Revolving Credit And Term Loan Facility Agreement

500,000,000


364-DAY


REVOLVING CREDIT AND TERM LOAN FACILITY AGREEMENT


Dated as of February 22, 2001


among


AGERE SYSTEMS INC.,


LUCENT TECHNOLOGIES INC.,


THE LENDERS PARTY HERETO,


SALOMON SMITH BARNEY INC., as Syndication Agent, and


THE CHASE MANHATTAN BANK, as Administrative Agent


JPMORGAN, a division of CHASE SECURITIES INC., and
SALOMON SMITH BARNEY INC.,
as Co-Lead Arrangers and Co-Bookrunners 2
TABLE OF CONTENTS


PAGE ARTICLE I Definitions..................................................................................................1


SECTION 1.01 Defined Terms......................................................................1


SECTION 1.02 Terms Generally...................................................................14


SECTION 1.03 Accounting Terms; GAAP............................................................14


SECTION 1.04 Loan Parties and Loan Documents...................................................14


SECTION 1.05 Schedule 2.10.....................................................................14


ARTICLE II The Credits................................................................................................14


SECTION 2.01 Assumption of Obligations; Commitments............................................14


SECTION 2.02 Revolving Loans...................................................................15


SECTION 2.03 Borrowing Procedure...............................................................16


SECTION 2.04 Conversion and Continuation of Loans..............................................16


SECTION 2.05 Fees..............................................................................17


SECTION 2.06 Repayment of Loans, Evidence of Debt..............................................17


SECTION 2.07 Interest on Loans.................................................................18


SECTION 2.08 Default Interest..................................................................18


SECTION 2.09 Alternate Rate of Interest........................................................19


SECTION 2.10 Optional and Mandatory Termination and Reduction of Commitments; Prepayments
of Term Loans in Connection with Certain Transactions.............................19


SECTION 2.11 Optional and Mandatory Repayment..................................................20


SECTION 2.12 Reserve Requirements, Change in Circumstances.....................................20


SECTION 2.13 Change in Legality................................................................22


SECTION 2.14 Indemnity.........................................................................22


SECTION 2.15 Pro Rata Treatment................................................................23


SECTION 2.16 Sharing of Setoff.................................................................23


SECTION 2.17 Payments..........................................................................23


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PAGE
SECTION 2.18 Taxes.............................................................................24


SECTION 2.19 Mandatory Assignment; Commitment Termination......................................26


ARTICLE III Representations and Warranties............................................................................26


SECTION 3.01 Organization; Powers..............................................................26


SECTION 3.02 Authorization.....................................................................26


SECTION 3.03 Enforceability....................................................................26


SECTION 3.04 Governmental Approvals............................................................27


SECTION 3.05 Financial Statements..............................................................27


SECTION 3.06 Properties........................................................................27


SECTION 3.07 Litigation and Environmental Matters..............................................27


SECTION 3.08 Compliance with Laws and Agreements...............................................27


SECTION 3.09 Federal Reserve Regulations.......................................................28


SECTION 3.10 Investment Company Act; Public Utility Holding Company Act........................28


SECTION 3.11 Taxes.............................................................................28


SECTION 3.12 ERISA.............................................................................28


SECTION 3.13 Labor Matters.....................................................................28


SECTION 3.14 Subsidiaries......................................................................28


SECTION 3.15 Use of Proceeds...................................................................28


SECTION 3.16 No Material Misstatements.........................................................29


ARTICLE IV Conditions of Lending; Covenants Relating to Assumption....................................................29


SECTION 4.01 All Borrowings....................................................................29


SECTION 4.02 Initial Conditions................................................................29


SECTION 4.03 Covenants Relating to Assumption..................................................30


ARTICLE V Affirmative Covenants.......................................................................................31


SECTION 5.01 Existence.........................................................................31


SECTION 5.02 Financial Statements, Reports, etc................................................31


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PAGE
SECTION 5.03 Maintaining Records...............................................................32


SECTION 5.04 Notices of Material Events........................................................32


SECTION 5.05 Existence; Conduct of Business....................................................32


SECTION 5.06 Payment of Obligations............................................................32


SECTION 5.07 Maintenance of Properties; Insurance..............................................33


SECTION 5.08 Inspection Rights.................................................................33


SECTION 5.09 Compliance........................................................................33


SECTION 5.10 Use of Proceeds...................................................................33


SECTION 5.11 Additional Subsidiary Guarantors..................................................33


ARTICLE VI Negative Covenants.........................................................................................33


SECTION 6.01 Financial Covenants...............................................................33


SECTION 6.02 Subsidiary Indebtedness...........................................................34


SECTION 6.03 Liens.............................................................................35


SECTION 6.04 Fundamental Changes...............................................................36


SECTION 6.05 Investments, Loans, Advances, Guarantees and Acquisitions.........................36


SECTION 6.06 Restricted Payments...............................................................36


SECTION 6.07 Transactions with Affiliates......................................................37


