Memorex 2014 Annual Report Download - page 18

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The agreement governing our credit facilities contains, and future debt agreements may contain,
various covenants that limit our discretion in the operation of our business. The agreement and instruments
governing our outstanding credit facilities, and the agreements and instruments governing future debt agreements,
may contain various restrictive covenants that, among other things, require us to comply with or maintain certain
financial tests and ratios that may restrict our ability to:
• incur more debt;
• redeem or repurchase stock, pay dividends or make other distributions;
• make certain investments;
• enter into transactions with affiliates;
• make unapproved acquisitions;
• transfer or sell assets; and
• make fundamental changes in our corporate existence and principal business.
In addition, events beyond our control could affect our ability to comply with and maintain the financial tests
and ratios under our credit facilities. Any failure by us to comply with or maintain all applicable financial tests and
ratios and to comply with all applicable covenants could result in an event of default with respect to our credit
facilities or any other future debt agreements. An event of default could lead to the acceleration of the maturity of
any outstanding loans and the termination of the commitments to make further extensions of credit. Even if we are
able to comply with all applicable covenants, the restrictions on our ability to operate our business at our sole
discretion could harm our business by, among other things, limiting our ability to take advantage of financing,
mergers, acquisitions and other corporate opportunities.
If we are unable to attract and retain employees and key talent our business and financial results
may be materially impacted. We operate in a highly competitive market for employees with specialized skill,
experience and industry knowledge. No assurance can be given that we will be able to attract and retain employees
and key talent. A failure to attract and retain key personnel could also have a material adverse impact on our
business.
Changing laws and regulations have resulted in increased compliance costs for us, which could
affect our operating results. Changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, regulations regarding conflict minerals and newly enacted SEC regulations have created additional
compliance requirements. We are committed to maintaining high standards of internal controls over financial
reporting, corporate governance and public disclosure. As a result, we intend to continue to invest appropriate
resources as necessary to comply with evolving standards which may result in increased expenses. Laws enacted
that directly or indirectly affect the production, distribution, packaging, cost of raw materials and fuel could impact
our business and financial results.
We rely on our aging information systems to conduct our business, and failure to protect these
systems against security breaches could adversely affect our business and results of operations.
Additionally, if these systems fail or become unavailable for any significant period of time, our business
could be harmed. The efficient operation of our business is dependent on computer hardware and software
systems. Information systems are vulnerable to security breach by computer hackers and cyber terrorists. We rely
on industry accepted security measures and technology to securely maintain confidential and proprietary
information maintained on our information systems. However, these measures and technology may not adequately
prevent security breaches. In addition, the unavailability of the information systems or failure of these systems to
perform as anticipated for any reason could disrupt our business and could result in decreased performance and
increased overhead costs, causing our business and results of operations to suffer. Any interruption or failure of our
information systems or any breach of security could adversely affect our business and results of operations.
The announcement of our review of strategic alternatives could adversely affect our business,
financial results and operations, and there can be no assurance that any transaction will result from this
review. On February 10, 2015, we announced that we have been working with Houlihan Lokey as our financial
adviser to review and explore strategic alternatives to maximize shareholder value and the value of each of our
business units. There can be no assurance that this review will result in any transaction or any change to our overall
structure or our business model, or that any transaction or change will enhance shareholder value or the value of
any of our business units. Any transaction that is identified and pursued would be dependent on factors that may be
beyond our control, including, among others, global economic conditions, the market environment, the possible