ZHNE » Topics » 7.3 Mergers or Acquisitions.

These excerpts taken from the ZHNE 10-K filed Mar 16, 2009.

7.3 Mergers or Acquisitions.

(a) Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person without Bank’s prior written consent (which shall be a matter of its good faith business judgment); or

(b) acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person;

in each case (of (a) or (b) above), provided however that (i) prior or concurrent written notice by Borrower to Bank (rather than such written consent of Bank) is required with respect to any such transaction as to which Borrower (or, as to any such transaction to which Borrower is not a party, such Subsidiary) is the surviving or successor person and no Default or Event of Default has occurred and is continuing or would result therefrom, and (ii) a Subsidiary of Borrower may merge or consolidate into another Subsidiary of Borrower.

In connection with any such acquisition, Borrower may create a subsidiary that has nominal assets (and would not constitute a Material Domestic Subsidiary prior to giving effect to the acquisition) solely for the purpose of and in preparation for such acquisition prior to obtaining Bank’s consent.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary of Borrower to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of the Collateral, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interests of Bank therein (subject in lien priority only to those Permitted Liens that are expressly entitled to such priority over the security interests of Bank by operation of law or by written subordination agreement duly executed and delivered by Bank in favor of the holders of such Permitted Liens), or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s owned (as opposed to licensed) Material Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Lien” herein.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8.(b) hereof.

 

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7.7 Investments; Distributions; Special Investment re Campus Real Estate Loan. (a) Directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, provided that (i) Zhone may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in equity securities; (iii) Zhone may repurchase the stock of former employees, directors, or consultants pursuant to stock repurchase agreements so long as no Default or Event of Default has occurred at the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate of $250,000 per fiscal year; and (iv) payments of dividends or distributions made by (x) any Borrower to any other Borrower, or (y) any Subsidiary of Borrower to Borrower, or (z) any Subsidiary of Borrower to any other Subsidiary of Borrower, are expressly permitted. With respect to the real estate loan of Campus secured by the real property used by Borrower, Borrower may make Investments in Campus solely for the purpose of funding, when due, regularly scheduled principal and interest payments in respect of such real estate loan, provided that (i) no Event of Default has occurred and is continuing or would result therefrom, and (ii) after giving pro forma effect to such Investment, Borrower would be in compliance with the financial covenant(s) in Section 6.9.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are upon fair and reasonable terms and no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-Affiliated Person, other than bona fide sales of Borrower’s equity securities.

7.9 Subordinated Debt. Without Bank’s prior written consent, (a) make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or the amount of any permitted payments thereunder or adversely affect the subordination thereof to Obligations owed to Bank.

7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

7.3 Mergers or Acquisitions.

(a) Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person without Bank’s prior written consent (which shall be a matter of its good faith business judgment); or

(b) acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person;

in each case (of (a) or (b) above), provided however that (i) prior or concurrent written notice by Borrower to Bank (rather than such written consent of Bank) is required with respect to any such transaction as to which Borrower (or, as to any such transaction to which Borrower is not a party, such Subsidiary) is the surviving or successor person and no Default or Event of Default has occurred and is continuing or would result therefrom, and (ii) a Subsidiary of Borrower may merge or consolidate into another Subsidiary of Borrower.

 

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In connection with any such acquisition, Borrower may create a subsidiary that has nominal assets (and would not constitute a Material Domestic Subsidiary prior to giving effect to the acquisition) solely for the purpose of and in preparation for such acquisition prior to obtaining Bank’s consent.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary of Borrower to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of the Collateral, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interests of Bank therein (subject in lien priority only to those Permitted Liens that are expressly entitled to such priority over the security interests of Bank by operation of law or by written subordination agreement duly executed and delivered by Bank in favor of the holders of such Permitted Liens), or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s owned (as opposed to licensed) Material Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Lien” herein.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8.(b) hereof.

7.7 Investments; Distributions; Special Investment re Campus Real Estate Loan. (a) Directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, provided that (i) Zhone may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in equity securities; (iii) Zhone may repurchase the stock of former employees, directors, or consultants pursuant to stock repurchase agreements so long as no Default or Event of Default has occurred at the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate of $250,000 per fiscal year; and (iv) payments of dividends or distributions made by (x) any Borrower to any other Borrower, or (y) any Subsidiary of Borrower to Borrower, or (z) any Subsidiary of Borrower to any other Subsidiary of Borrower, are expressly permitted. With respect to the real estate loan of Campus secured by the real property used by Borrower, Borrower may make Investments in Campus solely for the purpose of funding, when due, regularly scheduled principal and interest payments in respect of such real estate loan, provided that (i) no Event of Default has occurred and is continuing or would result therefrom, and (ii) after giving pro forma effect to such Investment, Borrower would be in compliance with the financial covenant(s) in Section 6.9.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are upon fair and reasonable terms and no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-Affiliated Person, other than bona fide sales of Borrower’s equity securities.

7.9 Subordinated Debt. Without Bank’s prior written consent, (a) make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or the amount of any permitted payments thereunder or adversely affect the subordination thereof to Obligations owed to Bank.

7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

 

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EXCERPTS ON THIS PAGE:

10-K (2 sections)
Mar 16, 2009

"7.3 Mergers or Acquisitions." elsewhere:

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