EXHIBIT 10.21
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Second Amended and Restated Loan and Security Agreement ("Agreement")
is made and entered into on March 20, 2001 by and between FormFactor, Inc., a
Delaware corporation ("Borrower"), and Imperial Bank, a California banking
corporation ("Lender"). Except as otherwise defined herein, initially
capitalized terms used in this Agreement have the meanings assigned to them in
Appendix A attached hereto.
Borrower and Lender entered into an Amended and Restated Loan and Security
Agreement dated July 7, 2001 ("Prior Agreement") and hereby agree that the Prior
Agreement is amended and restated in full on the terms and conditions contained
herein.
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender shall make the Loans to Borrower in an aggregate amount up to
US$16,000,000 as set forth below.
In consideration of the mutual covenants and conditions hereof, the
parties agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 REVOLVING LINE OF CREDIT COMMITMENT.
1.1.1 REVOLVING LINE OF CREDIT. Subject to the terms and conditions
of this Agreement, from time to time from the Closing Date to April 30, 2002
(the "Maturity Date"), Lender shall, upon Borrower's request in accordance with
this Agreement, make advances (each a "Revolving Loan" and collectively, the
"Revolving Loans") to Borrower in an aggregate amount outstanding not to exceed
at any one time $12,000,000, the "Maximum Revolving Amount", the proceeds of
which shall be used by Borrower only for short term working capital requirements
and the issuance of Letters of Credit (as defined below). Revolving Loans may be
repaid and reborrowed, subject to the terms and conditions hereof including the
provisions of the LIBOR Addendum, provided that the outstanding principal amount
of all Revolving Loans, together with all accrued and unpaid interest thereon,
shall be due and payable in full on the Maturity Date.
1.1.2 LETTER OF CREDIT USAGE AND SUBLIMIT. Subject to availability
of Revolving Loans and subject to the terms and conditions of this Agreement,
from time to time from the Closing Date to the Business Day immediately prior to
the Maturity Date, Lender shall issue for the account of Borrower such standby
letters of credit (each a "Letter of Credit," and collectively, the "Letters of
Credit") as Borrower may request, which requests shall be made by delivering to
Lender a duly executed letter of credit application on Lender's standard form;
provided, however, that the outstanding and undrawn amounts under all such
Letters of Credit (i) shall not at any time exceed $4,000,000 in the aggregate
(the "Letter of Credit Sublimit"), (ii) shall be deemed to constitute Revolving
Loans for the purpose of calculating the availability of Revolving Loans. Each
Letter of Credit shall have an initial maturity not to exceed 365 days from the
issuance date and shall be renewable annually for another year unless at least
60 days prior to the then current maturity date the Lender gives notice to the
beneficiary that the Letter of
Credit will not be renewed, provided, however, that the maximum maturity date of
any Letter of Credit shall not be more that eight (8) years from its issuance
date. All Letters of Credit shall be in form and substance acceptable to Lender
in its sole discretion and shall be subject to the terms and conditions of
Lender's form application and letter of credit agreement and such other
agreements as are required by Lender. Borrower shall pay all usual issuance and
other fees that Lender notifies Borrower it will be charged for issuing and
processing Letters of Credit for Borrower. The standard bank fees related to
issuing and processing Letters of Credit are as follows:
- Processing fee: $250
- Applicable Annual Fee if cash collateralized Letter(s) of Credit:
1% of the letter of credit amount
- Applicable Annual Fee if Letter(s) of Credit is not cash collateralized:
1.25% of the letter of credit amount.
1.1.3 REVOLVING NOTE. The interest rate, payment terms, maturity
date and certain other terms of the Revolving Loans shall be contained in a
promissory note dated the date of this Agreement, as such may be amended or
replaced from time to time, but which shall be substantially identical in
material terms and substance to the form attached hereto as Schedule 1.1.3.
1.2 CONVERTING NON-REVOLVING EQUIPMENT LINE OF CREDIT COMMITMENT.
1.2.1 CONVERTING NON- REVOLVING EQUIPMENT LINE OF CREDIT. Subject to
the terms and conditions of this Agreement, from time to time from the Closing
Date to the Revolving Line of Credit Maturity Date ("Maturity Date"), Lender
shall, upon Borrower's request in accordance with this Agreement, make advances
(each a "Converting Non-Revolving Loan," and collectively, the "Converting
Non-Revolving Loans") to Borrower in an aggregate amount not to exceed
$2,000,000, the proceeds of which shall be used by Borrower only for equipment
expenditures. Subject to all of the limitations, terms and conditions contained
herein or in the promissory note representing the Converting Non-Revolving
Loans, Borrower may, from time to time through the Maturity Date, borrow, repay
its outstanding borrowings in part or in whole, but may not reborrow any amount
of the Converting Non-Revolving Loans so repaid. From and after the Maturity
Date any amounts repaid may not be reborrowed.
1.2.2 REQUESTS FOR CONVERTING NON-REVOLVING EQUIPMENT ADVANCES. Each
request for a Converting Non-Revolving Loan made for Equipment acquisitions
hereunder shall be in writing, duly executed by Borrower in form satisfactory to
Lender, and shall be irrevocable upon receipt by Lender. Each such notice shall
be received by Lender no later than 3:00 p.m. Pacific time (1) Business Days
prior to the date on which the requested Converting Non-Revolving Loan is to be
made. Converting Non-Revolving Loans shall only be used to purchase Equipment
approved by Lender from time to time, and shall be limited to 100% of the
invoice amount for such Equipment approved by Lender, less any taxes, shipping
and freight charges or discounts, warranty charges, installation expenses and
other soft costs.
1.2.3 CONVERSION OF NON-REVOLVING EQUIPMENT LOANS. On April 30,
2002, the outstanding amount of all Converting Non-Revolving Loans shall be
converted to a term loan payable in 48 equal principal payments, due on the last
day of each month, plus interest.
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1.3 CONVERTING NON-REVOLVING NOTE. The interest rate, payment terms,
maturity date and certain other terms of the Converting Non-Revolving Loans and
each term loan conversion thereof in accordance with subsection 1.2.3 hereof
shall be contained in a promissory note dated the date of this Agreement, as
such may be amended or replaced from time to time but which shall be
substantially identical in material terms and substance to the form attached
hereto as Schedule 1.3.
1.4 TERM LOAN COMMITMENT.
1.4.1 TERM LOAN. Subject to the terms and conditions of this
Agreement, Lender shall make available to Borrower a term loan (the "Term Loan")
on the Closing Date in the amount of $2,000,000, the proceeds of which shall be
used only for consolidating existing terms loans from the Bank to the Borrower
and to refund other long term debt of the Borrower, which it previously retired
in the amount of approximately $886,714.
1.4.2 TERM LOAN NOTE. The interest rate, payment terms, maturity
date and certain other terms of the Term Loan shall be contained in a promissory
note dated the date of this Agreement, as such may be amended or replaced from
time to time, but which shall be substantially identical in material terms and
substance to the form attached hereto as Schedule 1.4.2.
1.5 MERCHANT SERVICES, CORPORATE CREDIT CARDS. Subject to the terms and
conditions of this Agreement, Borrower may request corporate credit cards and
merchant services from Lender (collectively the "Credit Card Services"). The
aggregate limit of the corporate credit cards plus any amounts that may become
due or owing to Lender in connection with the Credit Card Services shall not
exceed One Hundred Fifty Thousand Dollars ($150,000) in the aggregate at any one
time. The terms and conditions (including fees and repayment) of such Credit
Card Services shall be subject to the terms and conditions of the Lender's
standard forms of application and agreement for the Credit Card Services, which
Borrower hereby agrees to execute, and copies of which are attached hereto as
Schedule 1.5. Lender's obligations hereunder shall terminate in accordance with
such applications and agreements.
1.6 LATE CHARGE. If any installment payment, interest payment, principal
payment or principal balance due under the Revolving Loans or any other payment
due to Lender in connection with the Loan Account is delinquent 10 or more days
after written notice to Borrower from Lender in accordance with the Notice
provisions of this Agreement, in addition to and not in substitution of Lender's
other rights and remedies with respect to such late payment, Borrower agrees to
pay Lender a late charge in the amount of 5% of the payment so due and unpaid,
in addition to the payment. All payments, at Lender's sole discretion, shall be
applied first to any late charges owing, then to interest and the remainder, if
any, to principal.
1.7 DEFAULT RATE. If an Event of Default occurs hereunder, then during the
continuance thereof, at Lender's option, all Obligations shall bear interest at
a rate equal to 5.00% per year in excess of the rate applicable immediately
prior to the occurrence of the Event of Default, and such rate of interest shall
fluctuate thereafter from time to time at the same time and in the same amount
as any fluctuation in the rate applicable immediately prior to any such
occurrence.
