COMPANY GUARANTY AGREEMENT
GUARANTY AGREEMENT dated as of September 22, 2000, between MEMC ELECTRONIC
MATERIALS, INC., a Delaware corporation ("MEMC" or the "Guarantor"), and VEBA
INTERNATIONAL FINANCE B.V., a company organized under the laws of the
Netherlands ("VEBA"), as Agent and as Initial Lender (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of September 22, 2000
(the "Credit Agreement"), between MEMC ELECTRONIC MATERIALS, S.P.A., as
Borrower, and VEBA, as Initial Lender and as Agent. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
The Lenders have agreed to make Advances to the Borrower, pursuant to, and
upon the terms and subject to the conditions specified in the Credit Agreement.
The Borrower is a wholly owned Subsidiary of MEMC, and MEMC acknowledges that it
will derive substantial benefit from the making of the Advances by the Lenders
to the Borrower. The obligations of the Lenders to make Advances to the Borrower
are conditioned on, among other things, the execution and delivery by MEMC of a
Guaranty Agreement in the form hereof. As consideration therefor and in order to
induce the Lenders to make Advances to the Borrower, MEMC is willing to execute
this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 50% or more of the
voting stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting stock, by contract or otherwise.
"Change of Control" means the Initial Lender or any Affiliate of the
Initial Lender, through any transaction or series of transactions or
otherwise, no longer has beneficial ownership, directly or indirectly, of
more than 50% of the shares of common stock of the Borrower.
"Change of Control Date" means the date of occurrence of a Change of
Control; provided, that if such occurrence is on or prior to January 1,
2001, the occurrence shall be deemed to have occurred on January 1, 2001.
"Commitment" has the meaning specified in Section 2.01 of the Credit
Agreement.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Debt" means (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as
capital leases, and (e) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to
in clause (a) through (d) of this definition; provided, however, that,
solely for purposes of calculating the Leverage Ratio at any time, Debt
shall not include obligations of MEMC under direct or indirect guaranties
of indebtedness or obligations of any Subsidiary of MEMC, to the extent the
inclusion of any such obligation results in double-counting thereof.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"EBIT" means, with respect to MEMC and its Subsidiaries for any
period, the sum of (a) net income (or net loss), (b) interest expense and
(c) income tax expense, in each case determined in accordance with GAAP for
such period.
"Effective Date" has the meaning specified in Section 3.01.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Events of Default" has the meaning specified in Section 6.01 of the
Credit Agreement.
"GAAP" means generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to in
Section 9(e) and Section 10(a)(iv).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any federal, state, local or
foreign court or governmental, executive, legislative, judicial,
administrative or regulatory agency, department, authority,
instrumentality, commission, board or similar body.
"Interest Coverage Ratio" means, with respect to MEMC and its
Subsidiaries on a Consolidated basis for any period, a ratio of (a)
Consolidated EBIT of MEMC and its Subsidiaries for such period to (b)
interest payable on all Debt during such period.
"Lender" means the Initial Lender and each Person that shall become a
party to the Credit Agreement pursuant to Section 8.07 of the Credit
Agreement.
"Leverage Ratio" means, with respect to MEMC and its Subsidiaries at
any date of determination, the ratio of (a) Consolidated Debt of MEMC and
its Subsidiaries at such date to (b) Consolidated net worth of MEMC and its
Subsidiaries at such date.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of MEMC and its Subsidiaries taken as a whole.
"Net Proceeds" means, with respect to any issuance of equity or debt
securities (including debt securities convertible into equity) or any
incurrence of Debt (other than non-interest bearing Debt not for borrowed
money (i.e., customer deposits) and other than Debt from E.ON AG or its
Affiliates), an amount equal to the cash proceeds received by MEMC or any
of its Subsidiaries in respect thereof (including cash proceeds received as
income or other proceeds of any noncash proceeds), less any direct expenses
reasonably incurred by MEMC and its Subsidiaries in connection therewith
and excluding any Restricted Proceeds.
"Note" has the meaning specified in Section 2.
"Obligations" has the meaning specified in Section 2.
