CREDIT AGREEMENT

EXHIBIT 10.1

 

$2,500,000,000

CREDIT AGREEMENT

Among

ADVANCED MICRO DEVICES, INC.,

as Borrower,

The Several Lenders

from Time to Time Parties Hereto,

MORGAN STANLEY SENIOR FUNDING, INC.,

as Administrative Agent

WELLS FARGO BANK, N.A.,

as Collateral Agent

and

MORGAN STANLEY SENIOR FUNDING, INC.,

as Syndication Agent

Dated as of October 24, 2006

 

MORGAN STANLEY SENIOR FUNDING, INC.,

as Sole Lead Arranger

MORGAN STANLEY SENIOR FUNDING, INC.,

as Sole Bookrunner

 

TABLE OF CONTENTS

 

 

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CREDIT AGREEMENT, dated as of October 24, 2006, among ADVANCED MICRO DEVICES, INC., a Delaware corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “ Lenders ”), MORGAN STANLEY SENIOR FUNDING, INC. (“ MS ”), as administrative agent (in such capacity, and together with its successors in such capacity, the “ Administrative Agent ”), WELLS FARGO BANK, N.A., as collateral agent under the Collateral Agreement (in such capacity, the “ Collateral Agent ”) and MORGAN STANLEY SENIOR FUNDING, INC., as syndication agent (in such capacity, the “ Syndication Agent ”).

WHEREAS, the Borrower intends to acquire directly or indirectly (the “ Acquisition ”) all of the issued and outstanding Capital Stock of ATI Technologies Inc. (“ ATI ”);

WHEREAS, the Borrower has requested that the Lenders lend to the Borrower up to $2,500,000,000 to finance a portion of the Acquisition and to pay fees and expenses relating to the Transaction (as defined below). The Lenders have indicated their willingness to agree to lend such amounts on the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“ Accounts Receivable ”: as defined in the Collateral Agreement.

“ Acquisition ”: as defined in the recitals to this Agreement.

“ Acquisition Agreement ”: the Acquisition Agreement, dated as of July 23, 2006, among the Borrower, 1252986 Alberta ULC and ATI.

“ Acquisition Documentation ”: collectively, the Acquisition Agreement and all schedules, exhibits and annexes thereto and all side letters and agreements affecting the terms thereof or entered into in connection therewith.

“ Additional Notes ”: as defined in the Senior Notes Indenture.

“ Administrative Agent ”: as defined in the preamble to this Agreement.

“ Affiliate ”: of any specified Person means (a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (b) any other Person who is a director or executive officer of (i) such specified Person, (ii) any Subsidiary of such specified Person, or (iii) any Person described in clause (a) above. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “ controlling ” and “ controlled ” have meanings correlative to the foregoing.

“ Affiliate Transaction ”: as defined in Section 7.8.

“ Agents ”: the collective reference to the Collateral Agent, the Administrative Agent and the Syndication Agent.

“ Aggregate Exposure ”: with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the aggregate then unpaid principal amount of such Lender’s Loans.

“ Aggregate Exposure Percentage ”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

“ Agreement ”: this Credit Agreement.

“ AMD Fab 36 KG ”: AMD Fab 36 Limited Liability Company & Co. KG.

“ Anti-Terrorism Laws ”: Executive Order No. 13224, the Patriot Act, the laws comprising or implementing the Bank Secrecy Act and the laws administered by the United States Treasury Department’s Office of Foreign Asset Control (each as from time to time in effect) and any similar laws relating to terrorism.

“ Applicable Margin ”: for any day, a rate per annum equal to (a) at any time the outstanding aggregate principal amount of the Term Loans is equal to or greater than $1,750,000,000, (i) with respect to Base Rate Loans, 1.25% and (ii) with respect to Eurodollar Loans, 2.25% and (b) at any time the outstanding aggregate principal amount of the Term Loans is less than $1,750,000,000, (x) with respect to Base Rate Loans, 1.00% and (y) with respect to Eurodollar Loans, 2.00%.

 

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“ Approved Fund ”: with respect to any Lender, any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans or similar extensions of credit in the ordinary course and is administered, advised or managed by (a) such Lender, (b) an Affiliate of such Lender, or (c) an entity or an Affiliate of an entity that administers, advises or manages such Lender.

“ Asset Sale ”: any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by the Borrower or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “ disposition ”), of (a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares) or (b) any other Property of the Borrower or any Restricted Subsidiary outside of the ordinary course of business of the Borrower or such Restricted Subsidiary, other than, in the case of clause (a) or (b) above:

(i) any disposition by a Restricted Subsidiary to the Borrower or by the Borrower or a Restricted Subsidiary to a Restricted Subsidiary;

(ii) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by Section 7.5;

(iii) any disposition effected in compliance with Section 7.3;

(iv) the sale or other disposition of cash or Cash Equivalents;

(v) the exchange of assets held by the Borrower or a Restricted Subsidiary of the Borrower for assets held by any Person (including Capital Stock of such Person); provided that (x) the assets received by the Borrower or such Restricted Subsidiary of the Borrower in any such exchange will immediately constitute, be part of or used in a Related Business and (y) any such assets received are of a comparable Fair Market Value to the assets exchanged;

(vi) any disposition in a single transaction or series of related transactions of assets for aggregate consideration of less than $10,000,000; and

(vii) any disposition of surplus, discontinued, damaged or worn-out equipment or other immaterial assets no longer used in the ongoing business of the Borrower and its Restricted Subsidiaries;

provided that, in each case, (x) if any Accounts Receivable are disposed of in any manner to the Borrower or a Restricted Subsidiary, either the Borrower or such Restricted Subsidiary shall

 

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comply with the provisions of Section 6.9 so that the Collateral Agent maintains a first priority perfected Lien on such Accounts Receivable and (y) any disposition of Intellectual Property by a Subsidiary to the Borrower or by the Borrower or a Subsidiary to a Subsidiary shall be (i) in the ordinary course of business or (ii) in connection with tax planning or tax optimization.

“ Assignee ”: as defined in Section 10.6(b).

“ Assignment and Assumption ”: an Assignment and Assumption, substantially in the form of Exhibit A.

“ ATI ”: as defined in the recitals to this Agreement.

“ ATI Existing Credit Facilities ”: collectively, (i) the Facility Letter from HSBC Bank Canada to ATI Technologies Inc. dated March 31, 2006, (ii) the Facility Letter from HSBC Bank Canada to ATI Technologies Distribution Inc. dated March 31, 2006, (iii) the Facility Letter from HSBC Bank Canada to ATI Technologies Ltd. dated April 19, 2006, and (iv) the Facility Letter from HSBC Bank Canada to ATI Technologies (L) Inc. dated April 19, 2006.

