ADVANCED ENERGY INDUSTRIES, INC.
LOAN AGREEMENT
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Accounting Terms 7
2. LOAN AND TERMS OF PAYMENT 7
2.1 Advances 7
2.2 Foreign Exchange Contract; Foreign Exchange Settlements 10
2.3 Term Conversion Option 10
2.4 Overadvances 11
2.5 Interest Rates, Payments, and Calculations 11
2.6 Crediting Payments 12
2.7 Bank Expenses 12
2.8 Additional Costs 12
2.9 Conversion/Continuation of Advances 12
2.10 Additional Requirements/Provisions Regarding LIBOR Rate
Advances or Optional Currency Rate Advances 13
2.11 Term 15
3. CONDITIONS OF LOANS 15
3.1 Conditions Precedent to Initial Advance 15
3.2 Conditions Precedent to all Advances 15
4. REPRESENTATIONS AND WARRANTIES 16
4.1 Due Organization and Qualification 16
4.2 Due Authorization; No Conflict 16
4.3 No Prior Encumbrances 16
4.4 Merchantable Inventory 16
4.5 Litigation 16
4.6 No Material Adverse Change in Financial Statements 16
4.7 Solvency 16
4.8 Regulatory Compliance 16
4.9 Environmental Condition 17
4.10 Taxes 17
4.11 Subsidiaries 17
4.12 Government Consents 17
4.13 Full Disclosure 17
5. AFFIRMATIVE COVENANTS 17
5.1 Good Standing 17
5.2 Government Compliance 18
5.3 Financial Statements, Reports, Certificates 18
5.4 Inventory; Returns 18
5.5 Taxes 18
5.6 Insurance 18
5.7 Quick Ratio 19
5.8 Debt-Tangible Net Worth Ratio 19
5.9 Tangible Net Worth 19
5.10 Profitability 19
5.11 Debt Service Coverage 19
5.12 Further Assurances 19
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6. NEGATIVE COVENANTS 19
6.1 Dispositions 19
6.2 Change in Business or Control 19
6.3 Mergers or Acquisitions 19
6.4 Indebtedness 20
6.5 Encumbrances 20
6.6 Distributions 20
6.7 Investments 20
6.8 Transactions with Affiliates 20
6.9 Subordinated Debt 20
6.10 Compliance 20
7. EVENTS OF DEFAULT 20
7.1 Payment Default 20
7.2 Covenant Default 20
7.3 Material Adverse Change 21
7.4 Attachment 21
7.5 Insolvency 21
7.6 Other Agreements 21
7.7 Judgments 21
7.8 Misrepresentations 21
8. BANKS' RIGHTS AND REMEDIES 21
8.1 Rights and Remedies 21
8.2 Bank Expenses 22
8.3 Remedies Cumulative 22
8.4 Demand; Protest 22
9. NOTICES 22
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 23
11. INTERCREDITOR PROVISIONS 23
11.1 Proportionate Interests 23
11.2 Designation of Service Agent 23
11.3 Resignation 24
11.4 Servicing Agent as Bank 24
11.5 No Agency 24
11.6 No Reliance 24
12. GENERAL PROVISIONS 24
12.1 Successors and Assigns 24
12.2 Indemnification 24
12.3 Time of Essence 24
12.4 Severability of Provisions 24
12.5 Amendments in Writing, Integration 24
12.6 Counterparts 25
12.7 Survival 25
12.8 Confidentiality 25
12.9 Optional Currency Rate Instruments 25
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This LOAN AGREEMENT is entered into as of December 8, 1997 by and among
SILICON VALLEY BANK ("SVB") as Servicing Agent and a Bank and BANK OF HAWAII
("BofH;" SVB and BofH are referred to individually herein as a "Bank," and
collectively as the "Banks") and ADVANCED ENERGY INDUSTRIES, INC., a Delaware
corporation ("AEI" or "Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Banks, and Banks
desire to advance credit to Borrower. This Agreement sets forth the terms on
which Banks will lend to Borrower, and Borrower will repay the advances to
Banks.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Advance" or "Advances" means a cash advance 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.
"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; and each Bank's reasonable attorneys' fees and expenses
incurred in amending, enforcing or defending the Loan Documents, whether or
not suit is brought.
"Borrower's Books" means all of Borrower's books and records
relating to its property.
"Business Day" means a day of the year (a) that is not a
Saturday, Sunday or other day on which banks in the States of California or
Hawaii or the City of London are authorized or required to close and (b) on
which dealings are carried on in the interbank market in which Bank
customarily participates and, (c) with respect to Advances and payments in an
Optional Currency or any requests or notices related thereto, that is not a
day on which the BofH branch or other banks in the country of such Optional
Currency are authorized or required to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Committed Line" means Thirty Million Dollars ($30,000,000).
"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
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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.
"Credit Extension" means an Advance, a Letter of Credit or a
Foreign Exchange Contract.
"Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Borrower and its
Subsidiaries, excluding all outstanding Advances made under Section 2.1
hereof, but including all other Indebtedness that is payable upon demand or
within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"EBITDA" means, for any period, earnings before interest
expense, taxes, depreciation and amortization.
"Equipment" means machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments.
"Equivalent Amount" means the equivalent in United States
Dollars of an Optional Currency, calculated at the spot rate for the purchase
of such Optional Currency by BofH.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"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 or similar instruments, (c) all capital lease obligations and (d)
all Contingent Obligations.
"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, extension generally with
all or substantially all creditors, or proceedings seeking general
reorganization, arrangement, or other relief.
"Interest Period" means for each LIBOR Rate Advance, a period
of approximately one, three or six months as Borrower may elect, provided
that the last day of an
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Interest Period for a LIBOR Rate Advance shall be determined in accordance
with the practices, of the LIBOR interbank market as from time to time in
effect, provided, further, in all cases such period shall expire not later
than the applicable Revolving Maturity Date.
"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.
"Issuing Bank" means the Bank issuing a Letter of Credit
pursuant to Section 2.1.1. SVB shall be the issuing bank, except that BofH
shall be the Issuing Bank if (i) SVB is unable to issue a Letter of Credit or
(ii) a Letter of Credit issued by SVB would require confirmation by another
bank under circumstances in which a Letter of Credit issued by BofH would not
require confirmation.
"Letter of Credit" means a Letter of Credit issued pursuant to
Section 2.1.1.
"LIBOR Base Rate" means, for any Interest Period for a LIBOR
Rate Advance, the rate of interest per annum determined by SVB to be the per
annum rate of interest at which deposits in United States Dollars are offered
to SVB in the London interbank market in which SVB 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 Rate" shall mean, for any Interest Period for a LIBOR
Rate Advance, a rate per annum (rounded upwards, if necessary, to the nearest
1/16 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 Advances" means any Advances made or a portion
thereof on which interest is payable based on the LIBOR Rate in accordance
with the terms hereof.
"Lien" means any mortgage, lien, deed of trust, 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 Banks 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 financial condition of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower, taken as a
whole, to repay the Obligations.
"Maturity Date" means December 7, 2003.
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"Obligations" means all debt, principal, interest, Bank
Expenses and other amounts owed to the Banks by Borrower pursuant to this
Agreement, whether absolute or contingent, due or to become due (including
any interest accruing after the commencement of an Insolvency Proceeding and
any interest that would have accrued but for the commencement of an
Insolvency Proceeding), now existing or hereafter arising.
"Operating Loss" means an operating loss under GAAP,
specifically excluding non-cash losses arising from business-combination
activities.
"Optional Currency" means the lawful currency of Japan.
"Optional Currency Rate Advance" means an Advance in an
Optional Currency, made pursuant to and in accordance with Section 2.1(c).
"Optional Currency Rate" means, with respect to Advances in
Japanese Yen, the Japanese Short Term Prime Rate, as quoted by the office of
BofH located in Japan.
"Optional Currency Rate Instruments" means the promissory
notes and other agreements and instruments requested by Banks as a condition
to making Optional Currency Rate Advances.
"Percentage Share" means, as to each Bank, the percentage
calculated in accordance with Section 12.1 hereof.
"Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to either Bank pursuant to the terms and provisions of any instrument, or
agreement now or hereafter in existence between Borrower and such Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Banks arising under
this Agreement or any other Loan Document;
(b) Subordinated Debt;
(c) Capital leases or indebtedness incurred solely to
purchase equipment, which is secured in accordance with clause (c) of
"Permitted Liens" below and is not in excess of the lesser of the purchase
price of such equipment or the fair market value of such equipment on the
date of acquisition, provided the outstanding principal balance of such
Indebtedness incurred in any fiscal year shall not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000);
(d) Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Indebtedness set forth on the Schedule;
(f) Indebtedness of Borrower to any Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of Borrower
(provided that the primary obligations are not prohibited hereby), and
Indebtedness of any Subsidiary to any other Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of any other
Subsidiary (provided that the primary obligations are not prohibited hereby),
and Indebtedness consisting of Investments that are "Permitted Investments"
under clause (l) of the definition of Permitted Investments;
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(g) Indebtedness secured by Permitted Liens;
(h) Extensions, refinancings, modifications, amendments and
restatements of any of items of Permitted Indebtedness (a), (b), (c), (e) and
(g) above, provided that the principal amount thereof is not increased or the
terms thereof are not modified to impose more burdensome terms upon Borrower
or its Subsidiaries, as the case may be.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed on the
Schedule;
(b) Investments made or obtained through either Bank that
consist of (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by either Bank or (iv) that are permitted by
Borrower's investment policy, as amended from time to time by its board of
directors, provided that such investment policy (and any such amendment
thereto) has been approved by the Banks, which approval shall not be
unreasonably withheld; and
(c) Investments made in connection with the merger or
consolidation with another Person or the acquisition of all or substantially
all of the capital stock or property of another Person where the sole
consideration paid by Borrower or any Subsidiary consists of Borrower's
equity securities and cash and the aggregate value of such equity securities
and cash paid after the date hereof does not exceed Fifteen Percent (15%) of
Borrower's Tangible Net Worth immediately prior to the date such Investment
is made.
"Permitted Liens" means the following:
(a) Any liens existing as of the date hereof and disclosed on
the Schedule;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of
Banks' security interests;
(c) Liens (i) upon or in any equipment acquired by Borrower
or any of its Subsidiaries after the date hereof to secure the purchase price
of such equipment or indebtedness incurred solely for the purpose of
financing the acquisition of such equipment, or (ii) existing on such
equipment 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 equipment;
(d) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property not constituting a Material Adverse
Effect;
(e) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a), (c), and (d) 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.
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"Person" means any individual, sole proprietorship,
partnership, 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 SVB as its "prime rate," or BofH as its "base
rate," as applicable to the Advances made hereunder by each such Bank,
whether or not such announced rate is the lowest rate available from such
Bank.
"Prime Rate Advances" means any Advances made or a portion
thereof on which interest is payable based on the Prime Rate in accordance
with the terms hereof.
"Quick Assets" means, at any date as of which the amount
thereof shall be determined, the consolidated cash, cash-equivalents,
accounts receivable and investments, with maturities not to exceed 90 days,
of Borrower determined in accordance with GAAP.
"Regulatory Change" means, with respect to Bank, any change on
or after the date of this Agreement in United States federal, state or
foreign laws or regulations, including Regulation D, or the adoption or
making on or after such date of any written interpretations, directives or
requests applying to a class of lenders including Bank of or under any United
States federal or state, or any foreign, laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"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 each of the Chief Executive
Officer, the Chief Financial Officer, the Treasurer and the Controller of
Borrower.
"Revolving Facility" means the facility under which a Borrower
may request Bank to issue cash advances, as specified in Section 2.1 hereof.
"Revolving Maturity Date" means the day before the third
anniversary of the Closing Date.
"Schedule" means the schedule of exceptions attached hereto.
"Servicing Agent" means SVB or such entity as may succeed to
such position.
"Subordinated Debt" means any debt incurred by a Borrower that
is subordinated to the Obligations under this Agreement on terms reasonably
acceptable to Banks.
"Subsidiary" means any corporation or partnership 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 shall, at the time as of which any
determination is being made, is owned by Borrower, either directly or through
an Affiliate.
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"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower minus,
without duplication, (i) the sum of any amounts attributable to (a) goodwill,
(b) intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, and (c) all reserves not already deducted
from assets, and (ii) Total Liabilities.
"Term Advance" means an Advance converted into a term loan
pursuant to Section 2.3.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of
Borrower, including in any event all Indebtedness, but specifically excluding
Subordinated Debt.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
2.1 Advances. Subject to the terms and conditions of this Agreement,
each Bank severally will make Advances to Borrower as set forth herein. BofH
shall make all of the Advances made in an Optional Currency. Each Bank
severally will make its Percentage Share of Advances such that the aggregate
amount of each Bank's Advances (including Optional Rate Advances) under this
Agreement shall not exceed such Bank's Percentage Share of the lesser of (i)
Twenty Million Dollars ($20,000,000) or (ii) the Committed Line minus the
face amount of the outstanding Letters of Credit minus the Foreign Exchange
Reserve, provided that the aggregate outstanding Advances in an Optional
Currency shall not exceed Five Million Dollars ($5,000,000). At the request
of Borrower, each of the sublimits of Five Million Dollars ($5,000,000) for
Optional Currency Rate Advances and Foreign Exchange Contracts may be reduced
from time to time, and the sublimit for Advances concurrently increased by
the amount of such reduction, provided that the sum of the sublimits for
Advances, Optional Currency Rate Advances, Letters of Credit and Foreign
Exchange Contracts shall at no time exceed Thirty Million Dollars
($30,000,000), and the sublimits for Optional Currency Rate Advances or
Foreign Exchange Contracts shall not exceed Five Million Dollars ($5,000,000)
each. Each such adjustment shall be in an amount not less than
[Five Hundred Thousand Dollars ($500,000)], and shall be effected by a
written notice delivered to each Bank not later than five (5) Business Days
before the effective date of such adjustment. As a condition to any
adjustment, the Advances, Optional Currency Rate Advances, Letters of Credit
and Foreign Exchange Contracts outstanding on such effective date shall be
within the corresponding sublimits, as adjusted. Subject to the terms and
conditions of this Agreement, amounts borrowed pursuant to this Section 2.1
may be repaid and reborrowed at any time prior to the Revolving Maturity Date.
(a) Requests for Advances. Whenever Borrower desires an Advance,
Borrower will notify Servicing Agent by facsimile transmission or telephone
no later than 11:00 a.m. California time on the Business Day that a Prime
Rate Advance is to be made, noon California time on the Business Day that is
two (2) Business Days in the country of the Optional Currency prior to the
Business Day on which an Optional Currency Rate Advance is to be made, and
noon California time on the Business Day that is three (3) Business Days
prior to the Business Day on which a LIBOR Rate Advance is to be made.
Servicing Agent shall promptly deliver such notice to the Banks. Each Bank
may make Advances under this Agreement, based upon instructions received by
Servicing Agent from a Responsible Officer, or without instructions if in
Servicing Agent's discretion such Advances are necessary to meet Obligations
under this Agreement which have become due and remain unpaid.
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Each Bank shall be entitled to rely on any notice by telephone or otherwise
given by a person who Servicing Agent reasonably believes to be a Responsible
Officer, and Borrower shall indemnify and hold such Bank harmless for any
damages or loss suffered by such Bank as a result of such reliance. Such
Bank will wire or credit, as appropriate, the amount of Advances in United
States Dollars made under this Section 2.1 to Borrower's deposit account held
by Servicing Agent, as specified by Borrower, or, as to an Advance in an
Optional Currency, to the Borrower's deposit account of Advanced Energy
Industries, K.K., Borrower's wholly-owned Japanese subsidiary, held by the
branch office of BofH in Japan.
Each such notice shall specify:
(i) the date such Advance is to be made, which shall be a
Business Day;
(ii) the amount of such Advance;
(iii) whether such Advance is to be a Prime Rate Advance, an
Optional Currency Rate Advance, or a LIBOR Rate Advance;
(iv) if the Advance is to be a LIBOR Rate Advance, the Interest
Period for such Advance; and
(v) if the Advance is to be in an Optional Currency, the type of
currency.
Each written request for an Advance, and each confirmation of a telephone
request for such an Advance, shall be in the form of a Borrowing Certificate
in the form of Exhibit B executed by Borrower on behalf of Borrower.
(b) Prime Rate Advances. Each Prime Rate Advance shall be in an
amount not less than Twenty Five Thousand Dollars ($25,000). The outstanding
principal balance of each Prime Rate Advance shall bear interest until
principal is due (computed daily on the basis of a 360 day year and actual
days elapsed), at a rate per annum equal to the Prime Rate minus One and One
Quarter of One Percent (1.25%). Borrower shall pay the entire outstanding
principal amount of each Prime Rate Advance on the Revolving Maturity Date.
