EXHIBIT 10(ab)
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of the Effective
Date between (i) SILICON VALLEY BANK, a California corporation with its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and with a loan production office located at One ▇▇▇▇▇▇ Executive Park, Suite
200, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Bank"), and (ii)
SPIRE CORPORATION, a Massachusetts corporation, SPIRE SOLAR, INC., a
Massachusetts corporation, SPIRE BIOMEDICAL, INC., a Massachusetts corporation,
each with offices located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and SPIRE SEMICONDUCTOR, LLC, a Delaware limited liability company (formerly
known as Bandwidth Semiconductor, LLC), with offices at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (jointly and severally, individually and collectively, the
"Borrower"), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in Section 13. All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to
pay Bank the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon as and when due in accordance with this Agreement.
2.1.1 Revolving Advances.
(a) Availability. Subject to the terms and conditions of
this Agreement and to deduction of Reserves, Bank shall make Advances not
exceeding the Availability Amount. Amounts borrowed hereunder may be repaid and,
prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable
terms and conditions precedent herein.
(b) Termination; Repayment. The Revolving Line terminates
on the Revolving Line Maturity Date, when the principal amount of all Advances,
the unpaid interest thereon, and all other Obligations relating to the Revolving
Line shall be immediately due and payable.
2.1.2 Letters of Credit Sublimit.
(a) As part of the Revolving Line, Bank shall issue or
have issued Letters of Credit for Borrower's account. Such aggregate amounts
utilized hereunder shall at all times reduce the amount otherwise available for
Advances under the Revolving Line. The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed One Million Five Hundred Thousand Dollars
($1,500,000) inclusive of the Credit Extensions made pursuant to Sections 2.1.3
and 2.1.4. If, on the Revolving Line Maturity Date, there are any outstanding
Letters of Credit, then on such date Borrower shall provide to Bank cash
collateral in an amount equal to 105% of the face amount of all such Letters of
Credit plus all interest, fees, and costs due or to become due in connection
therewith (as estimated by Bank in its good faith business judgment), to secure
all of the Obligations relating to said Letters of Credit. All Letters of Credit
shall be in form and substance acceptable to Bank in its sole discretion and
shall be subject to the terms and conditions of Bank's standard Application and
Letter of Credit Agreement (the "Letter of Credit Application"). Borrower agrees
to execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request. Borrower further agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Bank and opened for Borrower's account or by Bank's
interpretations of any Letter of Credit issued by Bank for Borrower's account,
and Borrower understands and agrees that Bank shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.
(b) The obligation of Borrower to immediately reimburse
Bank for drawings made under Letters of Credit shall be absolute, unconditional,
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.
(c) Borrower may request that Bank issue a Letter of
Credit payable in a Foreign Currency. If a demand for payment is made under any
such Letter of Credit, Bank shall treat such demand as an Advance to Borrower of
the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the
then-prevailing rate of exchange in San Francisco, California, for sales of the
Foreign Currency for transfer to the country issuing such Foreign Currency.
(d) To guard against fluctuations in currency exchange
rates, upon the issuance of any Letter of Credit payable in a Foreign Currency,
Bank shall create a reserve (the "Letter of Credit Reserve") under the Revolving
Line in an amount equal to ten percent (10%) of the face amount of such Letter
of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank
from time to time to account for fluctuations in the exchange rate. The
availability of funds under the Revolving Line shall be reduced by the amount of
such Letter of Credit Reserve for as long as such Letter of Credit remains
outstanding.
2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line,
Borrower may enter into foreign exchange contracts with Bank under which
Borrower commits to purchase from or sell to Bank a specific amount of Foreign
Currency (each, a "FX Forward Contract") on a specified date (the "Settlement
Date"). FX Forward Contracts shall have a Settlement Date of at least one (1) FX
Business Day after the contract date and shall be subject to a reserve of ten
percent (10%) of each outstanding FX Forward Contract in a maximum aggregate
amount equal to One Hundred Fifty Thousand Dollars ($150,000) (the "FX
Reserve"). The aggregate amount of FX Forward Contracts at any one time plus
Credit Extensions made pursuant to Sections 2.1.2 and 2.1.4 may not exceed ten
(10) times the amount of the FX Reserve. Any amounts needed to fully reimburse
Bank will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.
2.1.4 Cash Management Services Sublimit. Borrower may use up to One
Million Five Hundred Thousand Dollars ($1,500,000), inclusive of the Credit
Extensions made pursuant to Sections 2.1.2 and 2.1.3, for Bank's cash management
services which may include merchant services, direct deposit of payroll,
business credit card, and check cashing services identified in Bank's various
cash management services agreements (collectively, the "Cash Management
Services"). Any amounts Bank pays on behalf of Borrower for any Cash Management
Services will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.
2.2 Overadvances. If, at any time the sum of (a) the outstanding
amount of any Advances (including any amounts used for Cash Management Services)
plus (b) the face amount of any outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit and any Letter of Credit Reserve, plus (c)
the FX Reserve (such sum being an "Overadvance"), exceeds the lesser of either
the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank
in cash such Overadvance. Without limiting Borrower's obligation to repay Bank
any amount of the Overadvance, Borrower agrees to pay Bank interest on the
outstanding amount of any Overadvance, on demand, at the Default Rate.
2.3 Payment of Interest on the Credit Extensions.
(a) Interest Rate; Advances. Subject to Section 2.3(b),
the principal amount outstanding under the Revolving Line shall accrue interest
at a per annum rate equal to the Prime Rate plus one percent (1.00%).
(b) Default Rate. Immediately upon the occurrence and
during the continuance of an Event of Default, Obligations shall bear interest
at a rate per annum which is five percentage points (5.00%) above the rate that
is otherwise applicable thereto (the "Default Rate"). Payment or acceptance of
the increased interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.
(c) Adjustment to Interest Rate. Changes to the interest
rate of any Credit Extension based on changes to the Prime Rate shall be
effective on the effective date of any change to the Prime Rate and to the
extent of any such change.
(d) 360-Day Year. Interest shall be computed on the basis
of a 360-day year for the actual number of days elapsed.
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(e) Debit of Accounts. Bank may debit any of Borrower's
deposit accounts, including the Designated Deposit Account, for principal and
interest payments or any other amounts Borrower owes Bank when due. These debits
shall not constitute a set-off.
(f) Payment; Interest Computation; Float Charge. Interest
is payable monthly on the last calendar day of each month. In computing interest
on the Obligations, all Payments received after 12:00 p.m. Pacific time on any
day shall be deemed received on the next Business Day. In addition, so long as
any principal or interest with respect to any Credit Extension remains
outstanding, Bank shall be entitled to charge Borrower a "float" charge in an
amount equal to three (3) Business Days interest, at the interest rate
applicable to the Credit Extensions on all Payments received by Bank. The float
charge for each month shall be payable on the last day of the month. Bank shall
not, however, be required to credit Borrower's account for the amount of any
item of payment which is unsatisfactory to Bank in its good faith business
judgment, and Bank may charge Borrower's Designated Deposit Account for the
amount of any item of payment which is returned to Bank unpaid.
2.4 Fees. Borrower shall pay to Bank:
(a) Commitment Fee. A fully earned, non-refundable
commitment fee of Fifty Thousand Dollars ($50,000), payable on the Effective
Date;
(b) Letter of Credit Fee. Bank's customary fees and
expenses for the issuance or renewal of Letters of Credit, upon the issuance,
each anniversary of the issuance, and the renewal of such Letter of Credit by
Bank;
(c) Termination Fee. Subject to the terms of Section 12.1,
a termination fee;
(d) Unused Revolving Line Facility Fee. A fee (the "Unused
Revolving Line Facility Fee"), payable monthly, in arrears, on a calendar year
basis, in an amount equal to three-quarters of one percent (0.75%) per annum of
the average unused portion of the Revolving Line, as determined by Bank. The
unused portion of the Revolving Line, for the purposes of this calculation,
shall include amounts reserved under the Cash Management Services Sublimit for
products provided and under the Foreign Exchange Sublimit for FX Forward
Contracts. Borrower shall not be entitled to any credit, rebate or repayment of
any Unused Revolving Line Facility Fee previously earned by Bank pursuant to
this Section notwithstanding any termination of the Agreement, or suspension or
termination of Bank's obligation to make loans and advances hereunder;
(e) Collateral Monitoring Fee. For any month or any
portion thereof in which a Liquidity Event has occurred or is continuing, a
collateral monitoring fee, payable monthly, in arrears, on the last day of each
month, in the amount of Seven Hundred Fifty Dollars ($750); and
(f) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses, plus expenses, for documentation and negotiation
of this Agreement) incurred through and after the Effective Date, when due.