“ Attributable Debt ”: in respect of a Sale and Leaseback Transaction means, at any date of determination, (a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Indebtedness represented thereby according to the definition of “Capital Lease Obligations,” and (b) in all other instances, the present value (discounted at the interest rate implicit in such transaction, determined in accordance with GAAP) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended).

“ Austin Facility Sale and Leaseback Transaction ”: any Sale and Leaseback Transaction consummated after the Closing Date relating to the approximately 58.787 acres of Property located in Austin, Texas at the southeast corner of William Cannon and Southwest Parkway described generally as the Lantana project Phase 1, Section 4, Blk. U, Lot 1 City of Austin Grids C-20 and C-21 whereby the Borrower transfers such Property to a third party and leases the Property back from such party.

“ Average Life ”: as of any date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the sum of the product of the number of years (rounded to the nearest one twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (b) the sum of all such payments.

 

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“ Base Rate ”: a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of (a) the rate of interest published by the Wall Street Journal, from time to time, as the prime rate and (b)   ¹ / 2 of 1% per annum above the Federal Funds Effective Rate.

“ Base Rate Loans ”: Loans the rate of interest applicable to which is based upon the Base Rate.

“ Benefited Lender ”: as defined in Section 10.7(a).

“ Blocked Person ”: as defined in Section 4.21.

“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

“ Board of Directors ”: the board of directors of the Borrower.

“ Borrower ”: as defined in the preamble to this Agreement.

“ Borrowing Date ”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

“ Business ”: as defined in Section 4.17(b).

“ 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, provided, that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

“ Capital Expenditures ”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Restricted Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Restricted Subsidiaries.

 

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“ Capital Lease Obligations ”: any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 7.2, a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased.

“ Capital Stock ”: with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest.

“ Capital Stock Sale Proceeds ”: the aggregate cash proceeds received by the Borrower from the issuance or sale (other than to a Subsidiary of the Borrower or an employee stock ownership plan or trust established by the Borrower or any Subsidiary for the benefit of their employees) by the Borrower of its Capital Stock (other than the New Equity or Disqualified Stock) after the Closing Date, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof minus any portion of such proceeds required to be applied to the prepayment of the Loans pursuant to Section 3.2.

“ Cash Equivalents ”: any of the following:

(a) United States dollars or euros;

(b) Investments in U.S. Government Obligations maturing within 365 days of the date of acquisition thereof;

(c) certificates of deposit and eurodollar time deposits with maturities of 12 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 12 months and overnight bank deposits, in each case with any domestic commercial bank or any commercial bank in a member state of the European Union having capital and surplus in excess of $500,000,000;

(d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above;

 

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(e) commercial paper, having the highest rating obtainable from Moody’s or Standard & Poor’s and in each case maturing within one year after the date of acquisition;

(f) auction-rate preferred securities having a maturity of 28 days or less from the date of acquisition and a minimum rating of “AA” by Standard and Poor’s or “Aa2” by Moody’s; and

(g) money market funds at least 90% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition.

“ Change of Control ”: the occurrence of any of the following events:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of the total voting power of the Voting Stock of the Borrower; or

(b) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the Property of the Borrower and the Restricted Subsidiaries, considered as a whole (other than a disposition of such Property as an entirety or virtually as an entirety to a Wholly Owned Restricted Subsidiary) or the Borrower merges or consolidates with or into any other Person or any other Person merges or consolidates with or into the Borrower, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Borrower is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where:

(i) the outstanding Voting Stock of the Borrower is reclassified into or exchanged for other Voting Stock of the Borrower or for Voting Stock of the Surviving Person; and

(ii) the holders of the Voting Stock of the Borrower immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the Borrower or the Surviving Person immediately after such transaction and in substantially the same proportion as before the transaction; or

 

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(c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the stockholders of the Borrower was approved by a vote of not less than a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors then in office; or

(d) the stockholders of the Borrower shall have approved any plan of liquidation or dissolution of the Borrower.

“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied, which date is October 24, 2006.

“ Closing Date Material Adverse Effect ”: a change, effect, event, occurrence, state of facts or development that, individually or in the aggregate with other such changes, effects, events, occurrences, states of facts or developments, is both material and adverse with respect to the financial condition, business, operations, results of operations, properties, assets or liabilities of the Borrower, ATI and their subsidiaries taken as a whole; provided , however , that to the extent any effect, event, occurrence, state of facts or development is caused by or results from any of the following, it shall not be taken into account in determining whether there has been (or whether there could reasonably be expected to be) a Closing Date Material Adverse Effect: (a) conditions affecting the United States or Canadian economy generally, (b) conditions generally affecting the industries in which the Borrower or ATI conduct business, (c) any direct or indirect actions of Nvidia Corporation or Intel Corporation, (d) (i) with respect to ATI, conditions directly caused by the actions of the Borrower or resulting from actions taken in accordance with a request or the consent of the Borrower made after the date hereof and (ii) with respect to the Borrower, conditions directly caused by the actions of ATI or resulting from actions taken in accordance with a request or the consent of ATI made after the date hereof, (e) any delays or cancellation of orders caused by the announcement of the Acquisition Agreement, (f) any change in the market price or trading volume of securities or failure by the Borrower or ATI to meet published securities analyst estimates (but not the underlying causes thereof), (g) material worsening of market conditions caused by acts of terrorism or war occurring after the date hereof, (h) any stockholder litigation arising from allegations of breach of fiduciary duty relating to the Acquisition Agreement, and (i) any losses of employees of ATI or the Borrower caused by the announcement of the Acquisition Agreement.

“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.

“ Collateral ”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

 

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“ Collateral Agent ”: as defined in the preamble to this Agreement.

“ Collateral Agreement ”: the Collateral Agreement to be executed and delivered by the Borrower and each Subsidiary party thereto, substantially in the form of Exhibit B.

“ Collateral Trust Agreement ”: the Collateral Trust Agreement to be executed by the Loan Parties, the Trustee (as defined therein) and the Administrative Agent, substantially in the form of Exhibit H.

“ Commitment ”: as to any Lender, the obligation of such Lender, if any, to make a Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “ Commitment ” under such Lender’s name on such Lender’s Addendum or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Commitments is $2,500,000,000.

“ Commonly Controlled Entity ”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

“ Conduit Lender ”: any special purpose entity organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument, subject to the consent of the Administrative Agent and the Borrower (which consent shall not be unreasonably withheld); provided , that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided , further , that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 3.9, 3.10, 3.11 or 10.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated October 2006 and furnished to the Lenders.

 

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“ Consolidated Cash Flow ”: for any period, an amount equal to, for the Borrower and its consolidated Restricted Subsidiaries:

(a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period, without duplication:

(i) the provision for taxes based on income or profits or utilized in computing net loss;

(ii) Consolidated Fixed Charges;

(iii) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of the Borrower and its consolidated Restricted Subsidiaries for such period; and

(iv) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of, or reserve for, cash expenditures in any future period); minus

(b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period).