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1.8 LOAN FEE. In addition to any other amounts due or to become due under
this Agreement concurrent with the execution hereof, Borrower shall pay to
Lender the following fees:
1.8.1 UNUSED COMMITMENT FEE. On the first day of each quarter during
the term of this Agreement, an unused facility fee, payable in arrears in an
amount equal to 0.25% per annum times the average available amount of the
Revolving Loans (any amounts reserved for letters of credit will be included in
used portion).
1.8.2 DOCUMENTATION FEE, COSTS AND EXPENSES. In addition to any
other amounts due, or to become due, concurrently with the execution hereof,
Borrower agrees to pay to Lender documentation fee of $450, and all actual costs
and expenses (other than attorneys' fees) incurred by Lender in the preparation
of this Agreement, the other Loan Documents and the perfection of any security
interest granted to Lender by Borrower; provided that Lender presents Borrower
in advance with a written estimate of such costs and expenses which are
anticipated to exceed $5,000, and does not exceed such written estimate by more
than ten percent (10%).
1.9 COLLECTION OF PAYMENTS. Borrower hereby authorizes Lender to collect
all interest, fees, costs, or expenses due under this Agreement as follows:
1.9.1 AUTOMATIC PAYMENTS. Borrower authorizes Lender to
automatically deduct from Borrower's account number ▇▇-▇▇▇-▇▇▇ with Lender, or
any other account maintained by Borrower with Lender, the full amount thereof.
Should there be insufficient funds in any such account to pay all such sums when
due, the full amount of such deficiency shall be immediately due and payable by
Borrower; provided, however, that Lender shall not be obligated to advance funds
to cover any such payment.
1.9.2 OTHER PAYMENTS. Any such amounts not collected in accordance
with the forgoing instructions may be paid in cash or deducted from loan
proceeds; provided, however, that Lender shall not be obligated to advance funds
to cover payment of any such amounts.
2. CREATION OF SECURITY INTEREST
2.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Lender a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Lender's security interests in
the Collateral shall attach to all Collateral without further act on the part of
Lender or Borrower. Such security interest constitutes a valid, first priority
security interest in the presently existing Collateral, and shall constitute a
valid, first priority security interest in Collateral acquired after the date
hereof, other than Permitted Liens as shown on Schedule 2.1 attached hereto, and
as that schedule may be amended form time to time hereafter by mutual consent,
which consent on the part of Borrower and Lender shall not be unreasonably
withheld.
2.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower,
immediately upon the request of Lender, shall (a) endorse or assign such
Negotiable Collateral to Lender, (b) deliver physical possession of such
Negotiable Collateral to Lender, and (c) ▇▇▇▇ conspicuously all of its records
pertaining to such Negotiable Collateral with a legend, in form and substance
satisfactory to
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Lender (and in the case of Negotiable Collateral consisting of tangible Chattel
Paper, immediately ▇▇▇▇ all such Chattel Paper with a conspicuous legend in form
and substance satisfactory to Lender), indicating that the Negotiable Collateral
is subject to the security interest granted hereby.
2.3 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time at the
request of Lender, Borrower shall execute and deliver to Lender all financing
statements, continuation financing statements, fixture filings, security
agreements, pledges, assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices, schedules of accounts,
letters of authority and other documents that Lender may reasonably request, in
form satisfactory to Lender, to perfect and continue perfected Lender's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
2.4 RIGHT TO INSPECT. Lender (through any of its officers, employees, or
agents) shall have the right upon reasonable prior notice, from time to time
during Borrower's usual business hours (or at any time and without notice
required if an Event of Default has occurred and is continuing) but no more than
once a year (unless an Event of Default has occurred and is continuing), to
inspect Borrower's Books and to make copies thereof and to check, test, and
appraise the Collateral in order to verify Borrower's financial condition or the
amount, condition of, or any other matter relating to, the Collateral. This
right to inspect is conditional upon (i) the inspecting entities' execution of
the Confidentiality Letter Agreement attached hereto as Schedule 2.4
("Confidentiality Letter Agreement"); and (ii) the treatment of all information
of Borrower's Books as confidential consistent with the Confidentiality Letter
Agreement.
2.5 BAILEES AND OTHER THIRD PARTIES IN POSSESSION. In the event that any
Collateral is in the possession of a third party, Borrower shall join with
Lender in notifying such third party of Lender's security interest and obtaining
an acknowledgment from such third party that it is holding such Collateral for
the benefit of Lender.
2.6 CONTROL AGREEMENTS. Borrower shall cooperate with Lender in obtaining
a control agreement in form and substance satisfactory to Lender with respect to
all Deposit Accounts, electronic Chattel Paper, Investment Property, and Letter
of Credit Rights.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of Lender to
make the initial Loan or issue the initial Letter of Credit is subject to the
fulfillment, to the satisfaction of Lender, of each of the following conditions
on or before the Closing Date:
3.1.1 PROMISSORY NOTE(S). Lender shall have received original,
executed promissory note(s) as applicable, in form and substance satisfactory to
Lender;
3.1.2 FINANCING STATEMENT(S). Lender shall have received original,
executed financing statement(s) executed by Borrower and any grantor of a
security interest, in each case in form and substance satisfactory to Lender;
3.1.3 SEARCH RESULTS. Lender shall have received Uniform Commercial
Code and other public record searches with respect to Borrower and any grantor
of a security interest, in each case in form and substance satisfactory to
Lender;
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3.1.4 DUE DILIGENCE. Lender shall have completed its due diligence
requirements with respect to Borrower and each Guarantor, including audits,
financial and legal survey, the results of which in each case shall be
satisfactory to Lender in its sole discretion;
3.1.5 INSURANCE. Borrower shall have delivered to Lender
satisfactory evidence of insurance coverage required pursuant to that certain
Agreement to Provide Insurance executed by Borrower, in form, substance,
amounts, covering risks and issued by companies satisfactory to Lender,
including, where required by Lender, certified copies of the policies of
insurance therefor, together with endorsements thereto, and where required by
Lender, with a Lenders Loss Payable Endorsement in favor of Lender as an
additional loss payee thereunder, in form, substance, amount and covering risks
satisfactory to Lender, and specifying that the insurer shall give Lender at
least 30 days prior written notice of the cancellation of any such policies of
insurance for any reason;
3.1.6 ORGANIZATIONAL DOCUMENTS. Borrower shall have delivered to
Lender copies of the charter/articles of incorporation or similar document, as
the case may be, of Borrower, in each case in form and substance satisfactory to
Lender;
3.1.7 AUTHORIZATIONS. Certified copies of all action taken by
Borrower to authorize the execution, delivery and performance of the Loan
Documents;
3.1.8 GOOD STANDING. Good standing certificates from the appropriate
secretary of state of the state in which any Borrower is organized and in each
state in which it is required to be qualified to do business;
3.1.9 EXECUTED AGREEMENT. Lender shall have received an original of
this Agreement, duly executed by Borrower;
3.1.10 CERTIFICATES OF TITLE. Lender shall have received duly
executed certificates of title with respect to that portion of the Collateral
that is subject to certificates of title;
3.1.11 COLLATERAL ACCESS AGREEMENTS. Lender shall have received such
collateral access agreements from each lessor, warehouseman, bailee, and other
Person as Lender may reasonably require;
3.1.12 CONTROL AGREEMENTS. Lender shall have received such control
agreements from each Person as Lender may reasonably require;
3.1.13 PAYMENT OF ALL FEES AND EXPENSES. Lender shall have received
payment of all fees payable on the Closing Date in accordance with the
provisions of Article 1 hereof, together with all Lender expenses owing on the
Closing Date;
3.1.14 MATERIAL ADVERSE CHANGE. No event that has resulted or could
reasonably be expected to result in a Material Adverse Change shall have
occurred, as reasonably determined jointly by Lender after reasonable efforts by
Lender to discuss the matter with Borrower.
3.2 CONDITIONS PRECEDENT TO ALL LOANS. The following shall be
conditions precedent to the obligation of Lender to make each Loan or issue each
Letter of Credit hereunder:
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3.2.1 BORROWING REQUEST. With respect to each Loan or other
extension of credit hereunder, Lender shall have received a request for
borrowing that complies with the applicable provisions of Article 1 hereof, and,
with respect to each Letter of Credit, Lender shall have received an application
for such Letter of Credit that complies with the applicable provisions of
Article 1 hereof;
3.2.2 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties contained in this Agreement and the other Loan Documents shall be
true and correct in all respects on and as of the date of such Loan or other
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date);
3.2.3 DEFAULTS. No Event of Default shall occur, or shall have
occurred and be continuing, on the date of such extension of credit, nor shall
either result from the making thereof.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and to make Loans or
issue Letters of Credit, Borrower makes the following representations and
warranties to Lender which shall be true, correct, and complete in all respects
as of the Closing Date and at, and as of, the date of the making of each Loan or
issuance of each Letter of Credit made thereafter (except to the extent that
such representations and warranties relate solely to an earlier date):
4.1 EXISTENCE AND RIGHTS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the state of Delaware, which
shall survive at least five years beyond the maturity of any Loans hereunder.