3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. Bank's
obligation to make the initial Credit Extension is subject to the condition
precedent that Borrower shall consent to or have delivered, in form and
substance satisfactory to Bank, such documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate, including,
without limitation:
(a) duly executed original signatures to the Loan
Documents to which it is a party;
(b) its Operating Documents and a good standing
certificate of each Borrower certified by the Secretary of State of the
Commonwealth of Massachusetts and the State of Delaware, as applicable, as of a
date no earlier than thirty (30) days prior to the Effective Date;
(c) duly executed original signatures to the completed
Borrowing Resolutions for Borrower;
(d) certified copies, dated as of a recent date, of
financing statement searches, as Bank shall request, accompanied by written
evidence (including any UCC termination statements) that the Liens indicated in
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any such financing statements either constitute Permitted Liens or have been or,
in connection with the initial Credit Extension, will be terminated or released;
(e) the Perfection Certificates executed by Borrower;
(f) a landlord's consent executed by each landlord of the
Borrower in favor of Bank;
(g) a legal opinion of Borrower's counsel dated as of the
Effective Date together with the duly executed original signatures thereto;
(h) evidence satisfactory to Bank that the insurance
policies required by Section 6.7 hereof are in full force and effect, together
with appropriate evidence showing loss payable and/or additional insured clauses
or endorsements in favor of Bank; and
(i) payment of the fees and Bank Expenses then due as
specified in Section 2.4 hereof.
3.2 Conditions Precedent to all Credit Extensions. Bank's
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:
(a) except as otherwise provided in Section 3.4, timely
receipt of an executed Transaction Report;
(b) the representations and warranties in Section 5 shall
be true in all material respects on the date of the Transaction Report and on
the Funding Date of each Credit Extension; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, and no Default or Event of Default shall
have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower's representation and warranty on that date that the
representations and warranties in Section 5 remain true in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; and
(c) in Bank's sole discretion, there has not been any
material impairment in the general affairs, management, results of operations,
financial condition or the prospect of repayment of the Obligations, or there
has not been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank.
3.3 Covenant to Deliver.
Borrower agrees to deliver to Bank each item required to be delivered
to Bank under this Agreement as a condition to any Credit Extension. Borrower
expressly agrees that a Credit Extension made prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of Borrower's obligation to
deliver such item, and any such Credit Extension in the absence of a required
item shall be made in Bank's sole discretion.
3.4 Procedures for Borrowing. Subject to the prior satisfaction of
all other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the
Funding Date of the Advance. Together with such notification, Borrower must
promptly deliver to Bank by electronic mail or facsimile a completed Transaction
Report executed by a Responsible Officer or his or her designee. Bank shall
credit Advances to the Designated Deposit Account. Bank may make Advances under
this Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee.
4 CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower hereby grants Bank, to
secure the payment and performance in full of all of the Obligations, a
continuing security interest in, and pledges to Bank, the Collateral, wherever
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located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof. Borrower represents, warrants, and covenants that the
security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral (subject only to
Permitted Liens that may have superior priority to Bank's Lien under this
Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the general details
thereof and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Bank.
If this Agreement is terminated, Bank's Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations and at
such time as Bank's obligation to make Credit Extensions has terminated, Bank
shall, at Borrower's sole cost and expense, release its Liens in the Collateral
and all rights therein shall revert to Borrower.
4.2 Authorization to File Financing Statements. Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank's interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code. Such financing statements may indicate the Collateral as "all
assets of the Debtor" or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Bank's discretion.
5 REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1 Due Organization, Authorization; Power and Authority. Each
Borrower is duly existing and in good standing as a Registered Organization in
its jurisdiction of formation and is qualified and licensed to do business and
is in good standing in any jurisdiction in which the conduct of its business or
its ownership of property requires that it be qualified except where the failure
to do so could not reasonably be expected to have a material adverse effect on
Borrower's business. In connection with this Agreement, each Borrower has
delivered to Bank a completed certificate signed by such Borrower, entitled
"Perfection Certificate". Each Borrower represents and warrants to Bank that (a)
such Borrower's exact legal name is that indicated on such Perfection
Certificate and on the signature page hereof; (b) such Borrower is an
organization of the type and is organized in the jurisdiction set forth in its
respective Perfection Certificate; (c) each Perfection Certificate accurately
sets forth such Borrower's organizational identification number or accurately
states that such Borrower has none; (d) each Perfection Certificate accurately
sets forth such Borrower's place of business, or, if more than one, its chief
executive office as well as such Borrower's mailing address (if different than
its chief executive office); (e) each Borrower (and each of its respective
predecessors) has not, in the past five (5) years, changed its jurisdiction of
formation, organizational structure or type, or any organizational number
assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to such Borrower and each of its Subsidiaries
is accurate and complete (it being understood and agreed that each Borrower may
from time to time update certain information in the Perfection Certificate after
the Effective Date to the extent permitted by one or more specific provisions in
this Agreement). If any Borrower is not now a Registered Organization but later
becomes one, such Borrower shall promptly notify Bank of such occurrence and
provide Bank with such Borrower's organizational identification number.
The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party have been duly authorized, and do not (i)
conflict with any of Borrower's organizational documents, (ii) contravene,
conflict with, constitute a default under or violate any material Requirement of
Law, (iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any of its Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect or (v) constitute an event of default under any material
agreement by which Borrower is bound. Other than defaults of the Borrower under
the Equipment Line that (X) have been previously disclosed to Bank and (Y) have
been waived by Bank, Borrower is not in default under any agreement to which it
is a party or by which it is bound in which the default could reasonably be
expected to have a material adverse effect on Borrower's business.
5.2 Collateral. Borrower has good title to, has rights in, and the
power to transfer each item of the Collateral upon which it purports to ▇▇▇▇▇ ▇
▇▇▇▇ hereunder, free and clear of any and all Liens except Permitted Liens.
Borrower has no deposit accounts other than the deposit accounts with Bank, the
deposit accounts, if any, described in the Perfection Certificate delivered to
Bank in connection herewith, or of which Borrower has given
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Bank notice and taken such actions as are necessary to give Bank a perfected
security interest therein. The Accounts are bona fide, existing obligations of
the Account Debtors.
The Collateral is not in the possession of any third party
bailee (such as a warehouse) except as otherwise provided in the Perfection
Certificate. None of the components of the Collateral shall be maintained at
locations other than as provided in the Perfection Certificate or as permitted
pursuant to Section 7.2. In the event that Borrower, after the date hereof,
intends to store or otherwise deliver any portion of the Collateral to a bailee,
then Borrower will first receive the written consent of Bank and such bailee
must execute and deliver a bailee agreement in form and substance satisfactory
to Bank in its sole discretion.
All Inventory is in all material respects of good and marketable
quality, free from material defects.
Borrower is the sole owner of its intellectual property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Each patent is valid and enforceable and no part of the intellectual
property has been judged invalid or unenforceable, in whole or in part, and to
the best of Borrower's knowledge, no claim has been made that any part of the
intellectual property violates the rights of any third party.
Borrower is not a party to, nor is bound by, any material license or
other agreement with respect to which Borrower is the licensee (a) that
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower's interest in such license or agreement or any other property, or (b)
for which a default under or termination of could interfere with the Bank's
right to sell any Collateral. Borrower shall provide written notice to Bank
within ten (10) days of entering or becoming bound by any such license or
agreement which is reasonably likely to have a material impact on Borrower's
business or financial condition (other than over-the-counter software that is
commercially available to the public). Borrower shall take such steps as Bank
requests to obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for (x) all such licenses or agreements to be deemed
"Collateral" and for Bank to have a security interest in it that might otherwise
be restricted or prohibited by law or by the terms of any such license or
agreement, whether now existing or entered into in the future, and (y) Bank to
have the ability in the event of a liquidation of any Collateral to dispose of
such Collateral in accordance with Bank's rights and remedies under this
Agreement and the other Loan Documents.
5.3 Accounts Receivable; Inventory.
(a) For each Account with respect to which Advances are
requested, on the date each Advance is requested and made, such Account shall be
an Eligible Account.
(b) All statements made and all unpaid balances appearing
in all invoices, instruments and other documents evidencing the Eligible
Accounts are and shall be true and correct and all such invoices, instruments
and other documents, and all of Borrower's Books are genuine and in all respects
what they purport to be. Whether or not an Event of Default has occurred and is
continuing, Bank may notify any Account Debtor owing Borrower money of Bank's
security interest in such funds and verify the amount of such Eligible Account.
