EXHIBIT 10.27
FIFTH MODIFICATION AGREEMENT
OF
LOAN AGREEMENT
BETWEEN
INTEGRATED PROCESS EQUIPMENT CORP.,
IPEC CLEAN, INC.
IPEC PRECISION, INC.
IPEC PLANAR, INC.,
FORMERLY KNOWN AS IPEC PLANAR PHOENIX, INC.,
SUCCESSOR BY MERGER TO IPEC PLANAR PORTLAND, INC.,
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
SUCCESSOR-BY-MERGER TO FIRST INTERSTATE BANK OF ARIZONA, N.A.,
INDIVIDUALLY AND AS AGENT
DATED AS OF APRIL 30, 1997
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS........................................................... 2
2. PRIOR LOAN AGREEMENTS................................................. 2
2.1 Existing Indebtedness............................................ 2
2.2 Prior Modifications.............................................. 2
2.3 Prior Loan Agreements Acknowledgments............................ 3
2.4 Release.......................................................... 4
3. ADDITIONAL CONSIDERATION FOR FORBEARANCE................................. 4
4. MODIFICATION OF LOAN AGREEMENT........................................... 4
4.1 Additions and Substitutions to the Definitions and Miscellaneous
Provisions Section............................................... 4
4.2 Amendment of Section 4.3(b)...................................... 5
4.3 Amendment of Section 6.2(a)...................................... 5
4.4 Amendment of Section 8.1(j)...................................... 6
4.5 Amendment of Section 9.9......................................... 6
4.6 Amendment of Section 9.14........................................ 6
4.7 Amendment of Annex 1............................................. 6
5. REAFFIRMATIONS AND ACKNOWLEDGMENTS....................................... 7
5.1 Reaffirmations and Certifications................................ 7
5.2 No Waiver........................................................ 7
5.3 Miscellaneous.................................................... 8
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FIFTH MODIFICATION AGREEMENT
OF
LOAN AGREEMENT
BETWEEN
INTEGRATED PROCESS EQUIPMENT CORP.,
IPEC CLEAN, INC.
IPEC PRECISION, INC.
IPEC PLANAR, INC.,
FORMERLY KNOWN AS IPEC PLANAR PHOENIX, INC.,
SUCCESSOR BY MERGER TO IPEC PLANAR PORTLAND, INC.,
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
SUCCESSOR-BY-MERGER TO FIRST INTERSTATE BANK OF ARIZONA, N.A.,
INDIVIDUALLY AND AS AGENT
DATED AS OF APRIL 30, 1997
RECITALS:
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A. INTEGRATED PROCESS EQUIPMENT CORP., a Delaware corporation ("Parent"),
together with IPEC CLEAN, INC., IPEC PRECISION, INC., IPEC PLANAR, INC.,
formerly known as IPEC PLANAR PHOENIX, INC., successor by merger to IPEC PLANAR
PORTLAND, INC. (collectively, together with Parent, hereinafter "BORROWERS") and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, successor-by-merger to FIRST INTERSTATE
BANK OF ARIZONA, N.A. ("▇▇▇▇▇ FARGO") (▇▇▇▇▇ FARGO and any other lender who
becomes a party hereto under subsection 12.6 of the Loan Agreement being herein
referred to collectively as the "Banks" and individually as a "Bank"), and ▇▇▇▇▇
FARGO as agent for the Banks (in such capacity, together with any successor
agent appointed hereunder, the "Agent"), are parties to that certain Loan
Agreement, made and entered into as of April 24, 1996, and thereafter amended
from time to time (collectively, the "Loan Agreement").
B. Borrowers, Bank and Agent have agreed to modify the Loan Agreement as
hereinafter set forth.
AGREEMENT:
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NOW, THEREFORE, for due and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
Words and terms defined in the Loan Agreement shall have the same meanings
when used in this Fifth Modification Agreement, except as otherwise indicated.
"Fifth Modification" means this Fifth Modification Agreement of the Loan
Agreement.
2. PRIOR LOAN AGREEMENTS.
2.1 Existing Indebtedness. Borrowers are currently indebted to Bank
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in the principal amount of $4,000,000.00.
2.2 Prior Modifications. The Loan Agreement has previously been
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modified as follows:
First Modification as of August 22, 1996:
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Article 8.1 Section (b)(ii) was deleted in its entirety.
Second Modification as of October 24, 1996:
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Section 9.12 of the Loan Agreement was restated in its entirety to read as
follows:
"The Quick Ratio shall not be less than .85:1.0 as of the last day of
the fiscal quarter of Parent ending September 30, 1996, and shall not
be less than 1.0:1.0 as of the last day of every fiscal quarter of
Parent thereafter."
