EXHIBIT 10.47
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
COMERICA BANK
AND
ASYST TECHNOLOGIES, INC.
$25,000,000
May 15, 2004
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This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of May
15, 2004 ("Closing Date"), by and between COMERICA BANK, as successor by merger
to Comerica Bank-California ("Bank") and ASYST TECHNOLOGIES, INC., a California
corporation ("Borrower").
RECITALS
Borrower and Bank previously entered into that certain Loan and Security
Agreement, dated October I, 2002 (the "Prior Loan Agreement"). Borrower and Bank
wish to amend, restate and supersede the Prior Loan Agreement pursuant to this
Agreement. Borrower wishes to obtain credit from time to time from Bank, and
Bank desires to extend credit to Borrower. This Agreement sets forth the terms
on which Bank will advance credit to Borrower, and Borrower will repay the
amounts owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms
shall have the definitions set forth on Exhibit A.
1.2 Accounting Terms. All accounting terms not specifically defined
on Exhibit A shall be construed in accordance with GAAP and all calculations
shall be made in accordance with GAAP. The term "financial statements" shall
include the accompanying notes and schedules.
2. LOAN AND TERMS OF PAYMENT.
2.1 Credit Extensions.
(a) Borrower promises to pay to Bank, in lawful money of the
United States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrower, together with interest on the unpaid
principal amount of such Credit Extensions at rates in accordance with the terms
hereof.
(b) Revolving Advances.
(i) Subject to and upon the terms and conditions of
this Agreement (1) Borrower may request Advances in an aggregate outstanding
amount not to exceed the lesser of (A) the Committed Revolving Line or (B) the
Borrowing Base, and (2) amounts borrowed pursuant to this Section 2.1(b) may be
repaid and reborrowed at any time prior to the Revolving Maturity Date, at which
time all Advances under this Section 2.1(b) shall be immediately due and
payable. Advances shall be in a minimum amount of S1,000,000 each and integral
multiples of $50,000 in excess of the amount; provided that no more than five
LIBOR Rate Advances shall be outstanding at any time. Borrower may prepay any
Advances without penalty or premium other than LIBOR Funding Losses. Borrower
shall indemnify,
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defend, and hold Bank harmless against any loss, reasonable cost, or reasonable
expense incurred by Bank as a result of (a) the payment of any principal of any
LIBOR Rate Advance other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), or (b) the failure to
borrow, continue or repay any LIBOR Rate Advance on the date specified in any
Payment/Advance notice provided pursuant to subsection (ii) below (other than a
default by Bank).
(ii) Whenever Borrower desires an Advance, Borrower
will notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific time, on the day which is three Business Days prior to the Business Day
on which such Advance is to be made, if such Advance is to be a LIBOR Rate
Advance, and one Business Day, if such Advance is to be a Prime Rate Advance.
Each such notification shall include the Borrower's election as to whether the
Advance is to be a LIBOR Rate Advance or a Prime Rate Advance and, if a Prime
Rate Advance, the applicable Interest Period and shall be promptly confirmed by
a Payment/Advance Form in substantially the form of Exhibit C. Bank is
authorized to make Advances under this Agreement, based upon written
instructions received from the Responsible Officers, or a designee of the
Responsible Officers, or without instructions if in Bank's reasonable discretion
such Advances are necessary to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any written or telephonic notice given
by the persons whom Bank reasonably believes in good faith to be the Responsible
Officers, or a designee thereof, and Borrower shall indemnify and Bank shall
have no liability to Borrower as a result of such reliance. Bank will credit the
amount of Advances made under this Section 2.1(b) to Borrower's deposit account.
2.2 Overadvances. If the aggregate amount of the outstanding
Advances exceeds the lesser of the Committed Revolving Line or the Borrowing
Base at any time, Borrower shall promptly pay to Bank, in cash, the amount of
such excess.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rates.
(i) Advances. Except as set forth in Section 2.3(b),
the LIBOR Rate Advances shall bear interest in arrears, on the outstanding Daily
Balance thereof, at a rate per annum equal to two and one-half (2.5) percentage
points (250 basis points) above the LIBOR Rate, and Prime Rate Advances shall
bear interest at the Prime Rate, as such Prime Rate may change from time to
time.
(b) Default Rate. All Obligations shall bear interest, upon
the occurrence and during the continuance of an Event of Default, at a rate
equal to four percentage points above the interest rate applicable immediately
prior to the occurrence of the Event of Default.
(c) Payments. Interest hereunder shall be due and payable on
the first calendar day of each month during the term hereof. Bank shall, at its
option, charge such interest, all Bank Expenses, against any of Borrower's
deposit accounts or against the Committed Revolving Line, in which case those
amounts shall thereafter accrue interest at the
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Prime Rate based rate then applicable hereunder. Any interest not paid when due
shall be compounded by becoming a part of the Obligations, and such interest
shall thereafter accrue interest at the Prime Rate based rate then applicable
hereunder.
(d) Computation. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by an
amount equal to such change in the Prime Rate. All interest chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.
2.4 Crediting Payments. So long as an Event of Default does not
exist, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. When an
Event of Default has occurred and is continuing, the receipt by Bank of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 2:00 p.m. Pacific time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.5 Fees. Borrower shall pay to Bank the following:
(a) Unused Line Fee. Monthly, in arrears, on the first day
of each month, an Unused Line Fee equal to 0.375% per annum, of the positive
difference, if any, between the Committed Revolving Line and the average Daily
Balance during such month.
(b) Bank Expenses. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys' fees and expenses, within thirty (30) days after Borrower receives an
invoice thereafter.
2.6 Term.
(a) Initial Term. This Agreement shall become effective on
the Closing Date and, subject to Section 12.7, shall continue in full force and
effect for a term ending on the Revolving Maturity Date. Notwithstanding
anything herein to the contrary, Borrower may terminate this Agreement upon at
least ten (10) Business Days' notice to Bank, upon (a) the payment in full in
cash of all outstanding Advances, (b) the payment in full in cash of all other
Obligations, together with accrued and unpaid interest thereon, and (c) the
payment in cash of LIBOR Funding Losses. Upon termination of this Agreement in
accordance with the terms hereof, Bank agrees that Borrower shall no longer be
liable for an Unused Line Fee which would accrue after the date of termination
of this Agreement but for such termination.
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(b) Extensions of Term. In light of Borrower's desire to
maintain financial accounting treatment of the Credit Extensions as long term
debt on the financial statements of Borrower, Borrower and Bank agree that, at
Borrower's request made at any time during the period which precedes the final
twelve (12) months of the term hereof (as it may be extended from time to time),
Borrower and Bank shall discuss and consider a one (1) year extension of the
then effective Revolving Maturity Date, any such extension to be on mutually
acceptable terms and conditions. Any such agreement to extend shall be effective
only if in writing and signed by both Borrower and Bank. Borrower and Bank
acknowledge and agree that Bank has not committed or agreed to any such
extension and that Bank may determine, in its sole discretion and for any reason
whatsoever, to not grant any such requested extension of the term.
2.7 Special Provisions Relating to LIBOR Rate.
(a) The LIBOR Rate may be adjusted by Bank on a prospective
basis to take into account any additional or increased costs to Bank of
maintaining or obtaining any eurodollar deposits or increased costs due to
changes in applicable law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System (or
any successor), which additional or increased costs would increase the cost of
funding loans bearing interest at the LIBOR Rate. In any such event, Bank shall
give Borrower notice of such a determination and adjustment and, upon its
receipt of the notice from Bank, Borrower may require Bank to furnish to
Borrower a statement setting forth the basis for adjusting such LIBOR Rate and
the method for determining the amount of such adjustment; provided, however,
that Borrower shall not be obligated to pay Bank such additional compensation
attributable to any period prior to the date that is 90 days prior to the date
on which Bank gave notice to Borrower of the increased LIBOR Rate.