SECTION 6.08 Limitations on Sale and Leaseback Transactions and CMO Transactions...............37


ARTICLE VII Events of Default.........................................................................................37


ARTICLE VIII The Administrative Agent.................................................................................39


ARTICLE IX Miscellaneous..............................................................................................41


SECTION 9.01 Notices...........................................................................41


SECTION 9.02 Survival of Agreement.............................................................41


SECTION 9.03 Binding Effect....................................................................42


SECTION 9.04 Successors and Assigns............................................................42


SECTION 9.05 Expenses; Indemnity...............................................................44


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PAGE
SECTION 9.06 Applicable Law...................................................................45


SECTION 9.07 Waivers; Amendment................................................................45


SECTION 9.08 Entire Agreement..................................................................45


SECTION 9.09 Severability......................................................................45


SECTION 9.10 Right of Setoff...................................................................45


SECTION 9.11 Counterparts......................................................................46


SECTION 9.12 Headings..........................................................................46


SECTION 9.13 Release of Guarantees and Liens...................................................46


SECTION 9.14 Confidentiality...................................................................46


SECTION 9.15 Submission to Jurisdiction........................................................47


SECTION 9.16 WAIVER OF JURY TRIAL..............................................................47


SECTION 9.17 Withdrawal of Lucent..............................................................47


EXHIBITS


Exhibit A Form of Assignment and Acceptance Exhibit B Form of Borrowing Request Exhibit C Form of Closing Certificate Exhibit D-1 Form of Opinion of Cravath, Swaine & Moore Exhibit D-2 Form of Opinion of the Vice President-Law of the Borrower


SCHEDULES


Schedule 1.01 Commitments Schedule 2.10 Allocation Matters Schedule 3.14 Subsidiaries Schedule 6.02 Existing Subsidiary Indebtedness Schedule 6.03 Existing Liens


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364-DAY REVOLVING CREDIT AND TERM LOAN FACILITY AGREEMENT, dated as of February 22, 2001, among AGERE SYSTEMS INC., a Delaware corporation (the "Borrower"), LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"), the several banks and other financial institutions or entities from time to time parties to this Agreement (the "Lenders"), SALOMON SMITH BARNEY INC., as Syndication Agent (in such capacity, the "Syndication Agent"), and THE CHASE MANHATTAN BANK, as administrative agent for the Lenders.


The Borrower has agreed to assume, on the Assumption Effective Date (as herein defined) immediately prior to the Agere IPO, all of the rights and monetary obligations of Lucent under the Lucent Assumable Credit Agreement (as herein defined) to the extent described in Section 2.01 below. The Lenders have agreed to permit the assumption by the Borrower, on and after the Assumption Effective Date, of all of Lucent's rights and monetary obligations under the Lucent Assumable Credit Agreement and have agreed to extend, on and after the Assumption Effective Date, up to $2,500,000,000 of credit to the Borrower to enable it to (a) borrow on a revolving credit basis and at any time and from time to time prior to the Maturity Date (as herein defined) a principal amount at any time outstanding not in excess of the aggregate Revolving Commitments and (b) assume the "Term Loans" made pursuant to the Lucent Assumable Credit Agreement. The aggregate principal amount of such "Term Loans" shall not, in any event, exceed $1,500,000,000. The proceeds of such borrowings are to be used for capital expenditures, refunding of debt, support for commercial paper and general corporate purposes, including working capital of the Borrower and its Subsidiaries. The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth.


Accordingly, Lucent, the Borrower, the Lenders and the Administrative Agent agree as follows:


ARTICLE I


Definitions


SECTION 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:


"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.


"ABR Loan" shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.


"Administrative Agent" shall mean The Chase Manhattan Bank, together with its affiliates, as an arranger of the Revolving Commitments and Term Loans and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.


"Administrative Questionnaire" shall mean an administrative questionnaire in a form approved by the Administrative Agent.


"Affiliate" shall mean, when used with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.


"Agere Distribution" shall mean the distribution to Lucent's securityholders of all of the common stock of the Borrower held by Lucent after the Agere IPO. 7
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"Agere IPO" shall mean the consummation of an initial public offering of the common stock of the Borrower.


"Agere IPO Exchange" shall mean the exchange of Indebtedness of Lucent for common stock of the Borrower in connection with the Agere IPO.


"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as effective. For purposes hereof, "Federal Funds Effective Rate" shall mean, 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 released on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so released for any day which is a Business Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as determined by the Administrative Agent, 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. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.


"Applicable Percentage" shall mean, on any date, the per annum rate applicable on such date, as determined pursuant to the table set forth below.