“ Consolidated Fixed Charge Coverage Ratio ”: as of any date of determination, the ratio of (a) the aggregate amount of Consolidated Cash Flow for the most recent four consecutive fiscal quarters for which internal financial statements are available to (b) Consolidated Fixed Charges for such four fiscal quarters; provided , however , that:

(i) if (x) since the beginning of such period the Borrower or any Restricted Subsidiary has Incurred any Indebtedness that remains outstanding or Repaid any Indebtedness or (y) the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio is an Incurrence or Repayment of Indebtedness, then, in each case, Consolidated Fixed Charges for such four-quarter period shall be calculated after giving effect on a pro forma basis to such Incurrence or Repayment as if such Indebtedness was Incurred or Repaid on the first day of such four-quarter period; provided that in the event of any such Repayment of Indebtedness, Consolidated Cash Flow for such period shall be calculated as if the Borrower or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to Repay such Indebtedness; and

(ii) if (x) since the beginning of such period the Borrower or any Restricted Subsidiary shall have made any Asset Sale or an Investment (by

 

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merger or otherwise) in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of Property which constitutes all or substantially all of an operating unit of a business, (y) the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio is such an Asset Sale, Investment or acquisition, or (z) since the beginning of such period any Person, that subsequently became a Restricted Subsidiary or was merged with or into the Borrower or any Restricted Subsidiary since the beginning of such period, shall have made such an Asset Sale, Investment or acquisition, then, in each case, Consolidated Cash Flow for such four-quarter period shall be calculated after giving pro forma effect to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment or acquisition had occurred on the first day of such four-quarter period.

If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the base interest rate in effect for such floating rate of interest on the date of determination had been the applicable base interest rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). In the event the Capital Stock of any Restricted Subsidiary is sold during the period, the Borrower shall be deemed, for purposes of clause (x) above, to have Repaid during such period the Indebtedness of such Restricted Subsidiary to the extent the Borrower and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale.

“ Consolidated Fixed Charges ”: for any period, the total interest expense of the Borrower and its Consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Borrower or its Restricted Subsidiaries, without duplication,

(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations;

(b) amortization of debt discount and debt issuance costs, including commitment fees;

(c) capitalized interest;

(d) non-cash interest expense;

(e) commissions, discounts and other fees and charges owed with respect to letters of credit and banker’s acceptance financing;

 

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(f) net costs associated with Hedging Obligations (including amortization of fees) related to Interest Rate Agreements;

(g) Disqualified Stock Dividends;

(h) Preferred Stock Dividends;

(i) interest Incurred in connection with Investments in discontinued operations; and

(j) interest actually paid by the Borrower or any Restricted Subsidiary under any Guarantee of Indebtedness of any other Person.

“ Consolidated Net Income ”: for any period, the net income (loss) of the Borrower and its consolidated Restricted Subsidiaries; provided , however , that there shall not be included in such Consolidated Net Income:

(a) any net income of any Person (other than the Borrower) if such Person is not a Restricted Subsidiary, except that, subject to the exclusion contained in clause (c) below, equity of the Borrower and its consolidated Restricted Subsidiaries in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Borrower or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (b) below);

(b) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Borrower, except that, subject to the exclusion contained in clause (d) below, the equity of the Borrower and its Consolidated Restricted Subsidiaries in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the greater of (i) the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Borrower or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause (b)) and (ii) the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Borrower or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause (b));

 

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(c) any gain or loss realized upon the sale or other disposition of any Property of the Borrower or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business;

(d) any net after-tax extraordinary gain or loss;

(e) to the extent non-cash, any unusual, non-operating or non-recurring gain or loss;

(f) the cumulative effect of a change in accounting principles;

(g) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Borrower or any Restricted Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of the Borrower (other than Disqualified Stock);

(h) any cash or non-cash expenses attributable to the closing of manufacturing facilities or the lay-off of employees, in either case which are recorded as “restructuring and other special charges” in accordance with GAAP; and

(i) gains or losses due to fluctuations in currency values and the related tax effect.

Notwithstanding the foregoing, for purposes of Section 7.5 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of Property from Unrestricted Subsidiaries to the Borrower or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under clause (a)(iii)(y) thereof.

“ Consolidated Net Senior Secured Debt ”: at any date, (a) the aggregate principal amount of all Senior Secured Indebtedness of the Borrower and its Restricted Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP minus (b) the average daily balance of all amount of cash and Cash Equivalents that would, in conformity with GAAP, be included in “total current assets” (or like caption) on a consolidated balance sheet of the Company and its Restricted Subsidiaries for the 30-day period prior to such date.

“ Consolidated Net Senior Secured Leverage Ratio ”: as at the last day of any period, the ratio of (a) Consolidated Net Senior Secured Debt on such day to (b) Consolidated Cash Flow for such period.

 

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“ Consolidated Working Capital ”: at any date, the excess of (a) all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries on such date over (b) all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date, but excluding the current portion of any Funded Debt of the Borrower and its Restricted Subsidiaries on such date.

“ 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.

“ Currency Exchange Protection Agreement ”: in respect of a Person, any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates.

“ Default ”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Disqualified Stock ”: any Capital Stock of the Borrower or any of its Restricted Subsidiaries that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise:

(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

(b) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part; or

(c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock, on or prior to, in the case of clause (a), (b) or (c), 123-days following the maturity date of the Loans. Notwithstanding the foregoing, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Borrower to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Borrower may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 7.5.

 

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“ Disqualified Stock Dividends ”: all dividends with respect to Disqualified Stock of the Borrower held by Persons other than a Restricted Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the Borrower.

“ Dollars ” and “ $ ”: dollars in lawful currency of the United States.

“ Domestic Subsidiary ”: any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

“ Employee Plan ”: an employee benefit plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained (or that was maintained at any time during the six (6) calendar years preceding the date of any borrowing hereunder) for employees of the Borrower or a Commonly Controlled Entity.

“ 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) that regulate, relate to or impose 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 maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves under any regulations of the Board 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) 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, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “ Eurodollar Base Rate ” shall be determined by reference to such other comparable publicly available service for displaying Eurodollar rates as may be selected by the Administrative Agent or, in the absence

 

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of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank Eurodollar market where its Eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

“ 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 Tranche ”: the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

“ Event of Default ”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“ Excess Cash Flow ”: for any fiscal year of the Borrower, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such fiscal year and (iv) the aggregate net amount of non cash loss on the sale, lease, transfer or other disposition of assets by the Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income over (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Restricted Subsidiaries in cash during such fiscal year on account of Capital Expenditures (excluding the principal amount of Indebtedness incurred to finance such expenditures (but including repayments of any such Indebtedness incurring during such period or any prior period) and any such expenditures financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all regularly scheduled principal payments or voluntary prepayments of Funded Debt (including the Loans and the principal portion of Capital Lease Obligations) of the Borrower and its Restricted Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (iv) increases in Consolidated Working Capital for such fiscal year, and (v) the aggregate net amount of non-cash gain on the sale, lease, transfer or other disposition of assets by the Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income.