All sales and other transactions underlying or giving rise to each Eligible
Account shall comply in all material respects with all applicable laws and
governmental rules and regulations. Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible
Accounts in any Transaction Report. To the best of Borrower's knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Eligible Accounts are genuine, and all such documents,
instruments and agreements are legally enforceable in accordance with their
terms.
(c) For any item of Inventory consisting of Eligible
Inventory in any Transaction Report, such Inventory (i) consists of finished
goods, in good, new, and salable condition, which is not perishable, returned,
consigned, obsolete, not sellable, damaged, or defective, and is not comprised
of demonstrative or custom inventory, works in progress, packaging or shipping
materials, or supplies; (ii) meets all applicable governmental standards; (iii)
has been manufactured in compliance with the Fair Labor Standards Act; (iv) is
not subject to any Liens, except the first priority Liens granted or in favor of
Bank under this Agreement or any of the other Loan Documents; and (v) is located
at the locations identified by Borrower in the Perfection Certificate where it
maintains Inventory (or any location permitted under Section 7.2).
5.4 Litigation. Except as set forth on Schedule 5.4 attached
hereto, there are no actions or proceedings pending or, to the knowledge of the
Responsible Officers, threatened in writing by or against Borrower or any of its
Subsidiaries involving more than One Hundred Thousand Dollars ($100,000).
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5.5 No Material Deviation in Financial Statements. All
consolidated financial statements for Borrower and any of its Subsidiaries
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.6 Solvency. The fair salable value of Borrower's assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; Borrower is not left with unreasonably small capital after the
transactions in this Agreement; and Borrower is able to pay its debts (including
trade debts) as they mature.
5.7 Regulatory Compliance. Borrower is not an "investment company"
or a company "controlled" by an "investment company" under the Investment
Company Act of 1940, as amended. Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors). Borrower has complied in all material
respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of
its Subsidiaries is a "holding company" or an "affiliate" of a "holding company"
or a "subsidiary company" of a "holding company" as each term is defined and
used in the Public Utility Holding Company Act of 2005. Borrower has not
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to have a material adverse effect on its business. None of
Borrower's or any of its Subsidiaries' properties or assets has been used by
Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. Borrower and each of its Subsidiaries
have obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all Government
Authorities that are necessary to continue their respective businesses as
currently conducted.
5.8 Subsidiaries; Investments. Borrower does not own any stock,
partnership interest or other equity securities except for Permitted
Investments.
5.9 Tax Returns and Payments; Pension Contributions. Borrower has
timely filed all required tax returns and reports, and Borrower has timely paid
all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower. Borrower may defer payment of any contested
taxes, provided that Borrower (a) in good faith contests its obligation to pay
the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material
development in, the proceedings, (c) posts bonds or takes any other steps
required to prevent the governmental authority levying such contested taxes from
obtaining a Lien upon any of the Collateral that is other than a "Permitted
Lien". Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not withdrawn from participation in, and has
not permitted partial or complete termination of, or permitted the occurrence of
any other event with respect to, any such plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental
agency.
5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.
5.11 Full Disclosure. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, taken
together with all such written certificates and written statements given to
Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance.
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(a) Maintain its and all its Subsidiaries' legal existence
and good standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower's business
or operations. Borrower shall comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower's business.
(b) Obtain all of the Governmental Approvals necessary for
the performance by Borrower of its obligations under the Loan Documents to which
it is a party and the grant of a security interest to Bank in all of its
property. Borrower shall promptly provide copies of any such obtained
Governmental Approvals to Bank.
6.2 Financial Statements, Reports, Certificates.
(a) Borrower shall provide Bank with the following:
(i) monthly within fifteen (15) days after the end of such
period (or, during a Liquidity Event, weekly on the last Business Day of such
week), and with each request for a Credit Extension, a Transaction Report (and
any schedules related thereto);
(ii) within fifteen (15) days after the end of each month, (A)
monthly accounts receivable agings, aged by invoice date, (B) monthly accounts
payable agings, aged by invoice date, backlog reports and outstanding or held
check registers, if any, (C) monthly reconciliations of accounts receivable
agings (aged by invoice date), and the general ledger, (D) monthly inventory
reports for Inventory, computed on a first-in, first-out basis, valued at the
lower of cost or market (in accordance with GAAP), or such other Inventory
reports as are requested by Bank in its good faith business judgment, and (E)
outstanding purchase orders;
(iii) as soon as available, and in any event within thirty
(30) days after the end of each month, monthly unaudited financial statements;
(iv) within thirty (30) days after the end of each month a
monthly Compliance Certificate signed by a Responsible Officer, certifying that
as of the end of such month, Borrower was in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations showing
compliance with the financial covenants set forth in this Agreement and such
other information as Bank shall reasonably request, including, without
limitation, a statement that at the end of such month there were no held checks;
(v) within thirty (30) days prior to the end of each fiscal
year of Borrower, (A) annual operating budgets (including income statements,
balance sheets and cash flow statements, by month) for the upcoming fiscal year
of Borrower, and (B) annual financial projections for the following fiscal year
(on a monthly basis) as approved by Borrower's board of directors, together with
any related business forecasts used in the preparation of such annual financial
projections; and
(vi) as soon as available, and in any event within one hundred
fifty (150) days following the end of Borrower's fiscal year, annual financial
statements audited by independent certified public accountants acceptable to
Bank.
Notwithstanding the foregoing, during a Liquidity Event,
Borrower shall be required to provide Bank with the Transaction Report required
pursuant to clause (a)(i) above on a weekly basis, as of the last Business Day
of such month.
(b) In the event that Borrower becomes subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended,
within five (5) days after filing, all reports on Form 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission or a link thereto on Borrower's or
another website on the Internet.
6.3 Accounts Receivable.
(a) Schedules and Documents Relating to Accounts. Borrower
shall deliver to Bank Transaction Reports and schedules of collections, as
provided in Section 6.2, on Bank's standard forms; provided, however, that
Borrower's failure to execute and deliver the same shall not affect or limit
Bank's Lien and other rights in all of Borrower's Accounts, nor shall Bank's
failure to advance or lend against a specific Account affect or limit Bank's
Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank
with copies (or, at Bank's request, originals) of all contracts, orders,
invoices, and other similar documents, and all shipping instructions, delivery
receipts, bills of lading, and other evidence of delivery, for any goods the
sale or disposition of which gave rise to such Accounts. In addition, Borrower
shall deliver to Bank, on its request, the originals of all
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instruments, chattel paper, security agreements, guarantees and other documents
and property evidencing or securing any Accounts, in the same form as received,
with all necessary indorsements, and copies of all credit memos.
(b) Disputes. Borrower shall promptly notify Bank of all
disputes or claims relating to Accounts. Borrower may forgive (completely or
partially), compromise, or settle any Account for less than payment in full, or
agree to do any of the foregoing so long as (i) Borrower does so in good faith,
in a commercially reasonable manner, in the ordinary course of business, in
arm's-length transactions, and reports the same to Bank in the regular reports
provided to Bank; (ii) no Default or Event of Default has occurred and is
continuing; and (iii) after taking into account all such discounts, settlements
and forgiveness, the total outstanding Advances will not exceed the lesser of
the Revolving Line or the aggregate Borrowing Base.
(c) Collection of Accounts. Borrower shall have the right
to collect all Accounts, unless and until a Default or an Event of Default has
occurred and is continuing. Collections of Accounts shall be deposited by
Borrower into a lockbox account, or such other "blocked account" as Bank may
specify, pursuant to a blocked account agreement in such form as Bank may
specify in its good faith business judgment. Whether or not an Event of Default
has occurred and is continuing, Borrower shall hold all Payments on, and
proceeds of, Accounts in trust for Bank, and Borrower shall immediately deliver
all such payments and proceeds to Bank in their original form, duly endorsed, to
be applied to the Obligations pursuant to the terms of Section 9.4 hereof;
provided, however, on any date in which Liquidity is equal to or greater than
two and one-half (2.5) times the outstanding principal amount of the
Obligations, and provided no Default has occurred, Bank shall transfer such
amounts on such date to Borrower's Designated Deposit Account.
(d) Returns. Provided no Event of Default has occurred and
is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly (i) determine the reason for such return, (ii) issue a credit
memorandum to the Account Debtor in the appropriate amount, and (iii) provide a
copy of such credit memorandum to Bank, upon request from Bank. In the event any
attempted return occurs after the occurrence and during the continuance of any
Event of Default, Borrower shall hold the returned Inventory in trust for Bank,
and immediately notify Bank of the return of the Inventory.