"Other Taxes" has the meaning specified in Section 7(c).
"PHC" means Posco Huls Co., Ltd., a corporation organized and existing
under the laws of the Republic of Korea.
"Restricted Proceeds" means cash proceeds received by a Subsidiary of
MEMC from any issuance of debt securities or any incurrence of Debt, to the
extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of such proceeds is not at that time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such limited liability company, partnership or joint venture or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries; provided, however, that the term "Subsidiary" shall not
include any joint venture of MEMC with respect to any action or decision of
the board of directors of such joint venture if, by written agreement, such
action or decision requires a vote in excess of the number of members of
such board of directors elected or controlled by MEMC.
"Taxes" has the meaning specified in Section 7(b).
SECTION 2. Guaranty. The Guarantor unconditionally guaranties, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Advances, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by any Borrower under the Credit Agreement or any note issued pursuant to
the Credit Agreement (individually a "Note" and collectively the "Notes"), when
and as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower under the Credit Agreement or any
Note, and (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or pursuant to the Credit
Agreement or any Note (all the monetary and other obligations referred to in the
preceding clauses (a) through (b) being collectively called the "Obligations").
The Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guaranty notwithstanding any extension or renewal of any
Obligation.
SECTION 3. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guaranty and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of the Guarantor hereunder
shall not be affected by (a) the failure of the Agent or any Lender to assert
any claim or demand or to enforce or exercise any right or remedy against any
Borrower or any guarantor under the provisions of the Credit Agreement, any
Note, any guaranty agreement, or otherwise, or (b) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of this Guaranty Agreement, the Credit Agreement, any Note, any guaranty
agreement, or any other agreement.
SECTION 4. Guaranty of Payment. The Guarantor further agrees that its
guaranty constitutes a guaranty of payment when due and not of collection, and
waives any right to require that any resort be had by the Agent or any Lender to
the Borrower or to any other guarantor or to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Agent or any other Lender in favor of any Borrower or any other
person.
SECTION 5. No Discharge or Diminishment of Guaranty. The obligations of the
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Agent or any Lender or any other party
to assert any claim or demand or to enforce any remedy under the Credit
Agreement or any other agreement, by any waiver or modification of any provision
of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of the Guarantor or that
would otherwise operate as a discharge of the Guarantor as a matter of law or
equity (other than the indefeasible payment in full in cash of all the
Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, the Guarantor waives any defense based on or arising out of any
defense of the Borrower or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower, other than the final payment in full in cash of the Obligations. The
Agent may, at its election, foreclose on any security held by judicial or
nonjudicial sale, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Borrower or any other guarantor or exercise any other
right or remedy available to it against the Borrower, or any other guarantor,
without affecting or impairing in any way the liability of the Guarantor
hereunder except to the extent the Obligations have been fully and finally paid
in cash or otherwise satisfied pursuant to the terms of the Credit Agreement.
Pursuant to applicable law, the Guarantor waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or other right or remedy of
the Guarantor against the Borrower or any other guarantor, as the case may be,
or any security.
SECTION 7. Agreement to Pay; Subordination. (a) In furtherance of the
foregoing and not in limitation of any other right that the Agent, any Lender or
any other party has at law or in equity against the Guarantor by virtue hereof,
upon the failure of the Borrower to pay any Obligation when and as the same
shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, the Guarantor hereby promises to and will forthwith
pay, or cause to be paid, to the Agent as designated thereby in cash the amount
of such unpaid Obligations. Upon payment by the Guarantor of any sums to the
Agent as provided above, all rights of the Guarantor against the Borrower
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior payment in full in cash of all the
Obligations. In addition, any indebtedness of the Borrower now or hereafter held
by the Guarantor is hereby subordinated in right of payment to the prior payment
in full of the Obligations. If any amount shall erroneously be paid to the
Guarantor on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of the Borrower, and if
an Event of Default shall have occurred and be continuing, such amount shall be
held in trust for the benefit of the Borrower and shall forthwith be paid to the
Agent to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement.