 

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“ Excess Cash Flow Application Date ”: as defined in Section 3.2.

“ Exchange Act ”: the U.S. Securities Exchange Act of 1934, as amended.

“ Excluded Foreign Subsidiary ”: any Foreign Subsidiary in respect of which the pledge of all of the Capital Stock of such Subsidiary as Collateral, would, in the good faith judgment of the Borrower, result in a tax liability to the Borrower.

“ Excluded Indebtedness ”: all Indebtedness permitted by Section 7.1 except for Indebtedness permitted under Section 7.1(b)(xii) and (xiii).

“ Existing Senior Notes ”: the Borrower’s 7.75% senior notes due 2012 issued pursuant to the Senior Notes Indenture.

“ Extraordinary Event ”: any event the result of which any Person receives Extraordinary Receipts.

“ Extraordinary Receipts ”: any cash received by or paid to or for the account of any Person not in the ordinary course of business, including, without limitation, tax refunds received in connection with or as a result of any settlement or audit, pension plan reversions, proceeds of insurance (including, without limitation, any key man life insurance but excluding any business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments received in connection with any purchase agreement but excluding amounts received in reimbursement or compensation for a prior expenditure or loss.

“ Fab 36 ”: individually and collectively, AMD Fab 36 Holding GmbH, AMD Fab 36 Admin GmbH, AMD Fab 36 KG and AMD Fab 36 LLC.

“ Fab 36 Credit Facility ”: the €700,000,000 Term Loan Facility, dated April 21, 2004, among AMD Fab 36 Limited Liability Company & Co. KG, and the lenders party thereto as in effect on the date hereof.

“ Fab 36 Partnership Agreements ”: (i) the Limited Partnership Agreement of AMD Fab 36 Limited Liability Company & Co. KG dated April 21, 2004, by and among AMD Fab 36 LLC, LM Beteiligungsgesellschaft MbH, AMD Fab 36 Holding GmbH, AMD Fab 36 Admin

 

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GmbH, Leipziger Messe GmbH and Fab 36 Beteiligungs GmbH, (ii) Agreement of Purchase and Sale of Limited Partner’s Interests dated April 21, 2004, by and among Leipziger Messe GmbH, Fab 36 Beteiligungs GmbH, AMD Fab 36 Holding GmbH, AMD Fab 36 Admin GmbH, and AMD Fab 36 Limited Liability Company & Co. KG, (iii) Agreement on the Formation of a Silent Partnership dated April 21, 2004, by and among AMD Fab 36 Limited Liability Company & Co. KG, Leipziger Messe GmbH and Fab 36 Beteiligungs GmbH and (iv) Agreement of Purchase and Sale of Silent Partner’s Interests dated April 21, 2004, by and among the Borrower, Leipziger Messe GmbH, Fab 36 Beteiligungs GmbH, AMD Fab 36 Holding GmbH, AMD Fab 36 Admin GmbH, and AMD Fab 36 Limited Liability Company & Co. KG.

“ Fair Market Value ”: with respect to any Property, the price that could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined, except as otherwise provided, (a) if such Property has a Fair Market Value equal to or less than $25,000,000, by any Responsible Officer of the Borrower or (b) if such Property has a Fair Market Value in excess of $25,000,000, by at least a majority of the Board of Directors and evidenced by a Board Resolution dated within 30 days of the relevant transaction.

“ Federal Funds Effective Rate ”: 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 that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

“ Foreign Subsidiary ”: any Subsidiary of the Borrower that is not a Domestic Subsidiary.

“ Fund ”: any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans or similar extensions of credit in the ordinary course.

“ Funded Debt ”: as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans.

 

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“ Funding Office ”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

“ GAAP ”: generally accepted accounting principles in the United States as in effect from time to time and, when used to refer to the financial statements of ATI and its Subsidiaries prior to the Closing Date, as in effect in Canada.

“ Governmental Authority ”: any nation or government, any state or other political subdivision thereof, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

“ Group Members ”: the collective reference the Borrower and its Subsidiaries (including, without limitation, ATI and its Subsidiaries).

“ Guarantee ”: any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), provided, however, that the term “Guarantee” shall not include (a) endorsements for collection or deposit in the ordinary course of business or (b) a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (a), (b) or (c) of the definition of “Permitted Investment.” The term “ Guarantee ” used as a verb has a corresponding meaning. The term “ Guarantor ” shall mean any Person Guaranteeing any obligation.

“ Hedge Agreement ”: any Interest Rate Agreement, Currency Exchange Protection Agreement or any similar agreement or arrangement.

“ Hedging Obligation ”: with respect to any Person means any obligation of such Person pursuant to any Hedge Agreement.

“ Incur ”: with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or obligation on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing);

 

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provided , however , that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Indebtedness, becoming Indebtedness shall not be deemed an Incurrence of such Debt; provided further , however, that any Indebtedness or other obligations of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary; and provided further , however, that solely for purposes of determining compliance with Section 7.1, amortization of debt discount shall not be deemed to be the Incurrence of Indebtedness, provided that in the case of Indebtedness sold at a discount, the amount of such Indebtedness Incurred shall at all times be the aggregate principal amount at Stated Maturity.

“ Indebtedness ”: with respect to any Person on any date of determination (without duplication):

(a) the principal of and premium (if any, but only in the event such premium has become due) in respect of (i) debt of such Person for borrowed money and (ii) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;

(b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person;

(c) all obligations of such Person representing the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);

(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);

(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends);

(f) all obligations of the type referred to in clauses (a) through (e) above, and all dividends of other Persons the payment of which, in either case, such Person is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;

 

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(g) all obligations of the type referred to in clauses (a) through (f) above of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such Property or the amount of the obligation so secured; and

(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person.

The amount of Indebtedness of any Person at any date shall be the outstanding balance, or the accreted value of such Indebtedness in the case of Indebtedness issued with original issue discount, at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. The amount of Indebtedness represented by a Hedging Obligation shall be equal to:

(x) zero if such Hedging Obligation has been Incurred pursuant to Section 7.1(b)(vi) or (vii); or

(y) the notional amount of such Hedging Obligation if not Incurred pursuant to such clauses.

“ Indemnified Liabilities ”: as defined in Section 10.5.

“ Indemnitee ”: as defined in Section 10.5.

“ Independent Financial Advisor ”: an investment banking firm of national standing or any third-party appraiser with national standing in the United States; provided that such firm or appraiser is not an Affiliate of the Borrower.