(e) Verification. Bank may, from time to time, verify
directly with the respective Account Debtors the validity, amount and other
matters relating to the Accounts, either in the name of Borrower or Bank or such
other name as Bank may choose.
(f) No Liability. Bank shall not be responsible or liable
for any shortage or discrepancy in, damage to, or loss or destruction of, any
goods, the sale or other disposition of which gives rise to an Account, or for
any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Account, or for settling
any Account in good faith for less than the full amount thereof, nor shall Bank
be deemed to be responsible for any of Borrower's obligations under any contract
or agreement giving rise to an Account. Nothing herein shall, however, relieve
Bank from liability for its own gross negligence or willful misconduct.
6.4 Remittance of Proceeds. Except as otherwise provided in
Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of
any Collateral to Bank in the original form in which received by Borrower not
later than the following Business Day after receipt by Borrower, to be applied
to the Obligations pursuant to the terms of Section 9.4 hereof; provided that,
if no Default or Event of Default has occurred and is continuing, Borrower shall
not be obligated to remit to Bank the proceeds of the sale of worn out or
obsolete Equipment disposed of by Borrower in good faith in an arm's length
transaction for an aggregate purchase price of $25,000 or less (for all such
transactions in any fiscal year). Borrower agrees that it will not commingle
proceeds of Collateral with any of Borrower's other funds or property, but will
hold such proceeds separate and apart from such other funds and property and in
an express trust for Bank. Nothing in this Section limits the restrictions on
disposition of Collateral set forth elsewhere in this Agreement.
6.5 Taxes; Pensions. Timely file, and require each of its
Subsidiaries to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely file, all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower
and each of its Subsidiaries, except for deferred payment of any taxes contested
pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on
demand, appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.
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6.6 Access to Collateral; Books and Records. At reasonable times,
on one (1) Business Day's notice (provided no notice is required if an Event of
Default has occurred and is continuing), Bank, or its agents, shall have the
right, on a semi-annual basis (or more frequently, as Bank shall determine
necessary in its sole discretion) to inspect the Collateral and the right to
audit and copy Borrower's Books. The foregoing inspections and audits shall be
at Borrower's expense, and the charge therefor shall be $750 per person per day
(or such higher amount as shall represent Bank's then-current standard charge
for the same), plus reasonable out-of-pocket expenses. In the event Borrower and
Bank schedule an audit more than ten (10) days in advance, and Borrower cancels
or seeks to reschedules the audit with less than ten (10) days written notice to
Bank, then (without limiting any of Bank's rights or remedies), Borrower shall
pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to
compensate Bank for the anticipated costs and expenses of the cancellation or
rescheduling.
6.7 Insurance. Keep its business and the Collateral insured for
risks and in amounts standard for companies in Borrower's industry and location
and as Bank may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
shall have a loss payable endorsement showing Bank as an additional loss payee
and waive subrogation against Bank, and all liability policies shall show, or
have endorsements showing, Bank as an additional insured. All policies (or the
loss payable and additional insured endorsements) shall provide that the insurer
shall endeavor to give Bank at least twenty (20) days notice before canceling,
amending, or declining to renew its policy. At Bank's request, Borrower shall
deliver certified copies of policies and evidence of all premium payments.
Proceeds payable under any property policy shall, at Bank's option, be payable
to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so
long as no Event of Default has occurred and is continuing, Borrower shall have
the option of applying the proceeds of any casualty policy up to Two Hundred
Fifty Thousand Dollars ($250,000) with respect to any loss, but not exceeding
Five Hundred Thousand Dollars ($500,000) in the aggregate for all losses under
all casualty policies in any one year, toward the replacement or repair of
destroyed or damaged property; provided that any such replaced or repaired
property (i) shall be of equal or like value as the replaced or repaired
Collateral and (ii) shall be deemed Collateral in which Bank has been granted a
first priority security interest, and (b) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Bank, be payable to Bank on account of the
Obligations. If Borrower fails to obtain insurance as required under this
Section 6.7 or to pay any amount or furnish any required proof of payment to
third persons and Bank, Bank may make all or part of such payment or obtain such
insurance policies required in this Section 6.7, and take any action under the
policies Bank deems prudent.
6.8 Operating Accounts.
(a) Subject to the following, maintain all of its and all
of its Subsidiaries' domestic operating and other deposit accounts and
securities accounts with Bank and Bank's Affiliates:
(i) Borrower is permitted to maintain Spire Corporation's
account no. 0000 2591 5267 with Bank of America, provided that the balance in
such Deposit Account shall at no time exceed Twenty Five Thousand Dollars
($25,000);
(ii) Borrower is permitted to maintain Spire Corporation's
account nos. 113759-490-7 and 1165-123685 and Spire Semiconductor, LLC's account
nos. 330400-908-9 and 330918-730-8 (collectively, the "Citizens' Accounts",
provided that (A) on a weekly basis, on the last Business Day of each week, and
in any event when the aggregate balance in the Citizens' Accounts exceeds One
Hundred Thousand Dollars ($100,000) , transfer such amounts in the Citizens'
Accounts to Bank for deposit into such account as Bank shall specify; and (B)
within thirty (30) Business Days' after the Effective Date, Borrower shall have
either closed the Citizen's Accounts or shall have entered into a blocked
account agreement with RBS Citizens, N.A. in favor of Bank, in form and
substance reasonably acceptable to Bank. In any event, Borrower shall promptly
notify its Account Debtors to remit payments to Borrowers' Collateral Account
maintained at Bank.
(b) Provide Bank five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution
other than Bank or Bank's Affiliates. For each Collateral Account that Borrower
at any time maintains, Borrower shall cause the applicable bank or financial
institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Bank's Lien in
such Collateral Account in accordance with the terms hereunder. The provisions
of the previous sentence shall not apply to deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of Borrower's employees and identified to Bank by Borrower as
such.
6.9 Financial Covenants.
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Borrower shall maintain at all times, to be tested as of the
last day of each month, unless otherwise noted, on a consolidated basis with
respect to Borrower and its Subsidiaries:
(a) Liquidity. The ratio of (x) (i) Borrower's
unrestricted cash and Cash Equivalents at Bank plus (ii) eighty percent (80%) of
Eligible Accounts, plus (iii) the lesser of (1) twenty-five percent (25%) of
Borrower's Eligible Inventory or (2) $2,500,000 to (y) all outstanding Credit
Extensions and any other outstanding Obligations of Borrower owed to Bank,
including reserves, shall be greater than 2.00:1.00; and
(b) Profitability. A minimum Net Income, on a trailing six
(6) month basis, of (i) not less than ($1,000,000), for each monthly period
beginning on the Effective Date through and including May 31, 2008; and (ii) not
less than $1.00, for each monthly period beginning June 1, 2008 and thereafter.
6.10 Protection of Intellectual Property Rights. Borrower shall:
(a) protect, defend and maintain the validity and enforceability of its
intellectual property; (b) promptly advise Bank in writing of material
infringements of its intellectual property; and (c) not allow any intellectual
property material to Borrower's business to be abandoned, forfeited or dedicated
to the public without Bank's prior written consent.
6.11 Litigation Cooperation. From the date hereof and continuing
through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower's
books and records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Bank with respect to any Collateral or relating to Borrower.
6.12 Further Assurances. Execute any further instruments and take
further action as Bank reasonably requests to perfect or continue Bank's Lien in
the Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without Bank's prior written
consent:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (a)
of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; (c) in connection with Permitted Liens and Permitted Investments; and
(d) of non-exclusive licenses for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business;
7.2 Changes in Business, Management, Ownership, Control, or
Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in
any business other than the businesses currently engaged in by Borrower and such
Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) if a Key Person ceases to hold such office with Borrower and a
replacement satisfactory to Bank is not made within ninety (90) days thereafter.