(b) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of Bank, make it unlawful or impractical for Bank to
fund or maintain Advances bearing interest at the LIBOR Rate, or to continue
such funding or maintaining, or to determine or charge interest rates at the
LIBOR Rate, Bank shall give notice of such changed circumstances to Borrower
and, in the case of any LIBOR Rate Advances that are outstanding, the date
specified in Bank's notice shall be deemed to be the last day of the Interest
Period of such Advances, and such LIBOR Rate advances shall be automatically
converted to Prime Rate Advances.
(c) Bank shall not be required to acquire Eurodollar
deposits to fund or otherwise match fund any Advances as to which interest
accrues at the LIBOR Rate. The determination of a LIBOR Funding Loss and the
provisions of this Section shall apply as if Bank had match funded any Advance
at issue by acquiring Eurodollar deposits for the applicable Interest Period in
the amount of such Advance.
(d) If, after the date hereof, Bank reasonably determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by
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any governmental authority charged with the administration thereof, or (ii)
compliance by Bank with any guideline, request, or directive of any such entity
regarding capital adequacy (whether or not having the force of law), the effect
of reducing the return on Bank's capital as a consequence of its obligations
hereunder to a level below that which Bank could have achieved but for such
adoption, change, or compliance (taking into consideration Bank's then existing
policies with respect to capital adequacy and assuming the full utilization of
such entity's capital) by any amount deemed by Bank to be material, then Bank
may notify Borrower thereof. Following receipt of such notice, Borrower agrees
to pay Bank on demand the amount of such reduction of return of capital as and
when such reduction is determined, payable within 90 days after presentation by
Bank of a statement in the amount and setting forth in reasonable detail Bank's
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, Bank may use any reasonable averaging and attribution
methods.
3. CONDITIONS OF LOANS.
3.1 Conditions Precedent to Initial Credit Extension. The obligation
of Bank to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:
(a) this Agreement;
(b) an officer's certificate of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) agreement to provide insurance;
(d) payment of the fees and Bank Expenses then due specified
in Section 2.5;
(e) a certified copy of Borrower's investment policy as
adopted by Borrower's Board of Directors;
(f) current financial statements in accordance with Section
6.2; and
(g) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Credit Extensions. The obligation of
Bank to make each Credit Extension, including the initial Credit Extension, is
further subject to the following conditions:
(a) timely receipt by Bank of the Payment/Advance Form as
provided in Section 2.1(b)(iii); and
(b) the representations and warranties contained in Section
5 shall be true and correct in all material respects on and as of the date of
such Payment/Advance Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no
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Event of Default shall have occurred and be continuing, or would exist after
giving effect to such Credit Extension (provided, however, that those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of such date). The making
of each Credit Extension shall be deemed to be a representation and warranty by
Borrower on the date of such Credit Extension as to the accuracy of the facts in
all material respects referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower grants and pledges to Bank
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral to secure prompt repayment of any and all Obligations and
to secure prompt performance by Borrower of each of its covenants and duties
under the Loan Documents. Except as set forth in Schedule 4.1 and except for
Liens which constitute Permitted Liens pursuant to paragraph (c) of the
definition thereof (and any Liens incurred in connection with extensions,
renewals or refinancing of the indebtedness secured by such Permitted Liens),
upon the due filing of appropriately completed financing statements with the
applicable governing filing offices or upon taking such additional actions as
may be required by the Code or other applicable law, such security interest
constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in
later-acquired Collateral. Notwithstanding any termination, Bank's Lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.
4.2 Termination of Security Interest. Upon the payment in full of
all amounts due under this Agreement and of all other Obligations, Bank shall,
at the reasonable cost and expense of Borrower, execute and deliver to Borrower
all such documents and instruments that shall be necessary to evidence
termination of this Agreement and the security interests created hereunder.
4.3 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Bank, at the reasonable request of
Bank, all Negotiable Collateral and other documents that Bank may reasonably
request, in form reasonably satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents. Where
Collateral is in possession of a third party bailee, Borrower shall take such
steps as Bank reasonably requests for Bank to (i) obtain an acknowledgment, in
form and substance reasonably satisfactory to Bank, of the bailee that the
bailee holds such Collateral for the benefit of Bank, (ii) obtain "control" of
any Collateral consisting of investment property, deposit accounts,
letter-of-credit rights or electronic chattel paper (as such items and the term
"control" are defined in Revised Article 9 of the Code) by causing the
securities intermediary or depositary institution or issuing bank to execute a
control agreement in form and substance reasonably satisfactory to Bank.
4.4 Right to Inspect. Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior written notice, from time
to time during Borrower's usual business hours but no more than (a) once per
calendar year, if no Obligations are outstanding, (b) twice per calendar year,
if Obligations are outstanding and Borrower was not profitable for the prior
completed fiscal year, (c) once per calendar year, if Obligations are
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outstanding and Borrower was profitable for the prior completed fiscal year, and
(d) no restrictions, if an Event of Default has occurred and is continuing, to
inspect Borrower's Books and to make copies thereof and to check, test, and
appraise the Collateral in order to verify Borrower's financial condition or the
amount, condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each Subsidiary
is a corporation duly existing under the laws of its state of incorporation and
qualified and licensed to do business in any state in which the conduct of its
business or its ownership of property requires that it be so qualified, except
where the failure to do so would not reasonably be expected to cause a Material
Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's corporate powers, have
been duly authorized, and are not in conflict with nor constitute a breach of
any provision contained in Borrower's Articles of Incorporation or Bylaws, nor
will they constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any material agreement by
which it is bound, which default would reasonably be expected to have a Material
Adverse Effect.
5.3 Collateral. Borrower has good title to the Collateral, free and
clear of Liens, except for Permitted Liens. The Eligible Accounts are bona fide
existing obligations. The property or services giving rise to such Eligible
Accounts has been delivered to or performed for the account debtor or its agent
for immediate shipment to and unconditional acceptance by the account debtor,
other than customary testing and acceptance procedures and conditions consistent
with Borrower's past practices and ordinary course of business. Borrower has not
received notice of actual or imminent Insolvency Proceeding of any account
debtor whose accounts are included in any Borrowing Base Certificate as an
Eligible Account. All Inventory is in all material respects of good and
merchantable quality, free from all material defects, except for Inventory for
which adequate reserves have been made. Except as set forth in the Schedule 5.3.
as of the Closing Date, and as may be permitted by Bank pursuant to Sections
7.7, 7.10 and other provisions of this Agreement, no Collateral is maintained or
invested with a Person other than Bank or an affiliate of Bank. Borrower shall
provide to Bank an updated Schedule 5.3, certified by the Chief Financial
Officer of Borrower, within 30 days of reasonable written request from Bank
(which request may not be made more than twice per calendar year unless an Event
of Default has occurred and is continuing).
5.4 Intellectual Property. Borrower is the sole owner or licensee or
otherwise has the right to use of the Intellectual Property, except for licenses
granted by Borrower to its customers in the ordinary course of business, and
except where lack of such ownership, license or right of use would not
reasonably be expected to cause a Material Adverse Effect. To the best knowledge
of Borrower, no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual
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Property violates the rights of any third party, except to the extent such
judgment or claim would not reasonably be expected to cause a Material Adverse
Effect. Except as set forth in the Schedule 5.4. Borrower's rights as a licensee
of intellectual property do not give rise to more than 5% of its gross revenue
in any given quarter, including without limitation revenue derived from the
sale, licensing, rendering or disposition of any product or service.