Borrower is authorized and in good standing to do business in the state of its
incorporation; Borrower has the appropriate powers and adequate authority,
rights and franchises to own its property and to carry on its business as now
conducted, and is duly qualified and in good standing in each state in which the
character of the properties owned by it therein or the conduct of its business
makes such qualification necessary and where the failure to be so qualified
could reasonably be expected to result in a Material Adverse Change; and
Borrower has the power and adequate authority to execute, deliver and perform
this Agreement and the other Loan Documents. Borrower has no investment in any
other business entity unless specified in writing to Lender;
4.2 AGREEMENT AUTHORIZED. The execution, delivery and performance of this
Agreement and the Loan Documents are duly authorized and do not require any
registration with, consent or approval of, or notice to, or other action with or
by, any governmental body or other regulatory authority; are not in
contravention of or in conflict with any law or regulation or any term or
provision of Borrower's charter/articles of incorporation, or similar document
as the case may be, and this Agreement and each of the other Loan Documents is a
valid, binding and legally enforceable obligation of Borrower in accordance with
its terms; subject only to bankruptcy, insolvency or similar laws affecting
creditors rights generally;
4.3 NO CONFLICT. To the Borrower's knowledge, after due diligence, the
execution, delivery and performance of this Agreement and the Loan Documents are
not in contravention of or in conflict with, and do not result in a breach or
constitute a default under any agreement, contract, indenture, instrument or
undertaking to which Borrower is a party, or by which it or any
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of its property may be bound or affected, and do not cause any Lien, charge or
other encumbrance to be created or imposed upon any such property by reason
thereof. To the Borrower's knowledge, after due diligence, it is not in default
under any agreement, contract, indenture, instrument or undertaking to which
Borrower is a party or by which it may be bound, which default could result in a
Material Adverse Change.;
4.4 LITIGATION. There is no litigation or other proceeding pending or, to
the best of Borrower's knowledge, threatened against or affecting Borrower which
if determined adversely to Borrower or its interest could result in a Material
Adverse Change, and Borrower is not aware that it is in default with respect to
any order, writ, injunction, decree or demand of any court or other governmental
or regulatory authority;
4.5 FINANCIAL CONDITION. The consolidated balance sheet of Borrower as of
December 30, 2000, and the related profit and loss statement for the period
ended as of that date, a copy of which has heretofore been delivered to Lender
by Borrower, and all other statements and data submitted in writing by Borrower
to Lender in connection with this request for credit are true and correct, and
said balance sheet and profit and loss statement each fairly presents the
financial condition of Borrower as of the date thereof and the results of the
operations of Borrower for the period covered thereby, and has been prepared in
accordance with GAAP. Since such date there have been no changes in the
financial condition or business of Borrower that have resulted or could
reasonably be expected to result in a Material Adverse Change. Borrower is not
aware of any material liabilities, contingent or otherwise, at such date not
reflected in said balance sheet, and Borrower has not entered into special
commitments or substantial contracts that have resulted or could reasonably
result in a Material Adverse Change;
4.6 TITLE TO ASSETS. Borrower has the power and authority to transfer the
Collateral, and Borrower has good and indefeasible title to the Collateral,
which to the best of its knowledge after reasonable inquiry is free and clear of
any Liens or restrictions, except for Permitted Liens;
4.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Borrower has not done
business under any name other than that specified on the signature page hereof.
The chief executive office of Borrower is located at the address and the Federal
Employer Identification Number is that set forth in Schedule 4.7 to this
Agreement;
4.8 SUBSIDIARIES. Borrower does not own any Stock, partnership interest or
other equity securities of any Person that is a Subsidiary, other than those
identified in Schedule 4.8 attached hereto;
4.9 TAX STATUS. Borrower has filed or caused to be filed all tax returns
required to be filed by Borrower, and has no liability for any delinquent state,
local or federal taxes, and, if Borrower has contracted with any government
agency, Borrower has no liability for renegotiation of profits;
4.10 TRADEMARKS, PATENTS. Borrower, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, trade secrets, and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents and license rights
of others;
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4.11 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940. Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulations T, U
and X of the Board of Governors of the Federal Reserve System). Borrower has
complied with all the provisions of the Federal Fair Labor Standards Act.
Borrower has not violated any statutes, laws, ordinances or rules applicable to
it, violation of which could result in a Material Adverse Change;
4.12 ERISA. All defined benefit pension plans as defined in the Employees
Retirement Income Security Act of 1974, as amended ("ERISA"), of Borrower meet,
as of the date hereof, the minimum funding standards of Section 302 of ERISA. No
Reportable Event or Prohibited Transaction as defined in ERISA has occurred with
respect to any such plan, or any other failure by Borrower to comply with ERISA
that is reasonably likely to result in Borrower's incurring any liability that
could result in a Material Adverse Change;
4.13 SOLVENCY, PAYMENT OF DEBTS. Borrower is solvent and able to pay its
debts (including trade debts) as they mature. No transfer of property is being
made by Borrower and no obligation is being incurred by Borrower in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of Borrower;
4.14 FULL DISCLOSURE. No representation, warranty or other statement made
by Borrower in any certificate or written statement furnished to Lender contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained in such certificates or
statements not misleading;
4.15 ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This Agreement
creates a security interest which is enforceable against the Collateral in which
Borrower now has rights and will create a security interest which is enforceable
against the Collateral in which Borrower hereafter acquires rights at the time
Borrower acquires any such rights, and (ii) when financing statements in
appropriate form are filed in the office of the Secretary of State of the State
of California in accordance with the provisions of the California Uniform
Commercial Code ("California UCC") and the equivalent code in effect in the
State of Delaware ("Delaware Code"), this Agreement shall constitute a fully
perfected security interest in all right, title and interest of the Borrower in
such Collateral (other than intellectual property related collateral, e.g.,
patents, trademarks and copyrights, as to which Borrower covenants and agrees to
not grant a security interest to any third party Person pursuant to Section 6.5
of this Agreement), in each case prior and superior in right to any other person
to the extent perfection can be obtained by filing uniform commercial code
financing statements in accordance with the California UCC and Delaware Code,
other than with respect to the rights of persons to Permitted Liens as shown on
Schedule 2.1 attached hereto, and as that schedule may be amended from time to
time hereafter by mutual consent, which consent on the part of Borrower and
Lender shall not be unreasonably withheld;
4.16 OTHER FINANCING STATEMENTS. Other than financing statements in favor
of Lender and financing statements filed in connection with Permitted Liens, no
effective financing statement naming Borrower as debtor, assignor, grantor,
mortgagor, pledgor or the like and
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covering all or any part of the Collateral is on file in any filing or recording
office in any jurisdiction.
5. AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees that until the full and final payment of the Obligations and so
long as Lender has any obligation to extend credit to Borrower, and unless
Lender shall otherwise consent in writing, Borrower shall do each of the
following:
5.1 RIGHTS AND FACILITIES. Maintain and preserve all rights, franchises,
qualifications, licenses, approvals and other authority adequate for the conduct
of its business; maintain its properties, equipment and facilities in good order
and repair; conduct its business in an orderly manner without voluntary
interruption and maintain and preserve its legal existence;
5.2 USE OF PROCEEDS. Use the proceeds of the Loans only for purposes
specified in Article 1 hereof;
5.3 INSURANCE. Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses or in the exercise of good business judgment,
and as required by that certain Agreement to Provide Insurance executed by
Borrower, with Lender to be shown as Lenders Loss Payee on such policies, and
specifying that the insurer shall give Lender at least 30 days prior written
notice of the cancellation of any such policies of insurance for any reason;
5.4 TAXES AND OTHER LIABILITIES. Pay and discharge, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and
governmental charges upon or against it or any of its properties, and all its
other liabilities at any time existing, except to the extent and so long as: (a)
the same are being contested in good faith and by appropriate proceedings in
such manner as not to cause any materially adverse effect upon its financial
condition or the loss of any right of redemption from any sale thereunder; and
(b) Borrower shall have set aside on its books reserves (segregated to the
extent required by GAAP) deemed by it to be adequate with respect thereto;
5.5 RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with GAAP; permit Lender's representatives to have
access to, and to examine its properties, books and records in conformity to
section 2.4, hereof. Borrower agrees to furnish to Lender the following:
5.5.1 QUARTERLY FINANCIAL STATEMENT. As soon as available, and in
any event within 45 days after and as of each fiscal quarter end the Borrower's
consolidated balance sheet, profit and loss statement, reconciliation of
Borrower's capital balance accounts and cash flow statement as of the close of
such period and covering operations for the portion of Borrower's fiscal year
ending on the last day of such period, all in reasonable detail and reasonably
acceptable to Lender, stating in comparative form the figures for the
corresponding date and period in the preceding fiscal year, prepared in
accordance with GAAP by Borrower and certified by an appropriate officer of
Borrower, subject, however, to year-end adjustments required by fiscal year end
statements not published prior to the date of such statement;
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5.5.2 ANNUAL FINANCIAL STATEMENT. As soon as available, and in any
event within 120 days after and as of the close of each fiscal year of Borrower,
a consolidated report of audit of Borrower, all in reasonable detail and
reasonably acceptable to Lender, stating in comparative form the figures for the
corresponding date and period in the preceding fiscal year, prepared on an audit
basis by an independent certified public accountant selected by Borrower and
reasonably acceptable to Lender, in accordance with GAAP and certified by an
appropriate officer of Borrower. Lender agrees that as of the date of this
Agreement PriceWaterhouseCoopers is an acceptable independent certified public
accountant;
5.5.3 COMPLIANCE CERTIFICATE. Concurrently with the submission of
each financial statement of Borrower, a certificate signed by chief financial
officer of Borrower (in the form of Exhibit 5.5.3 attached hereto, "Compliance
Certificate"), stating that Borrower has performed and observed each and every
covenant contained in this Agreement to be performed by it and that no event has
occurred and no condition then exists which constitutes an event of default
hereunder or would constitute such an event of default hereunder or would
constitute such an event of default upon the lapse of time or upon the giving of
notice and the lapse of time specified herein; or, if any such event has
occurred or any such condition exists, specifying the nature thereof;
5.5.4 OTHER INFORMATION. Such other information relating to the
affairs of Borrower as Lender may reasonably request from time to time. This
right to information is conditional upon Borrower's consent, which Borrower
agrees will not be unreasonably withheld, provided that upon the occurrence and
continuance of an Event of Default, Borrower's consent will not be required;
5.6 ERISA. Cause all defined benefit pension plans, as defined in ERISA,
of Borrower to, at all times, meet the minimum funding standards of Section 302
of ERISA, and ensure that no Reportable Event or Prohibited Transaction, as
defined in ERISA, shall occur with respect to any such plan;
5.7 LAWS. At all times comply with, or cause to be complied with, all
laws, statues, rules, regulations, orders and directions of any governmental
authority having jurisdiction over Borrower or Borrower's business;
5.8 COMPLIANCE WITH GAAP. All information used in and the calculation of
Borrower's compliance with all financial covenants hereunder shall be based on
and in accordance with GAAP;
5.9 OPERATING ACCOUNTS. Maintain, or cause to be maintained, on deposit
with Lender, non-interest bearing demand deposit balances sufficient to
compensate Lender for all services provided to Borrower by Lender. All deposit
balances shall be calculated after reduction for the reserve requirement of the
Federal Reserve Board and uncollected funds. Any deficiencies therein shall be
charged directly to Borrower on a monthly basis;
5.10 NOTICES. Promptly notify Lender in writing of (i) the occurrence of
any Event of Default hereunder or any event that, upon notice or upon notice and
the lapse of time specified herein, would be an Event of Default under this
Agreement or under any other Loan Document; (ii) all litigation affecting
Borrower where the amount is $100,000 or more; any substantial dispute which may
exist between Borrower and any governmental regulatory body or law
11
enforcement authority; any change in Borrower's name or principal place of
business; or any other matter which has resulted or could result in a Material
Adverse Change.
6. NEGATIVE COVENANTS OF BORROWER
Borrower agrees that until the full and final payment of the Obligations and so
long as Lender has any obligation to extend credit to Borrower, and unless
Lender has consent in writing, Borrower shall not do any of the following:
6.1 TYPE OF BUSINESS. Make any substantial change in the character of its
business;
6.2 CHANGE OF NAME. Change its legal name, trade names, or trade styles (a
name under which Borrower has conducted all or part of its business) or add any
new trade names or trade styles unless (i) Borrower gives Lender 30 days' prior
written notice thereof, and (ii) Borrower executes and delivers such additional
agreements, instruments and documents as Lender shall reasonably require to
maintain Lender's perfected security interests in the Collateral;
6.3 CHANGE OF STATE OF INCORPORATION. Change its state of incorporation or
formation;
6.4 OUTSIDE INDEBTEDNESS. Except for Permitted Indebtedness, create,
incur, assume or permit to exist any indebtedness (other than lease obligations
but including sale and lease back transactions) for borrowed moneys in excess of
$750,000 in any one year other than Loans from Lender except obligations now
existing as shown in the financial statement dated December 30, 2000, excluding
those obligations being refinanced by Lender, or sell or transfer, either with
or without recourse, any accounts or notes receivable or any moneys due or to
become due;
6.5 LIENS, ENCUMBRANCES AND NEGATIVE PLEDGE. Except for Permitted Liens,
create, incur, permit to exist, or assume any mortgage, pledge, encumbrance,
Lien or charge of any kind upon any asset now owned or hereafter acquired by it,
other than liens for taxes not delinquent and liens in Lender's favor and other
than liens agreed to in writing by Lender. In addition Borrower shall not enter
into any agreement with a third party by which Borrower places an additional
negative pledge on its assets or promises not to hypothecate or transfer said
assets. Borrower acknowledges and agrees that assets shall include, without
limitation, Intellectual Property Rights;
6.6 LOANS, INVESTMENTS, SECONDARY LIABILITIES. Except for Permitted
Investments, directly or indirectly make any loans or advances to any Person or
other entity except loans to employees (which shall be limited to $300,000 per
employee, and $2,000,000 in aggregate) and or loans to employees from time to
time to facilitate exercise of stock options which Borrower may have granted to
them, other than in the ordinary and normal course of its business as now
conducted, or directly or indirectly make any capital contribution to, or
acquire, own or make any investment in the securities of, any person; directly
or indirectly guarantee or otherwise become liable upon the obligation of any
person, except by endorsement of negotiable instruments for deposit or
collection in the ordinary and normal course of its business as now conducted;
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6.7 ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase or
otherwise acquire the assets or business of any person or other entity; or
liquidate, dissolve, merge or consolidate, or commence any proceedings therefor;
or sell any assets; or sell, lease, assign, or transfer any substantial part of
its business or fixed assets, or any property or other assets necessary for the
continuance of its business as now conducted, including without limitation the
selling of any property or other asset accompanied by the leasing back of the
same, other than: (a) transfers of Inventory in the ordinary course of
Borrower's business; (b) transfers of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries; (c)
transfers of surplus, worn-out or obsolete Equipment; or (d) other assets not in
excess of i.) $ $500,000 per calendar year if for non-Intellectual Property
Rights assets, and ii.) $2,000,000 per calendar year if for any Intellectual
Property Rights (e.g. patent portfolios);
6.8 DISTRIBUTIONS; DIVIDENDS. Make any distribution or declare or pay any
dividend on any of its Stock now outstanding or hereafter issued or purchase,
redeem or retire any of such Stock other than in dividends or distributions
payable in Borrower's Stock, except for the repurchase of Borrower's Stock from
officers, directors, employees or consultants of Borrower upon termination of
their employment with or rendering of service to Borrower;
6.9 SUBORDINATED LIABILITIES. Make any payments of interest or principal
on any Subordinated Debt, other than regularly scheduled payments of in
accordance with the provisions of any subordination agreement executed by Lender
and the subordinated debt holder, or amend any provision contained in any
documentation relating to the Subordinated Debt without Lender's prior written
consent;
6.10 TRANSACTIONS WITH SUBSIDIARIES AND AFFILIATES. Directly or indirectly
enter into or permit to exist any material transaction with any Subsidiary or
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. FINANCIAL COVENANTS
Borrower agrees that until the full and final payment of the Obligations and so
long as Lender has any obligation to extend credit to Borrower, and unless
Lender shall otherwise consent in writing, Borrower shall not fail to comply
with the following:
7.1 QUICK RATIO. Maintain on a quarterly basis a consolidated quick ratio
of cash and accounts receivable to current liabilities (including all amounts
due to stockholders, officers and Affiliates and contingent liabilities
represented by standby letters of credit issued and outstanding) of at least
1.25:1.00;
7.2 TANGIBLE NET WORTH. Maintain on a monthly basis a consolidated
Tangible Net Worth of not less than $35,000,000;
7.3 TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. Maintain on a monthly
basis a consolidated ratio of total liabilities to Tangible Net Worth of not
greater than 0.75:1.00;
13
7.4 DEBT COVERAGE RATIO. Maintain quarterly on a rolling 4-quarter basis,
starting with the four quarters ending December 31, 2000, a consolidated Debt
Coverage Ratio of not less than 1.25:1.00;
7.5 PROFITABILITY. Maintain on a consolidated basis net profit after taxes
of at least (a) $1.00 on a quarterly basis, and (b) $500,000 on an annual basis;
7.6 CAPITAL EXPENDITURES. Make or incur obligations for fixed or capital
assets, which includes purchase money indebtedness or capital lease obligations
in excess of $25,000,000 from the date hereof until December 31, 2001, or in any
single fiscal year thereafter;
7.7 CASH AND EQUIVALENTS. Maintain on a monthly basis a minimum amount of
cash and cash equivalents of not less than $5,000,000.
8. EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Events of Default")
shall, at Lender's option, terminate Lender's commitment after the applicable
cure period, to lend and make all sums of principal and interest then remaining
unpaid on all Borrower's indebtedness to Lender immediately due and payable, all
without demand, presentment or notice, all of which are hereby expressly waived:
8.1 FAILURE TO PAY. Failure to pay any installment of principal or of
interest on the Obligations or any other amount payable hereunder or under any
other Loan Document within 10 days of the due date thereof;
8.2 BREACH OF NEGATIVE OR FINANCIAL COVENANTS. Failure of Borrower or any
Guarantor to observe or perform any term or condition set forth in Article 6 or
Article 7 hereof and such failure continues for 10 days after such breach;
8.3 BREACH OF OTHER COVENANTS. Failure of Borrower or any Guarantor to
observe or perform any term or condition of this Agreement, instrument or
agreement with or in favor of Lender entered into by or binding upon Borrower
(other than those terms and conditions described in Sections 8.1 and 8.2
hereof), and such failure continues for 15 days after the earlier of (a)
Borrower's discovery of such failure and (b) Lender's dispatch of notice to
Borrower of such failure;
8.4 BREACH OF WARRANTY. Any of Borrower's or any Guarantor's
representations or warranties made herein or in any statement or certificate at
any time given in writing pursuant hereto or in connection herewith shall be
false or misleading in any respect, or if any such representation, warranty,
statement or certification is withdrawn;
8.5 INSOLVENCY; RECEIVER OR TRUSTEE. Borrower or any Guarantor shall
become insolvent; or admit its inability to pay its debts as they mature; or
make an assignment for the benefit of creditors; or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business;
8.6 JUDGMENTS, ATTACHMENTS. Any money judgment in excess of $100,000, writ
or warrant of attachment, or similar process shall be entered or filed against
Borrower or any
14
Guarantor or any of its assets and shall remain unsatisfied, unvacated, unbonded
or unstayed for a period of 15 days or in any event later than 5 days prior to
the date of any proposed sale thereunder;
8.7 BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against Borrower or any
Guarantor and, if instituted against it, shall not be dismissed within 30 days
thereafter;
8.8 SECURITY INTEREST. This Agreement or any other Loan Document ceases to
be in full force and effect (including the failure of this Agreement or any
other Loan Document to create a valid and perfected security interest or lien on
the Collateral) at any time and for any reason;
8.9 CESSATION OF BUSINESS. Borrower shall voluntarily suspend its
business;
8.10 MATERIAL ADVERSE CHANGE. No event that has resulted or could
reasonably be expected to result in a Material Adverse Change shall have
occurred, as determined by Lender after reasonable efforts by Lender to discuss
the matter with Borrower;
8.11 OTHER DEFAULTS. Borrower or any Guarantor shall commit or do or fail
to commit or do any act or thing which would constitute an event of default
under any of the terms of any other agreement, document or instrument executed
or to be executed by it concerning the obligation to pay money, and such event
of default continues for 15 days.
9. LENDER'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the continuation
of an Event of Default, Lender may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Borrower:
9.1.1 Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable;
provided, however, that upon the occurrence of an Event of Default described in
Section 8.7, all Obligations shall become immediately due and payable without
any action by Lender;
9.1.2 Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the other Loan Documents,
or under any other agreement between Borrower and Lender; provided, however,
that Lender shall have no duty to make advances while any Event of Default
exists notwithstanding any cure period provided for herein;
9.1.3 Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of Lender, but without affecting
Lender's rights and security interests in the Collateral and without affecting
the Obligations;
9.1.4 Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Lender reasonably
considers advisable;
15
9.1.5 Without notice to or demand upon Borrower or any guarantor,
make such acts as Lender considers necessary or reasonable to protect its
security interest in the Collateral. Borrower agrees to assemble the Collateral
if Lender so requires, and to deliver or make available to Lender all or any
portion of the Collateral and any and all certificates of title and other
documents relating thereto as Lender may designate. Borrower authorizes Lender
to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Lender's determination
appears to be prior or superior to its security interest and to pay all expenses
incurred in connection therewith. With respect to any of Borrower's owned
premises, Borrower hereby grants Lender a license to enter into possession of
such premises and to occupy the same, without charge, in order to exercise any
of Lender's rights or remedies provided herein, at law, in equity, or otherwise;
9.1.6 Set off and apply to the Obligations any and all (i) balances
and deposits of Borrower held by Lender, or (ii) indebtedness at any time owing
to or for the credit or the account of Borrower held by Lender;
9.1.7 Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Lender
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Lender deems appropriate; provided, however, that
Lender shall have no obligation to clean-up or otherwise prepare the Collateral
for sale;
9.1.8 Lender may credit bid and purchase at any public sale;
9.1.9 To the extent permitted by applicable law, Lender may have a
receiver appointed as a matter of right, who may be an employee of Lender and
may serve without bond, and all fees of such receiver and his or her attorney
shall become part of the Obligations secured by this Agreement and payable from
the disposition of the Collateral, payable upon demand with interest at the rate
applicable to Loans hereunder until repaid; and
9.1.10 Any deficiency that exists after disposition of the
Collateral as provided above shall be paid immediately by Borrower.
9.2 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes, and
appoints Lender (and any of Lender's designated officers, employees or agents)
as Borrower's true and lawful attorney to, upon the occurrence and during the
continuance of an Event of Default: (a) send requests for verification of
Accounts or notify account debtors of Lender's security interest in the
Accounts; (b) endorse Borrower's name on any checks or other forms of payment or
security that may come into Lender's possession; (c) sign Borrower's name on any
invoice or ▇▇▇▇ of lading relating to any Account, drafts against account
debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and
adjust all claims under and decisions with respect to Borrower's policies of
insurance; (f) settle and adjust disputes and claims respecting the accounts
directly with account debtors, for amounts and upon terms which Lender
determines to be reasonable; (g) to file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of Borrower where permitted by law;
provided, however, that Lender or any of its designees or attorneys-in-fact may
16
exercise such power of attorney to sign the name of Borrower on any of the
documents described in Section 2.3, and to do any and all things necessary in
the name and on behalf of Borrower in order to perfect, or continue the
perfection of, Lender's security interests in the Collateral, regardless of
whether an Event of Default has occurred or is continuing. Borrower agrees that
neither Lender, nor any of its designees or attorneys-in-fact, will be liable
for any act of commission or omission, or for any error of judgment or mistake
of fact or law with respect to the exercise of the power of attorney granted
under this Section 9.2, other than as a result of its or their gross negligence
or willful misconduct. The appointment of Lender as Borrower's attorney-in-fact
and each and every one of Lender's rights and powers granted under this Section
9.2, being coupled with an interest, shall be irrevocable until all of the
Obligations have been indefeasibly paid in full, Lender's obligation to provide
advances hereunder has been terminated, and all Borrower's duties hereunder have
been performed in full.
9.3 ACCOUNTS COLLECTION. At any time during the occurrence and continuance
of an Event of Default hereunder, Lender may notify any Person owing funds to
Borrower of Lender's security interest in such funds and verify the amount of
such Account. Borrower shall collect all amounts owing to Borrower for Lender,
receive in trust all payments as Lender's trustee, and immediately deliver such
payments to Lender in their original form as received from the account debtor,
with proper endorsements for deposit.
9.4 PAYMENT OF EXPENSES BY LENDER. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lender may do any or all of the
following after reasonable notice to Borrower: (a) make payment of the same or
any part thereof; (b) set up such reserves under the Revolving Facility as
Lender deems necessary to protect Lender from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type discussed in
Section 5.3 hereof, and take any action with respect to such policies as Lender
deems prudent. Any amounts so paid or deposited by Lender shall be immediately
due and payable, and shall bear interest at the rate applicable to the Loans
from time to time, and shall be secured by the Collateral. Any payments made by
Lender shall not constitute an agreement by Lender to make similar payments in
the future or a waiver by Lender of any Event of Default under this Agreement.
9.5 NO OBLIGATION TO PURSUE OTHERS. Lender shall have no obligation to
attempt to satisfy the Obligations by collecting them from any third Person
which may be liable for them or any portion thereof, and Lender may release,
modify or waive any collateral provided by any other Person as security for the
Obligations or any portion thereof, all without affecting Lender's rights
against Borrower. Borrower waives any right it may have to require Lender to
pursue any third Person for any of the Obligations.