Borrower shall not, without at least thirty (30) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Ten Thousand
Dollars ($10,000) in Borrower's assets or property), (2) change its jurisdiction
of organization, (3) change its organizational structure or type, (4) change its
legal name, or (5) change any organizational number (if any) assigned by its
jurisdiction of organization;
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with any other Person, or acquire,
or permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower; provided that, in the case
of a merger of a Subsidiary into Borrower, Borrower shall remain the surviving
entity;
7.4 Indebtedness. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness;
7.5 Encumbrance. (a) Create, incur, allow, or suffer any Lien on
any of its property, or assign or convey any right to receive income, including
the sale of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, permit any Collateral not to be subject to the first priority
security interest granted herein, or (b) enter into any agreement, document,
instrument or other arrangement (except with or in favor of
11
Bank) with any Person which directly or indirectly prohibits or has the effect
of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrower's or any
Subsidiary's intellectual property, except as is otherwise permitted in Section
7.1 hereof and the definition of "Permitted Lien" herein;
7.6 Maintenance of Collateral Accounts. Maintain any Collateral
Account except pursuant to the terms of Section 6.8(b) hereof;
7.7 Distributions; Investments. (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock; or (b)
directly or indirectly make any Investment other than Permitted Investments and
Investments existing as of the Effective Date and listed on Schedule 7.7
attached hereto;
7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower,
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person;
7.9 Subordinated Debt. (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b)
amend any provision in any document relating to the Subordinated Debt which
would increase the amount thereof or adversely affect the subordination thereof
to Obligations owed to Bank; and
7.10 Compliance. Become an "investment company" or a company
controlled by an "investment company", under the Investment Company Act of 1940,
as amended, or undertake as one of its important activities extending credit to
purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), or use the proceeds of any Credit
Extension for that purpose; fail to meet the minimum funding requirements of
ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA,
to occur; fail to comply with the Federal Fair Labor Standards Act or violate
any other law or regulation, if the violation could reasonably be expected to
have a material adverse effect on Borrower's business, or permit any of its
Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.
7.11 Subsidiaries. Permit any Subsidiary other than a Borrower to
maintain assets in an aggregate amount in excess of Twenty Five Thousand Dollars
($25,000) outstanding at any time.
7.12 Joint Ventures. Permit any Investment (other than Investments
described on Schedule 7.7 attached hereto) in any joint venture, including,
without limitation, any additional Investment in ▇▇▇▇▇▇ ▇▇▇▇▇ Solar, LLC.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an
"Event of Default") under this Agreement:
8.1 Payment Default. Borrower fails to (a) make any payment of
principal or interest on any Credit Extension on its due date, or (b) pay any
other Obligations within three (3) Business Days after such Obligations are due
and payable (which three (3) Business Day grace period shall not apply to
payments due on the Revolving Line Maturity Date). During the cure period, the
failure to cure the payment default is not an Event of Default (but no Credit
Extension will be made during the cure period);
8.2 Covenant Default.
(a) Borrower fails or neglects to perform any obligation
in Sections 6.2, 6.5, 6.7, 6.8, 6.9 or violates any covenant in Section 7; or
(b) Borrower fails or neglects to perform, keep, or
observe any other term, provision, condition, covenant or agreement contained in
this Agreement or any Loan Documents, and as to any default (other than those
specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has
12
failed to cure the default within ten (10) days after the occurrence thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional 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 cure the default shall not be deemed
an Event of Default (but no Credit Extensions shall be made during such cure
period). Grace periods provided under this section shall not apply, among other
things, to financial covenants or any other covenants set forth in subsection
(a) above;
8.3 Material Adverse Change. A Material Adverse Change occurs;
8.4 Attachment; Levy; Restraint on Business. (a) (i) The service
of process seeking to attach, by trustee or similar process, any funds of
Borrower or of any entity under control of Borrower (including a Subsidiary) on
deposit with Bank or any Bank Affiliate, or (ii) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency,
and the same under subclauses (i) and (ii) hereof are not, within ten (10) days
after the occurrence thereof, discharged or stayed (whether through the posting
of a bond or otherwise); provided, however, no Credit Extensions shall be made
during any such ten (10) day cure period; and (b) (i) any material portion of
Borrower's assets is attached, seized, levied on, or comes into possession of a
trustee or receiver, or (ii) any court order enjoins, restrains, or prevents
Borrower from conducting any part of its business;
8.5 Insolvency. (a) Borrower is unable to pay its debts (including
trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within forty-five (45) days (but no
Credit Extensions shall be made while of any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);
8.6 Other Agreements. There is (i) a default of the Borrower under
the Equipment Line that has (a) not been previously disclosed to Bank and (b)
not been previously waived or waived concurrently with the execution of this
Agreement by Bank, or (ii) 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 Fifty Thousand Dollars ($50,000) or that
could have a material adverse effect on Borrower's business;
8.7 Judgments. One or more judgments, orders, or decrees for the
payment of money in an amount, individually or in the aggregate, of at least
Fifty Thousand Dollars ($50,000) (not covered by independent third-party
insurance as to which liability has been accepted by such insurance carrier)
shall be rendered against Borrower and shall remain unsatisfied, unvacated, or
unstayed for a period of ten (10) days after the entry thereof (provided that no
Credit Extensions will be made prior to the satisfaction, vacation, or stay of
such judgment, order, or decree);
8.8 Misrepresentations. Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;
8.9 Subordinated Debt. A default or breach occurs under any
agreement between Borrower and any creditor of Borrower that signed a
subordination, intercreditor, or other similar agreement with Bank, or any
creditor that has signed such an agreement with Bank breaches any terms of such
agreement; or
8.11 Governmental Approvals. Any Governmental Approval shall have
been (a) revoked, rescinded, suspended, modified in an adverse manner or not
renewed in the ordinary course for a full term or (b) subject to any decision by
a Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.
9 BANK'S RIGHTS AND REMEDIES
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9.1 Rights and Remedies. While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:
(a) declare all Obligations immediately due and payable
(but if an Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Bank);
(b) stop advancing money or extending credit for
Borrower's benefit under this Agreement or under any other agreement between
Borrower and Bank;
(c) demand that Borrower (i) deposits cash with Bank in an
amount equal to the aggregate amount of any Letters of Credit remaining undrawn,
as collateral security for the repayment of any future drawings under such
Letters of Credit, and Borrower shall forthwith deposit and pay such amounts,
and (ii) pay in advance all Letter of Credit fees scheduled to be paid or
payable over the remaining term of any Letters of Credit;
(d) terminate any FX Forward Contracts;
(e) settle or adjust disputes and claims directly with
Account Debtors for amounts on terms and in any order that Bank considers
advisable, notify any Person owing Borrower money of Bank's security interest in
such funds, and verify the amount of such account;
(f) make any payments and do any acts it considers
necessary or reasonable to protect the Collateral and/or its security interest
in the Collateral. Borrower shall assemble the Collateral if Bank requests and
make it available as Bank designates. Bank may enter premises where the
Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which appears to
be prior or superior to its security interest and pay all expenses incurred.
Borrower grants Bank a license to enter and occupy any of its premises, without
charge, to exercise any of Bank's rights or remedies;
(g) apply to the Obligations any (i) balances and deposits
of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit
or the account of Borrower;
(h) ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is
hereby granted a non-exclusive, royalty-free license or other right to use,
without charge, Borrower's labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any similar property as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
(i) place a "hold" on any account maintained with Bank
and/or deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;
(j) demand and receive possession of Borrower's Books; and
(k) exercise all rights and remedies available to Bank
under the Loan Documents or at law or equity, including all remedies provided
under the Code (including disposal of the Collateral pursuant to the terms
thereof).
9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank
as its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower's name on any
checks or other forms of payment or security; (b) sign Borrower's name on any
invoice or ▇▇▇▇ of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle,
and adjust all claims under Borrower's insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits. Borrower hereby appoints Bank
as its lawful attorney-in-fact to sign Borrower's name on any documents
necessary to perfect or continue the perfection of Bank's security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Bank is under no further obligation
to make Credit Extensions hereunder. Bank's foregoing appointment as Borrower's
attorney in fact, and all of
14
Bank's rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank's obligation to
provide Credit Extensions terminates.
9.3 Protective Payments. If Borrower fails to obtain the insurance
called for by Section 6.7 or fails to pay any premium thereon or fails to pay
any other amount which Borrower is obligated to pay under this Agreement or any
other Loan Document, Bank may obtain such insurance or make such payment, and
all amounts so paid by Bank are Bank Expenses and immediately due and payable,
bearing interest at the then highest applicable rate, and secured by the
Collateral. Bank will make reasonable efforts to provide Borrower with notice of
Bank obtaining such insurance at the time it is obtained or within a reasonable
time thereafter. No payments by Bank are deemed an agreement to make similar
payments in the future or Bank's waiver of any Event of Default.
9.4 Application of Payments and Proceeds. Borrower shall have no
right to specify the order or the accounts to which Bank shall allocate or apply
any payments required to be made by Borrower to Bank or otherwise received by
Bank under this Agreement when any such allocation or application is not
specified elsewhere in this Agreement. If an Event of Default has occurred and
is continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion. Any
surplus shall be paid to Borrower by credit to the Designated Deposit Account or
to other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency. If Bank, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Bank shall have the option, exercisable at
any time, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Bank of cash therefor.