5.5 Name; Location of Chief Executive Office. Except as disclosed in
the Schedule 5.5, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof. Borrower's state of
incorporation is California.
5.6 Litigation. Except as set forth in the Schedule 5.6, there are
no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which if adversely determined would
reasonably be expected to have a Material Adverse Effect, or a material adverse
effect on Borrower's interest or Bank's security interest in the Collateral.
5.7 No Material Adverse Change in Financial Statements. All
consolidated and consolidating financial statements related to Borrower and any
Subsidiary that are delivered by Borrower to Bank in connection with the request
for credit granted by this Agreement fairly present in all material respects
Borrower's consolidated and consolidating financial condition as of and for the
period presented. There has not been a material adverse change in the
consolidated financial condition of Borrower since the date of the most recent
of such financial statements submitted to Bank.
5.8 Solvency, Payment of Debts. As of the Closing Date and after
giving effect to the full funding of all Advances permitted hereunder, Borrower
is able to pay its debts (including trade debts) as they mature; the fair market
value of Borrower's assets (including goodwill minus disposition costs) exceeds
the amount that will be required to be paid on its liabilities as they mature;
and Borrower is not left with unreasonably small capital to carry on its
business as conducted after the transactions contemplated by this Agreement.
5.9 Compliance with Laws and Regulations. Borrower and each
Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. No event has occurred resulting
from Borrower's failure to comply with ERISA that is reasonably likely to result
in Borrower's incurring any liability that would have a Material Adverse Effect.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, nor as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T and U of the Board of
Governors of the Federal Reserve System). Borrower has complied in all material
respects with all the applicable provisions of the Federal Fair Labor Standards
Act. Borrower is in compliance with all applicable environmental laws,
regulations and ordinances, except where the failure to comply would not
reasonably be expected to have a Material Adverse Effect. Borrower has not
violated any statutes, laws, ordinances or rules applicable to it, violation of
which would reasonably be expected to have a Material Adverse Effect. Borrower
and each Subsidiary have filed or caused to be filed all tax returns required to
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be filed, and have paid, or have made adequate provision for the payment of, all
taxes reflected therein, except those being contested in good faith with
adequate reserves under GAAP or where the failure to file such returns or pay
such taxes would not reasonably be expected to have a Material Adverse Effect.
5.10 Subsidiaries. All Subsidiaries owned as of the Closing Date are
set forth in the Schedule 5.10.
5.11 Government Consents. Borrower and each Subsidiary have obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.
5.12 Inbound Licenses. Except as disclosed on the Schedule 5.12,
Borrower is not a party to, nor is bound by, any license or other agreement that
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower's interest in such license or agreement or any other property, where
such license or agreement or other property is materially necessary to the
conduct of Borrower's business.
5.13 Full Disclosure. No representation, warranty or other statement
made as of the date such representations and warranties are made or deemed made
by Borrower in any certificate or written statement furnished to Bank pursuant
to this Agreement taken together with all such certificates and written
statements furnished to Bank contains any materially untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained in such certificates or statements in light of the
circumstances under which they were made not materially misleading, it being
recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results.
6. AFFIRMATIVE COVENANTS.
Borrower covenants that, until payment in full of all outstanding
Obligations, and for so long as Bank may have any commitment to make a Credit
Extension hereunder, Borrower shall do all of the following:
6.1 Good Standing and Government Compliance. Borrower shall maintain
its and each of its Subsidiaries' corporate existence in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify would reasonably be expected to have a Material Adverse
Effect, and shall deliver to Bank Borrower's organization number issued in
connection with Borrower's incorporation. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA, except where Borrower's failure
to comply with ERISA is not reasonably likely to result in Borrower's incurring
any liability that would have a Material Adverse Effect. Borrower shall comply,
and shall cause each Subsidiary to comply, with all statutes, laws, ordinances
and government rules and regulations to which it is subject, and shall
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maintain, and shall cause each of its Subsidiaries to maintain, in force all
licenses, approvals and agreements, the loss of which or failure to comply with
which would reasonably be expected to have a Material Adverse Effect, or a
material adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral.
6.2 Financial Statements, Reports, Certificates. Borrower shall
deliver to Bank: (a) as soon as available, but in any event within 50 days after
the end of each fiscal quarter, a company-prepared consolidated and
consolidating balance sheets and income statements covering Borrower's
consolidated and consolidating operations during such quarterly fiscal period,
in a form that fairly presents, in all material respects, the financial
condition of Borrower as of the end of such quarterly fiscal period, and
certified by one of the Responsible Officer; (b) as soon as available, but in
any event within 100 days after the end of Borrower's fiscal year, audited
consolidated and consolidating financial statements of Borrower prepared in
accordance with GAAP, consistently applied (except as otherwise disclosed in
such financial statements), together with an opinion which is unqualified or
otherwise consented to in writing by Bank on such financial statements of an
independent certified public accounting firm of recognized national standing;
(c) copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and all reports on Forms 10-K (within 100 days of fiscal year end) and 10-Q
(within 50 days of fiscal quarter end) filed with the Securities and Exchange
Commission; (d) promptly upon receipt of written notice thereof, a report of any
legal actions pending against Borrower or any Subsidiary that would reasonably
be expected to have a Material Adverse Effect; (e) such budgets, sales
projections, operating plans or other financial information generally prepared
by Borrower in the ordinary course of business as Bank may reasonably request
from time to time; and (f) within 30 days of reasonable written request from
Bank (which request may not be made more than twice per calendar year unless an
Event of Default has occurred and is continuing), a report signed by Borrower,
in form reasonably acceptable to Bank, listing any applications or registrations
that Borrower has made or filed in respect of any Patents, Copyrights or
Trademarks and the status of any outstanding applications or registrations.
(a) Prior to any initial borrowing hereunder, and thereafter
so long a Obligations are outstanding within 20 days after the last day of each
month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by one
of the Responsible Officers in substantially the form of Exhibit D hereto,
together with aged listings by invoice date of accounts receivable and accounts
payable.
(b) Within 50 days after the last day of each fiscal
quarter, Borrower shall deliver to Bank with the quarterly financial statements
a Compliance Certificate signed by one of the Responsible Officers in
substantially the form of Exhibit E hereto.
(c) As soon as possible and in any event within three (3)
business days after becoming aware of the occurrence or existence of an Event of
Default hereunder, a written statement of one of the Responsible Officers
setting forth details of the Event of Default, and the action which Borrower has
taken or proposes to take with respect thereto.
(d) Bank shall have a right from time to time hereafter to
audit Borrower's Accounts and appraise Collateral at Borrower's expense,
provided that such audits
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will be conducted no more often than every 6 months and only while Credit
Extensions are outstanding, following reasonable written notice and subject to
reasonable conditions, unless an Event of Default has occurred and is
continuing, in which case Bank may conduct shall audits and appraisals as and
when it deems appropriate (but only while Credit Extensions are outstanding).
6.3 Inventory; Returns. Borrower shall keep all Inventory in good
and merchantable condition, free from all material defects except for Inventory
for which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist on the
Closing Date. Borrower shall promptly notify Bank of all payment disputes and
claims from customers involving more than $1,000,000.
6.4 Taxes. Borrower shall make, and cause each Subsidiary to make,
due and timely payment or deposit of all applicable material federal, state, and
local taxes, assessments, or contributions required of it by law, including, but
not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state
disability, and will execute and deliver to Bank, on reasonable demand, proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits and any appropriate certificates attesting to the payment
or deposit thereof; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower, and except where failure to file such returns or to pay such taxes
would not reasonably be expected to have a Material Adverse Effect.