(b) Any and all payments by the Guarantor hereunder shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, net income taxes
(or franchise taxes imposed in lieu thereof) that are imposed on such Lender or
the Agent by the state or foreign jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, net income taxes (or
franchise taxes imposed in lieu thereof) that are imposed on such Lender by the
state or foreign jurisdiction of such Lender's Domestic Lending Office or any
political subdivision thereof (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder being hereinafter referred to as "Taxes"). If the Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 7), such Lender or the
Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Guarantor shall make such deductions and (iii)
the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(c) In addition, the Guarantor shall pay any present or future stamp,
documentary, excise, property or other taxes, charges or levies that arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Guaranty (hereinafter referred to as "Other
Taxes").
(d) The Guarantor shall indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes and for the full amount of Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 7 imposed on
or paid by such Lender or the Agent (as the case may be) or any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from the
date such Lender or the Agent makes written demand therefor.
(e) Within 30 days after the date of any payment of Taxes, the Guarantor
shall furnish to the Agent, at its address referred to in Section 8.02 of the
Credit Agreement, the original receipt of payment or a certified copy of such
receipt. If no Taxes are payable in respect of any payment hereunder, the
Guarantor shall furnish to the Agent, at such address, a certificate from each
appropriate taxing authority, or an opinion of counsel acceptable to the
Lenders, in either case stating that such payment is exempt from or not subject
to Taxes.
(f) Each Lender organized under the laws of a jurisdiction outside the
United States shall, prior to payment of unpaid Obligations by the Guarantor
pursuant to Section 7(a) and from time to time thereafter if requested in
writing by the Guarantor or the Agent (but only so long as such Lender remains
lawfully able to do so), provide each of the Guarantor and the Agent with
Internal Revenue Service form W-8, W-BEN or W-8ECI, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Lender is exempt from or entitled to a reduced rate of United States
withholding tax on payments of interest pursuant to this Guaranty. If any form
or document referred to in this subsection (f) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W-8,
W-BEN or W-8ECI, that the Lender reasonably considers to be confidential, the
Lender shall give notice thereof to the Guarantor and shall not be obligated to
include in such form or document such confidential information.
(g) For any period with respect to which a Lender has failed to provide the
Guarantor with the appropriate form described in Section 7(f) (other than if
such failure is due to a change in law occurring subsequent to the date on which
a form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 7(b) with respect to Taxes imposed by
the United States until such form is provided; provided, however, that should
such Lender become subject to Taxes because of its failure to deliver a form
required hereunder, the Guarantor shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(h) If following any amount paid under this Section 7, the Lender receives
or is granted a credit against or remission for any Taxes or Other Taxes payable
by such Lender which the Lender determines, in its sole and absolute discretion,
is attributable to any Taxes or Other Taxes paid hereunder, such Lender shall,
subject to the Guarantor having made any increased payment hereunder and to the
extent such Lender can do so in its sole opinion without prejudicing the
retention of the amount of such credit or remission and without prejudice to its
rights to obtain any other relief or allowance which may be available to such
Lender and to conduct its own tax affairs as it sees fit, reimburse such amount
to the Guarantor as the Lender shall in its sole and absolute discretion certify
to be the proportion of such credit or remission as will leave the Lender (after
such reimbursement) in no worse position than it would have been in had no
payment been required under this Section 7. Such reimbursement shall be made
promptly upon the Lender certifying that the amount of such credit or remission
has been received by it; provided, however, that no such payment shall be made
so long as an Event of Default shall have occurred and be continuing. The
disallowance or reduction of any credit or remission of Taxes or Other Taxes
with respect to which a Lender has made a payment to Guarantor under this
Section 7 shall be treated as Taxes for which Guarantor is obligated to
indemnify such Lender hereunder. Notwithstanding the above, no Lender shall (i)
be under any obligation to claim a tax credit in priority to any other claim,
relief, credit or deduction available to such Lender or (ii) be obligated to
disclose any information regarding its tax affairs or computations to the
Guarantor.
SECTION 8. Information. The Guarantor assumes all responsibility for being
and keeping itself informed of the Borrower's financial condition and assets,
and of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Agent or any other
Lender will have any duty to advise the Guarantor of information known to it or
any of them regarding such circumstances or risks.