9.5 Bank's Liability for Collateral. So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6 No Waiver; Remedies Cumulative. Bank's failure, at any time or
times, to require strict performance by Borrower of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Bank thereafter to demand strict performance and compliance herewith or
therewith. No waiver hereunder shall be effective unless signed by Bank and then
is only effective for the specific instance and purpose for which it is given.
Bank's rights and remedies under this Agreement and the other Loan Documents are
cumulative. Bank has all rights and remedies provided under the Code, by law, or
in equity. Bank's exercise of one right or remedy is not an election, and Bank's
waiver of any Event of Default is not a continuing waiver. Bank's delay in
exercising any remedy is not a waiver, election, or acquiescence.
9.7 Demand Waiver. Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.
10 NOTICES
All notices, consents, requests, approvals, demands, or other
communication by any party to this Agreement or any other Loan Document must be
in writing and shall be deemed to have been validly served, given, or delivered:
(a) upon the earlier of actual receipt and three (3) Business Days after deposit
in the U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by
electronic mail or facsimile transmission; (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address, facsimile number, or email
address indicated below. Bank or Borrower may change its mailing or electronic
mail address or facsimile number by giving the other party written notice
thereof in accordance with the terms of this Section 10.
15
If to Borrower: Spire Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ Traurig LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Ms. ▇▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇.▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
Massachusetts law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Massachusetts; provided, however, that nothing
in this Agreement shall be deemed to operate to preclude Bank from bringing suit
or taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of Bank. Borrower expressly submits and consents
in advance to such jurisdiction in any action or suit commenced in any such
court, and Borrower hereby waives any objection that it may have based upon lack
of personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in
Section 10 of this Agreement and that service so made shall be deemed completed
upon the earlier to occur of Borrower's actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK
EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 Termination Prior to Revolving Line Maturity Date. This
Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank. Notwithstanding any such termination, Bank's lien and security
interest in the Collateral shall
16
continue until Borrower fully satisfies its Obligations. If such termination is
at Borrower's election (regardless of the existence of any Event of Default), or
at Bank's election due to the occurrence and continuance of an Event of Default,
Borrower shall pay to Bank, in addition to the payment of any other expenses or
fees then-owing, a termination fee in an amount equal to one percent (1.00%) of
the Revolving Line Amount (i.e. Fifty Thousand Dollars ($50,000)); provided that
no termination fee shall be charged if the credit facility hereunder is replaced
with a new facility from another division of Silicon Valley Bank.
12.2 Successors and Assigns. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any rights or obligations under it without Bank's prior
written consent (which may be granted or withheld in Bank's discretion). Bank
has the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights, and benefits under this Agreement and the other Loan
Documents.
12.3 Indemnification. Borrower agrees to indemnify, defend and hold
Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank (each, an "Indemnified Person")
harmless against: (a) all obligations, demands, claims, and liabilities
(collectively, "Claims") asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by such Indemnified Person from, following, or
arising from transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for Claims and/or losses directly caused
by such Indemnified Person's gross negligence or willful misconduct.
12.4 Time of Essence. Time is of the essence for the performance of
all Obligations in this Agreement.
12.5 Severability of Provisions. Each provision of this Agreement
is severable from every other provision in determining the enforceability of any
provision.
12.6 Correction of Loan Documents. Bank may correct patent errors
and fill in any blanks in this Agreement and the other Loan Documents consistent
with the agreement of the parties.
12.7 Amendments in Writing; Integration. All amendments to this
Agreement must be in writing and signed by both Bank and Borrower. This
Agreement and the Loan Documents represent the entire agreement about this
subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement and the Loan
Documents merge into this Agreement and the Loan Documents.
12.8 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, are an original, and all taken together, constitute
one Agreement.
12.9 Survival. All covenants, representations and warranties made
in this Agreement continue in full force until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been satisfied. The obligation of Borrower
in Section 12.3 to indemnify Bank shall survive until the statute of limitations
with respect to such claim or cause of action shall have run.
12.10 Confidentiality. In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Bank's Subsidiaries or Affiliates; (b) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee's or
purchaser's agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank's regulators or as otherwise
required in connection with Bank's examination or audit; (e) as Bank considers
appropriate in exercising remedies under the Loan Documents; and (f) to
third-party service providers of Bank so long as such service providers have
executed a confidentiality agreement with Bank with terms no less restrictive
than those contained herein. Confidential information does not include
information that either: (i) is in the public domain or in Bank's possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.
Bank may use confidential information for any purpose, including,
without limitation, for the development of client databases, reporting purposes,
and market analysis, so long as Bank does not disclose Borrower's identity or
the
17
identity of any person associated with Borrower unless otherwise expressly
permitted by this Agreement. The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.
12.11 Attorneys' Fees, Costs and Expenses. In any action or
proceeding between Borrower and Bank arising out of or relating to the Loan
Documents, the prevailing party shall be entitled to recover its reasonable
attorneys' fees and other costs and expenses incurred, in addition to any other
relief to which it may be entitled.
12.12 Borrower Liability. Either Borrower may, acting singly,
request Credit Extensions hereunder. Each Borrower hereby appoints the other as
agent for the other for all purposes hereunder, including with respect to
requesting Credit Extensions hereunder. Each Borrower hereunder shall be
obligated to repay all Credit Extensions made hereunder, regardless of which
Borrower actually receives said Credit Extension, as if each Borrower hereunder
directly received all Credit Extensions. Each Borrower waives any suretyship
defenses available to it under the Code or any other applicable law. Each
Borrower waives any right to require Bank to: (i) proceed against any Borrower
or any other person; (ii) proceed against or exhaust any security; or (iii)
pursue any other remedy. Bank may exercise or not exercise any right or remedy
it has against any Borrower or any security it holds (including the right to
foreclose by judicial or non-judicial sale) without affecting any Borrower's
liability hereunder. Notwithstanding any other provision of this Agreement or
any other Loan Document, each Borrower irrevocably waives all rights that it may
have at law or in equity (including, without limitation, any law subrogating
Borrower to the rights of Bank under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in
connection with this Agreement, any other Loan Document or otherwise and all
rights that it might have to benefit from, or to participate in, any security
for the Obligations as a result of any payment made by Borrower with respect to
the Obligations in connection with this Agreement or otherwise. Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section 12.12 shall be null and void. If any payment is made to a
Borrower in contravention of this Section 12.12, such Borrower shall hold such
payment in trust for Bank and such payment shall be promptly delivered to Bank
for application to the Obligations, whether matured or unmatured.
12.13 Right of Set Off. Borrower hereby grants to Bank, a lien,
security interest and right of set off as security for all Obligations to Bank,
whether now existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
13 DEFINITIONS
13.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"Account" is any "account" as defined in the Code with such additions
to such term as may hereafter be made, and includes, without limitation, all
accounts receivable and other sums owing to Borrower.
"Account Debtor" is any "account debtor" as defined in the Code with
such additions to such term as may hereafter be made.
"Advance" or "Advances" means an advance (or advances) under the
Revolving Line.
"Affiliate" of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"Agreement" is defined in the preamble hereof.
18
"Availability Amount" is (a) the lesser of (i) the Revolving Line or
(ii) the amount available under the Borrowing Base minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit) plus an amount equal to the Letter of Credit Reserve, minus (c) the FX
Reserve, minus (d) any amounts used for Cash Management Services, and minus (e)
the outstanding principal balance of any Advances.
"Bank" is defined in the preamble hereof.
"Bank Expenses" are all audit fees and expenses, costs, and expenses
(including reasonable attorneys' fees and expenses) for preparing, amending,
negotiating, administering, defending and enforcing the Loan Documents
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower.
"Borrower" is defined in the preamble hereof.
"Borrower's Books" are all Borrower's books and records including
ledgers, federal and state tax returns, records regarding Borrower's assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
"Borrowing Base" is (a) eighty percent (80%) of Eligible Accounts plus
(b) the lesser of (1) twenty-five percent (25%) of Borrower's Eligible
Inventory, but in any event not to exceed Two Million Five Hundred Thousand
Dollars ($2,500,000); or (2) fifty percent (50%) of the outstanding principal
balance of all Credit Extensions made under the Revolving Line, in each case as
determined by Bank from Borrower's most recent Transaction Report; provided,
however, that Bank may decrease the foregoing amount and/or percentages in its
good faith business judgment based on events, conditions, contingencies, or
risks which, as determined by Bank, may adversely affect Collateral.