9.6 COMPLIANCE WITH OTHER LAWS. Lender may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral, and Lender's compliance therewith will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
9.7 WARRANTIES. Lender may sell the Collateral without giving any
warranties as to the Collateral. Lender may specifically disclaim any warranties
of title or the like. This procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.
17
9.8 SALES ON CREDIT. If Lender sells any of the Collateral upon credit,
Borrower will be credited only with payments actually made by the purchaser,
received by Lender and applied to the indebtedness of the purchaser. In the
event that the purchaser fails to pay for the Collateral, Lender may resell the
Collateral and Borrower will be credited with the proceeds of such sale.
9.9 NO MARSHALING. Lender shall be under no obligation to marshal any
assets in favor of Borrower, or against or in payment of the Obligations or any
other obligation owed to Lender by Borrower or any other Person.
9.10 GOVERNMENT CONSENTS. Upon the exercise by Lender of any power, right,
privilege, or remedy pursuant to this Agreement which requires any consent,
approval, registration, qualification, or authorization of any federal, state,
local or other governmental authority, Borrower agrees to execute and deliver,
or will cause the execution and delivery of, all applications, certificates,
instruments, assignments, and other documents and papers that Lender or any
purchaser of the Collateral may be required to obtain for such governmental
consent, approval, registration, qualification, or authorization.
9.11 LENDER'S LIABILITY FOR COLLATERAL. So long as Lender complies with
its obligations under the Code, Lender shall not in any way or manner be liable
or responsible for: (a) the safekeeping of the Collateral; (b) any loss or
damage thereto occurring or arising in any manner or fashion from any cause; (c)
any diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
9.12 REMEDIES CUMULATIVE. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative and
not alternative. Lender shall have all other rights, powers and remedies not
inconsistent herewith as provided under the Code, by law, or in equity against
Borrower or any other person, including but not limited to Lender's rights of
setoff or banker's lien. No exercise by Lender of one right or remedy shall be
deemed an election, and no waiver by Lender of any Event of Default on
Borrower's part shall be deemed a continuing waiver. No delay by Lender shall
constitute a waiver, election, or acquiescence by it. No waiver by Lender shall
be effective unless made in a written document signed on behalf of Lender and
then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.13 DEMAND; PROTEST. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which Borrower may in any way be liable.
10. MISCELLANEOUS PROVISIONS
10.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
Lender or any holder of notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement or any note(s) issued in
connection with a
18
Loan that Lender may make hereunder, are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
10.2 AMENDMENTS AND MODIFICATIONS. This Agreement may be modified only by
a writing signed by all parties hereto.
10.3 CONSTRUCTION, INTERPRETATION.
10.3.1 Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
10.3.2 Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the term "including" is not limiting, and the term
"or" has, except where otherwise indicated, the inclusive meaning represented by
the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. An Event of Default shall "continue"
or be "continuing" until such Event of Default has been waived in writing by
Lender. Section, subsection, clause, schedule, and exhibit references are to
this Agreement unless otherwise specified. Any reference in this Agreement or in
the Loan Documents to this Agreement or any of the Loan Documents shall include
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and thereof, as
applicable. All accounting terms shall have the meanings applied under GAAP
unless otherwise specified. All section titles appear as a matter of convenience
only and shall not affect the interpretation of this Agreement.
10.4 CUMULATIVE EFFECT, CONFLICT OF TERMS. The provisions of the other
Loan Documents are hereby made cumulative with the provisions of this Agreement.
Except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
10.5 COUNTERPARTS; ENTIRE AGREEMENT. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement, together with the other Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject matter
hereof and supersedes amends and restates in full any prior agreements, written
or oral, with respect thereto.
10.6 LENDER'S EXPENSES AND ATTORNEY'S FEES. If, at any time or times
regardless of whether an Event of Default then exists, Lender pays or incurs
legal or accounting expenses or any other costs or expenses in connection with
(a) the negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, (b) the administration of this Agreement or any of the
other Loan Documents and the transactions or the Collateral contemplated hereby
and
19
thereby, (c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrower, or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Loan Documents or
Borrower's affairs, (d) any attempt to enforce any rights of Lender against
Borrower, any Guarantor, or any other person which may be obligated to Lender by
virtue of this Agreement or any of the other Loan Documents, whether or not suit
is filed, or (e) any attempt to inspect, verify, protect, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the Collateral,
then all such reasonable legal and accounting expenses (including all reasonable
attorneys' fees) together with all other reasonable costs and expenses of Lender
shall be payable by Borrower without demand after notice, and Borrower shall
promptly pay all such amounts payable to Lender under this Section 10.6, and all
such amounts shall be secured by the Collateral and shall bear interest from the
date of such notice until paid in full at the rate applicable to the Loans from
time to time. If suit is brought to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
court costs in addition to any other remedy or recovery awarded by the court.
10.7 INUREMENT. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without Lender's prior written consent and any prohibited assignment shall be
absolutely void. No consent to an assignment by Lender shall release Borrower
from its Obligations. Lender may assign this Agreement and its rights and duties
hereunder and no consent or approval by Borrower is required in connection with
any such assignment to an equally rated and bona fide financial institution.
Lender reserves the right to sell, assign, transfer, negotiate, or grant
participations in all or any part of, or any interest in Lender's rights and
benefits hereunder. In connection with any such assignment or participation,
Lender may disclose all documents and information which Lender now or hereafter
may have relating to Borrower or Borrower's business. To the extent that Lender
assigns its rights and obligations hereunder to a third Person, Lender
thereafter shall be released from such assigned obligations to Borrower and such
assignment shall effect a novation between Borrower and such third Person.
10.8 APPLICABLE LAW. This Agreement and all other agreements and
instruments required by Lender in connection therewith shall be governed by and
construed according to the internal laws of the State of California, except to
the extent that the Code provides for the application of the laws of another
state.
10.9 SEVERABILITY. Should any one or more provisions of the Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
10.10 TIME OF THE ESSENCE. Time is hereby declared to be of the essence of
this Agreement and of every part hereof.
10.11 REFERENCE PROVISION.
10.11.1 Other than (i) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (ii) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Agreement, any security agreement executed by Borrower in favor
of Lender or any note executed by Borrower in favor of Lender or any other
agreement or instrument
20
issued in favor of Lender by Borrower (collectively in this Section, the
"Agreement") which controversy, dispute or claim is not settled in writing
within 30 days after the "Claim Date" (defined as the date on which a party
subject to this Agreement gives written notice to all other parties that a
controversy, dispute or claim exists), shall be settled by a reference
proceeding in California in accordance with the provisions of Section 638 et
seq. of the California Code of Civil Procedure, or their successor section
("CCP"), which shall constitute the exclusive remedy for the settlement of any
controversy, dispute or claim concerning this Agreement, including whether such
controversy, dispute or claim is subject to the reference proceeding and except
as set forth above, the parties waive their rights to initiate any legal
proceedings against each other in any court or jurisdiction other than the
Superior Court in the County where the Real Property, if any, is located or the
County in which the Obligations are payable to Lender if none (the "Court"). The
referee shall be a retired judge of the Court selected by mutual agreement of
the parties, and if they cannot so agree within 45 days after the Claim Date,
the referee shall be promptly selected by the Presiding Judge of the Court (or
his representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers of a temporary judge, as authorized by law, and upon
selection should take and subscribe to the oath of office as provided for in
Rule 244 of the California Rules of Court (or any subsequently enacted Rule).
Each party shall have one peremptory challenge pursuant to CCP Section 170.6.
The referee shall (a) be requested to set the matter FOR hearing within 60 days
after the date of selection of the referee and (b) try any and all issues of law
or fact and report a statement of decision upon them, if possible, within 90
days of the Claim Date. Any decision rendered by the referee shall be final,
binding and conclusive and judgment shall be entered pursuant to CCP Section 644
in any court in the State of California having jurisdiction. Any party may apply
for a reference proceeding at any time after 30 days following notice to any
other party of the nature of the controversy, dispute or claim, by filing a
petition for a hearing or trial. All discovery permitted by this Agreement shall
be completed no later than 15 days before the first hearing date established by
the referee. The referee may extend such period in the event of a party's
refusal to provide requested discovery for any reason whatsoever, including,
without limitation, legal objections raised to such discovery or unavailability
of a witness due to absence or illness. No party shall be entitled to "priority"
in conducting discovery. Depositions may be taken by either party upon 14 days
written notice, and request for production or inspection of documents shall be
responded to within 20 days after service. All disputes relating to discovery
which cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending appointment of the
referee as provided herein, the Court is empowered to issue temporary or
provisional remedies, as appropriate.