6.5 Insurance.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain liability
and other insurance in amounts and of a type that are customary to businesses
similar to Borrower's.
(b) All such policies of insurance shall be in such form and
with such companies as are reasonably satisfactory to Bank, and in such amounts
as provided in Section 6.5(a). All policies of property insurance shall contain
a lender's loss payable endorsement, in a form reasonably satisfactory to Bank,
showing Bank as an additional loss payee, and all liability insurance policies
shall show Bank as an additional insured and specify that the insurer must give
at least 10 days notice to Bank before canceling its policy due to non-payment
and at least 20 days notice to Bank before canceling its policy for any other
reason. Upon Bank's reasonable request, Borrower shall deliver to Bank a
certificate or certificates of insurance with respect to all of Borrower's
insurance policies. If no Event of Default has occurred and is continuing,
proceeds payable under any property policy will, at Borrower's option, be
payable to Borrower to replace the property subject to the claim, provided that
any such replacement property shall be deemed Collateral in which Bank has been
granted a first priority security interest, as provided under this Agreement. If
an Event of Default has occurred and is continuing, all proceeds
11
payable under any such policy shall, at Bank's option, be payable to Bank to be
applied on account of the Obligations.
6.6 Primary Depository and Operating Accounts. Borrower shall
maintain those primary depository and operating accounts maintained by Borrower
in the United States and with respect to Borrower's operations in the United
States with Bank.
6.7 Financial Covenants. Borrower shall maintain, as of the last day
of each fiscal quarter unless stated otherwise:
(a) Maximum Net Loss. Net Loss (calculated on an after-tax
basis, excluding depreciation, amortization and other non-cash items (an
non-cash items causing future cash effect shall be deducted in such future
period), all determined in accordance with GAAP) not to exceed the following
amounts:
Quarter Ending Net Loss
3/31/04 <$8.5 million>
6/30/04 and thereafter $1.00 net profit
(b) Minimum Liquidity. Maintain as of the Closing Date and
at all times thereafter a balance of cash and Cash Equivalents held in the
United States of at least $35,000,000, certified by Borrower to Bank quarterly,
of which at least $5,000,000 shall be held in checking, money market or other
accounts maintained at Bank, measured daily.
6.8 Intellectual Property Rights.
(a) Borrower shall (i) protect, defend and maintain the
validity and enforceability of the trade secrets, Trademarks, Patents and
Copyrights material to the ordinary conduct of its business as determined by
Borrower, (ii) use commercially reasonable efforts to detect infringements of
such material Trademarks, Patents and Copyrights and promptly advise Bank in
writing of material infringements detected and (iii) not allow any material
Trademarks, Patents or Copyrights to be abandoned, forfeited or dedicated to the
public without the written consent of Bank, which consent shall not be
unreasonably withheld.
(b) Bank may, at Bank's expense, audit upon prior reasonable
written notice Borrower's Intellectual Property to confirm compliance with this
Section 6.8, provided such audit may not occur more often than twice per
calendar year, unless an Event of Default has occurred and is continuing.
6.9 Further Assurances. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this Agreement.
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7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until payment in full of the outstanding Obligations or for so
long as Bank may have any commitment to make any Credit Extensions, Borrower
will not do any of the following without Bank's prior written consent, which
shall not be unreasonably withheld:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose
of (collectively, to "Transfer"), or permit any of its Subsidiaries to Transfer,
all or any material part of its business or property, other than Permitted
Transfers.
7.2 Change in Name, Location or Executive Office, Change in
Business; Change in Fiscal Year. Change its name, the state of Borrower's
incorporation or organization, or relocate its chief executive office without 30
days prior written notification to Bank; engage in any business other than or
reasonably related or incidental to the businesses currently engaged in by
Borrower; change its fiscal year end.
7.3 Mergers or Acquisitions. Merge or consolidate with or into any
other Person (other than mergers or consolidations, or the liquidation, winding
up or dissolution, of a Subsidiary into another Subsidiary or into Borrower, or
all or any part of the business, property or assets of a Subsidiary may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transaction from a Subsidiary to another Subsidiary or into
Borrower), or acquire all or substantially all of the capital stock or property
of another Person except Permitted Investments or except where (i) the surviving
entity has a credit rating and creditworthiness, as determined by Bank in the
exercise of its reasonable commercial judgment, equal to or better than that of
Borrower, (ii) the surviving entity is in a similar line of business as Borrower
or its Subsidiaries, (iii) the surviving entity expressly and unconditionally
assumes the due and punctual performance of all obligations under this Agreement
and (iv) no Event of Default has occurred, is continuing or would exist after
giving effect to the transactions.
7.4 Indebtedness. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness. Borrower shall be permitted to repay or prepay any
Indebtedness owed by Borrower under any agreement to which Borrower is a party,
including any agreement involving Indebtedness of a Subsidiary provided that (i)
such repayment or prepayment is not otherwise expressly prohibited by this
Agreement or any Loan Document, and (ii) both before and after giving effect to
such repayment or prepayment, no Event of Default has occurred and is
continuing, or will result therefrom.
7.5 Encumbrances. Create, incur, assume or allow any Lien with
respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, except for Permitted Liens,
or covenant to any other Person that Borrower in the future will refrain from
creating, incurring, assuming or allowing any Lien with respect to any of
Borrower's Intellectual Property.
7.6 Distributions. Pay any dividends or make any other distribution
or payment on account of or in redemption, retirement or purchase of any capital
stock, except that
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Borrower may (a) pay dividends or distributions or redeem, repay, prepay or
convert Subordinated Debt, in each case only in Borrower's or a Subsidiary's
equity securities, (b) so long as no Event of Default exists, repurchase the
stock of former employees pursuant to stock repurchase agreements or contractual
obligations, (d) make any redemption of securities with the proceeds received
from a the substantially concurrent issue of new shares of capital stock, and
(e) distribute and redeem rights under any stockholder rights plan; provided no
distribution of capital stock that also constitutes a Permitted Investment shall
be prohibited by the application of this Section.
7.7 Investments. Directly or indirectly acquire or own, or make any
Investment in or to any Person other than Permitted Investments.
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 in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person;
provided that the foregoing restriction shall not apply to (a) any transaction
between Borrower's wholly-owned Subsidiaries or Borrower and its Subsidiaries,
(b) reasonable and customary fees paid to members of the Board of Directors of
Borrower and its Subsidiaries or (c) the raising of new equity for Borrower with
respect to the pricing of such equity.
7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or as allowed
consistent with Section 8.8, or amend any provision contained in any
documentation relating to the rate of interest, frequency of payment, maturity
date (either shortening or increasing the term), or the unsecured and
subordinated nature of the Subordinated Debt, or any other provision which could
materially adversely affect Bank's interests without Bank's prior written
consent which consent shall not be unreasonably withheld.
7.10 Inventory and Equipment. Except for Inventory sold in the
ordinary course of business or pursuant to Permitted Transfers, and except for
such other locations as Bank may approve in writing, which approval shall not be
unreasonably withheld, Borrower shall keep the Inventory and Equipment only at
the locations set forth in Schedule 7.10 and such other locations of which
Borrower gives Bank prior written notice, and as to which Bank's security
interest is perfected (including by way of delivery of any and all warehouse
receipts as may be issued in connection with such Inventory).