(c) Optional Currency Rate Advances. Each Optional Currency Rate
Advance shall be in an Equivalent Amount of not less than Fifty Thousand
Dollars ($50,000). The outstanding principal balance of each Optional
Currency Rate Advance shall bear interest until principal is due (computed
daily on the basis of a 360 day year and actual days elapsed or, where
required by any law or is customary in the country of the Optional Currency,
a 365 day year) at a rate per annum equal to the Optional Currency Rate plus
100 basis points for such Optional Currency Rate Advance. The Optional
Currency Rate Advances shall be evidenced by this Agreement and by the
Optional Currency Rate Instruments. Borrower shall pay the entire
outstanding principal amount of each Optional Currency Rate Advance on the
Revolving Maturity Date.
(d) LIBOR Rate Advances. Each LIBOR Rate Advance shall be in an
amount or an Equivalent Amount of not less than Five Hundred Thousand Dollars
($500,000). The outstanding principal balance of each LIBOR Rate Advance
shall bear interest until principal is due (computed daily on the basis of a
360 day year and actual days elapsed) at a rate per annum equal to the LIBOR
Rate plus 150 basis points for such LIBOR Rate Advance. The entire
outstanding principal amount of each LIBOR Rate Advance shall be due and
payable on the last day of the LIBOR Rate Interest Period for such LIBOR Rate
Advance and on the Revolving Maturity Date.
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(e) Prepayment of the Advances. Borrower may at any time prepay
any Prime Rate Advance, any Optional Currency Rate Advance, or any LIBOR Rate
Advance, in full or in part. Each partial prepayment for a LIBOR Rate
Advance shall be in an amount not less than Two Hundred Fifty Thousand
Dollars ($250,000). Each prepayment shall be made upon the irrevocable
written or telephone notice of Borrower received by Servicing Agent not later
than 10:00 a.m. California time on the date of the prepayment of a Prime Rate
Advance, not less than two Business Days in the country of the Optional
Currency prior to the date of the prepayment of an Optional Currency Rate
Advance, and not less than three (3) Business Days prior to the date of the
prepayment of a LIBOR Rate Advance. The notice of prepayment shall specify
the date of the prepayment, the amount of the prepayment, and the Advance or
Advances to be prepaid. Each prepayment of an Optional Currency Rate Advance
for which the term and interest rate have been fixed or LIBOR Rate Advance
shall be accompanied by the payment of accrued interest on the amount prepaid
and any amount required by Section 2.12.
(f) Fees. On each anniversary of the Closing Date, Borrower shall
pay SVB a non-usage fee equal to One Fourth of One Percent (0.25%) of the
difference between the Committed Line and the average Daily Balance during
the prior year.
(g) Term. The Revolving Facility shall terminate on the Revolving
Maturity Date, at which time all Advances under this Section 2.1 shall be
immediately due and payable.
2.1.1 Letters of Credit.
(a) At Borrower's written request, Issuing Bank shall issue
Letters of Credit for Borrower's account. Each Bank severally agrees to
participate in Letters of Credit, in accordance with such Bank's Percentage
Share.
(b) Issuing Bank shall issue the Letter of Credit upon receipt
of Borrower's written request and Issuing Bank's standard form of
application, stating (a) the date Borrower wishes to receive the Letter of
Credit (which shall be a Business Day); (b) the requested amount of such
Letter of Credit; (c) the aggregate amount of all Advances and Letters of
Credit then outstanding; (d) if appropriate, the conditions requested by
Borrower under which the Letter of Credit may be drawn upon; and (e) any
other information Issuing Bank might need to issue the Letter of Credit.
Issuing Bank shall promptly notify all of the Banks upon receipt of a request
for a Letter of Credit.
(c) The maximum aggregate obligation at any one time for
undrawn and drawn but unreimbursed Letters of Credit shall be Five Million
Dollars ($5,000,000). Each Letter of Credit shall be issued pursuant to the
terms and conditions of this Agreement and of the Issuing Bank's standard
form of application and security agreement for letters of credit. Each
Letter of Credit shall (a) expire no later than the Revolving Maturity Date;
and (b) be otherwise in form and substance satisfactory to Issuing Bank.
Upon issuing a Letter of Credit, the Issuing Bank shall immediately notify
the other Bank of such issuance and shall, on a continuing basis, keep the
other Bank informed of the drawn and undrawn but unreimbursed amount of each
Letter of Credit for so long as such Letter of Credit is outstanding.
Borrower shall pay Issuing Bank its standard fees on account of each Letter
of Credit issued hereunder, which shall be shared by Banks in accordance with
their agreement. On the day on which Issuing Bank honors any drawing made by
the beneficiary of a Letter of Credit, Borrower shall pay to Issuing Bank the
full amount of the drawing so honored, or at Borrower's option, shall treat
the amount of such drawing as an Advance under Section 2.1. The obligation
to reimburse Issuing Bank for the amount of such drawing is absolute,
unconditional, and irrevocable.
9
(d) Borrower may request that Issuing Bank issue a Letter of
Credit payable in a currency other than United States Dollars. If a demand
for payment is made under any such Letter of Credit, Issuing Bank shall treat
such demand as an advance to Borrower of the Equivalent Amount thereof. Upon
the issuance of any Letter of Credit payable in a currency other than United
States Dollars, Banks shall create a reserve under the Committed Line for
letters of credit against fluctuations in currency exchange rates, in an
amount equal to ten percent (10%) of the face amount of such Letter of
Credit. The amount of such reserve may be amended by Banks from time to time
to account for fluctuations in the exchange rate. The availability of funds
under the Committed Line shall be reduced by the amount of such reserve for
so long as such Letter of Credit remains outstanding.
2.2 Foreign Exchange Contract; Foreign Exchange Settlements.
(a) Subject to the terms of this Agreement, Borrower may utilize up
to Five Million Dollars ($5,000,000) for Exchange Contracts, pursuant to
which the Japanese branch office of BofH shall sell to or purchase from
Borrower foreign currency on a spot or future basis. All Exchange Contracts
must provide for delivery of settlement on or before the Maturity Date. The
limit available at any time shall be reduced by the following amounts (the
"Foreign Exchange Reserve") on each day (the "Determination Date"): (i) on
all outstanding Exchange Contracts on which delivery is to be effected or
settlement allowed more than two business days from the Determination Date,
10% of the gross amount of the Exchange Contracts. In lieu of the Foreign
Exchange Reserve for 100% of the gross amount of any Exchange Contract,
Borrower may request that Banks treat such amount as an Advance under the
Committed Line.
(b) Banks may, in their discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or (b) that there
is no sufficient availability under the Committed Line and Borrower does not
have available funds in its bank account to satisfy the Foreign Exchange
Reserve. If Banks terminate the Exchange Contracts, and without limitation
of any applicable indemnities, Borrower shall reimburse Banks for any and all
fees, costs and expenses relating thereto or arising in connection therewith.
(c) Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and settlement allowed
in any two business day period to be more than Five Million Dollars
($5,000,000) nor shall Borrower permit the total gross amount of all Exchange
Contracts to which Borrower is a party, outstanding at any one time, to
exceed Five Million Dollars ($5,000,000).
(d) As a condition to requesting any Exchange Contracts, Borrower
shall request each Exchange Contract by written notice to Servicing Agent,
and shall execute all standard form applications and agreements of Banks in
connection with the Exchange Contracts and, without limiting any of the terms
of such applications and agreements, Borrower will pay all standard fees and
charges of Banks in connection with the Exchange Contracts.
2.3 Term Conversion Option.
(a) Subject to and upon the terms and conditions of this Agreement,
at any time from the date hereof through the Revolving Maturity Date,
Borrower may elect to convert all or any portion of the outstanding Advances
in an aggregate amount not to exceed Ten Million Dollars ($10,000,000) into
Term Advances.
(b) Interest shall continue to accrue on each Term Advance at the
rate applicable prior to the effective date of conversion, and shall continue
to be payable on the seventh day of each calendar month thereafter. Each
Term Advance will be payable in twelve (12) equal
10
quarterly installments of principal, beginning on the _____ day of the fiscal
quarter immediately following the date of conversion, and continuing on the
_____ day of each subsequent fiscal quarter.
(c) When Borrower desires to convert an Advance into a Term
Advance, Borrower shall notify Servicing Agent (which notice shall be
irrevocable) by facsimile transmission to be received no later than 3:00 p.m.