10.11.2 Except as expressly set forth in this Agreement, the referee
shall determine the manner in which the reference proceeding is conducted
including the time and place of all hearings, the order of presentation of
evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee,
except for trial, shall be conducted without a court reporter except that when
any party so requests, a court reporter will be used at any hearing conducted
before the referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
10.11.3 The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the state
of California shall be applicable to the reference
21
proceeding. The referee shall be empowered to enter equitable as well as legal
relief, to provide all temporary or provisional remedies and to enter equitable
orders that shall be binding upon the parties. The referee shall issue a single
judgment at the close of the reference proceeding which shall dispose of all of
the claims of the parties that are the subject of the reference. The parties
hereto expressly reserve the right to contest or appeal from the final judgment
or any appealable order or appealable judgment entered by the referee. The
parties hereto expressly reserve the right to findings of fact, conclusions of
laws, a written statement of decision, and the right to move for a new trial or
a different judgment, which new trial, if granted, is also to be a reference
proceeding under this provision.
10.11.4 In the event that the enabling legislation which provides
for appointment of a referee is repealed (and no successor statute is enacted),
any dispute between the parties that would otherwise be determined by the
reference procedure herein described shall be resolved and determined by
arbitration. The arbitration shall be conducted by a retired judge of the Court,
in accordance with the California Arbitration Act, Section 1280 through
Section 1294.2 of the CCP as amENDED FROM time to time. The limitations with
respect to discovery as set forth hereinabove shall apply to any such
arbitration proceeding.
11. NOTICES. All notices, requests and other communications hereunder shall be
in written form (including bank wire, telegram, facsimile, telex, or similar
writing) and shall be given to the party to whom addressed, at its address,
facsimile or telex number set forth below, or such other address, facsimile or
telex number as such party may hereafter specify for the purpose by notice to
the other parties listed below. Each such notice, request or communication shall
be effective (i) if given by facsimile, telex or other electronic means, when
such communication is transmitted to the address specified below and the
appropriate answer back is received, (ii) if given by mail, three days after
such communication is deposited in the United States mail with postage prepaid
by registered or certified mail, return receipt requested, address as aforesaid
or (iii) if given by any other means, when addressed at the address specified
below. All notices given by telex, facsimile or other electronic means shall be
confirmed in writing as promptly as practicable.
If to Borrower: FormFactor, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No: ▇▇▇ ▇▇▇-▇▇▇▇
If to Lender: Imperial Bank, a Comerica Incorporated company
▇▇▇▇ ▇▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Services
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: Imperial Bank East Bay Regional Office
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
22
This Agreement is duly executed on behalf of each of the parties hereto by duly
authorized officers as of the date first above written.
IMPERIAL BANK, FORMFACTOR, INC.,
a California corporation a Delaware corporation
X /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ X /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------- ---------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------- --------------------------
Title: Senior Vice President Title: CFO
---------------------------- --------------------------
23
APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan and Security Agreement dated as of
March 20, 2001, by and between Imperial Bank, a California banking corporation
and FormFactor, Inc., the following terms shall have the following meanings
(terms defined in the singular to have the same meaning when used in the plural
and vice versa):
Accounts - all presently existing and hereafter arising accounts, accounts
receivable, contract rights and other forms of monetary obligations and
receivables (including healthcare receivables) owing to Borrower, and any credit
insurance, guaranties, or security therefor, irrespective of whether earned by
performance.
Affiliate - with respect to any Person, any other Person who, directly or
indirectly, controls, is controlled by, is under common control with, or is a
director, officer or partner of such Person. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to vote 5%
or more of the Stock having ordinary voting power for the election of directors
(or comparable managers) or the direct or indirect power to direct the
management and policies of a Person.
Agreement - the Amended and Restated Loan and Security Agreement referred to in
the first sentence of this Appendix A, all Schedules and Exhibits thereto, and
this Appendix A.
Bankruptcy Code - the United States Bankruptcy Code (11 U.S.C.Section 101 et
seq.), as amended, and any successor statute.
Borrower's Books - means all of Borrower's books and records including: ledgers;
records indicating, summarizing, or evidencing Borrower's properties or assets
(including the Collateral) or liabilities; all information relating to
Borrower's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
Business Day - any day that is not a Saturday, Sunday, or other day on which
banks in the State of California, Arizona, Colorado or Washington are authorized
or required to close.
Chattel Paper - all chattel paper (including tangible chattel paper and
electronic chattel paper) (as such terms are defined in the Code).
Closing Date - the date of the making of the initial Loan under the Agreement.
Code - the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35,
operative July 1, 2001. Any and all terms used in the Agreement which are
defined in the UCC shall be construed and defined in accordance with the meaning
and definition ascribed to such terms under the UCC, unless otherwise defined
herein.
1
Collateral - all of Borrower's right, title, and interest in and to each of the
following in which Borrower now has rights or hereafter acquires right:
1. the Accounts,
2. Borrower's Books,
3. the Deposit Accounts,
4. the Equipment,
5. the General Intangibles,
6. the Inventory,
7. the Investment Property,
8. the Letter of Credit Rights,
9. the Negotiable Collateral,
10. the Supporting Obligations,
11. any money, or other assets of Borrower that now or hereafter come into the
possession, custody, or control of Lender, and
12. the proceeds and products , whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Borrower's Books, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Property, Letter of
Credit Rights, Negotiable Collateral, Real Property, Supporting
Obligations, money, deposit accounts, or other tangible and intangible
property received or receivable from the sale, exchange, collection,
lease, license, use or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
Notwithstanding the foregoing, Collateral does not include: (i) leasehold
interests as a lessee or sublessee under real property leases or
subleases; (ii) leasehold interests as a lessee under an equipment lease
or loan, or equipment subject to a lease or loan unless and to the extent
permitted by the applicable contractual arrangement; (iii) interests as a
licensee under software or other intellectual property right subleases
unless and to the extent permitted by the applicable contractual
arrangement; or (iv) Intellectual Property Rights.
Debt Coverage Ratio - net profit after taxes plus depreciation and amortization,
divided by current portion of long term debt, plus the current amount due on all
capital leases. This ratio to be measured on a rolling 4-quarter basis, starting
with the 4 quarters ending December 30, 2000.
Deposit Account - any demand, time, savings, passbook or similar account now or
hereafter maintained by or for the benefit of Borrower with an organization that
is engaged in the business of banking including a bank, savings bank, savings
and loan association, credit union and trust
2
companies, and all funds and amounts therein, whether or not restricted or
designated for a particular purpose.
Documents - any and all documents and documents of title, including documents of
title, bills of lading, dock warrants, dock receipts, warehouse receipts and
other documents of Borrower, whether or not negotiable, and includes all other
documents which purport to be issued by a bailee or agent and purport to cover
goods in any bailee's or agent's possession which are either identified or are
fungible portions of an identified mass, including such documents of title made
available to Borrower for the purpose of ultimate sale or exchange of goods or
for the purpose of loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with goods in a manner
preliminary to their sale or exchange, in each case whether now existing or
hereafter acquired.
Equipment - all of Borrower's machinery, machine tools, apparatus, motors,
equipment, fittings, furniture, furnishings, fixtures, vehicles (including motor
vehicles and trailers), tools, parts, goods (including software imbedded in such
goods) and other tangible personal property (other than Inventory) of every kind
and description used in Borrower's operations or owned by Borrower or in which
Borrower has an interest, whether now owned or hereafter acquired by Borrower
and wherever located, and all parts, accessories, and special tools, and all
increases and accessions thereto and substitutions and replacements therefor.
GAAP - generally accepted accounting principles as in effect from time to time
in the United States, consistently applied.
General Intangibles - all of Borrower's present and future general intangibles
and other personal property (including payment intangibles, electronic Chattel
Paper, contract rights, rights arising under common law, statutes, or
regulations, choses or things in action, blueprints, drawings, plans, diagrams,
schematics, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, software, information contained on computer disks or
tapes, literature, reports, catalogs, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), other than goods, Accounts,
Intellectual Property and Negotiable Collateral.
Guarantor - means, jointly and severally, individually and collectively, each
Person that from time to time enters into a continuing guaranty of the
obligations of Borrower to Lender.
Indebtedness - all (a) obligations of Borrower for borrowed money, (b)
obligations of Borrower evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations of Borrower in respect of
letters of credit, bankers acceptances, interest rate swaps, or other financial
products, (c) obligations of Borrower under capital leases, (d) obligations or
liabilities of others secured by a Lien on any property or asset of Borrower,
irrespective of whether such obligation or liability is assumed, and (e) any
obligation of Borrower guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse to Borrower)
any indebtedness, lease, dividend, letter of credit, or other obligation of any
other Person.
Insolvency Proceeding - any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other bankruptcy or insolvency
law, including
3
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
Instruments - any and all negotiable instruments, and every other writing which
evidences a right to the payment of a monetary obligation, in each case whether
now existing or hereafter acquired.
Intellectual Property Rights - any inventions (patentable or otherwise),
patents, trademarks, copyrights, trade secrets or other intellectual property
rights, and any licenses in or to the same.