7.11 Compliance. Become or be controlled by an "investment company,"
within the meaning of the Investment Company Act of 1940, or become principally
engaged in, or undertake as one of its important activities, the business of
extending credit for the purpose of purchasing or carrying margin stock, or use
the proceeds of any Credit Extension for such 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 law or regulation, which violation would
reasonably be expected to have a Material Adverse Effect, or a material adverse
effect on the Collateral or the priority of Bank's Lien on the Collateral, or
permit any of its Subsidiaries to do any of the foregoing.
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8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay to Bank (i) principal
when due or (ii) interest and any of the other Obligations when due and such
failure to pay shall not have been cured within five (5) days after Borrower
shall have received written notice from Bank of such failure to pay;
8.2 Covenant Default. If Borrower fails to perform any obligation
under Article 6 or violates any of the covenants contained in Article 7 of this
Agreement, or fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and Bank
executed in connection therewith and as to any default under such other term,
provision, condition or covenant that can be cured, has failed to cure such
default within 30 days after Borrower receives notice or Knowledge thereof;
provided, however, that if the default cannot by its nature be cured within the
30 day period or cannot after diligent attempts by Borrower be cured within such
30 day period, and such default is likely to be cured within a reasonable time,
then Borrower shall have an additional reasonable period (which shall not in any
case exceed 30 days) to attempt to cure such default, and within such reasonable
time period the failure to have cured such default shall not be deemed an Event
of Default but no Credit Extensions will be made;
8.3 Defective Perfection. If Bank shall receive at any time
following the Closing Date a Lien search report indicating that except as
provided in the Schedule 7.5 and except for the Permitted Liens described in
paragraphs (c), (e) - (m) and (p) (with respect to (p), to the extent any such
refinancing, extension or renewal relates to Permitted Liens described in such
paragraphs (c), (e) - (m)), Bank's security interest in the Collateral purported
to be covered by this Agreement is not prior to all other security interests or
Liens of record reflected in the report on such Collateral, other than due to
the failure of Bank to take any action to protect or perfect its security
interest with respect to such Collateral, and such occurrence has not been cured
within 30 days after Borrower shall have received notice of such failure from
Bank;
8.4 Material Adverse Effect. If there occurs any circumstance or
circumstances that could have a Material Adverse Effect;
8.5 Attachment. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within 45 days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets valued in the aggregate in
excess of $5,000,000 by the United States Government, or any department, agency,
or instrumentality thereof, or by any state, county, municipal, or governmental
agency, and any of
15
the same is not paid within 45 days after Borrower receives notice thereof,
provided that none of the foregoing shall constitute an Event of Default where
such action or event is stayed or extinguished, or an adequate bond has been
posted pending a good faith contest by Borrower (provided that no Credit
Extensions will be required to be made during such cure period);
8.6 Insolvency. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within 60 days (provided that no
Credit Extensions will be made prior to the dismissal of such Insolvency
Proceeding);
8.7 Other Agreements. If there is a default (after giving effect to
any applicable cure period) in any agreement to which Borrower is a party with a
third party or parties resulting in a right by such third party or parties,
whether or not exercised, to accelerate the maturity of any Indebtedness in an
amount in excess of $5,000,000 or that could have a Material Adverse Effect;
8.8 Subordinated Debt. If Borrower makes any payment on account of
Subordinated Debt (including any mandatory redemption upon the occurrence of a
"Change in Control" under the Indenture, other than any such redemption which is
funded by a combination of no more than $5,000,000 in cash and where the balance
is paid in common stock of Borrower), except for regularly scheduled payments of
interest with respect to Subordinated Debt in existence as of the Closing Date
and except for payment otherwise allowed under any subordination agreement
entered into with Bank with respect to other Subordinated Debt;
8.9 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least $5,000,000 shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period
of 60 days (provided that no Credit Extensions will be made prior to the
satisfaction or stay of the judgment); or
8.10 Misrepresentations. If, as of the date a representation or
warranty is made or deemed made, any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement, or to induce Bank to enter into this Agreement or
any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.6, all Obligations shall become immediately due and payable without
any action by Bank);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;
16
(c) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(d) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank at a location reasonably convenient to both
parties. Borrower authorizes Bank to enter the premises in accordance with local
laws where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank's determination appears to be prior
or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned premises, Borrower
hereby grants Bank a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Bank's rights or
remedies provided herein, at law, in equity, or otherwise;
(e) Set off and apply to the Obligations any and all (i)
balances and deposits of Borrower held by Bank, and (ii) indebtedness at any
time owing to or for the credit or the account of Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;
(g) Sell the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank reasonably deems appropriate;
(h) Bank may credit bid and purchase at any public sale; and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Exercisable only upon the occurrence and
during the continuance of an Event of Default and while any Obligations are
outstanding, Borrower hereby irrevocably appoints Bank (and any of Bank's
designated officers, or employees) as Borrower's true and lawful attorney to:
(a) send requests for verification of Accounts or notify account debtors of
Bank's security interest in the Accounts; (b) endorse Borrower's name on any
checks or other forms of payment or security that may come into Bank's
possession; (c) sign Borrower's name on any invoice or ▇▇▇▇ of lading relating
to any Account, drafts against account debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to account
17
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower's policies of insurance; and (f)
settle and adjust disputes and claims respecting the accounts directly with
account debtors, for amounts and upon terms which Bank determines to be
reasonable. The appointment of Bank as Borrower's attorney in fact, and each and
every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank's obligation to provide advances hereunder is terminated, but shall be
exercisable only so long as an Event of Default continues and any Obligations
are outstanding.
9.3 Accounts Collection. Upon the occurrence and continuance of an
Event of Default, Bank may notify any Person owing funds to Borrower of Bank's
security interest in such funds and verify the amount of such Account. So long
as an Event of Default shall continue and any Obligations are outstanding,
Borrower shall collect all amounts owing to Borrower for Bank, receive in trust
all payments as Bank's trustee, and immediately deliver such payments to Bank in
their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then Bank may do any or all of the following
after reasonable notice to Borrower: (a) make payment of the same or any part
thereof; (b) set up such reserves under the Revolving Facility as Bank
reasonably deems necessary to protect Bank from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type discussed in
Section 6.5 of this Agreement, and take any action with respect to such policies
as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute
Bank Expenses, shall be promptly due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.5 Bank's Liability for Collateral. So long as Bank complies with
reasonable banking practices and Section 9-207 of the Code, Bank shall not in
any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
person whomsoever. All risk of loss, damage or destruction of the Collateral
shall be borne by Borrower; except where such loss, damage or destruction
results from the gross negligence or willful misconduct of Bank or Bank's
failure to comply with Section 9-207 of the Code.
9.6 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
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9.7 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Borrower or to Bank, as the case may be, at its addresses
set forth below:
If to Borrower: Asyst Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
FAX: (▇▇▇)▇▇▇-▇▇▇▇
If to Bank: Comerica Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇. ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
M/C 4604
Attn: Manager
FAX: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to: Comerica Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇)▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
▇▇▇▇▇, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES
19
AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO
ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
12. GENERAL PROVISIONS.
12.1 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder to any Person other than a competitor
of Borrower.
12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct. Bank
may not enter into any settlement or other compromise with respect to any claim
covered by the indemnity set forth in this Section 12.2 without giving
reasonable advance notice thereof to Borrower. If Bank or any other indemnified
party obtains recovery of any of the amounts that Borrower has paid to them
pursuant to the indemnity set forth in this Section, then Bank or such other
indemnified party, as applicable, shall promptly pay to Borrower such amounts
paid by Borrower.