"Borrowing Resolutions" are, with respect to any Person, those
resolutions adopted by such Person's board of directors and delivered by such
Person to Bank approving the Loan Documents to which such Person is a party and
the transactions contemplated thereby, together with a certificate executed by
its secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Bank may conclusively rely on such certificate unless and until
such Person shall have delivered to Bank a further certificate canceling or
amending such prior certificate.
"Business Day" is any day that is not a Saturday, Sunday or a day on
which Bank is closed.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor's Ratings
Group or ▇▇▇▇▇'▇ Investors Service, Inc.; and (c) Bank's certificates of deposit
issued maturing no more than one (1) year after issue.
"Cash Management Services" is defined in Section 2.1.4.
"Code" is the Uniform Commercial Code, as the same may, from time to
time, be enacted and in effect in the Commonwealth of Massachusetts; provided,
that, to the extent that the Code is used to define any term herein or in any
Loan Document and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, or
priority of, or remedies with respect to, Bank's Lien on any Collateral is
governed by the Uniform Commercial Code in effect in a jurisdiction other than
the Commonwealth of Massachusetts, the term "Code" shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes on the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such
provisions.
"Collateral" is any and all properties, rights and assets of Borrower
described on Exhibit A.
"Collateral Account" is any Deposit Account, Securities Account, or
Commodity Account.
19
"Commodity Account" is any "commodity account" as defined in the Code
with such additions to such term as may hereafter be made.
"Compliance Certificate" is that certain certificate in the form
attached hereto as Exhibit C.
"Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
"Control Agreement" is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity Account, Borrower, and Bank pursuant to which
Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
"Credit Extension" is any Advance, Letter of Credit, FX Forward
Contract, amount utilized for Cash Management Services, or any other extension
of credit by Bank for Borrower's benefit.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Default Rate" is defined in Section 2.3(b).
"Deferred Revenue" is all amounts received or invoiced in advance of
performance under contracts and not yet recognized as revenue.
"Deposit Account" is any "deposit account" as defined in the Code with
such additions to such term as may hereafter be made.
"Designated Deposit Account" is Borrower's deposit account, account
number 700587370, maintained with Bank.
"Dollars," "dollars" and "$" each mean lawful money of the United
States.
"Domestic Subsidiary" means a Subsidiary organized under the laws of
the United States or any state or territory thereof or the District of Columbia.
"Effective Date" is the date Bank executes this Agreement as indicated
on the signature page hereof.
"Eligible Accounts" means Accounts which arise in the ordinary course
of Borrower's business that meet all Borrower's representations and warranties
in Section 5.3. Bank reserves the right at any time after the Effective Date to
adjust any of the criteria set forth below and to establish new criteria in its
good faith business judgment. Eligible Accounts shall not include:
(a) Accounts that the Account Debtor has not paid within ninety
(90) days of invoice date regardless of invoice payment period terms;
(b) Accounts owing from an Account Debtor, fifty percent (50%) or
more of whose Accounts have not been paid within ninety (90) days of invoice
date;
(c) Accounts billed in the United States and owing from an Account
Debtor which does not have its principal place of business in the United States,
except for Eligible Foreign Accounts;
20
(d) Accounts billed and payable outside of the United States
unless the Bank has a first priority, perfected security interest or other
enforceable Lien in such Accounts;
(e) Accounts owing from an Account Debtor to the extent that
Borrower is indebted or obligated in any manner to the Account Debtor (as
creditor, lessor, supplier or otherwise - sometimes called "contra" accounts,
accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by
Borrower in the ordinary course of its business;
(f) Accounts for which the Account Debtor is Borrower's Affiliate,
officer, employee, or agent;
(g) Accounts with credit balances over ninety (90) days from
invoice date;
(h) Accounts owing from an Account Debtor, including Affiliates,
whose total obligations to Borrower exceed twenty-five (25%) of all Accounts,
for the amounts that exceed that percentage, unless Bank approves in writing;
(i) Accounts owing from an Account Debtor which is a United States
government entity or any department, agency, or instrumentality thereof unless
Borrower has assigned its payment rights to Bank and the assignment has been
acknowledged under the Federal Assignment of Claims Act of 1940, as amended;
(j) Accounts for demonstration or promotional equipment, or in
which goods are consigned, or sold on a "sale guaranteed", "sale or return",
"sale on approval", or other terms if Account Debtor's payment may be
conditional;
(k) Accounts owing from an Account Debtor that has not been
invoiced or where goods or services have not yet been rendered to the Account
Debtor (sometimes called memo ▇▇▇▇▇▇▇▇ or pre-▇▇▇▇▇▇▇▇);
(l) Accounts subject to contractual arrangements between Borrower
and an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements where the Account Debtor has a right of
offset for damages suffered as a result of Borrower's failure to perform in
accordance with the contract (sometimes called contracts accounts receivable,
progress ▇▇▇▇▇▇▇▇, milestone ▇▇▇▇▇▇▇▇, or fulfillment contracts);
(m) Accounts owing from an Account Debtor the amount of which may
be subject to withholding based on the Account Debtor's satisfaction of
Borrower's complete performance (but only to the extent of the amount withheld;
sometimes called retainage ▇▇▇▇▇▇▇▇);
(n) Accounts subject to trust provisions, subrogation rights of a
bonding company, or a statutory trust;
(o) Accounts owing from an Account Debtor that has been invoiced
for goods that have not been shipped to the Account Debtor unless Bank,
Borrower, and the Account Debtor have entered into an agreement acceptable to
Bank in its sole discretion wherein the Account Debtor acknowledges that (i) it
has title to and has ownership of the goods wherever located, (ii) a bona fide
sale of the goods has occurred, and (iii) it owes payment for such goods in
accordance with invoices from Borrower (sometimes called "▇▇▇▇ and hold"
accounts);
(p) Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue (but only to the extent of such Deferred
Revenue); but excluding Accounts owing from an Account Debtor with respect to
which Borrower has received Deferred Revenue that are backed by a
Letter-of-Credit acceptable to Bank.
(q) Accounts that represent non-trade receivables or that are
derived by means other than in the ordinary course of Borrower's business;
(r) Accounts subject to chargebacks or others payment deductions
taken by an Account Debtor (but only to the extent the chargeback is determined
invalid and subsequently collected by Borrower);
(s) Accounts in which the Account Debtor disputes liability or
makes any claim (but only up to the disputed or claimed amount), or if the
Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or
goes out of business; and
(t) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful.
21
"Eligible Foreign Accounts" means those Accounts for which the Account
Debtor does not have its principal place of business in the United States: (a)
that are otherwise Eligible Accounts and backed by a Letter-of-Credit advised
upon and acceptable to Bank; or (b) up to fifteen percent (15%) of such Accounts
that are otherwise Eligible Accounts that are not backed by a Letter-of-Credit
acceptable to Bank, and are approved by Bank in writing, on a case-by-case
basis.
"Eligible Inventory" means, at any time, the aggregate of Borrower's
Inventory (valued at the lower of cost or wholesale fair market value) that (a)
consists of (i) raw materials, (ii) work-in-progress Inventory, to the extent
such work-in-progress Inventory is the subject of a purchase order, backed by a
letter of credit acceptable to Bank, and (iii) finished goods, in good, new, and
salable condition, which is not perishable, returned, consigned, obsolete, not
sellable, damaged, or defective, and is not comprised of demonstrative or custom
inventory, packaging or shipping materials, or supplies; (b) meets all
applicable governmental standards; (c) has been manufactured in compliance with
the Fair Labor Standards Act; (d) is not subject to any Liens, except the first
priority Liens granted or in favor of Bank under this Agreement or any of the
other Loan Documents; (e) is located at Borrower's principal place of business
(or any location permitted under Section 7.2), and, in the case of Inventory in
the possession of third parties, Bank has received written acknowledgment from
such third parties of Borrower's ownership of such goods, in form and substance
satisfactory to Bank; and (f) is otherwise acceptable to Bank in its good faith
business judgment.
"Equipment" is all "equipment" as defined in the Code with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.
"Equipment Line" is that certain Loan and Security Agreement, dated as
of May 25, 2007, between Borrower and Bank, as amended, amended and restated,
modified or otherwise supplemented from time to time.
"ERISA" is the Employee Retirement Income Security Act of 1974, and its
regulations.
"Event of Default" is defined in Section 8.
"Foreign Currency" means lawful money of a country other than the
United States.
"Foreign Subsidiary" means any Subsidiary which is not a Domestic
Subsidiary.
"Funding Date" is any date on which a Credit Extension is made to or on
account of Borrower which shall be a Business Day.
"FX Business Day" is any day when (a) Bank's Foreign Exchange
Department is conducting its normal business and (b) the Foreign Currency being
purchased or sold by Borrower is available to Bank from the entity from which
Bank shall buy or sell such Foreign Currency.