Pacific time three (3) Business Days before the day on which the conversion
is to be effected. Such notice shall be in a form reasonably acceptable to
Servicing Agent, and shall be signed by a Responsible Officer or its designee.
(d) Borrower may prepay all or any portion of any Term Advance
without penalty or premium, provided that any prepayment of a Term Advance
bearing a fixed rate of interest shall be accompanied by a prepayment fee
equal to the breakage costs advised by Banks at the time of such prepayment.
2.4 Overadvances. If, at any time or for any reason, the sum of
(i) Advances owed by Borrower to Banks pursuant to Section 2.1 of this
Agreement plus (ii) the Foreign Exchange Reserve plus (iii) the face amount
of any outstanding Letters of Credit is greater than the Committed Line,
Borrower shall immediately pay to SVB, in cash, the amount of such excess,
for payment to the Banks according to their respective Percentage Shares.
If, at any time or for any reason, the Equivalent Amount of Outstanding
Optional Currency Advances exceeds Five Million Dollars ($5,000,000),
Borrower shall immediately pay to BofH the amount of such excess.
2.5 Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in Section 2.5(b), any
Obligations shall bear interest, on the average Daily Balance, at the rates
specified in the provisions relating to each facility under this Agreement.
(b) Default Rate. All Obligations shall bear interest, from and
after the occurrence of an Event of Default, at a rate equal to the lesser of
(i) three (3) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default or (ii) the
maximum rate permitted by law including, to the extent applicable to Optional
Currency Advances, the law of the country of such Optional Currency.
(c) Payments. Accrued interest shall be due and payable in arrears
upon the earlier of (i) the end of the Interest Period or (ii) any payment of
principal or (iii) on the fourteenth day of each calendar month. With
respect to repayments of Prime Rate Advances and LIBOR Rate Advances,
Servicing Agent shall, at the option of each Bank, charge such interest, all
Bank Expenses, and all Periodic Payments against a Borrower's deposit account
held at SVB or against the Committed Line, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. With
respect to repayments of Optional Currency Advances, the branch of BofH in
the country of the Optional Currency shall, at the option of each Bank,
charge such interest and all periodic payments against a Borrower's deposit
account in such country or against the Committed Line, in which case those
amounts shall thereafter accrue interest at the 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 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 12:01 a.m. on 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 three hundred sixty (360) day year for the actual number of days
elapsed, except that interest chargeable on account of Optional Rate Currency
Advances shall be computed on the basis of a three hundred sixty five (365)
day year where such computation is required by any law or is customary in the
country of the Optional Currency.
11
2.6 Crediting Payments. Prior to the occurrence of an Event of
Default, each Bank shall credit a wire transfer of funds, check, or other
item of payment to such deposit account held at such Bank or Obligation as
Borrower specifies; provided that payments in an Optional Currency shall be
made only at the branch of BofH in the country of such Optional Currency.
After the occurrence and during the continuation of an Event of Default, the
receipt by a 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 a Bank after noon California time (or, as to a payment in an
Optional Currency, noon at the BofH branch office in the country of the
Optional Currency) shall be deemed to have been received by such Bank as of
the opening of business on the immediately following Business Day. Whenever
any payment to a 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.
2.7 Bank Expenses. Borrower shall pay to Banks upon the date
hereof, all Bank Expenses incurred through the date hereof, including
reasonable attorneys' fees and expenses, and, within thirty (30) days of
demand, other Bank Expenses as they become due from time to time hereunder.
2.8 Additional Costs. In case any law, regulation, treaty or
official directive or the written interpretation or application thereof by
any court or any governmental authority charged with the administration
thereof or the compliance with any guideline or request of any central bank
or other governmental authority (whether or not having the force of law):
(a) subjects any Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for
taxes on the overall net income of such Bank imposed by the United States of
America or any political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, any Bank; or
(c) imposes upon any Bank any other material condition with respect
to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to such Bank,
reduce the income receivable by such Bank or impose any expense upon such
Bank with respect to any loans, such Bank shall notify Borrower thereof in
writing. Borrower shall pay to such Bank the amount of such increase in
cost, reduction in income or additional expense as and when such cost,
reduction or expense is incurred or determined, upon presentation by such
Bank of a statement of the amount and setting forth such Bank's calculation
thereof, all in reasonable detail, which statement shall be deemed true and
correct absent manifest error; provided, however, that Borrower shall not be
liable for any such amount attributable to any period prior to 180 days prior
to the date of such certificate.
2.9 Conversion/Continuation of Advances.
(a) Borrower may from time to time submit in writing a request that
Prime Rate Advances be converted to LIBOR Rate Advances or that any existing
LIBOR Rate Advances continue for an additional Interest Period. Such request
shall specify the amount of the Prime Rate Advances which will constitute
LIBOR Rate Advances (subject to the limits set forth below) and the Interest
Period to be applicable to such LIBOR Rate Advances. Each written request for
a conversion to a LIBOR Rate Advance or a continuation of a LIBOR Rate
Advance shall be
12
substantially in the form of an Optional Currency Rate or LIBOR Rate
Conversion/Continuation Certificate as set forth on Exhibit B, which shall be
duly executed by a Responsible Officer. Subject to the terms and conditions
contained herein, three (3) Business Days after Servicing Agent's receipt of
such a request from Borrower, such Prime Rate Advances shall be converted to
LIBOR Rate Advances or such LIBOR Rate Advances or an Optional Currency Rate
Advance shall continue, as the case may be provided that:
(i) no Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists;
(ii) no party hereto shall have sent any notice of termination of
the Agreement;
(iii) Borrower shall have complied with such customary procedures
as Banks have established from time to time for Borrower's requests for
Optional Currency Rate Advances or LIBOR Rate Advances;
(iv) the amount of a Prime Rate Advance shall be $25,000 or more,
the amount of an Optional Currency Rate Advance shall be $50,000 or more, and
the amount of a LIBOR Rate Advance shall be $500,000 or such greater amount
which is an integral multiple of $50,000; and
(v) Servicing Agent shall have determined that the Interest
Period or LIBOR Rate or Optional Currency Rate is available to Banks as of
the date of the request for such LIBOR Rate Advance or Optional Currency Rate
Advance.
Any request by Borrower to convert Prime Rate Advances to LIBOR Rate
Advances or continue any existing LIBOR Rate Advances shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Banks shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR Rate market to fund any LIBOR Rate Advances,
but the provisions hereof shall be deemed to apply as if Banks had purchased
such deposits to fund the LIBOR Rate Advances.
(b) Any LIBOR Rate Advances shall automatically convert to Prime
Rate Advances upon the last day of the applicable Interest Period, unless
Banks have received and approved a complete and proper request to continue
such LIBOR Rate Advance at least three (3) Business Days prior to such last
day in accordance with the terms hereof. Any LIBOR Rate Advances or Optional
Currency Rate Advances shall, at Banks' option, convert to Prime Rate
Advances in the event that an Event of Default shall exist. Borrower shall
pay to Banks, upon demand by Banks (or Servicing Agent may, at its option,
charge Borrower's deposit account) any amounts required to compensate Banks
for any loss (including loss of anticipated profits), cost or expense
incurred by such person, as a result of the conversion of LIBOR Rate Advances
or Optional Currency Rate Advances to Prime Rate Advances pursuant to any of
the foregoing.
2.10 Additional Requirements/Provisions Regarding LIBOR Rate
Advances or Optional Currency Rate Advances.
(a) If for any reason (including voluntary or mandatory prepayment
or acceleration), Banks receive all or part of the principal amount of a
LIBOR Rate Advance prior to the last day of the Interest Period for such
LIBOR Rate Advance or the proposed term of any Optional Currency Rate Advance
for which the term and the interest rate have been fixed, Borrower shall on
demand by Servicing Agent, pay Servicing Agent the amount (if any) by which
(i) the additional interest which would have been payable on the amount so
received had it not been received until the last day of such Interest Period
or term exceeds (ii) the interest which would have been recoverable by Banks
by placing the amount so received on deposit in the certificate of deposit
markets or the offshore currency interbank markets or United States Treasury
investment products, as the case may
13
be, for a period starting on the date on which it was so received and ending
on the last day of such Interest Period or term at the interest rate
determined by Servicing Agent in its reasonable discretion. Servicing
Agent's determination as to such amount shall be conclusive absent manifest
error.