12.3 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. All amendments to or
terminations of this Agreement must be in writing. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement, if any, are
merged into this Agreement and the Loan Documents. This Agreement amends,
supersedes and restates the Prior Loan Agreement.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
20
12.7 Survival. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
12.8 Confidentiality. In handling any confidential information Bank
and all employees and agents of Bank shall exercise the same degree of care that
Bank exercises with respect to its own proprietary information of the same types
to maintain the confidentiality of any non-public information thereby received
or received pursuant to this Agreement except that disclosure of such
information may be made (i) to the subsidiaries or affiliates of Bank in
connection with their present or prospective business relations with Borrower,
(ii) to prospective transferees or purchasers of any interest in the Loans,
provided that they have entered into a comparable confidentiality agreement in
favor of Borrower and have delivered a copy to Borrower, (iii) as required by
law, regulations, rule or order, subpoena, judicial order or similar order, (iv)
as may be required in connection with the examination, audit or similar
investigation of Bank and (v) as Bank may reasonably determine in connection
with the enforcement of any remedies hereunder. Confidential information
hereunder shall not include information that either: (a) is in the public domain
or in the knowledge or possession of Bank when disclosed to Bank, or becomes
part of the public domain after disclosure to Bank through no fault of Bank; or
(b) is disclosed to Bank by a third party, provided Bank does not have actual
knowledge that such third party is prohibited from disclosing such information.
12.9 Designated Senior Indebtedness. Bank and Borrower agree that
the Obligations are intended to be and shall be "Designated Senior Indebtedness"
under and as defined in the Indenture.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ASYST TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Chairman, Chief Executive
Officer and President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Senior Vice President and
Chief Financial Officer
COMERICA BANK, as successor by merger
to Comerica Bank-California
By: /s/ [ILLEGIBLE]
----------------------------------
Title: Senior Vice President
22
EXHIBIT A
DEFINITIONS
"Accounts" means all presently existing and hereafter arising accounts, contract
rights, and all other forms of obligations owing to Borrower arising out of the
sale or lease of goods (including, without limitation, the licensing of software
and other technology) or the rendering of services by Borrower, whether or not
earned by performance, and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by
Borrower and Borrower's Books relating to any of the foregoing.
"Advance" or "Advances" means a cash advance or cash advances under the
Revolving Facility.
"Affiliate" means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person's senior
executive officers, directors, and partners.
"Agreement" means this Amended and Restated Loan and Security Agreement (as
further amended or restated from time to time).
"Bank Expenses" means all: reasonable costs or expenses (including reasonable
attorneys' fees and expenses) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; reasonable
Collateral audit fees; and Bank's reasonable attorneys' fees and expenses
incurred in amending, enforcing or defending the Loan Documents (including fees
and expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought.
"Borrower", as used in this Agreement, shall mean and refer to Asyst
Technologies, Inc., and shall, unless expressly otherwise provided, not mean or
refer to Borrower's Subsidiaries or Affiliates.
"Borrower's Books" means all of Borrower's books and records including: ledgers;
records concerning Borrower's assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files, and
the equipment, containing such information.
"Borrowing Base" means an amount equal to 100% of Borrower's deposits at Bank
plus 80% of Eligible Accounts and Eligible Foreign Accounts, as determined by
Bank with reference to the most recent Borrowing Base Certificate delivered by
Borrower.
"Business Day" means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California or Washington are authorized or required
to close.
"Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having, at
the time of the acquisition thereof, the highest rating obtainable from either
S&P or ▇▇▇▇▇'▇; (iii) corporate securities, including corporate bonds and
medium-term notes, which carry a long-term credit rating of A or A2; (iv)
corporate securities or commercial paper maturing no more than one year from the
date of creation thereof and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from ▇▇▇▇▇'▇; (v) certificates
of deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by Bank or by any commercial bank organized under the laws of
the United States, any state thereof, the District of Columbia or any foreign
country recognized by the United States that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator), (b) has Tier 1 capital (as defined in such regulations) of not less
than $100,000,000 (or the foreign currency equivalent thereof) and (c) has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act); (vi) auction-
1
rate preferred securities from U.S. issuers maturing no more than one year from
the date of acquisition thereof and having, at the time of acquisition thereof,
a rating of at least AAA from S&P or Aaa from ▇▇▇▇▇'▇; and (vii) shares of any
money market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500,000,000, and (c) has the highest
rating obtainable from either S&P or ▇▇▇▇▇'▇.
"Closing Date" has the meaning given to such term in the preamble of this
Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit B attached hereto and all
Negotiable Collateral to the extent not described on Exhibit B. except to the
extent any such property (i) is nonassignable by its terms without the consent
of the licensor thereof or another party (but only to the extent such
prohibition on transfer is enforceable under applicable law), or (ii) the
granting of a security interest therein is contrary to applicable law, provided
that upon the cessation of any such restriction or prohibition, such property
shall automatically become part of the Collateral.
"Committed Revolving Line" means a credit extension of up to $25,000,000.
"Contingent Obligation" means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit issued
for the account of that Person; and (iii) all obligations arising under any
interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"Copyrights" means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.
"Credit Extension" means each Advance or any other extension of credit by Bank
for the benefit of Borrower hereunder.
"Current Assets" means, as of any applicable date, all amounts that should, in
accordance with GAAP, be included as current assets on the consolidated balance
sheet of Borrower and its Subsidiaries as at such date.
"Daily Balance" means the amount of the Obligations owed at the end of a given
day.
"Eligible Accounts" means those Accounts that arise in the ordinary course of
Borrower's business, billed and invoiced by Borrower in the United States, that
comply with all of Borrower's representations and warranties to Bank set forth
in Section 5.3; provided, that Bank may change the standards of eligibility by
giving Borrower 30 days prior written notice. Unless otherwise agreed to by
Bank, Eligible Accounts shall not include the following:
(a) That portion of Accounts which the account debtor has failed to pay within
90 days of invoice date;
(b) Accounts with respect to an account debtor, 50% of whose Accounts are
ineligible under clause (a) above;
2
(c) Accounts with respect to which the account debtor is an officer, employee,
or agent of Borrower;
(d) Accounts with respect to which goods are placed on consignment, guaranteed
sale, sale or return, sale on approval, ▇▇▇▇ and hold, demo or
promotional, or other terms by reason of which the payment by the account
debtor may be conditional;
(e) Accounts with respect to which the account debtor is an Affiliate of
Borrower;
(f) Accounts with respect to which the account debtor does not have its
principal place of business in the United States, except for Eligible
Foreign Accounts;
(g) Accounts with respect to which the account debtor is the United States or
any department, agency, or instrumentality of the United States;
(h) Accounts with respect to which Borrower is liable to the account debtor
for goods sold or services rendered by the account debtor to Borrower, but
only to the extent of any amounts owing to the account debtor against
amounts owed to Borrower;
(i) Accounts with respect to an account debtor, including Subsidiaries and
Affiliates, whose total obligations to Borrower exceed 50% of all Accounts,
to the extent such obligations exceed the aforementioned percentage, except
as approved in writing by Bank;
(j) That portion of Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank
believes, in its reasonable commercial judgment, that there may be a basis
for dispute (but only to the extent of the amount subject to such dispute
or claim) after inquiry and consultation with Borrower, or is subject to
any Insolvency Proceeding, or becomes insolvent, or goes out of business;
and
(k) That portion of other Accounts the collection of which Bank determines
after inquiry and consultation with Borrower, in the exercise of Bank's
reasonable commercial judgment, to be doubtful.
"Eligible Foreign Accounts" means Accounts with respect to which the account
debtor does not have its principal place of business in the United States and
that (i) are supported by one or more letters of credit in an amount and of a
tenor, and issued by a financial institution, acceptable to Bank, (ii) insured
under foreign credit insurance on terms and by an insurer acceptable to Bank,
(iii) are Specified Foreign Accounts, or (iv) that Bank approves on a
case-by-case basis. Eligible Foreign Accounts shall not include that portion of
which Borrower has factored, pledged or sold as security for any credit or debt
obligation of or to Borrower.
