of itself and the Lenders, a fee of $________ (the "Consent Fee") due
and payable upon the execution of this Amendment. The Consent Fee shall be
shared pro rata among the Lenders and shall be fully earned by Collateral Agent
and Lenders when paid and shall not be subject to refund or rebate.
6. Representations, Warranties and Covenants of Borrowers. To
induce Agents and Lenders to enter into this Amendment:
(a) Each Borrower hereby represents, warrants and covenants to
Agents and Lenders that,
(i) as of the date hereof, and after giving effect to
the terms hereof, there exists no Event of Default under the Credit
Agreement or any of the other Loan Documents,
(ii) each representation and warranty made or deemed to
be made in this Amendment and in the Loan Documents is true and
correct in all material respects on and as of the date of this
Amendment (except to the extent that any such representation or
warranty relates to a prior specific date or period) and Borrowers
hereby reaffirm each of the agreements, covenants and undertakings set
forth in the Loan Documents and in each and every other agreement,
instrument and other document executed in connection therewith or
pursuant thereto as if Borrowers were making said agreements,
covenants and undertakings on the date hereof,
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(iii) each Borrower has the power and is duly authorized
to enter into, deliver and perform this Amendment and
(iv) this Amendment and each of the Loan Documents is the
legal, valid and binding obligation of each Borrower enforceable
against it in accordance with its terms.
(b) Each Borrower acknowledges and agrees that no right of
offset, defense (other than to the extent of prior payment or performance of
any Obligations), counterclaim, claim, causes of action or objection in favor
of any Borrower against either Agent or any Lender presently exists by reason
of any act, event, omission, manner, cause or things occurring on or prior to
the date of this Amendment arising out of or with respect to, (i) the Credit
Agreement, as hereby amended, or any of the other Loan Documents, (ii) any
other documents now or heretofore evidencing, securing or in any way relating
to the foregoing, or (iii) the administration or funding of any of the Loans,
the Obligations or any Letter of Credit.
(c) Each Borrower acknowledges and agrees that if Borrowers shall
fail to perform in a timely manner any covenants, agreements or obligations of
the Borrowers contained in this Amendment or any of the Loan Documents,
Collateral Agent may, but shall not be obligated to, perform such covenants,
agreements or obligations at the cost and expense of the Borrowers; provided,
however, that the performance of such covenants by Collateral Agent shall not
be deemed to have waived or cured any default of Borrowers with respect to the
performance of such covenants, agreements or obligations. The Borrowers agree
to pay on demand all costs and expenses incurred by Collateral Agent and its
representatives in connection with the foregoing, including, without
limitation, the reasonable fees and out-of-pocket expenses of legal counsel to
the Agent. The Borrowers authorize and direct the Collateral Agent to charge
the Collateral Account for such costs and expenses as Revolving Loans.
(d) Each Borrower acknowledges and agrees that the consents
contained in paragraph 2 of this Amendment (i) are not intended, and should not
be construed, as an amendment of, the Credit Agreement, but instead constitutes
a waiver of certain provisions of the Credit Agreement which would otherwise
have prohibited the Sale (such waiver includes, without limitation, the Change
in Control and any other Event of Default which would result from the Sale),
and (ii) shall not represent a consent or waiver related to any future actions
of any Borrower or Seller, including, without limitation, any future sale of
assets. Further, each of the Lenders reserves all of its rights pursuant to the
Credit Agreement and all other Loan Documents.
(e) Each Borrower acknowledges and aggress that Lenders'
agreement to consent to the specific matters herein addressed, does not and
shall not create (nor shall Seller nor any Borrower rely upon the existence of
or claim or assert that there exists) any obligation of Lenders or the
Requisite Lenders to consider or agree to any further consents and, in the
event that any Lender subsequently agrees to consider any further consents,
neither this consent nor any other conduct of any Lender shall be of any force
or effect on such Lender's consideration or decision with respect to any such
requested consent, and such Lender shall have no obligation whatsoever to
consider or agree to further consents.
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7. Further Assurances. Borrowers agree to take such further
action as Collateral Agent shall reasonably request in connection herewith to
evidence the agreement herein contained.
8. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed to be an original and
all of which counterparts, taken together, shall constitute but one and the
same instrument.
9. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of, and the decisions of the courts in,
the State of New York.
[Signature Pages Follow]
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IN WITNESS WHEREOF, Borrowers, the Agent and the Lenders have caused
this Amendment to be duly executed, all as of the date first above written.
BORROWERS:
ARRIS INTERNATIONAL, INC.
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
ARRIS INTERACTIVE L.L.C.
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
ANTEC ASSET MANAGEMENT COMPANY
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Vice President and Assistant Secretary
ANTEC LICENSING COMPANY
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
TEXSCAN CORPORATION
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Vice President
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ELECTRONIC CONNECTOR CORPORATION OF ILLINOIS
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
POWER GUARD, INC.
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
ELECTRONIC SYSTEM PRODUCTS INC.
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
KEPTEL, INC.
By: /s/Xxxxxxx Xxxx-Xxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxx-Xxxxxx
Title: Assistant Secretary
[Signatures Continue on Following Pages]
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COLLATERAL AGENT:
THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent, Collateral Agent, and
Syndication Agent
By: /s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
[Lenders' Signatures Follow]
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LENDERS:
BANK ONE, NA, as successor by merger to
American National Bank And Trust Company Of
Chicago
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Associate Director
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THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
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CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
By: /s/ Xxxx Xxxxx
--------------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
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FLEET CAPITAL CORPORATION
By:/s/ Xxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
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GMAC COMMERCIAL FINANCE LLC
successor by merger to GMAC COMMERCIAL CREDIT LLC
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President
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