(b) Borrower shall pay to a Bank, upon demand by a Bank, from time
to time such amounts as such Bank may reasonably determine to be necessary to
compensate it for any costs incurred by such Bank that such Bank determines
are attributable to its making or maintaining of any amount receivable by
such Bank hereunder in respect of any Advances relating thereto (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), in each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Bank under this Agreement in respect of any Advances (other than changes
which affect taxes measured by or imposed on the overall net income of such
Bank by the jurisdiction in which such Bank has its principal office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of such Bank (including any Advances or
any deposits referred to in the definition of "LIBOR Base Rate"); or
(iii) imposes any other material condition affecting this
Agreement (or any of such extensions of credit or liabilities).
Such Bank will notify Borrower of any event occurring after the date of the
Agreement which will entitle such Bank to compensation pursuant to this
section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Such Bank will furnish Borrower
with a statement setting forth the basis and amount of each request by such
Bank for compensation under this Section 2.10. Determinations and
allocations by a Bank for purposes of this Section 2.10 of the effect of any
Regulatory Change on its costs of maintaining its obligations to make
Advances or of making or maintaining Advances or on amounts receivable by it
in respect of Advances, and of the additional amounts required to compensate
such Bank in respect of any Additional Costs, shall be conclusive absent
manifest error.
(c) Borrower shall pay to a Bank, upon the request of such Bank,
such amount or amounts as shall be sufficient (in the sole good faith opinion
of such Bank) to compensate it for any reasonable loss, costs or expense
incurred by it as a result of any failure by Borrower to borrow a LIBOR Rate
Advance on the date for such borrowing specified in the relevant notice of
borrowing hereunder.
(d) If a Bank shall determine that the adoption or implementation
of any applicable law, rule, regulation or treaty regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
Bank (or its applicable lending office) with any respect or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank or any person
or entity controlling Bank (a "Parent") as a consequence of its obligations
hereunder to a level below that which Bank (or its Parent) could have
achieved but for such adoption, change or compliance (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by Bank to be material, then from time to time, within 15 days after
demand by such Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate such Bank for such reduction. A statement of such
Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error.
14
(e) If at any time a Bank, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Advances or Optional
Currency Rate Advances for periods equal to the corresponding Interest
Periods or any other period are not available to such Bank in the offshore
currency interbank markets, or (ii) the LIBOR Rate or Optional Currency Rate
does not accurately reflect the cost to Bank of lending the LIBOR Rate
Advance or Optional Currency Rate Advance, then such Bank shall promptly give
notice thereof to Borrower, and upon the giving of such notice such Bank's
obligation to make the LIBOR Rate Advances or Optional Currency Rate Advances
shall terminate, unless Banks and Borrower agree in writing to a different
interest rate applicable to LIBOR Rate Advances or Optional Currency Rate
Advances. If it shall become unlawful for a Bank to continue to fund or
maintain any Advances, or to perform its obligations hereunder, upon demand
by such Bank, Borrower shall prepay the Advances in full with accrued
interest thereon and all other amounts payable by Borrower hereunder
(including, without limitation, any amount payable in connection with such
prepayment pursuant to Section 2.10(a)).
2.11 Term. This Agreement shall become effective upon the date
hereof and shall continue in full force and effect for a term ending on the
Maturity Date. Notwithstanding the foregoing, Banks shall have the right to
terminate any obligation to make Advances under this Agreement immediately
and without notice upon the earlier of (i) the occurrence and during the
continuance of an Event of Default or (ii) the Revolving Maturity Date. On
the date of termination, all Obligations shall become immediately due and
payable in cash or by wire transfer.
Upon satisfaction of all Obligations hereunder (including
prepayment fees, if applicable) this Agreement shall, at Borrower's request,
terminate, and Banks shall execute such terminations of financing statements
as Borrower may reasonably request.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance. The obligation of
either Bank to make the initial Advance is subject to the condition precedent
that such Bank shall have received, in form and substance satisfactory to
such Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) the Optional Currency Rate Instruments (with respect to
Optional Currency Rate Advances only);
(d) an opinion of Borrower's counsel;
(e) payment of the Bank Expenses then due specified in Section 2.5
hereof, provided reasonably detailed invoices are received; and
(f) such other documents, and completion of such other matters, as
Banks may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Advances. The obligation of any
Bank to make each Advance, including the initial Advance, is further subject
to the following conditions:
(a) timely receipt by Servicing Agent of the Loan Payment/Advance
Form as provided in Section 2.1;
(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
Loan Payment/Advance Form and on the effective date of each Advance as though
made at and as of each such date (except to the extent
15
they relate specifically to an earlier date, in which case such
representations and warranties shall continue to have been true and accurate
as of such date), and no Event of Default shall have occurred and be
continuing, or would result from such Advance; and
(c) as to each Optional Currency Rate Advance, all of
the terms and conditions contained in the applicable Optional Currency Rate
Instruments have been satisfied.
The making of each Advance shall be deemed to be a representation and
warranty by each Borrower on the date of such Advance as to the accuracy of
the facts referred to in this Section 3.2(b).
4. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
4.1 Due Organization and Qualification. Borrower is a corporation
duly existing and in good standing under the laws of its state of
incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership
of property requires that it be so qualified except for states as to which
any failure so to qualify would not have a Material Adverse Effect.
4.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles or Certificate of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which such Borrower is a party or by which Borrower is bound.
Borrower is not in default under any agreement to which it is a party or by
which it is bound, which default is reasonably likely to have a Material
Adverse Effect.
4.3 No Prior Encumbrances. Borrower has good and indefeasible
title to its assets, free and clear of Liens, except for Permitted Liens.
4.4 Merchantable Inventory. All Inventory is in all material
respects of good and marketable quality, free from all material defects.
4.5 Litigation. There are no actions or proceedings pending by or
against any Borrower before any court or administrative agency in which an
adverse decision is reasonably likely to have a Material Adverse Effect.
Borrower has no knowledge of any such pending or threatened actions or
proceedings.
4.6 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrower that have been
delivered to Banks fairly present in all material respects the consolidated
financial condition as of the date thereof of each such entity and
consolidated results of operations for the period then ended of each such
entity. 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 Banks.
4.7 Solvency. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
4.8 Regulatory Compliance. Borrower has met the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to
ERISA. No Borrower has withdrawn from, and no termination or partial
termination has occurred with respect to, any deferred compensation plan, and
no Borrower has withdrawn from any multi-employer plan under 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 is
reasonably likely to have a Material Adverse Effect. No Borrower is an
"investment company" or a company "controlled" by an "investment company"
16
within the meaning of the Investment Company Act of 1940. No Borrower is
engaged principally, or as one of the important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, T and U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of the Advances will
be used to purchase or carry any margin stock or for any purpose that would
violate any of Regulations G, T and U. Borrower has complied with all the
provisions of the Federal Fair Labor Standards Act. Borrower has complied
with all laws and regulations to which it is subject, noncompliance with
which is reasonably likely to have a Material Adverse Effect.
4.9 Environmental Condition. None of Borrower's properties or
assets has ever been used by Borrower or any Subsidiary or, to Borrower's
knowledge, without any independent investigation, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release,
or transport, any hazardous waste or hazardous substance other than in
accordance with applicable law; to the best of Borrower's knowledge, none of
Borrower's properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a hazardous waste
or hazardous substance disposal site, or a candidate for closure pursuant to
any environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by a Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower or any Subsidiary
resulting in the releasing, or otherwise disposing of hazardous waste or
hazardous substances into the environment.
4.10 Taxes. Borrower and each Subsidiary have filed or caused to
be filed all material tax returns required to be filed, and has paid, or have
made adequate provision for the payment of, all taxes reflected therein.
4.11 Subsidiaries. No Borrower owns any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
4.12 Government Consents. Borrower has 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 their respective businesses as currently conducted.
4.13 Full Disclosure. The representations, warranties and other
statements included in the documents, certificates and written statements
furnished by Borrower to either Bank prior to or as of the date of this
Agreement for use in connection with the transactions contemplated by this
Agreement, taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact (known to Borrower, in the
case of any document not furnished by it) necessary in order to make the
statements contained herein or therein not misleading (it being recognized by
Banks that the projections and forecasts provided by Borrower 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).
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, from and after the Closing Date
until payment in full of all outstanding Obligations, and for so long as any
Bank may have any commitment to make an Advance hereunder, Borrower shall do
all of the following:
5.1 Good Standing. Maintain its and cause to be maintained each of
its Subsidiaries' corporate existence and good standing in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify is reasonably likely to have a Material Adverse Effect.
Borrower shall maintain, and shall cause each of its Subsidiaries to maintain
17
in force all licenses, approvals and agreements, the loss of which would have
a Material Adverse Effect.