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.
"Event of Default" has the meaning assigned in Article 8.
"GAAP" means generally accepted accounting principles which are applicable to
the circumstances as of the date of determination.
"Hedge Agreements" means interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts and other hedging agreements.
"Indebtedness" means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures, synthetic
lease agreements or similar
3
instruments, (c) all capital lease obligations that, in accordance with GAAP
would appear on a balance sheet and (d) all Contingent Obligations.
"Indenture" means that certain Indenture, dated as of July 3, 2001, entered into
by Borrower and State Street Bank and Trust Company of California, N.A., as
Trustee, with respect to Borrower's 5 3/4% Convertible Subordinated Notes due
2008.
"Insolvency Proceeding" means any proceeding commenced by or against any person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Intellectual Property" means all of Borrower's right, title, and interest in
and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter
existing, created, acquired or held;
(c) Any and all design rights which may be available to Borrower now or
hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not
the obligation, to ▇▇▇ for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use to
the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents;
(g) All proceeds and products of the foregoing other than those arising in
connection with the creation of Accounts (which proceeds shall be included
in the definition of Collateral).
"Interest Period" means, for each Advance, a period of approximately one, two,
three or six months as Borrower may elect, provided that the last day of an
Interest Period for an Advance shall be determined in accordance with the
practices, of the LIBOR interbank market as from time to time in effect.
"Inventory" means all present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is
temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title representing any of the above, and Borrower's Books relating to any of
the foregoing.
"Investment" means any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.
"Knowledge" shall mean the following: an individual will be deemed to have
knowledge of a particular fact or other matter if: (a) such individual is
actually aware of such fact or other matter; or (b) a prudent individual could
be expected to discover or otherwise become aware of such fact or other matter
in the course of conducting a reasonably comprehensive investigation concerning
the existence of such fact or other matter. Borrower will be
4
deemed to have knowledge of a particular fact or other matter if the chief
executive officer, chief operating officer, chief financial officer, controller,
treasurer, president, senior vice president or other such officer of Borrower
has, or at any time had, Knowledge of such fact or other matter.
"LIBOR Base Rate" means, for any Interest Period, the rate of interest per annum
determined by Bank to be the per annum rate of interest at which deposits in
United States Dollars are offered to Bank in the London interbank market in
which Bank customarily participates at 11:00 a.m. (local time in such interbank
market) three (3) Business Days before the first day of such Interest Period for
a period approximately equal to such Interest Period and in an amount
approximately equal to the amount of such Advance.
"LIBOR Funding Loss" shall be deemed to equal the amount determined by Bank to
be the excess, if any, of (i) the amount of interest that would have accrued on
the principal amount of an Advance had the prepayment or failure to continue or
repay such Advance not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the last day
of the then current Interest Period therefor (or, in the case of a failure to
borrow or continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate which Bank would be offered were it
to be offered, at the commencement of such period, deposits in U.S. dollars of a
comparable amount and period in the London interbank market.
"LIBOR Rate" shall mean, for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to (i) the LIBOR Base
Rate for such Interest Period divided by (ii) 1 minus the Reserve Requirement
for such Interest Period.
"LIBOR Rate Advance" shall mean any Advance which bears interest at a rate based
upon the LIBOR Rate pursuant to Sections 2.1 and 2.3 hereof.
"Lien" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note or notes executed
by Borrower, and any other agreement entered into between Borrower and Bank in
connection with this Agreement, all as amended or extended from time to time.
"Material Adverse Effect" means a material adverse effect on (i) the business
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Negotiable Collateral" means all of Borrower's present and future letters of
credit of which it is a beneficiary, notes, drafts, instruments, securities,
documents of title, and chattel paper, and Borrower's Books relating to any of
the foregoing.
"Obligations" means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement, as amended or
extended from time to time, whether absolute or contingent, due or to become
due, now existing or hereafter arising, including any interest that accrues
after the commencement of an Insolvency Proceeding.
"Patents" means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.
"Periodic Payments" means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of this Agreement, as amended or extended from time to
time.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or
any other Loan Document;
5
(b) Indebtedness existing on the Closing Date and disclosed in the Schedule
7.5;
(c) Indebtedness, including arising under capital leases, not to exceed
$1,000,000 in the aggregate secured by a lien described in clause (c) of
the definition of "Permitted Liens," provided such Indebtedness does not
exceed the lesser of the cost or fair market value of the equipment
financed with such Indebtedness;
(d) Subordinated Debt;
(e) Indebtedness to trade creditors incurred in the ordinary course of
business;
(f) Indebtedness incurred as a result of endorsing negotiable instruments
received in the usual course of business;
(g) Indebtedness of a Subsidiary to Borrower or to any other Subsidiary of
Borrower;
(h) Indebtedness in respect of Hedge Agreements incurred in the ordinary
course of business to hedge exchange rate risks;
(i) Indebtedness of Borrower's Subsidiaries other than Asyst Shinko, Inc.
("ASI") not to exceed $25,000,000 in the aggregate and, in the case of
ASI, not to exceed $30,000,000 (whether or not repayment in the individual
or aggregate is guaranteed by Borrower);
(j) Other Indebtedness not to exceed in the aggregate $5,000,000 at any time
outstanding; and
(k) Extensions, refinancings and renewals of any items of Permitted
Indebtedness.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the Schedule 7.7;
(b) Cash Equivalents and Investments made pursuant to Borrower's investment
policy in effect as of the Closing Date;
(c) Repurchases of stock from former employees, officers or directors of
Borrower under the terms of applicable repurchase agreements in an
aggregate amount not to exceed $1,000,000 in the aggregate in any fiscal
year, provided that no Event of Default has occurred, is continuing or
would exist after giving effect to the repurchases;
(d) Investments accepted in connection with Permitted Transfers or asset sales
pursuant to Section 7.1;
(e) Investments (whether consisting of the purchase of securities, loans,
capital contributions or otherwise) of Subsidiaries in or to other
Subsidiaries or Borrower and Investments by Borrower in or to Subsidiaries
or in and to Persons which simultaneously with such Investments become
Subsidiaries (provided that accounts payable of Subsidiaries owing to
Borrower incurred in the ordinary course of business are not subject to
the foregoing limitations) not to exceed $5,000,000 in the aggregate in
any fiscal year with respect to other Investments (whether consisting of
the purchase of securities, loans, capital contributions or otherwise) in
Subsidiaries or other Persons;
(f) Investments consisting of (i) compensation of employees, officers and
directors of Borrower so long as the Board of Directors determines that
such compensation in the best interests of Borrower, (ii) travel advances
and employee relocation loans and other employee loans and advances in the
ordinary course of business, (iii) loans to employees, officers or
directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plan agreements approved
by Borrower's Board of Directors, and (iv) employee loans existing on the
Closing Date;
6
(g) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of Borrower's business;
(h) Investments consisting of accounts receivable, notes receivable of, or
prepaid royalties and other credit extensions, to customers and suppliers
who are not Affiliates, in the ordinary course of business, provided that
this subparagraph (h) shall not apply to Investments of Borrower in any
Subsidiary;
(i) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business;
(j) Except as permitted under clause (e) above, joint ventures or strategic
alliances in the ordinary course of Borrower's business consisting of the