Third Modification as of February 13, 1997:
------------------------------------------
Section 6.2, Paragraph (a) was deleted in its entirety, and the following
substituted therefor:
"(a) Current Borrowing Base Certificate. As of the date of such
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Advance, Borrowers shall have furnished the Agent a Borrowing Base
Certificate duly completed and certified as true, complete and
correct by an Authorized Person, setting forth the Borrowing Base as
of a date not earlier than the fifth Business Day preceding the date
of the requested Advance."
Section 8.1, Paragraph (j) was deleted in its entirety, and the following
substituted therefor:
"(j) Borrowing Base Certificate. Within fifteen (15) days after
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the last day of each month, a Borrowing Base Certificate, duly
completed, as of the last Business Day of the month immediately
preceding the date of delivery of such Borrowing Base Certificate,
certified as true, complete and correct by an Authorized Person. The
identification of Accounts that
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are not Eligible Accounts pursuant to clause (ii) of the definition of
"Eligible Accounts" shall be determined in all instances by reference
to the date of the applicable invoice, and not by reference to the
payment due date set forth on an invoice under standard or other
payment terms. Additionally, as of the date of each Advance, Borrower
shall deliver a Borrowing Base Certificate as required in Section
6.2(a) hereof."
Section 9.14 was deleted in its entirety, and the following substituted
therefor:
"9.14 Tangible Net Worth. Tangible Net Worth, as of the last
------------------
day of any fiscal quarter of Parent (except for the fiscal quarter
ended December 31, 1996), shall not be less than the sum of (i)
$85,000,000 plus 100% of the aggregate amount of equity contributions
----
made to Parent after December 31, 1995, plus 75% of Parent's
----
consolidated positive net income for each fiscal quarter commencing
with the fiscal quarter ended March 31, 1996. For the fiscal quarter
ended December 31, 1996, Tangible Net Worth shall not be less than
$100,000,000."
Fourth Modification as of March 28, 1997:
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Section 9.14 was deleted in its entirety, and the following substituted
therefor:
"9.14 Tangible Net Worth. Tangible Net Worth, as of the last
------------------
day of any fiscal quarter of Parent (except for the fiscal quarters
ending December 31, 1996 and March 31, 1997), shall not be less than
the sum of (i) $85,000,000 plus 100% of the aggregate amount of equity
----
contributions made to Parent after December 31, 1995, plus 75% of
----
Parent's consolidated positive net income for each fiscal quarter
commencing with the fiscal quarter ended March 31, 1996. For the
fiscal quarters ending December 31, 1996 and March 31, 1997, Tangible
Net Worth shall not be less than $100,000,000."
2.3 Prior Loan Agreements Acknowledgments. Borrowers acknowledge
-------------------------------------
with respect to the amounts owing to Bank under the Loan Documents that
Borrowers have no offset, defense or counterclaim with respect thereto, no claim
or defense in abatement or reduction thereof, nor any other claim against Bank
or with respect to any document forming part of the transaction in respect of
which the Loan Documents were made or forming part of any other transaction
under which Borrowers are indebted to Bank. Borrowers acknowledge that all
interest imposed under the Loan Documents through the date hereof, and all fees
and other charges that have been collected from or imposed upon Borrowers with
respect to the Loans evidenced by the Loan Documents were and are agreed to, and
were properly computed and collected.
2.4 Release. Borrowers, effective on and from the date of this
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Agreement, do hereby unconditionally, absolutely and irrevocably release Bank
and its respective employees, agents (including
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Agent) and officers from any and all Claims (as the term is defined in this
Section 2.4) and defenses against them or any of them, and agree that Bank and
its respective employees, agents and officers shall have no liability to
Borrowers by reason of anything occurring prior to the date of this Agreement.
Accordingly, this Agreement is made to compromise, resolve, settle, and
terminate all actual and potential Claims by reason of anything occurring prior
to the date of this Agreement. The term "Claims" as used in this Section 2.4
means all claims, complaints, demands, causes of action, damages, costs,
expenses, fees, and all other debts, liabilities or obligations of every sort
and description, direct and indirect, fixed or contingent, known or unknown, and
whether or not liquidated, arising out of, caused by, or otherwise related in
any way to events or transactions occurring prior to the date of this Agreement
between or affecting any of the parties hereto. Borrowers agree that this
general release extends to Claims which Borrowers may not know of or suspect to
exist in their favor at the time of executing this release, and Borrowers
specifically waive the provisions of any law to the contrary.
3. ADDITIONAL CONSIDERATION FOR FORBEARANCE.
In consideration of the modification as herein stated, Borrowers shall
simultaneously with their execution of this Fifth Modification Agreement pay and
reimburse Agent and Bank for all of the Agent's and Bank's unreimbursed legal
expenses incurred in the preparation of this Agreement and other documents
necessary to continue the perfection of the security interests previously
granted.