5.2 Government Compliance. Meet, and shall cause each Subsidiary
to meet, the minimum funding requirements of ERISA with respect to any
employee benefit plans subject to ERISA. 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, noncompliance with
which could have a Material Adverse Effect.
5.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Banks: (a) upon the sooner of 45 days after the last day of each
fiscal quarter as to Form 10-Q, and the sooner of 90 days after the last day
of each fiscal year as to Form 10-K, or within five (5) days upon becoming
available, 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 Form 10-K and 10-Q filed with the
Securities and Exchange Commission; (b) promptly upon receipt of notice
thereof, a report of any legal actions pending or threatened against Borrower
or any Subsidiary that is reasonably likely to result in damages or costs to
Borrower or any Subsidiary of Five Hundred Thousand Dollars ($500,000) or
which could have a Material Adverse Effect; and (c) such budgets, sales
projections, operating plans or other financial information as Bank may
reasonably request from time to time.
Borrower shall deliver to Banks with the quarterly financial statements
a Compliance Certificate signed by a Responsible Officer in substantially the
form of Exhibit B hereto.
Any Bank shall have a right from time to time hereafter to audit
Borrower's Accounts, provided that such audits will be conducted at
Borrower's expense no more often than annually, unless an Event of Default
has occurred and is continuing, with the auditing Bank to conduct all other
audits at its own expense.
5.4 Inventory; Returns. Keep all Inventory in good and marketable
condition, free from all material defects. 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 at
the time of the execution and delivery of this Agreement. Borrower shall
promptly notify Bank when any particular return, recovery, dispute or claim
causes the aggregate returns for any fiscal month to exceed Ten Percent (10%)
of the gross sales for such month.
5.5 Taxes. Make, and shall cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, and will execute and
deliver to Banks, on demand, appropriate certificates attesting to the
payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments
and withholding taxes required of it by applicable laws, including, but not
limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish each
Bank with proof satisfactory to such Bank indicating that Borrower or a
Subsidiary has made such payments or deposits; 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.
5.6 Insurance.
(a) Borrower, at its expense, shall keep its assets 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 their respective
businesses are conducted on the date hereof. Borrower shall also maintain
insurance relating to Borrower's ownership and use of its assets in amounts
and of a type that are customary to businesses similar to Borrower's.
18
(b) All such policies of insurance shall be in such form, with such
companies, and in such amounts as are reasonably satisfactory to Banks. At a
Bank's request, Borrower shall deliver to Banks certified copies of such
policies of insurance and evidence of the payments of all premiums therefor.
All proceeds payable under any such policy shall, at the option of Banks, be
payable to Banks to be applied on account of the Obligations.
5.7 Quick Ratio. Maintain, on a consolidated basis, as of the last
day of each fiscal quarter, a ratio of Quick Assets to Current Liabilities of
at least 1.75 to 1.00.
5.8 Debt-Tangible Net Worth Ratio. Maintain, on a consolidated
basis, as of the last day of each fiscal quarter, a ratio of Total
Liabilities to Tangible Net Worth of not more than 0.65 to 1.00.
5.9 Tangible Net Worth. Maintain, on a consolidated basis, as of
the last day of each fiscal quarter, a Tangible Net Worth of not less than
Sixty Million Dollars ($60,000,000) plus Seventy Five Percent (75%) of
Borrower's quarterly profits beginning December 31, 1998.
5.10 Profitability. On a consolidated basis, have a minimum net
profit of One Dollar ($1.00) for each fiscal quarter, provided Borrower may
suffer a loss in any one fiscal quarter per fiscal year of not more than Five
Hundred Thousand Dollars ($500,000). Non-cash charges incurred in the
acquisition of Tower Electronics, Inc. shall not be included in the
calculation of profitability for the fiscal quarter ending September 30, 1997.
5.11 Debt Service Coverage. Borrower shall maintain, as of the last
day of each fiscal quarter, a Debt Service Coverage of at least 2.0 to 1.0 on
a rolling two quarter basis, annualized, excluding capital expenditures.
"Debt Service Coverage" means (a) the sum of (i) earnings after tax plus (ii)
depreciation and amortization expense less (iii) capital expenditures,
divided by (b) the current portion of total long term debt, excluding
Advances under the Committed Line.
5.12 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 any Bank to effect the purposes of
this Agreement.
6. NEGATIVE COVENANTS
Borrower covenants and agrees that, from and after the Closing
Date, so long as any credit hereunder shall be available and until payment in
full of the outstanding Obligations or for so long as any Bank may have any
commitment to make any Advances, Borrower will not do any of the following:
6.1 Dispositions. Without the Banks' consent, which shall not be
unreasonably withheld, convey, sell, lease, transfer or otherwise dispose of
(collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than: (i) Transfers in
the ordinary course of business; (ii) Transfers of non-exclusive licenses and
similar arrangements for the use of the property of Borrower or its
Subsidiaries; (iii) Transfers of worn-out or obsolete Equipment; or (iv)
Transfers which constitute liquidation of Investments permitted under Section
7.7.
6.2 Change in Business or Control. Engage in any business, or
permit any of its Subsidiaries to engage in any business, other than the
businesses currently engaged in by Borrower and any business substantially
similar or related thereto (or incidental thereto).
6.3 Mergers or Acquisitions. Except in the ordinary course of
Borrower's business, merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with or into any other business organization, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another Person; provided that this
Section 7.3 shall not apply to
19
Permitted Investments or to transactions among a Borrower and its
Subsidiaries in which such Borrower is the surviving entity or among its
Subsidiaries.
6.4 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.
6.5 Encumbrances. Create, incur, assume or suffer to exist 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, or permit any of
its Subsidiaries so to do, except for Permitted Liens.
6.6 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 for so long as an Event of Default has
not occurred and is not continuing (and would not exist immediately after
such payment), Borrower may repurchase its stock from former employees of
Borrower in accordance with the terms of repurchase or similar agreements
between Borrower and such employees.
6.7 Investments. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments and except as made in the ordinary
course of Borrower's business.
6.8 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 nonaffiliated Person, and except for transactions with a Subsidiary
that are upon fair and reasonable terms and transactions constituting
Permitted Investments.
6.9 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
amend any provision contained in any documentation relating to the
Subordinated Debt without Banks' prior written consent.
6.10 Compliance. Become an "investment company" 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 Advance 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, permit any
condition to exist that would entitle any Person to obtain a decree
adjudicating that any Plan under ERISA must be terminated, fail to comply
with the Federal Fair Labor Standards Act or violate any law or regulation,
which violation could have a Material Adverse Effect or a material adverse
effect on the Collateral or the priority of Banks' Lien on the Collateral, or
permit any of its Subsidiaries to do any of the foregoing.
7. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event
of Default by Borrower under this Agreement:
7.1 Payment Default. If Borrower fails to pay the principal of, or
any interest on, any Credit Extensions when due and payable; or fails to pay
any portion of any other Obligations not constituting such principal or
interest, including without limitation Bank Expenses, within thirty (30) days
of receipt by Borrower of a reasonably detailed invoice on account of such
other Obligations;
7.2 Covenant Default. If Borrower fails to perform any obligation
under Article 5 or violates any of the covenants contained in Article 6 of
this Agreement, or fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement
20
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and any Bank and as to any
default under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure such default within twenty (20) days
after Borrower receives notice thereof or any Responsible Officer becomes
aware thereof; provided, however, that if the default cannot by its nature be
cured within the twenty (20) day period or cannot after diligent attempts by
Borrower be cured within such twenty (20) 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 thirty (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 (provided that no Advances will be required to be made during such
cure period);
7.3 Material Adverse Change. If there occurs a material adverse
change in the business or financial condition of Borrower, taken as a whole,
or if there is a material impairment of the prospect of repayment of any
portion of the Obligations;
7.4 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 thirty (30) days,
or if a 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 by the
United States Government, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or governmental agency, and the
same is not paid within thirty (30) 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 an adequate bond has been
posted pending a good faith contest by Borrower (provided that no Advances
will be required to be made during such cure period);
7.5 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 thirty (30)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
7.6 Other Agreements. If there is a default 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 Five Hundred Thousand
Dollars ($500,000) or which would have a Material Adverse Effect;
7.7 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Five Hundred
Thousand Dollars ($500,000) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of thirty (30) days (provided
that no Advances will be made prior to the satisfaction or stay of such
judgment); or
7.8 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or
representation set forth herein or in any certificate delivered to any Bank
by any Responsible Officer pursuant to this Agreement or to induce Bank to
enter into this Agreement or any other Loan Document.