"FX Forward Contract" is defined in Section 2.1.3.
"FX Reserve" is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"General Intangibles" is all "general intangibles" as defined in the
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation, all copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, any trade secret
rights, including any rights to unpatented inventions, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income and
other tax refunds, security and other deposits, options to purchase or sell real
or personal property, rights in all litigation presently or hereafter
22
pending (whether in contract, tort or otherwise), insurance policies (including
without limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any kind.
"Governmental Approval" is any consent, authorization, approval, order,
license, franchise, permit, certificate, accreditation, registration, filing or
notice, of, issued by, from or to, or other act by or in respect of, any
Governmental Authority.
"Governmental Authority" is any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
"Indebtedness" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.
"Indemnified Person" is defined in Section 12.3.
"Insolvency Proceeding" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Inventory" is all "inventory" as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and
includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower's custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
"Investment" is any beneficial ownership interest in any Person
(including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person.
"Key Person" is any of Borrower's Chief Executive Officer or Chief
Financial Officer who are, as of the Effective Date, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, respectively.
"Letter of Credit" means a standby letter of credit issued by Bank or
another institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.1.2.
"Letter of Credit Application" is defined in Section 2.1.2(a).
"Letter of Credit Reserve" has the meaning set forth in Section
2.1.2(d).
"Lien" is a claim, mortgage, deed of trust, levy, charge, pledge,
security interest or other encumbrance of any kind, whether voluntarily incurred
or arising by operation of law or otherwise against any property.
"Liquidity Event" is, as of any date of measurement, either (i)
Borrower's unrestricted cash and Cash Equivalents held at Bank is less than the
aggregate outstanding Obligations owed by Borrower to Bank hereunder OR (ii)
Borrower's Net Income for the trailing six (6) months is less than One Hundred
Thousand Dollars ($100,000).
"Loan Documents" are, collectively, this Agreement, the Equipment Line,
the Perfection Certificate, any note, or notes or guaranties executed by
Borrower, and any other present or future agreement between Borrower and/or for
the benefit of Bank in connection with this Agreement, all as amended, restated,
or otherwise modified.
"Material Adverse Change" is (a) a material impairment in the
perfection or priority of Bank's Lien in the Collateral or in the value of such
Collateral; (b) a material adverse change in the business, operations, or
condition (financial or otherwise) of Borrower; (c) a material impairment of the
prospect of repayment of any portion of the Obligations or (d) Bank determines,
based upon information available to it and in its reasonable judgment, that
there is a reasonable likelihood that Borrower shall fail to comply with one or
more of the financial covenants in Section 6 during the next succeeding
financial reporting period.
23
"Net Income" means, as calculated on a consolidated basis for Borrower
and its Subsidiaries for any period as at any date of determination, the net
profit (or loss), after provision for taxes, of Borrower and its Subsidiaries
for such period taken as a single accounting period.
"Obligations" are Borrower's obligation to pay when due any debts,
principal, interest, Bank Expenses and other amounts Borrower owes Bank now or
later, whether under this Agreement, the Loan Documents, or otherwise,
including, without limitation, all obligations relating to letters of credit
(including reimbursement obligations for drawn and undrawn letters of credit),
cash management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower's
duties under the Loan Documents.
"Operating Documents" are, for any Person, such Person's formation
documents, as certified with the Secretary of State of such Person's state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
"Overadvance" is defined in Section 2.2.
"Perfection Certificate" is defined in Section 5.1.
"Permitted Indebtedness" is:
(a) Borrower's Indebtedness to Bank under this Agreement and the
other Loan Documents;
(b) Indebtedness or reimbursement obligations existing on the
Effective Date listed on Schedule 7.7 attached hereto;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors and with respect to
surety bonds and similar obligations incurred in the ordinary course of
business;
(e) Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;
(f) Indebtedness secured by Permitted Liens;
(g) Indebtedness of any Borrower to any other Borrower; and
(h) extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (h) 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 Investments" are:
(a) Investments listed on Schedule 7.7 attached hereto and
existing on the Effective Date;
(b) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;
(c) Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in any Subsidiaries that is not a Borrower
(with the exception of ▇▇▇▇▇▇ ▇▇▇▇▇ Solar, LLC) not to exceed Twenty Five
Thousand Dollars ($25,000) in the aggregate in any fiscal year;
(d) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower's board of
directors;
24
(e) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this clause (f)
shall not apply to Investments of Borrower in any Subsidiary;
(f) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business;
(g) Investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof; (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.; (iii) certificates of deposit
maturing no more than one year from the date of creation thereof issued by
commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$100,000,000.00 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"); (iv) time deposits
maturing no more than 30 days from the date of creation thereof with A Rated
Banks; and (v) mutual funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above;
(h) Cash Equivalents; and
(i) Investments consisting of intercompany loans by Borrower to
any other Borrower in an amount not to exceed Five Hundred Thousand Dollars
($500,000.00) in the aggregate.
"Permitted Liens" are:
(a) Liens existing on the Effective Date and shown on the
Perfection Certificate or arising under this Agreement and the other Loan
Documents;
(b) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, provided that no notice of
any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;
(c) purchase money Liens (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of Equipment securing no more
than Five Hundred Thousand Dollars ($500,000) in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the Equipment;
(d) statutory Liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other Persons imposed without
action of such parties, provided, they have no priority over any of Bank's Lien
and the aggregate amount of such Liens does not at any time exceed Two Hundred
Fifty Thousand Dollars ($250,000.00);
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (e), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase; and
(f) Liens securing Permitted Indebtedness.
"Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"Prime Rate" is the greater of (i) six percent (6.00%) or (ii) Bank's
most recently announced "prime rate," even if it is not Bank's lowest rate.
"Registered Organization" is any "registered organization" as defined
in the Code with such additions to such term as may hereafter be made.
25
"Related Account Debtor" means, with respect to any Person, any
Affiliate, relative, partner, shareholder, director, officer, of employee of
such Person.
"Requirement of Law" is as to any Person, the organizational or
governing documents of such Person, and any law (statutory or common), treaty,
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserves" means, as of any date of determination, such amounts as Bank
may from time to time establish and revise in its good faith business judgment,
reducing the amount of Advances and other financial accommodations which would
otherwise be available to Borrower (a) to reflect events, conditions,
contingencies or risks which, as determined by Bank in its good faith business
judgment, do or may adversely affect (i) the Collateral or any other property
which is security for the Obligations or its value (including without limitation
any increase in delinquencies of Accounts), (ii) the assets, business or
prospects of Borrower or any Guarantor, or (iii) the security interests and
other rights of Bank in the Collateral (including the enforceability, perfection
and priority thereof); or (b) to reflect Bank's good faith belief that any
collateral report or financial information furnished by or on behalf of Borrower
or any Guarantor to Bank is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts
which Bank determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.
"Responsible Officer" is any of the Chief Executive Officer, President,
Chief Financial Officer and Controller of Borrower
"Revolving Line" is an Advance or Advances in an amount up to Five
Million Dollars ($5,000,000).
"Revolving Line Maturity Date" is March 30, 2009.
"Securities Account" is any "securities account" as defined in the Code
with such additions to such term as may hereafter be made.
"Settlement Date" is defined in Section 2.1.3.
"Subordinated Debt" is indebtedness incurred by Borrower subordinated
to all of Borrower's now or hereafter indebtedness to Bank (pursuant to a
subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Bank entered into between Bank and the other creditor), on terms
acceptable to Bank.
"Subsidiary" means, with respect to any Person, any Person of which
more than 50.0% of the voting stock or other equity interests (in the case of
Persons other than corporations) is owned or controlled directly or indirectly
by such Person or one or more of Affiliates of such Person.
"Transaction Report" is that certain report of transactions and
schedule of collections in the form attached hereto as Exhibit D, containing, at
a minimum, a summary for the relevant period for sales, collections, credit
memos and other collateral adjustments, and including a Borrowing Base
Certificate in the form attached hereto as Exhibit B.
"Transfer" is defined in Section 7.1.
"Unused Revolving Line Facility Fee" is defined in Section 2.4(d).
[Signature page follows.]
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the Effective Date.
BORROWER:
SPIRE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
SPIRE SOLAR, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
SPIRE BIOMEDICAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
SPIRE SEMICONDUCTOR, LLC f/k/a BANDWITH
SEMICONDUCTOR, LLC
By: Spire Corporation, a Massachusetts
corporation, its sole Member and Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
BANK:
SILICON VALLEY BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Relationship Manager
Effective Date: 3/31/08
27