SECTION 9. Representations and Warranties. MEMC represents and warrants as
follows:
(a) MEMC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by MEMC of this Guaranty
Agreement are within MEMC's corporate powers, have been duly authorized by
all necessary corporate action, and do not contravene (i) MEMC's charter or
by-laws or (ii) any law or any contractual restriction binding on or
affecting MEMC.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required for the due
execution, delivery and performance by MEMC of this Guaranty Agreement.
(d) This Guaranty Agreement has been duly executed and delivered by
MEMC. This Guaranty Agreement is a legal, valid and binding obligation of
MEMC enforceable against MEMC in accordance with its terms.
(e) The Consolidated balance sheets of MEMC and its Subsidiaries as of
December 31, 1999 and June 30, 2000, and the related Consolidated
statements of income and cash flows of MEMC and its Subsidiaries for the
fiscal year and the six months then ended, copies of which have been
furnished to the Lenders, fairly present the financial condition of MEMC
and its Subsidiaries as at such dates and the results of the operations of
MEMC and its Subsidiaries for the periods ended on such dates, all in
accordance with GAAP. Since June 30, 2000, there has been no Material
Adverse Change.
(f) There is no pending or threatened action or proceeding affecting
MEMC or any of its Subsidiaries before any court, governmental agency or
arbitrator, that (i) may materially adversely affect the financial
condition or operations of MEMC or any of its Subsidiaries or (ii) purports
to affect the legality, validity or enforceability of the Credit Agreement,
this Guaranty Agreement or the consummation of the transactions
contemplated hereby.
(g) MEMC is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(h) The Obligations of MEMC under this Guaranty Agreement rank pari
passu with all other unsecured obligations of MEMC that are not, by their
terms, expressly subordinate to such other obligations of MEMC.
(i) The representations and warranties of the Borrower set forth in
the Credit Agreement are true and accurate.
(j) No event has occurred or is continuing that constitutes a Default.
SECTION 10. Covenants. (a) Affirmative Covenants. On and after the Change
of Control Date and so long as any Advance shall remain unpaid or any Lender
shall have any Commitment under the Credit Agreement, MEMC will, unless the
Lenders shall otherwise consent in writing:
(i) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and environmental laws.
(ii) Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, might by law become a lien upon its property;
provided, however, that neither MEMC nor any of its Subsidiaries shall
be required to pay or discharge any such tax, assessment, charge or
claim that is being contested in good faith and by proper proceedings
and as to which appropriate reserves are being maintained, unless and
until any lien resulting therefrom attaches to its property and
becomes enforceable against its other creditors.
(iii) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and
franchises; provided, however, that neither MEMC nor any of its
Subsidiaries shall be required to preserve any right or franchise if
the board of directors of MEMC or a Subsidiary shall determine that
the preservation thereof is no longer desirable in the conduct of the
business of MEMC or such Subsidiary, as the case may be, and that the
loss thereof is not disadvantageous in any material respect to MEMC,
the Subsidiary or the Lenders.
(iv) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of MEMC and each such Subsidiary in accordance with GAAP or,
in the case of any Subsidiary organized under the laws of a
jurisdiction other than the United States or any state thereof, the
equivalent of GAAP applicable in such jurisdiction.