8. BANKS' RIGHTS AND REMEDIES
8.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, any Bank may, at its election, do any one
or more of the following, all of which are authorized by Borrower:
21
(a) Declare all Obligations owing to such Bank, 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 8.5 all Obligations shall become immediately due
and payable without any action by any 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 any Bank; and
(c) Set off and apply to the Obligations any and all (i) balances,
deposits and investments of Borrower held by such Bank, or (ii) indebtedness
at any time owing to or for the credit or the account of Borrower held by
such Bank;
(d) Liquidate any Exchange Contracts not yet settled and demand
that Borrower immediately deposit cash with Banks in an amount sufficient to
cover any losses incurred by Bank due to liquidation of the Exchange
Contracts at the then prevailing market price; and
(e) Without notice to Borrower set off and apply to the Obligations
any and all (i) balances and deposits of Borrower held by a Bank, or (ii)
indebtedness at any time owing to or for the credit or the account of
Borrower held by a Bank.
8.2 Bank Expenses. After the occurrence of an Event of Default,
if a 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 Banks may do any or all of the following: (a) make payment
of the same or any part thereof; (b) set up such reserves under the Committed
Line as Banks deem necessary to protect Banks from the exposure created by
such failure; or (c) obtain and maintain insurance policies of the type
discussed in Section 5.6 of this Agreement, and take any action with respect
to such policies as Banks reasonably deem prudent. Any amounts so paid or
deposited by Banks shall constitute Bank Expenses, shall be immediately due
and payable, and shall bear interest at the then applicable rate hereinabove
provided. Any payments made by any Bank shall not constitute an agreement by
such Bank to make similar payments in the future or a waiver by Bank of any
Event of Default under this Agreement.
8.3 Remedies Cumulative. Banks' rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Banks shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by any Bank of
one right or remedy shall be deemed an election. No waiver by any Bank of
any Event of Default on a Borrower's part shall be effective unless also
waived in writing by any other Bank. No waiver shall be deemed a continuing
waiver. No delay by any Bank shall constitute a waiver, election, or
acquiescence by it.
8.4 Demand; Protest. Each Borrower waives protest, notice of
protest, notice of dishonor, notice of payment and nonpayment, notice of any
nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by any Bank on which Borrower may in any way be liable.
9. 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 certified
mail, postage prepaid, return receipt requested, or by prepaid telefacsimile
to Borrower or to each Bank, as the case may be, at its addresses set forth
below:
22
If to : Advanced Energy Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Banks: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Bank of Hawaii
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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. NOTICES TO ONE BANK SHALL NOT BE DEEMED NOTICE TO THE OTHER BANK.
10. 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. Borrower and Banks hereby submit to the
exclusive jurisdiction of the state and Federal courts located in the County
of Santa ▇▇▇▇▇, State of California. BORROWER AND BANKS 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
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.
11. INTERCREDITOR PROVISIONS
11.1 Proportionate Interests. Except for Optional Currency
Advances, which shall be the sole responsibility of BofH, and except as
otherwise provided in this Agreement, the rights, interests, and obligations
of each Bank under this Agreement and the Loan Documents at any time shall be
shared in the ratio of (a) the maximum amount the Bank has committed to
advance as set forth on the signature page signed by the Bank to (b) the
Committed Line. Any reference in this Agreement or the Loan Documents to an
allocation between or sharing by the Banks of any right, interest, or duty
"ratably," "proportionally," "pro rata," or in similar terms shall refer to
this ratio. No Bank is obligated to advance any funds in lieu of or for the
account of the other Bank if the latter Bank fails to make such Advance.
11.2 Designation of Service Agent. To facilitate the administration
of this Agreement, SVB shall act as "Servicing Agent" for itself and BofH.
Servicing Agent shall have only such duties as are expressly set forth in
this Agreement, or as otherwise agreed in writing by the Banks. Servicing
Agent shall be deemed to act on behalf of both Banks whenever Servicing Agent
acts under this Agreement.
23
11.3 Resignation. Servicing Agent may resign as Servicing Agent,
upon thirty (30) day's written notice to the other Banks and to Borrower and
appointment of a successor Servicing Agent approved by Banks. Upon receipt
of notice of resignation, the Banks shall appoint a successor Servicing
Agent. The resigning Servicing Agent shall cooperate fully in delivering to
the successor Servicing Agent the Loan Documents and copies of all records
relating to the Advances and payments made hereunder that the successor
Servicing Agent reasonably requests.
11.4 Servicing Agent as Bank. Servicing Agent shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not Servicing Agent. The term "Banks" includes
Servicing Agent in Servicing Agent's individual capacity. Servicing Agent
and its Subsidiaries and Affiliates may accept deposits from, lend money to,
act as agent or trustee for other lenders to, and generally engage in any
kind of banking, trust, or other business with, any Borrower or any
Subsidiary or Affiliates as if Servicing Agent were not Servicing Agent.
11.5 No Agency. EXCEPT AS SPECIFIED HEREIN, NEITHER BANK IS AN
AGENT OF THE OTHER. NEITHER BANK HAS ANY AUTHORITY TO ACT OR FAIL TO ACT FOR
THE OTHER. THE OBLIGATIONS OF EACH BANK HEREUNDER ARE SEVERAL. NO BANK
SHALL BE LIABLE FOR THE FAILURE OF ANY OTHER BANK TO PERFORM ITS OBLIGATIONS
HEREUNDER.
11.6 No Reliance. The provisions of this Article 11 are solely for
the benefit of Banks in specifying their rights and obligations with respect
to each other, and not for the benefit of any Borrower or its assigns or
successors.
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 any Borrower without each Bank's prior written
consent, which consent may be granted or withheld in each Bank's sole
discretion. Subject to the terms of any agreement between Banks, each Bank
shall have the right with the consent (which shall not be unreasonably
withheld) of Borrower to sell, transfer, negotiate, or grant participations
in all or any part of, or any interest in, Bank's obligations, rights and
benefits hereunder; provided no Bank will sell, transfer, negotiate or grant
participations in any part of, or any interest in, such obligations, rights
and benefits in a principal amount of less than Five Million Dollars
($5,000,000).
12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless each 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 (except with regard to a dispute between the Banks); and (b) all
losses or Bank Expenses in any way suffered, incurred, or paid by such Bank
as a result of or in any way arising out of, following, or consequential to
transactions between such Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and
expenses), except for losses caused by such Bank's gross negligence or
willful misconduct and except with regard to a dispute between the Banks.
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. This Agreement cannot be
changed or terminated orally. No amendment shall be effective without the
consent of all the parties hereto,
24
except the provisions of Article 11 may be amended by Banks without
Borrower's approval. 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.
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.
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
each 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 such Bank have run.
12.8 Confidentiality. In handling any confidential information each
Bank shall exercise the same degree of care that it 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 such 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 may be appropriate in the exercise 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 the Bank by a third party, provided the Bank does not have actual
knowledge that such third party is prohibited from disclosing such
information.
12.9 Optional Currency Rate Instruments. To the extent the terms of
any Optional Currency Rate Instrument differ from the terms of this Agreement
then the terms of such Optional Currency Rate Instrument shall govern the
rights and obligations of the parties thereto.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ADVANCED ENERGY INDUSTRIES, INC.
By:
Title:
SILICON VALLEY BANK
By:
Title:
Maximum Commitment Amount:
$15,000,000 (50%)
BANK OF HAWAII
By:
Title:
Maximum Commitment Amount:
$15,000,000 (50%)
26
EXHIBIT A
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS NOON, P.S.T.
TO: SILICON VALLEY BANK, as Servicing Agent
FAX#: (▇▇▇) ▇▇▇-▇▇▇▇ TIME: __________
FROM: __________________________________________________________
CLIENT NAME (BORROWER)
REQUESTED BY: __________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE: __________________________________________
PHONE NUMBER: __________________________________________________
FROM ACCOUNT # _________________ TO ACCOUNT # _________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $ ___________________________
PRINCIPAL PAYMENT (ONLY) $ ___________________________
INTEREST PAYMENT (ONLY) $ ___________________________
PRINCIPAL AND INTEREST (PAYMENT) $ ___________________________
OTHER INSTRUCTIONS: ____________________________________________
________________________________________________________________
All representations and warranties of Borrower stated in the
Loan Agreement are true, correct and complete in all material
respects as of the date of the telephone request for and Advance
confirmed by this Borrowing Certificate; 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.