“ Intellectual Property ”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

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“ Interest Payment Date ”: (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan, the date of any repayment or prepayment made in respect thereof.

“ Interest Period ”: as to any Eurodollar Loan, (a) 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 or, if available to all Lenders, nine or twelve 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 (b) 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 or, if available to all Lenders, nine or twelve months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent no later than 11:00 A.M., New York City time, on the date that is 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:

(i) 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;

(ii) the Borrower may not select an Interest Period that would extend beyond the date final payment is due on the Loans;

(iii) 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

(iv) 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 Loan.

“ Interest Rate Agreement ”: for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates.

 

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“ Investment ”: by any Person, any direct or indirect loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person. For purposes of Sections 7.5 and 7.12 and the definition of “Restricted Payment,” the term “Investment” shall include (a) upon the issuance, sale or other disposition of Capital Stock of any Restricted Subsidiary to a Person other than the Borrower or another Restricted Subsidiary as a result of which such Restricted Subsidiary ceases to be a Restricted Subsidiary, the Fair Market Value of the remaining interest, if any, in such former Restricted Subsidiary held by the Borrower or such other Restricted Subsidiary and (b) at the time that a Subsidiary of the Borrower is designated an Unrestricted Subsidiary, the portion (proportionate to the Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary; provided , however , that upon a redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary, the Borrower shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary of an amount (if positive) equal to:

(i) the Borrower’s “Investment” in such Subsidiary at the time of such redesignation; less

(ii) the portion of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation (proportionate to the Borrower’s equity interest in such Subsidiary).

In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment.

“ Issuer ”: the collective reference to each issuer of any of the pledged Collateral.

“ Lenders ”: as defined in the preamble hereto and including each Lender that has a Commitment or that holds a Loan; provided , that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.

“ Lien ”: with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction).

 

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“ Loan ”: as defined in Section 2.1.

“ Loan Documents ”: this Agreement, the Security Documents, any fee letter executed by the Borrower in connection with this Agreement and the Notes.

“ Loan Parties ”: each Group Member that is a party to a Loan Document.

“ Material Adverse Effect ”: a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under the Loan Documents in all material respects, (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder or (d) the validity, perfection or priority of the Collateral Agent’s Liens upon a material portion of the Collateral.

“ Material Indebtedness ”: (a) Indebtedness the outstanding principal amount of which exceeds in the aggregate $50,000,000 and (b) the Existing Senior Notes.

“ Material Subsidiary ”: each Subsidiary of the Borrower now existing or hereafter acquired or formed, and each successor thereto, (a) which accounts for more than five percent (5%) of (i) the consolidated gross revenues of the Borrower and its Subsidiaries or (ii) the consolidated assets of the Borrower and its Subsidiaries, in each case, as of the last day of the most recently completed fiscal quarter as reflected on the financial statements for such quarter; and (b) if the Subsidiaries that do not constitute Material Subsidiaries pursuant to clause (a) above account for, in the aggregate, more than ten percent of such consolidated gross revenues and more than ten percent of the consolidated assets, each as described in clause (a) above, then the term “ Material Subsidiary ” shall also include each such Subsidiary (starting with the Subsidiary that accounts for the most consolidated gross revenues or consolidated assets and then in descending order) necessary to account for at least ninety percent of the consolidated gross revenues and ninety percent of the consolidated assets, each as described in clause (a) above; provided that, notwithstanding anything to the contrary set forth above, Fab 36 shall not be a Material Subsidiary and, for purposes of clause (b) of this definition, the gross revenues and the assets of Fab 36 shall not be included in the determination of the consolidated gross revenues or consolidated assets of the Borrower and its Subsidiaries.

“ 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 asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

 

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“ Multiemployer Plan ”: a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Borrower or any Commonly Controlled Entity has at any time contributed or been obligated to contribute.

“ Net Available Cash ”: from any Asset Sale, cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations or liabilities relating to the Property that is the subject of such Asset Sale or received in any other non-cash form), in each case net of:

(a) all legal, title and recording tax expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial, foreign and local taxes paid or required to be accrued as a liability under GAAP, as a consequence of such Asset Sale;

(b) all payments made on or in respect of any Indebtedness that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale;

(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; and

(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed of in such Asset Sale and retained by the Borrower or any Restricted Subsidiary after such Asset Sale.

“ Net Cash Proceeds ”: (a) in connection with any Extraordinary Event, the sum or the cash and Cash Equivalents received in connection with such event, net of any Indebtedness (under than Indebtedness under the Loan Documents) secured by a Lien on the affected asset that is required to be prepaid with such Extraordinary Receipts and net of the direct costs relating to such event and (b) in connection with any issuance or sale of Capital Stock or any Incurrence of Indebtedness, the cash proceeds received from such issuance or Incurrence, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.

“ New Equity ”: the Capital Stock of the Borrower issued on or prior to the Closing Date to finance the Acquisition.

 

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“ Non-Consenting Lender ”: as defined in Section 3.13.

“ Non-Excluded Taxes ”: as defined in Section 3.10(a).

“ Non-Recourse Debt ”: Indebtedness (a) as to which neither the Borrower nor any Restricted Subsidiary provides any guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or is directly or indirectly liable (as a guarantor or otherwise) or as to which there is any recourse to the assets of the Borrower and (b) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of other Indebtedness of the Borrower or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment therefor to be accelerated or payable prior to its stated maturity.

“ Non-U.S. Lender ”: as defined in Section 3.10(d).

“ Notes ”: the collective reference to any promissory note evidencing Loans.

“ Obligations ”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, fraudulent conveyance, 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) the Loans and all other obligations and liabilities of the Borrower to any Agent or to any Lender (or, in the case of Specified Hedge Agreements, any Qualified Counterparty), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, any Specified Hedge Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to any Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided that any release of Collateral effected in a manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements.

“ Organizational Documents ”: as to any Person, the certificate of incorporation, certificate of formation, by-laws, limited liability company agreement, partnership agreement or other organizational or governing documents of such Person.

“ Other Taxes ”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

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“ Participant ”: as defined in Section 10.6(c).

“ Patriot Act ”: the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto).

“ Permitted Debt ”: as defined in Section 7.1.