4. MODIFICATION OF LOAN AGREEMENT.
4.1 Additions and Substitutions to the Definitions and Miscellaneous
----------------------------------------------------------------
Provisions Section. In the Definitions and Miscellaneous Provisions Section:
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(i) add the following definition:
"Prior Loan Agreement" means, collectively, Loan Documents as
--------------------
described and defined in the Loan Agreement, as amended and modified,
as described in Article 2 hereof.
(ii) modify the definition of "RCF Repayment Date" to read as follows:
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"RCF Repayment Date": April 23, 1998, or such later date as may from
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time to time be determined pursuant to Section 2.1(c) of this Loan
Agreement.
(iii) modify the definition of "Termination Date" by adding the following:
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"; provided, however, the Termination Date with respect to the Take-
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Out Term Loan shall, absent Agent exercising its option under clause
(b), be April 23, 1999."
4.2 Amendment of Section 4.3(b). Amend and restate Section 4.3(b) of
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the Loan Agreement to read as follows:
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(b) Take-Out Term Loan. The original principal amount of the
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Take-Out Term Loan (which in no event shall be less than $1,000,000)
shall be divided into twelve (12) equal amounts (each, a "Payment
Amount") and the unpaid principal balance shall be paid in consecutive
monthly installments, each in an amount equal to the Payment Amount
plus accrued but unpaid interest. The first such installment shall be
due and payable on May 15, 1998, and each subsequent installment shall
be due and payable on the corresponding date which is one month later;
provided, that the last installment shall in all events be in an
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amount necessary to repay the full unpaid principal amount of the
Take-Out Term Loan. Borrowers may apportion the outstanding
principal balance of the Take-Out Term Loan such that different
portions bear interest at different Available Interest Rates;
provided, that no such portion shall be in an amount less than
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$500,000, and no such portion subject to a LIBOR Rate may have an
Interest Period that extends beyond 30 days or that ends on a date
other than the fifteenth (15th) day of a month. Interest accrued on
portions of the Take-Out Term Loan which bear interest at the Prime
Rate during a calendar month shall be due and payable on the fifteenth
(15th) day of the immediately following calendar month. Interest
accrued on portions of the Take-Out Term Loan which bear interest at a
LIBOR Rate shall be due and payable on the last day of the Interest
Period therefor. Notwithstanding the foregoing, from and after the
earlier of (i) the last day of any Interest Period in effect on that
date immediately preceding the RCF Termination Date, and (ii) the 90th
day following the RCF Termination Date, not more than two portions of
the Take-Out Term Loan shall bear interest at the LIBOR Rate. All
accrued and unpaid interest on the Take-Out Term Loan shall be due and
payable on the Take-Out Term Loan Termination Date. Amounts repaid
under the Take-Out Term Loan may not be reborrowed.
4.3 Amendment of Section 6.2(a). Amend and restate Section 6.2(a) of
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the Loan Agreement to read as follows:
(a) Current Borrowing Base Certificate. As of the date of such
----------------------------------
Advance, Borrowers shall have furnished the Agent a Borrowing Base
Certificate meeting the requirements of Section 8.1(j) hereof,
provided, however, that if the aggregate principal amount of all
-------- -------
Advances under the RCF (together with all amounts then requested under
any Request For Advance) shall exceed $15 million, Borrowers shall
have delivered to the Agent a Borrowing Base Certificate setting forth
the Borrowing as of a date not earlier than the fifth Business Day
preceding the date of the requested Advance.
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4.4 Amendment of Section 8.1(j). Amend and restate Section 8.1(j) of
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the Loan Agreement to read as follows:
(j) Borrowing Base Certificate. Within 15 days after the last
--------------------------
day of each month, a Borrowing Base Certificate, duly completed, as of
the last Business Day of the month immediately preceding the date of
delivery of such Borrowing Base Certificate, certified as true,
complete and correct by an Authorized Person. The identification of
Accounts that are not Eligible Accounts pursuant to clause (ii) of the
definition of "Eligible Accounts" shall be determined in all instances
by reference to the date of the applicable invoice, and not by
reference to the payment due date set forth on an invoice under
standard or other payment terms.
4.5 Amendment of Section 9.9. Amend and restate Section 9.9 of the
------------------------
Loan Agreement to read as follows:
9.9 Operating Income. Borrowers shall not fail to have had
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Operating Income greater than zero (a) as at the end of any fiscal
year (beginning with the fiscal year ending June 30, 1998), or (b)
during any period of two consecutive fiscal quarters (beginning with
March 31, 1997).