(v) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(vi) Reporting Requirements. Furnish to the Lenders:
(A) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal
year of MEMC, Consolidated balance sheets of MEMC and its
Subsidiaries as of the end of such quarter and Consolidated
statements of income and cash flows of MEMC and its Subsidiaries
for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, duly certified (subject
to year-end audit adjustments) by the chief financial officer of
the Borrower as having been prepared in accordance with GAAP and
setting forth in reasonable detail the calculations necessary to
demonstrate compliance with subsections (vii), (viii) and (ix) of
this Section 10;
(B) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
annual report for such year for the Borrower and its
Subsidiaries, containing Consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year
and Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for such fiscal year, in each case
accompanied by an opinion acceptable to the Lenders by KPMG Peat
Marwick or other independent public accountants reasonably
acceptable to the Lenders and setting forth in reasonable detail
the calculations necessary to demonstrate compliance with
subsections (vii), (viii) and (ix) of this Section 10;
(C) as soon as possible and in any event within ten days
after the occurrence of each Default continuing on the date of
such statement, a statement of the chief financial officer of
MEMC setting forth details of such Default and the action that
MEMC has taken and proposes to take with respect thereto;
(D) promptly after the sending or filing thereof, copies of
all reports which MEMC sends to any of its securityholders, and
copies of all reports and registration statements which MEMC or
any of its Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(E) promptly after the filing or receiving thereof, copies
of all reports and notices which MEMC or any Subsidiary files
under ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or
which MEMC or any Subsidiary receives from the Pension Benefit
Guaranty Corporation;
(F) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or
arbitrator affecting MEMC or any of its Subsidiaries of the type
described in Section 9(f); and
(G) such other information respecting MEMC or any of its
Subsidiaries as any Lender through the Agent may from time to
time reasonably request.
(vii) Working Capital. Maintain an excess of Consolidated current
assets over Consolidated current liabilities of MEMC and its
Subsidiaries of not less than $50,000,000 and a ratio of Consolidated
current assets to Consolidated current liabilities of MEMC and its
Subsidiaries of not less than 1.25 to 1. Consolidated current
liabilities shall include the current portion of the Debt resulting
from the Notes.
(viii) Net Worth. Maintain an excess of Consolidated total assets
over Consolidated total liabilities of MEMC and its Subsidiaries of
not less than $400,000,000.
(ix) Interest Coverage Ratio. Maintain an Interest Coverage Ratio
of not less than 4.0 to 1.
(b) Negative Covenants. On and after the date hereof, and so long as
any Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, MEMC will not, unless the Lenders shall otherwise consent in
writing:
(i) Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any lien, security interest
or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any right to receive income, in each case to
secure any Debt of any Person, other than:
(A) purchase money liens or purchase money security
interests upon or in any property acquired or held by MEMC or any
Subsidiary in the ordinary course of business to secure the
purchase price of such property or to secure indebtedness
incurred solely for the purpose of financing the acquisition of
such property;
(B) liens or security interests existing on such property at
the time of its acquisition (other than any such lien or security
interest created in contemplation of such acquisition);
(C) liens for taxes, assessments and governmental charges or
levies to the extent not required to be paid under Section
10(a)(ii) hereof;
(D) liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar
liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30
days;
(E) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations;
(F) easements, rights of way and other encumbrances on title
to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes; and
(G) liens incurred or deposits made in the ordinary course
of business to secure the performance of letters of credit, bids,
tenders, sales contracts, leases, surety, appeal and performance
bonds and other similar obligations not incurred in connection
with the borrowing of money;
provided that the aggregate principal amount of the Debt, other
indebtedness, taxes, assessments, governmental charges or levies and
other obligations secured by the liens or security interests referred
to in clauses (A) through (G) of this Section 10(b)(i) shall not
exceed $45,000,000 in the aggregate at any time outstanding.
(ii) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as allowed by generally accepted
accounting principles.
(c) Required Repayment under the Credit Agreement. On and after the
Effective Date and so long as any Advance shall remain unpaid or any Lender
shall have any Commitment under the Credit Agreement, MEMC will, unless the
Lenders shall otherwise consent in writing:
(i) Obtain Funds from PHC. Use reasonable commercial efforts, and
cause the Borrower to use reasonable commercial efforts, to obtain
cash from PHC by way of dividends or loans (taking into account tax
consequences and PHC's reasonable capital requirements), which amounts
shall then be payable to the Lenders as a mandatory repayment pursuant
to Section 5.02 of the Credit Agreement.
(ii) Mandatory Repayment of PHC Funds. Within ten (10) days after
each date upon which MEMC or its Subsidiaries receives any cash from
PHC from dividends, reductions or repurchases of equity, share
redemptions or loans, cause the Borrower to pay the Lenders an amount
equal to 75% of any such cash received from PHC less any applicable
taxes as a mandatory repayment of the outstanding principal amount of
the Advances, together with accrued interest to the date of such
repayment on the principal amount repaid.
(iii) Within ten (10) days after each date upon which MEMC or its
Subsidiaries receives any Net Proceeds, cause the Borrower to pay to
the Lenders an amount equal to 100% of the Net Proceeds as a mandatory
repayment of the outstanding principal amount of the Advances,
together with accrued interest to the date of such repayment on the
principal amount repaid.
(iv) Cause the Borrower to comply with its obligations under the
Credit Agreement.
SECTION 11. Termination. The Guaranty made hereunder (a) shall terminate
when all the Obligations have been paid in full and the Lenders have no further
commitment to lend to any Borrower under the Credit Agreement and (b) shall be
reinstated if, at any time after the Guaranty has terminated, payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
the Guarantor or any other guarantor upon the bankruptcy or reorganization of
any Borrower, MEMC, any other guarantor or otherwise.
SECTION 12. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of MEMC that are contained in this
Agreement shall bind and inure to the benefit of each party hereto and their
respective successors and assigns. This Agreement shall become effective as to
MEMC when a counterpart hereof executed on behalf of MEMC shall have been
delivered to the Agent, and a counterpart hereof shall have been executed on
behalf of the Agent, and thereafter shall be binding upon MEMC and the Agent and
their respective successors and assigns, and shall inure to the benefit of MEMC,
the Agent and the Lenders, and their respective successors and assigns, except
MEMC shall not have the right to assign its rights or obligations hereunder or
any interest herein (and any such attempted assignment shall be void).
SECTION 13. Waivers; Amendment.
(a) No failure or delay of the Agent or any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Agent and of the Lenders hereunder
and under the Credit Agreement are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by MEMC therefrom
shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No
notice or demand on MEMC in any case shall entitle MEMC to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into
between MEMC and the Agent, with the prior written consent of the Lenders
(except as otherwise provided in the Credit Agreement).
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 8.02 of the Credit Agreement, except
the address for MEMC shall be 501 Pearl Drive, St. Peters, Missouri 63376,
Attention: Treasurer (telecopier number (636) 474-5158).
SECTION 16. Survival of Agreement; Severability.
(a) All covenants, agreements, representations and warranties made by
MEMC herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or the Credit
Agreement shall be considered to have been relied upon by the Agent and the
other Parties and shall survive the making by the Lenders of the Advances
to the Borrower, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Advance to the Borrower or any
other fee or amount payable under this Agreement or the Credit Agreement by
the Borrower is outstanding and unpaid.
(b) In the event any one or more of the provisions contained in this
Agreement or the Credit Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way
be affected or impaired thereby (it being understood that the invalidity of
a particular provision in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 17. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 12. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 18. Rules of Interpretation. The rules of interpretation specified
in Section 1.1 of the Credit Agreement shall be applicable to this Agreement.
SECTION 19. Jurisdiction; Consent to Service of Process.
(a) MEMC hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the Credit Agreement, or
for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in
such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that the Agent, any
Lender or any other party may otherwise have to bring any action or
proceeding relating to this Agreement or the Credit Agreement against MEMC
or its properties in the courts of any jurisdiction.
(b) The Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Credit
Agreement in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 20. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE CREDIT AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE CREDIT AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred and
be continuing, the Borrower is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other Indebtedness at any time owing by such Borrower to or for the
credit or the account of MEMC against any or all the obligations of MEMC now or
hereafter existing under this Agreement and the Credit Agreement held by such
Borrower, irrespective of whether or not such party shall have made any demand
under this Agreement or the Credit Agreement and although such obligations may
be unmatured. The rights of each party under this Section 21 are in addition to
other rights and remedies (including other rights of setoff) which such party
may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
MEMC ELECTRONIC MATERIALS, INC.
By /s/ Kenneth L. Young
____________________________________
Name: Kenneth L. Young
Title: Treasurer
VEBA INTERNATIONAL FINANCE B.V., as
Agent and as Initial Lender
By /s/ H. J. Wirix and S.A.L. Visser
____________________________________
Name: H.J. Wirix S.A.L. Visser
Title: Managing Director/Managing Director