“ Permitted Investment ”: any Investment by the Borrower or a Restricted Subsidiary in existence on the Closing Date or in:

(a) the Borrower or any Restricted Subsidiary;

(b) any Person that will, upon the making of such Investment, become a Restricted Subsidiary;

(c) any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its Property to, the Borrower or a Restricted Subsidiary;

(d) Cash Equivalents;

(e) receivables owing to the Borrower or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(f) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(g) loans and advances to employees made in the ordinary course of business consistent with past practices of the Borrower or a Restricted Subsidiary, as the case may be; provided that such loans and advances do not exceed $10,000,000 in the aggregate at any one time outstanding;

 

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(h) stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Borrower or a Restricted Subsidiary or in satisfaction of judgments;

(i) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in compliance with Section 7.4;

(j) Investments in Permitted Joint Ventures that do not exceed 15% of Total Assets in the aggregate outstanding at any one time;

(k) any acquisition of assets or Capital Stock solely in exchange for the issuance of Capital Stock (other than Disqualified Stock) of the Borrower;

(l) Investments represented by Hedging Obligations if such Hedging Obligation has been Incurred pursuant to Section 7.1(b)(vi) or (vii); and

(m) other Investments made for Fair Market Value that do not exceed $100,000,000 in the aggregate outstanding at any one time.

“ Permitted Joint Venture ”: any Person which is, directly or indirectly, engaged principally in a Related Business, and the Capital Stock, or securities convertible into Capital Stock, of which is owned by the Borrower and one or more Persons other than the Borrower or any of its Affiliates.

“ Permitted Liens ”:

(a) to the extent required by the Senior Notes Indenture, Liens securing the Existing Senior Notes;

(b) Liens to secure Indebtedness permitted to be Incurred pursuant to Section 7.1(b)(ii);

(c) Liens to secure Indebtedness permitted to be Incurred pursuant to Section 7.1(b)(iii); provided that any such Lien may not extend to any Property of the Borrower, other than the Property acquired, constructed or leased with the proceeds of any such Indebtedness and any improvements or accessions to such Property;

 

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(d) Liens for taxes, assessments or governmental charges or levies (including those not yet due and payable) on the Property of the Borrower if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor;

(e) Liens imposed by law, such as carriers’, landlords’, warehousemen’s and mechanics’ Liens and other similar Liens, on the Property of the Borrower arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings;

(f) Liens on the Property of the Borrower Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of the Borrower and the Restricted Subsidiaries taken as a whole;

(g) Liens on Property at the time the Borrower acquired such Property, including any acquisition by means of a merger or consolidation with or into the Borrower; provided , however , that any such Lien may not extend to any other Property of the Borrower; provided , further , however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by the Borrower;

(h) pledges or deposits by the Borrower under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which the Borrower is party, or deposits to secure public or statutory obligations of the Borrower, surety or appeal bonds, performance bonds or deposits for the payment of rent or margin deposits, in each case Incurred in the ordinary course of business;

(i) utility easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character;

 

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(j) Liens securing Indebtedness permitted to be Incurred with respect to Hedging Obligations pursuant to Section 7.1 or collateral for such Indebtedness to which the Hedging Obligations relate;

(k) Liens on the Capital Stock of any Unrestricted Subsidiary to secure Indebtedness under a debt facility with banks or other institutional lenders providing for revolving credit loans, term loans or trade or standby letters of credit;

(l) Liens in favor of the Borrower;

(m) Liens existing on the Closing Date and set forth on Schedule 7.2;

(n) Liens on the Property of the Borrower to secure any Refinancing, in whole or in part, of any Indebtedness secured by any Lien referred to in clause (c), (g) or (m) above; provided however , that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with any improvements and accessions to such Property) and the aggregate principal amount of Indebtedness that is secured by such Lien shall not be increased to an amount greater than the sum of:

(i) the outstanding principal amount, or, if greater, the committed amount, of the Indebtedness secured by Liens described under clause (c), (g) or (m) above, as the case may be, at the time the original Lien became a Permitted Lien hereunder; and

(ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by the Borrower in connection with such Refinancing; or

(o) other Liens to secure Indebtedness, so long as the aggregate principal amount of Indebtedness secured thereby at the time such Lien is created does not exceed 5% of the Consolidated Tangible Net Assets of the Borrower, shown on the Borrower’s consolidated balance sheet in accordance with GAAP on the last day of the most recent fiscal quarter for which financial statements were delivered to the Administrative Agent pursuant to Section 6.1;

provided that notwithstanding anything to the contrary set forth above, in no event shall a Lien on the Capital Stock of Spansion (or any holding company parent thereof) owned by any Group Member be a Permitted Lien (provided that for the purpose of Section 7.2, a lockup agreement shall not be considered a Lien).

 

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“ Permitted Refinancing Debt ”: any Indebtedness that Refinances any other Indebtedness, including any successive Refinancings, so long as:

(a) such Indebtedness is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of:

(i) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being Refinanced, and

(ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing;

(b) the Average Life of such Indebtedness is equal to or greater than the Average Life of the Indebtedness being Refinanced;

(c) the Stated Maturity of such Indebtedness is no earlier than the Stated Maturity of the Indebtedness being Refinanced; and

(d) the new Indebtedness shall not be senior in right of payment to the Indebtedness being Refinanced;

provided , however , that Permitted Refinancing Indebtedness shall not include:

(x) Indebtedness of a Subsidiary that Refinances Indebtedness of the Borrower; or

(y) Indebtedness of the Borrower or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

“ 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 ”: any Employee Plan or Multiemployer Plan.

“ Platform ”: as defined in Section 10.2(b).

 

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“ Preferred Stock ”: any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person.

“ Preferred Stock Dividends ”: all dividends with respect to Preferred Stock of Restricted Subsidiaries held by Persons other than the Borrower or a Restricted Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock.

“ pro forma ”: with respect to any calculation made or required to be made pursuant to the terms hereof, a calculation performed in accordance with Article 11 of Regulation S-X promulgated under the Securities Act.

“ Pro Forma Financial Statements ”: as defined in Section 4.1(a).

“ Projections ”: as defined in Section 6.2(c).

“ Properties ”: as defined in Section 4.17(a).

“ Property ”: with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to this Agreement, the value of any Property shall be its Fair Market Value.

“ Purchase Money Debt ”: Indebtedness

(a) consisting of the deferred purchase price of Property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the Property being financed; and

(b) Incurred to finance the acquisition, construction or lease by the Borrower or a Restricted Subsidiary of such Property, including additions and improvements thereto;

 

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provided , however , that such Indebtedness is Incurred within 180 days after the acquisition, construction or lease of such Property by the Borrower or such Restricted Subsidiary.

“ Qualified Counterparty ”: with respect to any specified Hedge Agreement, any counterparty thereto that, at the time such Specified Hedge Agreement was entered into, was a Lender, an Affiliate of a Lender, an Agent or an Affiliate of an Agent; provided that, in the event a counterparty to a Specified Hedge Agreement at the time such Specified Hedge Agreement was entered into was a Qualified Counterparty, such counterparty shall constitute a Qualified Counterparty hereunder and under the Loan Documents.

“ Refinance ”: in respect of any Indebtedness, to refinance, extend, renew, refund or Repay, or to issue other Indebtedness, in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“ Register ”: as defined in Section 10.6(b).

“ Regulation U ”: Regulation U of the Board as in effect from time to time.