4.6 Amendment of Section 9.14. Amend and restate Section 9.14 of the
-------------------------
Loan Agreement to read as follows:
9.14 Tangible Net Worth. Tangible Net Worth, as of the last day
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of any fiscal quarter of Parent shall not be less than the sum of (i)
$95,000,000 plus 100% of the aggregate amount of equity contributions
----
made to Parent after December 31, 1996, plus 75% of Parent's
----
consolidated positive net income for each fiscal quarter commencing
with the fiscal quarter ended March 31, 1997.
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4.7 Amendment of Annex 1. Amend and restate Annex 1 to the Loan
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Agreement to read as follows:
ANNEX 1
to
LOAN AGREEMENT
COMMITMENT AMOUNTS OF THE BANKS
I. RCF Commitments:
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RCF Commitment Amount
---------------------
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
successor-by-merger to
First Interstate Bank of Arizona, N.A., $20,000,000
Total RCF Commitments: $20,000,000
5. REAFFIRMATIONS AND ACKNOWLEDGMENTS.
5.1 Reaffirmations and Certifications. Borrowers reaffirm and/or
---------------------------------
certify to the Bank: (i) the accuracy in all material respects, as of the date
hereof, of all of the respective representations and warranties made by
Borrowers in the Loan Documents except as has been disclosed in writing to
Agent; (ii) Borrowers are in compliance in all material respects with the
covenants, agreements and conditions of the Loan Agreement; (iii) no Default or
Potential Default has occurred or is existing (or, if a Default or Potential
Default exists, a description of such Default or Potential Default and the
action being taken or proposed to be taken with respect thereto) has been given
to the Agent; (iv) there exists no event or occurrence including any litigation
or proceeding affecting Borrowers, which has caused or would cause any Material
Adverse Effect on (a) the business, assets, financial condition, results of
operations, or cash flow of Borrowers, taken as a whole, in each case from that
represented to exist in the financial statements that have been furnished to
the Agent, or (b) the current or prospective ability of Borrowers to perform
any of their payment or other material obligations under the Loan Agreement and
each other Loan Documents; (v) Borrowers continue to have good and marketable
title to or valid leasehold interests in the Collateral, free and clear of all
Liens, encumbrances and claims whatsoever, except for the Permitted Liens; (vi)
No financing statement, security agreement or other public notice covering the
Collateral is on file or on record in any public office, except such as have
been filed in favor of the Agent, for the benefit of the Banks, pursuant to this
Security Agreement, or as may evidence a Permitted Lien, or as otherwise allowed
by the Loan Documents; (vii) Agent, for the benefit of the Banks, has a valid
and perfected first priority security interest in the Collateral (as that term
is defined in the Security Agreement between Parent and First Interstate Bank of
Arizona, N.A., dated April 24, 1996); and (viii) all actions necessary to be
taken by Borrowers' respective Boards of Directors have been taken to authorize
and approve this Agreement.
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5.2 No Waiver. By entering into this Fifth Modification Agreement,
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the Bank does not waive any existing Default of which it is unaware or any
Default hereafter occurring, or become obligated to waive any condition or
obligation in any agreement between or among the parties hereto. As of the
making of this Fifth Modification Agreement, the Bank is not aware of any
existing Default.
5.3 Miscellaneous. Borrowers agree: (a) to provide and execute as
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necessary all other documents reasonably required by Agent and Bank to give
effect to this Fifth Modification Agreement, including documents necessary to
the continued perfection of security interests previously granted by Borrowers;
(b) this Fifth Modification Agreement is not intended for and shall not be
construed for the benefit of any party not a signatory hereto; (c) this Fifth
Modification Agreement shall be binding upon, and inure to the benefit of the
parties hereto and their respective successors and assigns; (d) this Fifth
Modification Agreement constitutes the entire agreement (including all
representations and promises made) among the parties with respect to the subject
matter hereof and no modification or waiver shall be effective unless in writing
and signed by the party to be charged; and, (e) time is of the essence hereof.
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IN WITNESS WHEREOF, the undersigned have executed this Fifth Modification
Agreement as of the day and year first above written.
"BORROWERS":
INTEGRATED PROCESS EQUIPMENT CORP.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its Vice President and CFO
IPEC CLEAN, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its Vice President and CFO
IPEC PRECISION, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its Vice President and CFO
IPEC PLANAR, INC.,
formerly known as IPEC Planar Phoenix, Inc.,
successor by merger to IPEC Planar Portland,
Inc.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Its Vice President and CFO
"AGENT":
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
successor-by-merger to FIRST INTERSTATE BANK
OF ARIZONA, as Agent
By /s/ ▇▇▇▇ ▇▇▇▇▇
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Its Vice President
"BANK":
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
successor-by-merger to FIRST INTERSTATE BANK
OF ARIZONA
By /s/ ▇▇▇▇ ▇▇▇▇▇
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Its Vice President
Address for Notices:
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Regional Commercial Banking Office
MAC 4101-251
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