exclusive or non-exclusive licensing of technology, the development of
technology or the providing of technical support, provided that any cash
Investments by Borrower do not exceed $5,000,000 in the aggregate in any
fiscal year;
(k) Investments constituting acquisitions permitted under Section 7.3 and the
resulting Investments owned by such acquired Person;
(l) Investments (whether consisting of the purchase of securities, loans,
capital contributions or otherwise) of Subsidiaries in or to other
Subsidiaries or in or to Borrower;
(m) Investments constituting Hedging Agreements or payments or advances under
Hedging Agreements entered into in the ordinary course of business for the
purpose of hedging exchange rate risk;
(n) Investments consisting of capital expenditures or Investments made
pursuant to capital leases in the aggregate not to exceed $5,000,000
during any fiscal quarter;
(o) Investments consisting of securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to
Borrower or any of its Subsidiaries or as security for any such
Indebtedness or claim;
(p) Inter-company loans permitted under the definition of "Permitted
Indebtedness"; and
(q) Other Investments aggregating not in excess of $5,000,000 in an fiscal
year.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the Schedule or
arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by
appropriate proceedings and for which Borrower maintains adequate
reserves, provided the same have no priority over any of Bank's security
interests;
(c) Liens not to exceed $1,000,000 in the aggregate (i) upon or in any
property acquired or held by Borrower or any of its Subsidiaries to secure
the purchase price of such property or indebtedness incurred solely for
the purpose of financing the acquisition of such property, or (ii)
existing on such property at the time of its acquisition, provided that
the Lien is confined solely to the property so acquired and improvements
thereon, and the proceeds of such property;
(d) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.5 or 8.9;
7
(e) Liens in favor of other financial institutions arising in connection with
Borrower's deposit accounts held at such institutions, provided that Bank
has a perfected security interest in the amounts held in such deposit
accounts;
(f) Liens securing claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons and other Liens imposed by
law;
(g) Liens incurred or deposits made in the ordinary course of Borrower's or a
Subsidiary's business in connection with worker's compensation,
unemployment insurance social security and other like laws, or to secure
the performance of tenders, statutory obligations, surety, bid and appeal
bonds, bids, leases, government contracts, trade contracts, performance
and return-of-money bonds and other similar obligations;
(h) Leases, subleases, licenses and sublicenses granted to others in the
ordinary course of business not interfering in any material respect with
the conduct of the business of Borrower, and any interest or title of a
lessor, sublessor, licensor or sublicensor or under any lease, sublease,
license or sublicense;
(i) Liens in favor of customs revenue authorities arising as a matter of law
to secure payment of customs, duties in connection with the importation of
goods;
(j) Liens which constitute rights of set-off of a customary nature of bankers'
liens with respect to amounts on deposit, whether arising by operation of
law or by contract, in connection with arrangements entered into with
banks in the ordinary course of business;
(k) Liens on insurance proceeds in favor of insurance companies granted solely
as security for financed premiums;
(l) Liens for reasonable and customary fees, charges and expenses in favor of
a trustee under any indenture relating to Subordinated Debt securing only
amounts due to such trustee thereunder;
(m) Any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(n) Other Liens, not otherwise permitted herein, which Indebtedness securing
such Liens do not in the aggregate exceed $5,000,000 at any time;
(o) Other Liens not described above arising in the ordinary course of business
and not having or not reasonably likely to have a Material Adverse Effect
on Borrower and its Subsidiaries taken as a whole; and
(p) Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clauses (a)
through (o) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and
the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Permitted Transfer" means the conveyance, sale, lease, transfer or disposition
by Borrower or any Subsidiary of:
(a) Inventory in the ordinary course of business;
(b) Licenses and similar arrangements for the use of the property of Borrower
or its Subsidiaries in the ordinary course of business;
(c) Surplus, worn-out or obsolete property;
(d) Inventory and Equipment to Solectron Corporation;
8
(e) Transfers from any Subsidiary to Borrower;
(f) Transfers from Borrower to any Subsidiary not greater than $10,000,000 in
any fiscal year;
(g) Assets that are sold or otherwise disposed of for cash or any other
consideration which represents the fair market value thereof;
(h) Assets which are substantially concurrently received in exchange for
assets which are to be used in the business of Borrower or any Subsidiary;
(i) Transfers permitted under Section 7.3 (Mergers or Acquisitions) of the
Agreement;
(j) In order to resolve disputes that occurring the ordinary course of
business, so long as no Event of Default exists, Borrower and its
Subsidiaries may discount or otherwise compromise for less than the face
value thereof, notes or accounts receivable;
(k) Transfers of condemned property to the respective governmental authority
or agency that has condemned the same (whether by deed in lieu of
condemnation or otherwise), and transfers of properties that have been
subject to a casualty of the respective insurer of such property or its
designee as party of an insurance settlement;
(l) Sales or other dispositions of Permitted Investments for fair market
value;
(m) Sales, assignments, transfers or dispositions of accounts in the ordinary
course of business for purposes of collection;
(n) Other assets of Borrower or its Subsidiaries which do not in the aggregate
exceed $500,000 per transaction or $2,500,000 in the aggregate per fiscal
year.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most recently
announced by Bank, as its "prime rate," whether or not such announced rate is
the lowest rate available from Bank.
"Prime Rate Advance" shall mean any Advance which bears interest at a rate based
upon the Prime Rate pursuant to Sections 2.1 and 2.3 hereof.
"Prior Loan Agreement" has the meaning set forth in the recitals to this
Agreement.
"Reserve Requirement" means, for any Interest Period, the average maximum rate
at which reserves (including any marginal, supplemental or emergency reserves)
are required to be maintained during such Interest Period under Regulation D
against "Eurocurrency liabilities" (as such term is used in Regulation D) by
member banks of the Federal Reserve System. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by Bank by reason of any Regulatory Change against (i) any
category of liabilities which includes deposits by reference to which the LIBOR
Rate is to be determined as provided in the definition of "LIBOR Base Rate" or
(ii) any category of extensions of credit or other assets which include
Advances.
"Responsible Officer" means Borrower's then serving Chief Executive officer and
Chief Financial Officer.
"Revolving Facility" means the facility under which Borrower may request Bank to
issue Advances, as specified in Section 2.1(b) hereof.
"Revolving Maturity Date" means May 15, 2006.
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"Schedule" means the Schedule of exceptions attached hereto, if any.
"Specified Foreign Accounts" means Accounts with respect to which the account
debtor does not have its principal place of business in the United States and
that (i) are due from any of Texas Instruments, ▇▇▇▇▇▇▇ Thermal, St
Microelectronics PTE Ltd, Chartered Semiconductor/Chartered Silicon Partners
PTE, United Microelectronics, Semiconductor Manufacturing International
Corporation, Systems on Silicon Manufacturing Company, Fuji Research Institute,
Nikon Corporation, Tokyo Electron Limited, or TSMC (Taiwan Semiconductor Mfg.
Co.), and (ii) the portion of which the account debtor has not failed to pay
within 90 days of invoice date.
"Subordinated Debt" means the 5 3/4% Subordinated Convertible Notes due 2008, as
amended, supplemented, extended, restated, renewed or otherwise modified from
time to time ("Convertible Notes") and any debt incurred by Borrower that is
subordinated in writing to the debt owing by Borrower to Bank on terms
reasonably acceptable to Bank (and identified as being such by Borrower and
Bank).
"Subsidiary" means any corporation, association, limited liability company,
joint venture, partnership or other business entity in which (i) any general
partnership interest or (ii) more than 50% of the stock of which by the terms
thereof ordinary voting power to elect the Board of Directors, managers or
trustees of the entity, at the time as of which any determination is being made,
is owned by Borrower, either directly or through an Affiliate.
"Trademarks" means any trademark and service ▇▇▇▇ rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.
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