“ Reinvestment Deferred Amount ”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds or Net Available Cash, as applicable, received by the Borrower or any Restricted Subsidiary in connection therewith that are not applied to prepay the Loans pursuant to Section 3.2(c) as a result of the delivery of a Reinvestment Notice.

“ Reinvestment Event ”: an Asset Sale or an Extraordinary Event in respect of which the Borrower has delivered a Reinvestment Notice.

“ Reinvestment Notice ”: a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Restricted Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Extraordinary Event or the Net Available Cash of an Asset Sale (x) to acquire or repair fixed or capital assets useful in its business or (y) in the case of an Asset Sale of Capital Stock of a Restricted Subsidiary to a joint venture partner in such Restricted Subsidiary, in the business of the Borrower or a Restricted Subsidiary; provided that at the time of such Asset Sale of Capital Stock, such Restricted Subsidiary has no assets other than de minimis assets.

“ Reinvestment Prepayment Amount ”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair fixed or capital assets useful in the Borrower’s business.

 

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“ Reinvestment Prepayment Date ”: with respect to any Reinvestment Event, the earlier of (a) the date occurring twelve months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair fixed or capital assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

“ Related Business ”: any business that is related, ancillary or complementary to the businesses of the Borrower and the Restricted Subsidiaries on the Closing Date and any reasonable extension thereof.

“ Related Party Register ”: as defined in Section 10.6(b).

“ Reorganization ”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“ Repay ”: in respect of any Indebtedness, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Indebtedness. “Repayment” and “Repaid” shall have correlative meanings. For purposes of Section 7.4 and the definition of “Consolidated Fixed Charge Coverage Ratio,” Indebtedness shall be considered to have been Repaid only to the extent the related loan commitment, if any, shall have been permanently reduced in connection therewith.

“ Reportable Event ”: (a) 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 .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043, (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, or (c) the filing pursuant to Section 412(d) of the Code or Section 503(d) of ERISA of an application for waiver of the minimum funding standard with respect to any Plan.

“ Reports ”: as defined in Section 4.2.

“ Required Lenders ”: at any time, the holders of more than 50% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the aggregate unpaid principal amount of the Loans then outstanding.

“ Requirement of Law ”: as to any Person any license, permit, consent, decree, 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.

 

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“ Responsible Officer ”: the chief executive officer, president, chief financial officer, controller or treasurer or an executive vice president of the Borrower, but in any event, with respect to financial matters, the chief financial officer, controller or treasurer of the Borrower.

“ Restricted Payment ”:

(a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of the Capital Stock of the Borrower or any Restricted Subsidiary, except for any dividend or distribution that is made solely to the Borrower or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Borrower or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis) or any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of the Borrower;

(b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Borrower or any Restricted Subsidiary (other than from the Borrower or a Restricted Subsidiary and other than for Capital Stock of the Borrower that is not Disqualified Stock);

(c) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition);

(d) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of the Existing Senior Notes; and

(e) any Investment (other than Permitted Investments) in any Person.

“ Restricted Subsidiary ”: any Subsidiary other than an Unrestricted Subsidiary.

“ Sale and Leaseback Transactions ”: any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the Borrower or a Restricted Subsidiary transfers such Property to another Person and the Borrower or a Restricted Subsidiary leases it from such Person.

 

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“ SEC ”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

“ Secured Parties ”: as defined in the Collateral Trust Agreement.

“ Securities Act ”: the U.S. Securities Act of 1933, as amended.

“ Security Documents ”: the collective reference to the Collateral Agreement, the Collateral Trust Agreement and all other security documents hereafter delivered to the Collateral Agent granting or perfecting a Lien on any property of any Person to secure the Obligations of any Loan Party under any Loan Document.

“ Senior Notes Indenture ”: the Indenture, dated as of October 29, 2004, by and between the Borrower and Wells Fargo Bank, N.A., as trustee.

“ Senior Secured Indebtedness ”: all secured Indebtedness other than Subordinated Obligations.

“ Significant Subsidiary ”: means any Subsidiary that would be a “significant subsidiary” of the Borrower within the meaning of Rule 1-02 under the Regulation S-X promulgated by the SEC.

“ Solvent ”: when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise,” as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts and liabilities as they mature. For purposes of this definition, (i) “debt” means liability on a “claim,” and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

“ Spansion ”: means Spansion LLC, a Delaware limited liability company, Spansion, Inc., a Delaware corporation, and their successors.

 

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“ Spansion Collateral Account ”: any deposit account or securities account as each such term is defined in the UCC that is established by the Borrower at the request of the Administrative Agent pursuant to Section 6.11 or any deposit account or securities account that is opened for the purpose of depositing any proceeds from the sale by the Borrower or any of its Subsidiaries of any Capital Stock of Spansion pursuant to Section 6.11.

“ Specified Hedge Agreement ”: any Hedge Agreement (a) entered into by (i) the Borrower or any Restricted Subsidiary and (ii) a Qualified Counterparty, as counterparty and (b) that has been designated by such Qualified Counterparty and the Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement. The designation of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of any Qualified Counterparty thereof that is a party thereto any rights in connection with the management or release of any Collateral under the Collateral Agreement.

“ Stated Maturity ”: with respect to any Indebtedness or security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer, unless such contingency has occurred).

“ Subordinated Obligations ”: any Indebtedness of the Borrower (whether outstanding on the Closing Date or thereafter Incurred) that is subordinate or junior in right of payment to the Obligations or such entity’s Guarantee pursuant to a written agreement to that effect.

“ Subsidiary ”: in respect of any Person, any corporation, company (including any limited liability company), association, partnership, joint venture or other business entity of which at least a majority of the total voting power of the Voting Stock is at the time owned or controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of 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. Notwithstanding the foregoing, Spansion shall not be deemed a Subsidiary of the Borrower for purposes of this Agreement.

“ Surviving Person ”: as defined in Section 7.3.

“ Syndication Agent ”: as defined in the preamble to this Agreement.

“ Term 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 Closing Date, 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).

 

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“ Total Assets ”: with respect to any date of determination, the Borrower’s total consolidated assets shown on its consolidated balance sheet in accordance with GAAP on the last day of the fiscal quarter prior to the date of determination for which financial statements were delivered to the Administrative Agent pursuant to Section 6.1.

“ Transaction ”: collectively, (a) the Acquisition, (b) the borrowing of the Loans and (c) the other transactions contemplated by the Loan Documents.

“ Transferee ”: any Assignee or Participant.

“ Type ”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

“ UCC ”: the Uniform Commercial Code in effect from time to time in the State of New York.

“ United States ”: the United States of America.