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment
transfer/loan advance on the advance designated account and is
known to me.
______________________________ _________________
Authorized Requester Phone #
______________________________ _________________
Received By (Bank) Phone #
__________________________________________
Authorized Signature (Bank)
▇-▇
▇▇▇▇▇▇▇ ▇-▇
ADVANCE/CONVERSION REQUEST FORM
The undersigned hereby certifies as follows:
I, ______________ , am the duly elected and acting ______________
of Advanced Energy Industries, Inc.
This certificate is delivered on behalf of Borrower to Silicon Valley
Bank, as Servicing Agent, pursuant to Section 2 of that certain Loan by and
between Borrower and Banks (the "Agreement"). The terms used in this
Borrowing Certificate which are defined in the Agreement have the same
meaning herein as ascribed to them therein.
Borrower hereby requests on ______________, 19___ an Advance (the
"Advance") as follows:
(a) The date on which the Advance is to be made or converted into a
Term Advance is ______________, 19___.
(b) The amount of the Advance is to be ______________
($______________), in the form of a Prime Rate Advance of $______________; a
LIBOR Rate Advance for an Interest Period of ______________ months; an
Optional Currency Rate Advance of an Equivalent Amount of $ ______________ in
[currency type] for an Interest Period of ______________ months.
All representations and warranties of Borrower stated in the Agreement
are true, correct and complete in all material respects as of the date of
this request for a loan; 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.
IN WITNESS WHEREOF, this Advance Request Form is executed by the
undersigned as of this ______________ day of ______________ , 19___.
ADVANCED ENERGY INDUSTRIES, INC.
By:
Title:
FOR INTERNAL BANK USE ONLY
LIBOR Pricing LIBOR Rate LIBOR Rate Maturity Date
Date Variance
___%
Optional Optional Optional Maturity Date
Currency Currency Rate Currency Rate
Pricing Date Variance
___%
▇-▇
▇▇▇▇▇▇▇ ▇-▇
Optional Currency/LIBOR RATE CONVERSION/CONTINUATION CERTIFICATE
The undersigned hereby certifies as follows:
I, ______________ , am the duly elected and acting ______________
of Advanced Energy Industries, Inc. ("Borrower").
This certificate is delivered on behalf of Borrower to Silicon Valley
Bank, as Servicing Agent, pursuant to Section 2 of that certain Loan
Agreement between Borrower and Banks (the "Agreement"). The terms used in
this Optional Currency/LIBOR Rate Conversion/Continuation Certificate which
are defined in the Agreement have the same meaning herein as ascribed to them
therein.
Borrower hereby requests on ______________ , 19___ a LIBOR Rate Advance
(the "Advance") as follows:
(a) __ (i) A rate conversion of an existing Prime Rate
Advance from a Prime Rate Advance to a LIBOR
Rate Advance; or
__ (ii) A continuation of an existing LIBOR Rate
Advance as a LIBOR Rate Advance; or
__ (iii) A continuation of an existing Optional
Currency Rate Advance as an Optional Currency
Rate Advance.
[Check (i), (ii) or (iii) above]
(b) The date on which the Advance is to be made is ______________ ,
19___.
(c) The amount or the Equivalent Amount of the Advance is to be
______________ ($__________), for an Interest Period of ______________
month(s).
All representations and warranties of Borrower stated in the Agreement
are true, correct and complete in all material respects as of the date of
this request for a loan; 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.
IN WITNESS WHEREOF, this Optional Currency/LIBOR Rate
Conversion/Continuation Certificate is executed by the undersigned as of this
______________ day of ______________ , 19___.
ADVANCED ENERGY INDUSTRIES, INC.
By:
Title:
FOR INTERNAL BANK USE ONLY
LIBOR Pricing LIBOR Rate LIBOR Rate Maturity Date
Date Variance
___%
Optional Optional Optional Maturity Date
Currency Currency Rate Currency Rate
Pricing Date Variance
___%
A-3
EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
BANK OF HAWAII
FROM: ADVANCED ENERGY INDUSTRIES, INC.
The undersigned authorized officer of Advanced Energy Industries, Inc. hereby
certifies that, in accordance with the terms and conditions of the Loan
Agreement between Borrower and Banks (the "Agreement"), (i) Borrower is in
complete compliance for the period ending __________________ with all
required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
Form 10-K Annually within 5 days Yes No
Form 10-Q Quarterly within 5 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain on a Quarterly Basis:
Minimum Quick Ratio 1.75:1.00 _____:1.0 Yes No
Minimum Tangible Net Worth $60,000,000_/1 $________ Yes No
Maximum Debt - Tangible Net
Worth 0.65:1.00 _____:1.0 Yes No
Profitability
Quarterly $1.00_/2 $________ Yes No
Debt Service Coverage 1.00:1.00 _____:1.00 Yes No
/1 Plus 75% of quarterly net income beginning 12/31/98.
/2 One loss quarter permitted per fiscal year, up to $500,000.
COMMENTS REGARDING EXCEPTIONS: BANK USE ONLY
See Attached.
Received by:
authorized signer
Sincerely,
Date:
Signature
Verified:
authorized signer
Title
Date:
Date
Compliance Status: Yes No
B-1
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Advanced Energy Industries, Inc. and Subsidiaries
LOAN TYPE. This is a Revolving Line of Credit.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Short Term Working
Capital and Equipment Finance.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will
be disbursed until all of Banks' conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
Revolving
Line
Amount paid to Borrower $0.0
directly:
Undisbursed Funds $
---------
Principal $30,000,000
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash:
$ Outside Counsel Fees and Expenses (Estimate)
------
Total Charges Paid in Cash $
------
AUTOMATIC PAYMENTS. Borrower hereby authorizes Banks to automatically deduct
the amount of any loan payment from AEI's account no. 351030170 at Silicon
Valley Bank. If the funds in the accounts are insufficient to cover any
payment, Banks shall not be obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANKS THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN SUCH BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANKS. THIS
AUTHORIZATION IS DATED AS OF ______________ , 1997.
BORROWER:
ADVANCED ENERGY INDUSTRIES, INC.
Authorized Officer
CORPORATE RESOLUTIONS TO BORROW
BORROWER: Advanced Energy Industries, Inc.
I, the undersigned Secretary or Assistant Secretary of Advanced Energy
Industries, Inc. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of
Delaware.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation
(or by other duly authorized corporate action in lieu of a meeting), duly
called and held, at which a quorum was present and voting, the following
resolutions were adopted.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
------------------ ------------------ ------------------
------------------ ------------------ ------------------
------------------ ------------------ ------------------
------------------ ------------------ ------------------
------------------ ------------------ ------------------
acting for an on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Bank of Hawaii and
Silicon Valley Bank ("Banks"), on such terms as may be agreed upon between
the officers, employees, or agents and Bank, such sum or sums of money as in
their judgment should be borrowed, without limitation, including such sums as
are specified in that certain Loan and Security Agreement dated as of
December 8, 1997 (the "Loan Agreement").
EXECUTE NOTES. To execute and deliver to Banks the promissory note or
notes of the Corporation, on each Bank's forms, at such rates of interest and
on such terms as may be agreed upon, evidencing the sums of money so borrowed
or any indebtedness of the Corporation to Banks, and also to execute and
deliver to Banks one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for one or more of the notes,
or any portion of the notes.
NEGOTIATE ITEMS. To draw, endorse, and discount with Banks all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Banks, or to
cause such other disposition of the proceeds derived therefrom as they may
deem advisable.
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LETTERS OF CREDIT. To execute letter of credit application and other
related documents pertaining to SVB's issuance of letters of credit.
FOREIGN EXCHANGE CONTRACTS. To request any Bank to enter into foreign
exchange contracts on its behalf.
FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full
force and effect and Banks may rely on these Resolutions until written notice
of their revocation shall have been delivered to and received by Bank. Any
such notice shall not affect any of the Corporation's agreements or
commitments in effect at the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the
case may be, and occupy the positions set forth opposite their respective
names; that the foregoing Resolutions now stand of record on the books of the
Corporation; and that the Resolutions are in full force and effect and have
not been modified or revoked in any manner whatsoever.
I FURTHER CERTIFY that attached hereto are true and correct copies of
the Certificate of Incorporation and Bylaws of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand on _______________ ,
19___ and attest that the signatures set opposite the names listed above are
their genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X
------------------------------
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