Level I Level II Level III Level IV
Baa2/BBB or better Baa3/BBB- Ba1/BB+ Ba2/BB or less ------------------------------------------------------------------------------------------------------------------------------------ Facility Fee Rate 0.50% 0.50% 0.50% 0.50% ------------------------------------------------------------------------------------------------------------------------------------ Eurodollar Revolving Loans 1.75% 2.00% 2.50% 3.00% ------------------------------------------------------------------------------------------------------------------------------------ Eurodollar Term Loans 2.25% 2.50% 3.00% 3.50% ------------------------------------------------------------------------------------------------------------------------------------ ABR Revolving Loans 0.75% 1.00% 1.50% 2.00% ------------------------------------------------------------------------------------------------------------------------------------ ABR Term Loans 1.25% 1.50% 2.00% 2.50% ------------------------------------------------------------------------------------------------------------------------------------


The Applicable Percentage shall be based upon the Borrower Debt Ratings most recently notified to the Administrative Agent by the Borrower. In the event that (a) the Borrower Debt Ratings fall within different consecutive Levels, the higher-numbered Level shall apply, (b) the Borrower Debt Ratings fall within different Levels, and the higher numbered Level is more than one numbered Level higher than the lower numbered Level, then the next higher numbered Level from that of the lower numbered Level shall apply, (c) the Borrower Debt Rating of only one of the Rating Agencies is available, then the Level determined by such Rating Agency shall apply and (d) a Borrower Debt Rating is available from neither of the Rating Agencies, then Level IV shall apply. Notwithstanding anything to the contrary in this definition, (i) until the later of (x) the date that is six months after the Original Closing Date and (y) the Exposure Reduction Date, Level II shall be deemed to be in effect at any time when 8
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Level I would otherwise be in effect and (ii) on each date that is 90 days or a whole multiple thereof after the Original Closing Date, the Applicable Percentage (other than the Facility Fee rate) shall increase by a further 0.25% above the rate that would otherwise be in effect (and any increased pricing effected prior to the Assumption Effective Date pursuant to the comparable provision of the Lucent Assumable Credit Agreement shall continue to be in effect subject to further increases on subsequent 90-day anniversaries of the Original Closing Date), provided, that, effective on the Exposure Reduction Date, the increases pursuant to this clause (ii) shall cease to apply.


"Arrangers" shall mean JP Morgan, a division of Chase Securities Inc., and Salomon Smith Barney Inc.


"Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit A.


"Assumption Effective Date" shall mean the date on which the Agere IPO shall occur.


"Attributable Debt" shall mean, as of the date of its determination, the present value (discounted semiannually at an interest rate implicit in the terms of the lease) of the obligation of a lessee for rental payments pursuant to any Sale and Leaseback Transaction (reduced by the amount of the rental obligations of any sublessee of all or part of the same property) during the remaining term of such Sale and Leaseback Transaction (including any period for which the lease relating thereto has been extended), such rental payments not to include amounts payable by the lessee for maintenance and repairs, insurance, taxes, assessments and similar charges and for contingent rents (such as those based on sales); provided, however, that in the case of any Sale and Leaseback Transaction in which the lease is terminable by the lessee upon the payment of a penalty, Attributable Debt shall mean the lesser of the present value of (a) the rental payments to be paid under such Sale and Leaseback Transaction until the first date (after the date of such determination) upon which it may be so terminated plus the then applicable penalty upon such termination and (b) the rental payments required to be paid during the remaining term of such Sale and Leaseback Transaction (assuming such termination provision is not exercised).


"Board" shall mean the Board of Governors of the Federal Reserve System of the United States.


"Borrower Debt Rating" shall mean any rating by a Rating Agency with respect to the senior unsecured non-credit enhanced long-term debt of the Borrower.


"Borrowing" shall mean a group of Loans of a single Type made by the Lenders on a single date and as to which a single Interest Period is in effect.


"Borrowing Request" shall mean a request made pursuant to Section 2.03 in the form of Exhibit B.


"Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however, that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.


"Capital Lease Obligations" of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted 9
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for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.


"Capital Markets Event" shall mean the issuance or incurrence by the Borrower or any of its Subsidiaries of (a) any Indebtedness for borrowed money in respect of (1) debt securities issued in a public offering or a private placement or (2) syndicated lines of credit or other credit facilities or (b) Indebtedness pursuant to any receivables securitization or CMO Transaction, but excluding (i) the Agere IPO and the Agere IPO Exchange, (ii) issuances of Capital Stock of the Borrower pursuant to any compensation plan for directors, employees or consultants of the Borrower and its Subsidiaries, (iii) refinancings of Indebtedness maturing within one year from the date of the refinancing (regardless of whether the refinancing occurs before or after the maturity date of the Indebtedness refinanced), (iv) commercial paper and other Short-Term Indebtedness (other than Short-Term Indebtedness under a syndicated line of credit or other credit facility), (v) working capital facilities entered into by Foreign Subsidiaries of the Borrower, (vi) any transaction described in clause (a) or (b) above consummated by a Foreign Subsidiary, (vii) any incurrence of Indebtedness by a Foreign Subsidiary pursuant to Section 6.02(j)(ii) and (viii) intercompany issuances of Capital Stock to the Borrower or any Subsidiary and intercompany Indebtedness incurred pursuant to loans made by the Borrower or any Subsidiary.


"Capital Stock" shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.


"Change in Control" shall mean (a) the acquisition ...