“ Unrestricted Subsidiary ”: (a) any Subsidiary of the Borrower that is designated after the Closing Date as an Unrestricted Subsidiary as permitted or required pursuant to Section 7.12; and in any case so long as the respective Unrestricted Subsidiary is not thereafter redesignated as a Restricted Subsidiary as permitted pursuant to Section 7.12 and (b) any Subsidiary of an Unrestricted Subsidiary.

“ U.S. Government Obligations ”: direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.

“ Voting Stock ”: of any Person, all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

“ Wholly Owned Restricted Subsidiary ”: at any time, a Restricted Subsidiary all the Voting Stock of which (except directors’ qualifying shares) is at such time owned, directly or indirectly, by the Borrower and its other Wholly Owned Restricted Subsidiaries.

 

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1.2 Other Definitional Provisions . (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, restated, modified, renewed, refunded, replaced or Refinanced in whole or in part from time to time (subject to any applicable restrictions hereunder).

(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, 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.

(e) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP; provided that, if either the Borrower notifies the Administrative Agent that such Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrowers that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

(f) When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment or performance shall extend to the immediately

 

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succeeding Business Day and such extension of time shall be reflected in computing interest or fees, as the case may be; provided that, with respect to any payment of interest on or principal of Eurodollar Loans, if such extension would cause any such payment to be made in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

2.1 Commitments . Subject to the terms and conditions hereof, each Lender severally agrees to make a Loan (a “ Loan ”) to the Borrower on the Closing Date in an amount not to exceed the amount of the Commitment of such Lender. The Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 3.3.

2.2 Procedure for Loan Borrowing . The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, one Business Day prior to the anticipated Closing Date) requesting that the Lenders make the Loans on the Closing Date and specifying the amount to be borrowed. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. Not later than 12:00 Noon, New York City time, on the Closing Date each Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Loan or Loans to be made by such Lender. Eurodollar Loans made on the Closing Date, if any, shall have an Interest Period of one month. The Administrative Agent shall credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Lenders in immediately available funds.

2.3 Repayment of Loans . The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders the aggregate outstanding principal amount of the Loan on the following dates in the amounts indicated (which amounts shall be reduced as a result of the application or prepayments in accordance with the order or priority set forth in Section 3.8):

 

 

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SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS

3.1 Optional Prepayments . The Borrower may at any time and from time to time prepay the Loans, in whole or in part, upon irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M., New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 11:00 A.M., New York City time, one Business Day prior thereto, in the case of Base Rate Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or Base Rate Loans; provided , that (a) if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 3.11 and (b) in no event shall the Borrower prepay the Loans if, after giving effect to such prepayment, (i) the aggregate outstanding principal amount of the Loans is less than the outstanding principal amount of the 2012 Notes (as defined in the Collateral Trust Agreement) and (ii) the 2012 Notes are secured by the Collateral. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Loans shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.

3.2 Mandatory Prepayments . (a) If any Capital Stock is issued by the Borrower (other than the New Equity or any Capital Stock issued to (i) a Subsidiary of the Borrower, (ii) an employee stock ownership plan or trust established by the Borrower or any Subsidiary for the benefit of their employees, (iii) employees or directors upon exercise of options pursuant to restricted stock agreements or other equity incentives, or (iv) holders of convertible debt upon conversion thereof), an amount equal to 50% of the Net Cash Proceeds thereof shall be applied on the date of such issuance, incurrence or contribution toward the prepayment of the Loans as set forth in Section 3.2(e).

 

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(b) If any Indebtedness is incurred by the Borrower or any Restricted Subsidiary (other than Excluded Indebtedness), an amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the date of such issuance, incurrence or contribution toward the prepayment of the Loans as set forth in Section 3.2(e).

(c) If on any date the Borrower or any Restricted Subsidiary shall receive Net Cash Proceeds from Extraordinary Receipts in excess of $30,000,000 or Net Available Cash from an Asset Sale in excess of $30,000,000 then, unless a Reinvestment Notice shall be delivered in respect thereof, the Net Cash Proceeds or Net Available Cash, as applicable, thereof shall be applied on such date toward the prepayment of the Loans as set forth in Section 3.2(e); provided , that, notwithstanding the foregoing, on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward the prepayment of the Loans as set forth in Section 3.2(e); provided further that the Net Available Cash from any Asset Sale of the Capital Stock of Spansion (or any holding company parent thereof), the Austin Facility Sale and Leaseback Transaction and any Collateral shall be applied to the prepayment of the Loans within ten Business Days of receipt thereof and shall not be available to be reinvested.

(d) If, for any fiscal year of the Borrower commencing with the fiscal year ending December 30, 2007, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply 50% of such Excess Cash Flow toward the prepayment of the Loans as set forth in Section 3.2(e). Each such prepayment shall be made on a date (an “ Excess Cash Flow Application Date ”) no later than five days after the earlier of (i) the date on which the financial statements of the Borrower referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the date such financial statements are actually delivered to the Lenders.

(e) The application of any prepayment pursuant to Section 3.2 shall be made, first , to Base Rate Loans and, second , to Eurodollar Loans. Each prepayment of the Loans under Section 3.2 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid. Any prepayment pursuant to Section 3.2 that is required to be applied to any Eurodollar Loan shall be made on the last day of the Interest Period applicable to such Eurodollar Loan; provided that Borrower shall promptly (and in any event within three Business Days of receipt thereof) deposit such prepayment into a deposit account or securities account over which the Collateral Agent has a perfected security interest and enter into a control agreement satisfactory to the Collateral Agent with respect to such account.

 

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3.3 Conversion and Continuation Options . (a) The Borrower may elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York City time, on the Business Day preceding the proposed conversion date, 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 Base Rate Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

(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 irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Eurodollar Loans, provided that no Eurodollar Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuations, and provided , further , that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Eurodollar Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

3.4 Limitations on Eurodollar Tranches . Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or integral multiples of $100,000 in excess thereof and (b) no more than one Eurodollar Tranche shall be outstanding at any one time.

3.5 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 Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin.

 

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(c) If an Event of Default has occurred and is continuing, all outstanding Loans (whether or not overdue) shall bear interest at a rate per annum equal to, in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or, in the case of all other Obligations, the rate then applicable to Base Rate Loans plus 2%.

(d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

3.6 Computation of Interest and Fees . (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to Base Rate Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 3.5(a).

3.7 Inability to Determine Interest Rate . If prior to the first day of any Interest Period:

(a) the Administrative Agent 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 the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

 

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the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders 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 Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the last day of the then-current Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Loans to Eurodollar Loans.

3.8 Pro Rata Treatment and Payments . (a) Each borrowing by the Borrower from the Lenders hereunder and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Term Percentages of the relevant Lenders.

(b) 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. The amount of each principal prepayment of the Loans shall be applied to reduce the then remaining installments of the Loans pro rata based upon the then remaining principal amount thereof. Amounts repaid or prepaid on account of the Loans may not be reborrowed.

(c) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwi