AMD 2006 Annual Report Download - page 297

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
$500 million. The Company, along with STI, Spansion International, Inc. and Cerium Laboratories LLC, or Cerium, are guarantors of Spansion LLC’s
obligations under the senior secured term loan facility. Amounts borrowed under the senior secured term loan facility bear interest equal to either (at Spansion
LLC’s option) (a) LIBOR, plus a 3.0 percent margin or 2.75 percent margin depending upon the Company’s credit rating or (b) the base rate, defined as the
higher of (i) the administrative agent’s prime rate and (ii) the federal funds rate (as defined in the credit agreement for the senior secured term loan facility) plus
0.50 percent, plus a 2.0 percent margin or 1.75 percent margin depending upon the Company’s credit rating. The senior secured term loan facility will terminate
and all outstanding borrowings must be repaid no later than November 3, 2012.
In connection with the senior secured term loan facility, the Company and each of Spansion LLC, STI, Spansion International and Cerium, collectively
referred to as the loan parties, executed a pledge and security agreement pursuant to which the administrative agent received a first priority security interest in
(a) all present and future capital stock of each of the Company’s present and future direct and indirect subsidiaries, limited in the case of foreign subsidiaries to a
pledge of 65 percent of the capital stock of each first-tier foreign subsidiary, (b) all present and future debt of each loan party, but excluding certain intercompany
debt to a foreign subsidiary, (c) all present and future other property and assets of each loan party, but excluding intellectual property and any equipment subject
to a lien securing a capitalized lease permitted by the credit agreement for the senior secured term loan facility, and (d) all proceeds and products of the property
and assets described above. The net book value of the pledged assets as of December 31, 2006 was approximately $663.5 million.
Pursuant to the terms of the senior secured term loan facility, and subject to certain exceptions, Spansion LLC and its subsidiaries are limited in their
ability, among other things, to:
• create or permit liens;
• incur indebtedness, subject to certain exceptions, including existing indebtedness under Spansion LLC’s 11.25% Senior Notes indenture, Spansion
LLC’s 2.25% Exchangeable Senior Subordinated Debentures indenture, the senior secured revolving credit facility, capital leases not to exceed 15
percent of Spansion Inc.’s total assets, indebtedness of acquired subsidiaries existing at the time of such acquisition and up to $500 million for capital
expenditures at SP1;
• make or hold investments above certain thresholds;
• have interest coverage and minimum liquidity of less than specified amounts;
• consolidate, merge or sell assets as an entirety or substantially as an entirety;
• make any disposition of properties, including any sale leaseback transaction;
• make certain distributions, stock redemptions or other payments on account of any equity interests;
• enter into certain types of transactions with affiliates;
• make or become obligated to make any capital expenditures except for those in the ordinary course of business not to exceed specified amounts; and
• voluntarily prepay any indebtedness.
In addition, under the senior secured term loan facility, the Company is not permitted to engage in any business or activity other than, among other things,
holding equity interests in Spansion LLC and STI and activities incidental to being a publicly traded company.
Amounts outstanding under the senior secured term loan facility may become immediately due and payable upon the occurrence of specified events,
including, among other things: failure to pay any obligations under the senior secured term loan facility; the breach of any representation or warranty or certain
covenants; any default in
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007