Inventory - all of Borrower's goods (including software imbedded in such goods),
merchandise and other personal property which are held for sale or lease,
including those held for display or demonstration or out on lease or consignment
or to be furnished under a contract of service or are raw materials, work in
process or materials used or consumed, or to be used or consumed in Borrower's
business, and shall include any returns or repossessions thereof and all
property rights, patents, copyrights, trademarks, plans, drawings, diagrams,
schematics, assembly and display materials relating thereto.
Investment Property - any and all of Borrower's presently existing and hereafter
acquired investment property (as defined in the Code).
Letter of Credit Rights - any and all of Borrower's presently existing and
hereafter acquired letter of credit rights (as defined in the Code).
LIBOR Addendum - the LIBOR Addendum attached to each applicable promissory note
evidencing the Loans, in the form attached hereto as Schedule A.
Lien - any lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, adverse claim or charge, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and any agreement to grant
any lien or security interest.
Loan Documents - the Agreement, all promissory note(s) executed by Borrower in
favor of Lender, any security agreements, guaranties, mortgages, deeds of trust,
environmental agreements, executed by Borrower with or in favor of Lender, and
any other instruments, documents, or agreements entered into, now or in the
future by Borrower in connection therewith.
Loans - all loans and advances of any kind made by Lender to Borrower pursuant
to the Agreement.
Long Term Debt - as of any date of determination, all debts and other
obligations of Borrower for borrowed money and all renewals or extensions
thereof whose remaining term exceeds 1 year.
Material Adverse Change - a material adverse effect on (a) the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower, any Subsidiary or Affiliate of Borrower,
(b) the ability of Borrower, any Subsidiary or Affiliate of
4
Borrower, to perform its obligations under the Loan Documents to which it is a
party or of Lender to enforce the Obligations or realize upon the Collateral,
(c) the value of the Collateral or the amount that Lender would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral (d) the validity or
enforceability of this Agreement, the other Loan Documents, or the rights and
remedies of Lender hereunder or thereunder, or (e) the priority of Lender's
liens with respect to the Collateral.
Maturity Date - April 30, 2002.
Maximum Revolving Amount - US$12,000,000.
Negotiable Collateral - all of Borrower's present and future letters of credit,
advises of credit, certificates of deposit, notes, drafts, money, Instruments,
Documents, and tangible Chattel Paper.
Obligations - all Loans, advances, debt, principal, interest, fees, expenses,
costs and other amounts owed to Lender by Borrower pursuant to this Agreement or
any other agreement, together with all guaranties, covenants and duties owing by
Borrower to Lender of any kind or description, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
including any interest, fees, expenses, costs and other amounts owed to Lender
that but for the provisions of the Bankruptcy Code would have accrued after the
commencement of any Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Lender may have obtained by
assignment or otherwise.
Permitted Indebtedness - all: (a) Indebtedness of Borrower in favor of Lender
arising under this Agreement or any other Loan Document; (b) Indebtedness
existing on the Closing Date and disclosed in writing; (c) Indebtedness secured
by a lien described in clause (c) of the defined term "Permitted Liens,"
provided such Indebtedness does not exceed the lesser of the cost or fair market
value of the Equipment financed with such Indebtedness; and (d) Subordinated
Debt.
Permitted Investments - all: (a) investments existing on the Closing Date
disclosed in writing; and (b) investments in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or any
agency or any State thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one (1) year
from the date of creation thereof and currently having rating of at least A-2 or
P-2 from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service,
(iii) certificates of deposit maturing no more than one (1) year from the date
of investment therein issued by Lender and/or (iv) Lender's money market
accounts, and such investments that Borrower's Board of Directors shall permit
as defined in the investment policy as duly adopted by such Board, from time to
time.
Permitted Liens - any: (a) any Liens existing on the Closing Date and disclosed
in writing or arising under this Agreement or the other Loan Documents; (b)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings, provided the same have no priority over any of Lender's security
interests; (c) Liens (i) upon or in any Equipment acquired or held by Borrower
or any of its Subsidiaries to secure the purchase price of such Equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such Equipment, or (ii) existing on such Equipment at
5
the time of its acquisition, provided that the Lien is confined solely to the
Equipment so acquired and improvements and additions thereto, and the proceeds
of such Equipment to the extent that the acquisition of such Equipment is
permitted under Section 7.6; (d) Liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by Liens of the
type described in clauses (a) through (c) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.
Person - any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock company,
estate, entity or governmental agency.
Real Property - means any estates or interests in real property now owned or
hereafter acquired by Borrower.
Stock - means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a corporation or equivalent
entity, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Securities
Exchange Act of 1934).
Subsidiary - of a Person means any corporation, partnership, limited liability
company, or other entity in which (i) any general partnership interest or (ii)
more than 50% of the Stock of which by the terms thereof having ordinary voting
power to elect the Board of Directors, managers or trustees of the entity, at
the time as of which any determination is being made, is owned by Borrower,
either directly or through an Affiliate.
Supporting Obligations - any and all of Borrower's presently existing and
hereafter acquired supporting obligations (as defined in the Code).
Tangible Net Worth - as of any date of determination, the sum of Borrower's
total stockholder's equity, less any value for goodwill, trademarks, patents,
copyrights, leaseholds, organization expense and other similar intangible items,
and any amounts due from stockholders, officers and Affiliates.
6
EXHIBIT 5.5.3
COMPLIANCE CERTIFICATE
To: IMPERIAL BANK
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
This Compliance Certificate is given pursuant to Section 5.5.3 of that certain
Amended and Restated Loan and Security Agreement, dated as of March 20, 2001
(the "Agreement"), by and among FormFactor, Inc. "Borrower"), and IMPERIAL BANK,
a California banking corporation. All initially capitalized terms used but not
defined in this Compliance Certificate shall have the meanings assigned to such
terms in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. He/She is the duly elected ____________________________ of Borrower;
2. He/She reviewed the terms of the Agreement and has made, or has caused to
be made under his/her supervision, a detailed review of the transactions and
condition of Borrowers during the accounting period covered by the attached
financial statements;
3. Based on the examination described in Paragraph (2) above, Borrower has
performed and observed each and every covenant contained in the Agreement to be
performed or observed by it;
4. The examinations described in Paragraph (2) above did not disclose, and
he/she has no knowledge of, the existence of any condition or the occurrence of
any event that constitutes, or that upon the lapse of time or upon the giving of
notice and the lapse of any time specified therefor shall constitute, an Event
of Default during, or at the end of, the accounting period covered by the
attached financial statements or as of the date of this Compliance Certificate,
except as set forth below; and
5. Schedule 1 attached hereto and incorporated herein by this reference sets
forth financial data and computations evidencing Borrowers' compliance with
those covenants set forth in Sections 7.1 through 7.7 of the Agreement, all of
which data and computations are to the best of my knowledge, true, complete and
correct.
FORMFACTOR, INC.
By: ________________________________
Title:________________________________
FIRST MODIFICATION TO
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This First Modification to Second Amended and Restated Loan and Security
Loan Agreement (this `Modification') is entered into by and between FORMFACTOR,
INC. ("Borrower") and IMPERIAL BANK ("Bank") as of this 17th day of September,
2001, at Inglewood, California.
RECITALS
This Modification is entered into upon the basis of the following facts
and understandings of the parties, which facts and understandings are
acknowledged by the parties to be true and accurate:
Bank and Borrower previously entered into a Second Amended and Restated
Loan and Security Agreement dated March 20, 2001. The Second Amended and
Restated Loan and Security Agreement shall be referred to herein as the
"Agreement."
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as set forth
below.
AGREEMENT
1. Incorporation by Reference. The Recitals and the documents referred to
therein are incorporated herein by this reference. Except as otherwise noted,
the terms not defined herein shall have the meaning set forth in the Agreement.
2. Modification to the Agreement. Subject to the satisfaction of the
conditions precedent as set forth in Section 3 hereof, the Agreement is hereby
modified as set forth below.
Section 7.5 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"7.5 LIMITATION ON LOSSES. Not to incur on a consolidated basis, a
net loss after taxes of more than (a) $1,500,000 for the fiscal quarter
ending September 30, 2001; (b) $1,000,000 for the fiscal quarter ending
December 31, 2001; and (c) $1,400,000 for each fiscal year end."
3. Legal Effect. The effectiveness of this Modification is conditioned
upon receipt by Bank of this Modification, and any other documents which Bank
may require to carry out the terms hereof. Except as specifically set forth in
this Modification, all of the terms and conditions of the Agreement remain in
full force and effect.
4. Integration. This is an integrated Modification and supersedes all
prior negotiations and agreements regarding the subject matter hereof. All
amendments hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
FORMFACTOR, INC. IMPERIAL BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- -------------------------
Title: CFO ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- Senior Vice President
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